|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------



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



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

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



|For the quarterly period ended December 31, 2008
|------------------------------------------------



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



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

|DELAWARE                        |  |                                                      |  | 04-3284631         
|------------------------------- |  | ---------------------------------------------------- |  | -------------------
|(State or other jurisdiction of |  |                                                      |  | (I.R.S. Employer   
|incorporation or organization)  |  |                                                      |  | Identification No.)
|                               
|                                |  | 230 Broadway E.                                      |  |                    
|                                |  | Lynnfield, Massachusetts 01940                       |  |                    
|                                |  | (Address of principal executive offices)             |  |                    
|                               
|                                |  | (781) 593-8565                                       |  |                    
|                                |  | (Registrant's telephone number, including area code) |  |                    

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

|Yes [X] |  | No [ ]
|------- |  | ------

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer [ ] |  | Accelerated filer [ ] |  | Non-accelerated filer [ ] |  | Smaller reporting company [X]
|--------------------------- |  | --------------------- |  | ------------------------- |  | -----------------------------

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

|Yes [ ] |  | No [X]
|------- |  | ------

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date:

Number of shares outstanding of our only class of common stock as of February 11, 2009: 6,547,342

---



|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------

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



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

PART I

--------------------------------------------------------------------------------
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

ITEM 4T. CONTROLS AND PROCEDURES

PART II

--------------------------------------------------------------------------------
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS ITEM 6. EXHIBITS

SIGNATURES

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

---



|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------

|PART I                                                                       |  | FINANCIAL INFORMATION                            
|---------------------------------------------------------------------------- |  | -------------------------------------------------
|                                                                            
|                                                                            
|ITEM 1.                                                                      |  | FINANCIAL STATEMENTS                             
|                                                                             |  | INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
|                                                                             |  | CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|                                                                            
|                                                                            
|                                                                             |  |                                                  
|                                                                             |  |                                                  
|                                                                             |  |                                                  
|Assets                                                                       |  |                                                  
|Current Assets                                                               |  |                                                  
|Cash and cash equivalents                                                    |  | $ 6,320,124                                      
|Deposit with clearing organization, restricted                               |  | 175,000                                          
|Accounts receivable                                                          |  | 4,159,068                                        
|Note receivable - (current)                                                  |  | 8,815                                            
|Loans receivable from registered representatives (current), net of allowance |  | 672,386                                          
|Prepaid income taxes                                                         |  | 553,941                                          
|Marketable securities, at market value                                       |  | 71,569                                           
|Investment (short term)                                                      |  | -                                                
|Prepaid expenses                                                             |  | 427,616                                          
|                                                                             |  |                                                  
|                                                                             |  |                                                  
|                                                                            
|Property and equipment, net                                                  |  | 1,115,471                                        
|                                                                            
|Long Term Investments                                                        |  |                                                  
|Loans receivable from registered representatives                             |  | 167,283                                          
|Note receivable                                                              |  | 747,617                                          
|Equity investments, at cost                                                  |  | 40,000                                           
|Investments                                                                  |  |                                                  
|Non-qualified deferred compensation investment                               |  | 492,237                                          
|Cash surrender value life insurance policies                                 |  | 392,475                                          
|                                                                             |  |                                                  
|                                                                             |  |                                                  
|                                                                            
|Other Assets                                                                 |  |                                                  
|Other assets                                                                 |  |                                                  
|Deferred tax asset, net                                                      |  | 1,019,453                                        
|                                                                             |  |                                                  
|                                                                             |  |                                                  
|                                                                            
|TOTAL ASSETS                                                                 |  | $ 16,542,610                                     
|                                                                             |  |                                                  
|Liabilities and Stockholders' Equity                                         |  |                                                  
|Current Liabilities                                                          |  |                                                  
|Accounts payable                                                             |  | $ 787,777                                        
|Accrued expenses                                                             |  | 1,425,659                                        
|Notes payable                                                                |  |                                                  
|Unearned revenues                                                            |  | 1,600,177                                        
|Commissions payable                                                          |  | 2,354,236                                        
|Securities sold, not yet purchased, at market value                          |  | 12,031                                           
|                                                                             |  |                                                  
|                                                                             |  |                                                  
|                                                                            
|Long-Term Liabilities                                                        |  |                                                  
|Non-qualified deferred compensation plan                                     |  | 493,631                                          
|                                                                             |  |                                                  
|                                                                             |  |                                                  
|                                                                            
|Total liabilities                                                            |  | 6,673,511                                        
|                                                                             |  |                                                  
|Commitments and contingencies                                                |  |                                                  
|                                                                            
|Stockholders' Equity:                                                        |  |                                                  
|Common stock, $.01 par value, 10,000,000 shares authorized;                  |  |                                                  
|6,572,631 issued and 6,568,746 outstanding at December 31,2008               |  |                                                  
|6,535,871 issued and 6,531,986 outstanding at March 31, 2008                 |  | 65,726                                           
|Additional paid-in capital                                                   |  | 11,683,623                                       
|Accumulated deficit                                                          |  | (1,836,807)                                      
|Less: Treasury stock, 3,885 shares at cost                                   |  | (30,135)                                         
|Accumulated other comprehensive income                                       |  | (13,308)                                         
|                                                                             |  |                                                  
|Total stockholders' equity                                                   |  | 9,869,099                                        
|                                                                            
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   |  | $ 16,542,610                                     
|                                                                             |  |                                                  

See Notes to Condensed Consolidated Financial Statements.

---



|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------

|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES                              
|-------------------------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                
|THREE MONTHS ENDED DECEMBER 31, 2008 AND 2007 (UNAUDITED)                      
|                                                                               
|                                                                               
|                                                                               
|Revenue:                                                                       
|Commissions                                                                    
|Advisory fees                                                                  
|Other fee income                                                               
|Marketing revenue                                                              
|Interest, dividend and investment                                              
|                                                                               
|Total revenue                                                                  
|                                                                               
|Commission and advisory fee expenses                                           
|                                                                               
|Gross profit                                                                   
|                                                                               
|Operating expenses:                                                            
|Advertising                                                                    
|Communications                                                                 
|                                                                               
|Selling expense                                                                
|                                                                               
|                                                                               
|Compensation and benefits                                                      
|Regulatory, legal and professional                                             
|Occupancy                                                                      
|Other administrative                                                           
|Interest expense                                                               
|                                                                               
|Administrative expense                                                         
|                                                                               
|Total operating expense                                                        
|                                                                               
|                                                                               
|Operating income (loss) before taxes                                           
|(Benefit) provision for income taxes                                           
|                                                                               
|Net income (loss)                                                              
|                                                                               
|                                                                               
|Earnings per common share:                                                     
|Basic earnings (loss) per common share                                         
|                                                                               
|Diluted earnings per common share                                              
|                                                                               
|                                                                               
|Dividends per common share:                                                    
|Basic earnings per common share                                                
|                                                                               
|Diluted earnings per common share                                              
|                                                                               
|                                                                               
|Share data:                                                                    
|                                                                               
|Weighted average shares used in basic earnings per common share calculations   
|                                                                               
|Incremental shares from assumed exercise of stock options and restricted shares
|                                                                               
|Weighted average shares used in diluted earnings per common share              
|calculations                                                                   
|                                                                               

See Notes to Condensed Consolidated Financial Statements.

---



|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------

|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES                              
|-------------------------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                
|NINE MONTHS ENDED DECEMBER 31, 2008 AND 2007 (UNAUDITED)                       
|                                                                               
|                                                                               
|                                                                               
|Revenue:                                                                       
|Commissions                                                                    
|Advisory fees                                                                  
|Other fee income                                                               
|Marketing revenue                                                              
|Interest, dividend and investment                                              
|                                                                               
|Total revenue                                                                  
|                                                                               
|Commission and advisory fee expenses                                           
|                                                                               
|Gross profit                                                                   
|                                                                               
|                                                                               
|Operating expenses:                                                            
|Advertising                                                                    
|Communications                                                                 
|                                                                               
|Selling expense                                                                
|                                                                               
|Compensation and benefits                                                      
|Regulatory, legal and professional                                             
|Occupancy                                                                      
|Other administrative                                                           
|Interest expense                                                               
|                                                                               
|Administrative expense                                                         
|                                                                               
|Total operating expenses                                                       
|                                                                               
|                                                                               
|Operating (loss) income before taxes                                           
|(Benefit) provision for income taxes                                           
|                                                                               
|Net (loss) income                                                              
|                                                                               
|                                                                               
|Earnings per common share:                                                     
|Basic earnings (loss) per common share                                         
|                                                                               
|Diluted earnings per common share                                              
|                                                                               
|                                                                               
|Dividends per common share:                                                    
|Basic earnings per common share                                                
|                                                                               
|Diluted earnings per common share                                              
|                                                                               
|                                                                               
|Share data:                                                                    
|                                                                               
|Weighted average shares used in basic earnings per common share calculations   
|                                                                               
|Incremental shares from assumed exercise of stock options and restricted shares
|                                                                               
|Weighted average shares used in diluted earnings per common share              
|calculations                                                                   
|                                                                               

See Notes to Condensed Consolidated Financial Statements.

---



| | Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
| | -----------------------------------------------------------------------------------



|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYNINE MONTHS ENDED DECEMBER 31, 2008 AND 2007 (UNAUDITED)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                           |  | Common Stock    |  |            |  |               |  |                   |  |               |  |             |  |              
|---------------------------------------------------------- |  | --------------- |  | ---------- |  | ------------- |  | ----------------- |  | ------------- |  | ----------- |  | -------------
|                                                           |  | $ .01 Par Value |  |            |  |               |  |                   |  |               |  | Accumulated |  |              
|                                                           |  |                 |  | Additional |  | Comprehensive |  | Retained          |  | Treasury      |  | Other       |  | Total        
|                                                           |  | Number of       |  | Carrying   |  | Paid - In     |  | Income            |  | Earnings      |  | Stock       |  | Comprehensive
|                                                           |  | Shares          |  | Amount     |  | Capital       |  |                   |  | (Deficit)     |  |             |  | Income       
|                                                           |  |                
|Balance at April 1, 2007                                   |  | 6,209,421       |  | $ 62,094   |  | $ 9,721,749   |  | $               - |  | $ 468,506     |  | $ (30,135)  |  | $ 33,324     
|                                                           |  |                
|Exercise of stock options                                  |  | 23,244          |  | 232        |  | 52,140        |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Amortization of deferred compensation                      |  |                 |  |            |  | 250,126       |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Issuance of common stock under plans                       |  | 60,450          |  | 606        |  | (606)         |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Comprehensive income:                                      |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Net loss                                                   |  |                 |  |            |  |               |  | 777,837           |  | 777,837       |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Other Comprehensive income:                                |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Unrealized gain or losses on securities:                   |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Unrealized holding gains arising during the period, net of |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|taxeffect                                                  |  |                 |  |            |  |               |  | 5,165             |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|No reclassification adjustment required                    |  |                 |  |            |  |               |  | -                 |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Other comprehensive income                                 |  |                 |  |            |  |               |  | 5,165             |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Comprehensive loss                                         |  |                 |  |            |  |               |  | 783,002           |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                
|Balance at December 31, 2007                               |  | 6,293,115       |  | $ 62,931   |  | $ 10,023,410  |  | $               - |  | $ 1,246,343   |  | $ (30,135)  |  | $ 38,489     
|                                                           |  |                
|                                                           |  |                
|Balance at April 1, 2008                                   |  | 6,535,871       |  | $ 65,359   |  | $ 10,886,381  |  | $               - |  | $ (455,623)   |  | $ (30,135)  |  | $ 28,674     
|                                                           |  |                
|Stock-based compensation:                                  |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Exercise of stock options                                  |  | 34,760          |  | 347        |  | 121,380       |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Amortization of deferred compensation                      |  |                 |  |            |  | 671,252       |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Issuance of common stock under plans                       |  | 2,000           |  | 20         |  | 4,610         |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Comprehensive income:                                      |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Net loss                                                   |  |                 |  |            |  |               |  | (1,381,184)       |  | (1,381,184)   |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Other Comprehensive loss:                                  |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Unrealized gain or losses on securities:                   |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Unrealized holding gains arising during the period, net of |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|taxeffect                                                  |  |                 |  |            |  |               |  | (41,982)          |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|No reclassification adjustment required                    |  |                 |  |            |  |               |  | -                 |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Other comprehensive loss                                   |  |                 |  |            |  |               |  | (41,982)          |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|Comprehensive loss                                         |  |                 |  |            |  |               |  | (1,423,166)       |  |               |  |             |  |              
|                                                           |  |                 |  |            |  |               |  |                   |  |               |  |             |  |              
|                                                           |  |                
|Balance at December 31, 2008                               |  | 6,572,631       |  | $ 65,726   |  | $ 11,683,623  |  | $               - |  | $ (1,836,807) |  | $ (30,135)  |  | $ (13,308)   
|                                                           |  |                

See Notes to Condensed Consolidated Financial Statements.

---



|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------

|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES           
|------------------------------------------------------------
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS             
|NINE MONTHS ENDED DECEMBER 31, 2008 AND 2007(UNAUDITED)     
|                                                            
|                                                            
|                                                            
|Cash flows from operating activities:                       
|Net (loss) income                                           
|Adjustments to reconcile net (loss) income to net cash      
|provided by operating activities:                           
|Depreciation and amortization                               
|Amortization of discount on U.S. Treasury note              
|Allowance for doubtful accounts on loans receivable         
|Deferred taxes                                              
|Stock-based compensation                                    
|Unrealized (gain) in marketable securities                  
|Non-qualified deferred compensation investment              
|Gain on investments                                         
|Market adjustment cash surrender value life insurance policy
|                                                            
|Change in operating assets and liabilities:                 
|Accounts receivable                                         
|Loans receivable from registered representatives            
|Prepaid expenses and other assets                           
|Prepaid income taxes                                        
|Accounts payable                                            
|Accrued expenses                                            
|Unearned revenues                                           
|Commissions payable                                         
|                                                            
|Net cash provided by operating activities                   
|                                                            
|Cash flows from investing activities:                       
|Acquisition of property and equipment                       
|Cash surrender value life insurance policies                
|Note receivable                                             
|Proceeds from maturity of Certificate of deposit            
|Proceeds from maturity of U.S. Treasury notes               
|                                                            
|Net cash provided by investing activities                   
|                                                            
|Cash flows from financing activities:                       
|Payments on note payable                                    
|Exercise of stock options                                   
|                                                            
|Net cash used in financing activities                       
|                                                            
|Net increase in cash and cash equivalents                   
|                                                            
|Cash and cash equivalents, beginning of period              
|                                                            
|Cash and cash equivalents, end of period                    
|                                                            
|                                                            
|Supplemental disclosures of cash flow information:          
|Interest paid                                               
|                                                            
|Income taxes paid                                           
|                                                            

See Notes to Condensed Consolidated Financial Statements.

---



|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008 (UNAUDITED)

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

Incorporated in July 1995 under Massachusetts law and redomiciled under Delaware law in November 2007, Investors Capital Holdings, Ltd. ("ICH") is a holding company whose wholly-owned subsidiaries assist a nationwide network of independent registered representatives ("representatives") in providing a diversified line of financial services to the public including securities brokerage, investment advice, asset management, financial planning and insurance. Our subsidiaries include the following:

- Investors Capital Corporation ("ICC") is duly registered under the Securities Exchange Act of 1934, the Investment Advisers Act of 1940 and applicable state law to provide broker-dealer and investment advisory services nationwide. ICCs national network of independent financial representatives is licensed to provide these services through ICC under the regulatory purview of the Securities and Exchange Commission (the SEC), the Financial Industry Regulatory Agency (FINRA) and state securities regulators. ICC clears its public customer accounts on a fully disclosed basis through a clearing broker. ICC, doing business as Investors Capital Advisors (ICA), also provides investment advisory services.
- In the past, Eastern Point Advisors, Inc. ("EPA") had been the Companys primary provider of investment advisory services. EPA withdrew its investment advisor registration with the SEC on May 5, 2008. EPA ceased operations and voluntarily dissolved during the fiscal quarter ended June 30, 2008. EPAs net assets and equity were transferred to ICC and ICH, respectively.
- Investors Capital Holdings Securities Corporation ("ICH Securities") holds cash, cash equivalents, interest income and dividend income for ICH.
- ICC Insurance Agency, Inc. facilitates the sale of insurance and annuities by our representatives.

INTERIM FINANCIAL REPORTING:

The accompanying interim unaudited condensed consolidated financial statements of Investors Capital Holdings, Ltd. and its subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Quarterly Report on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all of the adjustments necessary for a fair presentation of the results of the interim periods presented. Operating results for the three and nine month period ended December 31, 2008 are not necessarily indicative of the results that may be expected for the year ending March 31, 2009. The balance sheet at March 31, 2008 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Companys Annual Report on Form 10-K (the Form 10-K) for the fiscal year ended March 31, 2008 filed with the SEC.

USE OF ESTIMATES AND ASSUMPTIONS:

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

RECLASSIFICATIONS:

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

---



|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended December 31, 2008
|-----------------------------------------------------------------------------------



|SIGNIFICANT ACCOUNTING POLICIES:Revenue Recognition
|---------------------------------------------------

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

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

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

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

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

Advisory Fees.Our managed accounts advisory fees are based on the amount of assets managed per agreement negotiated between our independent representatives and their clients. These revenues are recorded quarterly as and when billed based on the fair market value of assets managed throughout the quarter. Any portion remaining uncollected due to account adjustments after account rebalancing is charged against earnings at quarter end.

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

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

Accounts Receivable  Allowance for Doubtful Accounts

Loans to representatives. Management performs periodic evaluations and provides an allowance based on the assessment of specifically identified unsecured receivables and other factors, including the representative's payment history and production levels. Once it is determined that it is both probable that a loan has been impaired, typically due to the termination of the relationship, and the amount of loss can reasonably be estimated, the portion of the loan balance estimated to be uncollectible is so classified. See Note 6 - Loans to Registered Representatives.

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

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Income Taxes

The Company uses the asset and liability method to account for income taxes, which requires recognition of deferred tax assets, subject to valuation allowances, and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income or loss in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has not recorded a valuation allowance against the deferred tax assets as management believes it is more likely than not that they will be realized.

Effective April 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No. 109,Accounting for Income Taxes.This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure and transition. Management conducted an analysis as to the financial impact of FIN 48 and concluded that FIN 48 does not have a material impact on its consolidated financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS:

In June 2008, the FASB issued FSP Emerging Issues Task Force (EITF) 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities(FSP EITF 03-6-1). FSP EITF 03-6-1 requires unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents to be treated as participating securities as defined in EITF Issue No. 03-6,"Participating Securities and the Two-Class Method under FASB Statement No. 128,"and, therefore, included in the earnings allocation in computing earnings per share under the two-class method described in FASB Statement No. 128,Earnings per Share.This FSP is effective for fiscal years beginning after December 15, 2008 (April 1, 2009 for the Company), and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of FSP EITF 03-6-1 will have on its consolidated financial statements.

In May 2008, the FASB issued Statement No. 162,The Hierarchy of Generally Accepted Accounting Principles. This Statement identifies the sources for GAAP and lists the categories in descending order. An entity should follow the highest category of GAAP applicable for each of its accounting transactions. The adoption of Statement No. 162 will not have a material effect on the Company's consolidated financial statements.

NOTE 2 - SEGMENT INFORMATION

SFAS No. 131,Disclosures about Segments of an Enterprise and Related Information (SFAS 131) requires that the Company report certain financial and descriptive information about its operating segments. SFAS 131 defines operating segments as components of a business about which separate financial information is available that is regularly evaluated by management in deciding how to allocate resources and in assessing performance. The Company evaluates performance based on profit and loss from operations before income taxes not including nonrecurring gains and losses.

The Company's reportable operating segments are (i) broker/dealer and related services offered through ICC and (ii) asset management (investment advisory) services offered through ICC, doing business as ICA, and, until recently, EPA. The segments are strategic business units that are managed separately. They operate under different regulatory systems, provide different services and require distinct marketing strategies and varied technological and operational support. They also have differing revenue models; ICC earns transactional commissions and various fees in connection with the brokerage of securities for its customers, whereas ICA generates recurring revenue from fees that are based on the value of assets under management.

The Company accounts for inter-segment services and transfers as if the services or transfers were to third parties, that is, at current market prices.

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

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Assets are allocated among ICH and its subsidiaries based upon legal ownership and, within ICC, they are further allocated between the two operating segments based upon a determination of which segments utilize the assets. Total period-end assets are presented in this Note 2 on a stand-alone basis, i.e., without inter-company eliminations. Corporate items and eliminations are presented in the following table for the purpose of reconciling the stand-alone asset amounts to total consolidated assets.

Effective October 1, 2008, management instituted a new expense sharing agreement which revised the previous method of allocating expenses. Prior to the new expense sharing agreement, ICHs expenses were absorbed by its principal operating subsidiary, ICC, as overhead, and these expenses were then further allocated between the operating segments pro rata to their respective revenue.

Under the new expense sharing agreement there are no such ICH-generated overhead expenses. Instead, management allocates all expenses separately to the parent and ICC, including allocation of costs associated with shared personnel, based upon time studies and a determination of which entities are the beneficiaries of the services rendered by the personnel. Within ICC, expenses are further allocated between the two segments, ICC and ICA as follows: overhead expenses pro rata to revenue, direct full-time and time-shared employee costs based on the segments being served, and other personnel-related expenses pro rata to head count.

Segment reporting is as follows:

|                                       |  | Period Ended 
|-------------------------------------- |  | -------------
|                                       |  | December 31, 
|                                       |  | 2008         
|                                       |  |              
|Inter-company eliminations             |  | $ (1,358,670)
|Deferred income taxes                  |  | -            
|Income Taxes                           |  | -            
|                                       |  |              
|                                      
|Total Corporate items and eliminations |  | $ (1,358,670)
|                                       |  |              

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
|--------------------------------------------------------------------------

|                                        | Quarter Ended December 31,
|--------------------------------------- | --------------------------
|                                        | 2008                      
|                                        |                           
|Non-interest revenues:                  |                           
|ICC brokerage services                  | $ 15,501,594              
|EPA, ICA asset management services      | 2,730,985                 
|ICH gain (loss) on investments          | (11,188)                  
|                                        |                           
|                                       
|Total                                   | $ 18,221,391              
|                                        |                           
|                                       
|Interest and dividend income:           |                           
|ICC brokerage services                  | $ 115,529                 
|EPA, ICA asset management services      | 11,185                    
|ICH                                     | 3,402                     
|ICH Securities                          | 13                        
|                                        |                           
|                                       
|Total                                   | $ 130,129                 
|                                        |                           
|                                       
|Depreciation and amortization expenses: |                           
|ICC brokerage services                  | $ 94,923                  
|EPA, ICA asset management services      | 1,167                     
|                                        |                           
|                                       
|Total                                   | $ 96,090                  
|                                        |                           
|                                       
|                                       
|Operating (loss) Income :               |                           
|ICC brokerage services                  | $ (447,634)               
|EPA, ICA asset management services      | 252,946                   
|ICH                                     | (615,227)                 
|ICH Securities                          | 13                        
|                                        |                           
|                                       
|Total                                   | $ (809,902)               
|                                        |                           
|                                       
|Period end total assets:                |                           
|ICC brokerage services                  | $ 12,986,493              
|EPA, ICA asset management services      | 1,187,881                 
|ICH                                     | 3,716,731                 
|ICH Securities                          | 10,175                    
|Corporate items and eliminations        | (1,358,670)               
|                                        |                           
|                                       
|Total                                   | $ 16,542,610              
|                                        |                           

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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|                                        |  | Nine Months Ended December 31,
|--------------------------------------- |  | ------------------------------
|                                        |  | 2008                          
|                                        |  |                               
|Non-interest revenues:                  |  |                               
|ICC brokerage services                  |  | $ 55,016,348                  
|EPA, ICA asset management services      |  | 8,885,693                     
|ICH gain (loss) on investments          |  | (4,071)                       
|                                        |  |                               
|                                       
|Total                                   |  | $ 63,897,970                  
|                                        |  |                               
|                                       
|Interest and dividend income:           |  |                               
|ICC brokerage services                  |  | $ 410,725                     
|EPA, ICA asset management services      |  | 34,796                        
|ICH                                     |  | 9,684                         
|ICH Securities                          |  | 38                            
|                                        |  |                               
|                                       
|Total                                   |  | $ 455,243                     
|                                        |  |                               
|                                       
|Depreciation and amortization expenses: |  |                               
|ICC brokerage services                  |  | $ 287,518                     
|EPA, ICA asset management services      |  | 3,500                         
|                                        |  |                               
|                                       
|Total                                   |  | $ 291,018                     
|                                        |  |                               
|                                       
|                                       
|Operating (loss) income:                |  |                               
|ICC brokerage services                  |  | $ (143,766)                   
|EPA, ICA asset management services      |  | 912,932                       
|ICH                                     |  | (2,401,748)                   
|ICH Securities                          |  | 38                            
|                                        |  |                               
|                                       
|Total                                   |  | $ (1,632,544)                 
|                                        |  |                               
|                                       
|Period end total assets:                |  |                               
|ICC brokerage services                  |  | $ 12,986,493                  
|EPA, ICA asset management services      |  | 1,187,881                     
|ICH                                     |  | 3,716,731                     
|ICH Securities                          |  | 10,175                        
|Corporate items and eliminations        |  | (1,358,670)                   
|                                        |  |                               
|                                       
|Total                                   |  | $ 16,542,610                  
|                                        |  |                               

NOTE 3 - LITIGATION

The Company typically is involved with various judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of its business. At December 31, 2008, the Company was a defendant in or subject of various such legal proceedings. The Company maintains Errors and Omissions insurance to protect itself from potential damages and/or legal costs associated with certain law suits and arbitration proceedings whereby the Companys exposure is generally limited to $75,000 per case, subject to policy limitations and exclusions. The Company also maintains a fidelity bond to protect itself from potential damages and/or legal costs related to fraudulent activities pursuant to which the Companys exposure is usually limited to $200,000 per case, subject to policy limitations and exclusions.

The Company had accrued expenses of approximately $1.09 million and $0.14 million as of December 31, 2008 and March 31, 2008, respectively, related to legal fees and estimated probable settlement costs.

NOTE 4 - STOCK BASED COMPENSATION

The Company applies the provisions of SFAS No. 123R,Share-Based Payment,to account for share-based awards made to employees and directors. This pronouncement requires the measurement and recognition of compensation expense for all share-based awards made to employees and directors to be based on estimated fair values. Under the modified prospective transition method selected by the Company, all equity-based awards granted to employees and existing awards

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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modified are accounted for at fair value with compensation expense recorded as a component of net (loss) income. The Company periodically issues common stock to employees, directors, officers, representatives and other key individuals in accordance with the provisions of the shareholder approved equity compensation plans.

Prior to the adoption of SFAS 123(R), the Company had granted options and had reported as a footnote disclosure thepro formaeffect if we had reported an expense under the guidelines of SFAS No. 123. There was no stock option expense for the three and nine months ended December 31, 2008 and 2007. The pro forma expense calculated using the Black-Scholes option pricing model did not exceed the cumulative expense previously disclosed in the Companys report on Form 10-K for the fiscal year ended March 31, 2005.

Stock Options

The following table summarizes information regarding the Company's employee and director fixed stock options as of December 31, 2008 and, 2007:

|Employee, Director and Officers    |  | 2008    |  | 2007            
|---------------------------------- |  | ------- |  | ----------------
|                                   |  |         |  |                 
|Fixed Options                      |  |         |  | Weighted-Average
|                                   |  | Shares  |  | Exercise Price  
|                                   |  |         |  |                 
|                                  
|Outstanding at beginning of year   |  | 150,000 |  | $1.00           
|Granted                            |  | -       |  |                 
|Forfeited                          |  | -       |  |                 
|Exercised                          |  | -       |  |                 
|Reclassified(non-employee)         |  | -       |  |                 
|                                   |  |         |  |                 
|                                  
|Outstanding at quarter end         |  | 150,000 |  | $1.00           
|                                  
|Options exercisable at quarter-end |  | 150,000 |  |                 
|                                  
|Weighted-average fair value of     |  |         |  |                 
|options granted during the year    |  | -       |  |                 
|                                   |  |         |  |                 



The following table summarizes further information about employee and Directors' fixed stock options outstanding as of December 31, 2008:

|Options Outstanding |  | Options Exercisable
|------------------- |  | -------------------
|                    |  |                    
|                    |  |                    
|Range Of            |  | Number             
|Exercise Prices     |  | Outstanding        
|                    |  |                    
|                   
|                   
|$1.00               |  | 150,000            

Restricted Stock

Under the 2005 Equity Incentive Plan (the Plan) the Company is authorized to grant shares of ICH common stock to employees, directors, officers, representatives and other key individuals. Restricted shares of stock granted under the Plan as of December 31, 2008 have been either fully vested at date of grant or subject, in whole or in part, to vesting over time periods varying from one to five years after the date of grant. Unvested shares are subject to forfeiture in the event of termination of the grantees relationship with the Company, other than for death or disability. The compensation cost associated with restricted stock grants is recognized over the vesting period of the shares and is calculated as the market value of the shares on the date of grant. Unvested shares have been recorded as deferred compensation, which is a component of paid-in capital within stockholders equity on the Companys Consolidated Balance Sheets.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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The following activity occurred during the three months ended December 31, 2008:

|                                                                                |  |           |  | Weighted Average |  | Weighted Average |  |           
|------------------------------------------------------------------------------- |  | --------- |  | ---------------- |  | ---------------- |  | ----------
|                                                                                |  | Shares    |  | Stock Price      |  | Vested Life      |  | Fair Value
|                                                                                |  |           |  |                  |  |                  |  |           
|Non-vested at October 1, 2008                                                   |  | 150,134   |  | $ 2.95           |  | 1.85 yrs         |  | $ 442,895 
|Granted                                                                         |  | -         |  | $  -             |  |                  |  | -         
|Vested                                                                          |  | (45,356)  |  | $ 5.04           |  |                  |  | (228,594) 
|Canceled                                                                        |  | (1,137)   |  | $ 5.15           |  |                  |  | (5,856)   
|                                                                                |  |           |  |                  |  |                  |  |           
|Non-vested at December 31, 2008                                                 |  | 103,641   |  | $ 2.95           |  | 2.04 years       |  | $ 305,741 
|                                                                                |  |           |  |                  |  |                  |  |           
|                                                                               
|The following activity occurred during the nine months ended December 31, 2008: |  |          
|                                                                                |  |           |  | Weighted Ave     |  | Weighted Average |  |           
|                                                                                |  | Shares    |  | Stock Price      |  | Vested Life      |  | Fair Value
|                                                                                |  |           |  |                  |  |                  |  |           
|Non-vested at April 1, 2008                                                     |  | 264,142   |  | $ 2.38           |  | 1.76 years       |  | $ 628,658 
|Granted                                                                         |  | 2,000     |  | $ 4.53           |  |                  |  | 9,060     
|Vested                                                                          |  | (141,201) |  | $ 5.01           |  |                  |  | (707,417) 
|Canceled                                                                        |  | (21,300)  |  | $ 4.73           |  |                  |  | (100,749) 
|                                                                                |  |           |  |                  |  |                  |  |           
|Non-vested at December 31, 2008                                                 |  | 103,641   |  | $ 3.66           |  | 2.04 years       |  | $ 379,326 
|                                                                                |  |           |  |                  |  |                  |  |           

During the three months ended December 31, 2008 the Company incurred $166,047 of compensation costs related to the Companys grants of restricted stock to executives and employees, and $34,028 for grants to independent representatives, under the Plan. During the three months ended December 31, 2007 the Company incurred $41,209 of compensation costs related to the Companys grants of restricted stock to employees, and $38,853 for grants to independent representatives, under the Plan.

For the nine months ended December 31, 2008 the Company incurred $531,791 of compensation costs related to executives and employees, and $144,091 for grants to independent representatives, under the Plan. For the nine months ended December 31, 2007 compensation costs included $150,702 to employees and $99,424 for grants to independent representatives under the Plan.

NOTE 5 - NOTE RECEIVABLE

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

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

The note provides for a principal amount of $747,617, quarterly payments of interest accruing thereon at a 5.5% annual rate, and full payment on or before October 31, 2010. Prepayments are permitted without penalty. Interest accrued for the periods ended December 31, 2008 and March 31, 2008 were $8,815 and $8,674, respectively

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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NOTE 6  LOANS TO REGISTERED REPRESENTATIVES

ICC has granted loans to certain registered representatives with the stipulation that the loans will be forgiven if the representatives remain licensed with the Company for an agreed upon period of time, generally one to five years, and/or meet specified performance goals. Upon forgiveness, the loans are charged to commission expense for financial reporting purposes. $0 and $32,450 was charged to commission expense upon the meeting respective forgiveness terms for the three and nine months ended December 31, 2008. There were no loans written off to commission expense for the three and nine months ended December 31, 2007, respectively.

Some loans to registered representatives are not subject to a forgiveness contingency. These loans, as well as loans that have failed the forgiveness contingency, are repayable to the Company by deducting a portion of the representatives commission payouts throughout the commission cycle until the loans are paid off. Interest charged on these loans to representatives range from 6% to 11.25% annually.

|                                          |  | December 31, |  | March 31,
|----------------------------------------- |  | ------------ |  | ---------
|                                          |  | 2008         |  | 2008     
|                                          |  |              |  |          
|Forgiveable loans                         |  | $ 389,919    |  | $ 475,488
|Other loans                               |  | 547,029      |  | 339,547  
|Less: allowance for doubtful accounts     |  | (97,279)     |  | -        
|                                          |  |              |  |          
|                                         
|Total loans to registered representatives |  | $ 839,669    |  | $ 815,035
|                                          |  |              |  |          

NOTE 7 - INVESTMENTS

Securities not readily marketable include investment securities (a) for which there is no market on a securities exchange or no independent publicly quoted market, (b) that cannot be publicly offered or sold unless registration has been effected under the Securities Act of 1933, or (c) that cannot be offered or sold because of other arrangements, restrictions, or conditions applicable to the securities or to the Company. At December 31, 2008 and March 31, 2008, the Company recorded its private equity holdings at cost of $40,000 in accordance with Accounting Principles Board No. 18 "The Equity Method of Accounting for Investments in Common Stock", as the Company does not exercise significant influence over these equity investments.

The Company had investments in U.S Treasury Notes being held to maturity in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. These investments matured during the nine-months ended December 31, 2008.

These investments are presented at an amortized value as follows as of March 31, 2008:

|Purchase Date |  | Purchase Price |  | Interest Rate /Maturity Date /Coupon Date           |  | Face Value  |  | Amortized Cost |  | Interest Date 
|------------- |  | -------------- |  | --------------------------------------------------- |  | ----------- |  | -------------- |  | --------------
|              |  |                |  |                                                     |  |             |  |                |  |               
|7/12/2006     |  | $ 248,525      |  | US TREAS NOTES 4.875% 04/30/08 B/E DTD 04/30/06 N/C |  | $ 250,000   |  | $ 249,918      |  | Apr 30, Oct 31
|7/12/2006     |  | 249,727        |  | US TREAS NOTES 5.125% 06/30/08 B/E DTD 06/30/06 N/C |  | 250,000     |  | 250,007        |  | Jun 30, Dec 30
|9/28/2006     |  | 250,732        |  | US TREAS NOTES 4.875% 08/31/08 B/E DTD 08/31/06 N/C |  | 250,000     |  | 250,159        |  | Feb 28, Aug 28
|11/3/2006     |  | 242,460        |  | US TREAS NOTES 3.125% 10/15/08 B/E DTD 10/15/03 N/C |  | 250,000     |  | 247,777        |  | Apr 15, Oct 15
|              |  |                |  |                                                     |  |             |  |                |  |               
|              |  | $ 991,444      |  | Balance at March 31, 2008                           |  | $ 1,000,000 |  | $ 997,861      |  |               
|              |  |                |  |                                                     |  |             |  |                |  |               

At March 31, 2008, the Company held an investment in a $250,000 Certificate of Deposit, which matured on December 26, 2008 with a coupon rate of 4.7% .

NOTE 8  FAIR VALUE MEASUREMENTS

On January 1, 2008, the Company adopted the provisions of SFAS No. 157, Fair Value Measurements (SFAS 157), for certain financial assets and financial liabilities that are measured at fair value on a recurring basis. In February 2008, the Company also adopted FSP 157-2,Partial Deferral of the Effective Date of Statement 157, which deferred the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities measured at fair value on a nonrecurring basis to fiscal years beginning after November 15, 2008. Also, in October 2008, FASB issued FSP-3Determining the Fair Value of a financial asset when the market for that asset is not activewhich was effective upon issuance including periods for

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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which financial statements had not been issued. SFAS 157 provides a consistent definition of fair value, with a focus on exit price from the perspective of a market participant.

The Company holds short-term money market investments, commercial paper, investments in private equity, and certain other financial instruments which are carried at fair value. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches when market quotes are not readily accessible or available.

Valuation techniques for fair value are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Companys best estimate, considering all relevant information. These valuation techniques involve some level of management estimation and judgment. The process to determine fair value also includes making appropriate adjustments to the valuation model outputs to consider risk factors.

The fair value hierarchy of the Companys inputs used in the determination of fair value for assets and liabilities during the current period consists of three levels. Level 1 inputs are comprised of unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs incorporate the Companys own best estimate of what market participants would use in pricing the asset or liability at the measurement date where consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

If inputs used to measure an asset or liability fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the asset or liability. The Companys assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following table presents financial assets and liabilities measured at fair value on a recurring basis and their related valuation inputs as of December 31, 2008:

|Assets and Liabilities Measured at Fair Value on a Recurring Basis |  |                     |  |                                                 |  |                  
|------------------------------------------------------------------ |  | ------------------- |  | ----------------------------------------------- |  | -----------------
|                                                                  
|                                                                   |  |                     |  | Fair Value Measurements of Reporting Date Using
|                                                                   |  |                     |  |                                                
|                                                                   |  |                     |  |                                                 |  | Significant      
|                                                                   |  |                     |  | Quotes Prices in                                |  | Other            
|                                                                   |  | Total Fair Value of |  | Active Markets for                              |  | Observable       
|                                                                   |  | Asset or Liability  |  | Identical Assets                                |  | Inputs           
|                                                                   |  |                     |  |                                                 |  |                  
|Non-qualified deferred compensation investment                     |  | $ 492,237           |  | $ 492,237                                       |  | $               -
|Cash surrender value of life insurance policies                    |  | 392,475             |  | 392,475                                         |  | -                
|Investments                                                        |  | 137,165             |  | 137,165                                         |  | -                
|Marketable securities, at market value                             |  | 71,569              |  | 71,569                                          |  | -                
|Private equity investments, at cost                                |  | 40,000              |  | -                                               |  | -                
|                                                                   |  |                     |  |                                                 |  |                  
|Total Assets                                                       |  | $ 1,133,446         |  | $ 1,093,446                                     |  | $               -
|                                                                   |  |                     |  |                                                 |  |                  
|                                                                  
|Securities sold, not yet purchased, at market value                |  | $ 12,031            |  | $ 12,031                                        |  |                  
|Non-qualified deferred compensation plan                           |  | 493,631             |  | 493,631                                         |  |                  
|                                                                   |  |                     |  |                                                 |  |                  
|Total Liabilities                                                  |  | $ 505,662           |  | $ 505,662                                       |  |                  
|                                                                   |  |                     |  |                                                 |  |                  

NOTE 9  NON-QUALIFIED PLAN

Effective December 2007, the Company established the Investors Capital Holdings, Ltd. Deferred Compensation Plan (the NQ Plan) as well as a Rabbi Trust Agreement for this Plan. ICH is the NQ Plans sponsor. The unfunded NQ Plan enables eligible ICC Representatives to elect to defer a portion of fees earned by them, as well as any gains or losses on the underlying investments, as defined by the NQ Plan. The total amount of compensation deferred by the participating representatives was $84,159 and $368,123 for the three and nine months ended December 31, 2008.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis reviews our consolidated financial condition as of December 31, 2008 and March 31, 2008, the consolidated results of operations for the three and nine months ended December 31, 2008 and 2007 and, as appropriate, factors that may affect future financial performance. The discussion should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q. Unless context requires otherwise, as used in this Managements Discussion and Analysis (i) the current period means the three or nine months ended December 31, 2008, (ii) the prior period means the three or nine months ended December 31, 2007, (iii) an increase or decrease compares the current period to the prior period, and (iv) all non-comparative amounts refer to the current period.

FORWARD-LOOKING STATEMENTS

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

OVERVIEW

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

Broker-Dealer Services

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

Investment Advisory Services

The Company provides investment advisory services, including asset allocation and portfolio rebalancing, for its representatives customers. In the past, investment advisory services were performed by both ICC, doing business as ICA, and EPA. The Companys investment advisory business has been centered in ICA since 2004. EPA limited its business to providing access to advisory services supplied by third parties until it completed a transfer of all assets to ICA on May 5, 2008 and withdrew its advisory registration.

Recruitment and Support of Representatives

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

Support provided to assist representatives in pursuing consistent and profitable sales growth takes many forms, including online brokerage systems, asset management models, training in practice management, targeted financial assistance and a network of communication links with investment product companies. Regional and national conventions provide forums for interaction to improve product knowledge, sales and client satisfaction. In addition, our dedicated transition and business development team focuses on providing representatives with programs and tools to grow their businesses both through new client acquisition and advancement of existing client relationships. These programs enhance our ability to attract and retain productive representatives.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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OUR PROCESS

Check and Application

Transactions are conducted through a process whereby the client submits a check and application for the desired investment product. Our services include principal review and may also include submission to the investment company.

Online Trading

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

Bond Trading

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

Asset Allocation

Asset allocation services are available through ICA. These services, for the most part, are executed through our online trading platform. Other allocation services are performed with the respective fund companies directly.

OFF-BALANCE SHEET RISK

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

CRITICAL ACCOUNTING POLICIES

In General

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

Reserves

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

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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KEY INDICATORS OF FINANCIAL PERFORMANCE FOR MANAGEMENT

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

COMPARISON OF THE FISCAL QUARTERS ENDED DECEMBER 31, 2008 AND 2007

|RESULTS OF OPERATIONS                |  |                            |  |                            |  |                       |  |         |  |             
|------------------------------------ |  | -------------------------- |  | -------------------------- |  | --------------------- |  | ------- |  | ------------
|                                    
|                                     |  |                            |  |                            |  | Percentage of Revenue |  | Percent
|                                     |  | Quarter Ended December 31, |  | Quarter Ended December 31, |  | Change               
|                                     |  | 2008                       |  | 2007                       |  | 2008                  |  | 2007    |  | 2008 vs 2007
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|                                    
|Revenue:                             |  |                            |  |                            |  |                       |  |         |  |             
|Commissions                          |  | $ 15,002,034               |  | $ 19,552,008               |  | 81.7%                 |  | 84.0%   |  | -23.3%      
|Advisory fees                        |  | 2,681,734                  |  | 2,752,804                  |  | 14.6%                 |  | 11.8%   |  | -2.6%       
|Other fee income                     |  | 398,811                    |  | 421,439                    |  | 2.2%                  |  | 1.8%    |  | -5.4%       
|Marketing revenue                    |  | 150,000                    |  | 314,444                    |  | 0.8%                  |  | 1.4%    |  | -52.3%      
|Interest, dividend and investment    |  | 118,941                    |  | 230,261                    |  | 0.7%                  |  | 1.0%    |  | -48.3%      
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|Total revenue                        |  | 18,351,520                 |  | 23,270,956                 |  | 100.0%                |  | 100.0%  |  | -21.1%      
|                                    
|Commission and advisory fee expenses |  | 14,370,627                 |  | 18,190,813                 |  | 78.3%                 |  | 78.2%   |  | -21.0%      
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|Gross profit                         |  | 3,980,893                  |  | 5,080,143                  |  | 21.7%                 |  | 21.8%   |  | -21.6%      
|                                    
|Operating expenses:                  |  |                            |  |                            |  |                       |  |         |  |             
|                                    
|Advertising                          |  | 267,918                    |  | 460,114                    |  | 1.5%                  |  | 2.0%    |  | -41.8%      
|Communications                       |  | 267,047                    |  | 197,344                    |  | 1.5%                  |  | 0.8%    |  | 35.3%       
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|Total Selling expenses               |  | 534,965                    |  | 657,458                    |  | 2.9%                  |  | 2.8%    |  | -18.6%      
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|                                    
|Compensation and benefits            |  | 2,197,976                  |  | 3,124,694                  |  | 12.0%                 |  | 13.4%   |  | -29.7%      
|Regulatory, legal and professional   |  | 1,400,626                  |  | 573,941                    |  | 7.6%                  |  | 2.5%    |  | 144.0%      
|Occupancy                            |  | 251,628                    |  | 282,158                    |  | 1.4%                  |  | 1.2%    |  | -10.8%      
|Other administrative                 |  | 401,226                    |  | 302,155                    |  | 2.2%                  |  | 1.3%    |  | 32.8%       
|Interest                             |  | 4,374                      |  | 3,931                      |  | 0.0%                  |  | 0.0%    |  | 11.3%       
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|Total administrative expenses        |  | 4,255,830                  |  | 4,286,879                  |  | 23.2%                 |  | 18.4%   |  | -0.7%       
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|                                    
|Total operating expenses             |  | 4,790,795                  |  | 4,944,337                  |  | 26.1%                 |  | 21.2%   |  | -3.1%       
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|                                    
|Operating (loss) income              |  | (809,902)                  |  | 135,806                    |  | -4.4%                 |  | 0.6%    |  | -696.4%     
|                                    
|(Loss) income before income taxes    |  | (809,902)                  |  | 135,806                    |  | -4.4%                 |  | 0.6%    |  | -696.4%     
|                                    
|(Benefit) provision for income taxes |  | (195,187)                  |  | 83,585                     |  | -1.1%                 |  | 0.4%    |  | -333.5%     
|                                     |  |                            |  |                            |  |                       |  |         |  |             
|                                    
|Net (loss) income                    |  | $ (614,715)                |  | $ 52,221                   |  | -3.3%                 |  | 0.2%    |  | -1,277.1%   
|                                     |  |                            |  |                            |  |                       |  |         |  |             

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Practice Diversification

The Company, through its recruitment practices and education and training programs, encourages diversification of the array of investments products and services offered by our independent representatives. First and foremost, this enables our representatives to more fully serve the investment and security needs of their clients, particularly in unsettling volatile markets. Recruitment of representatives who are duly qualified to offer sophisticated investment products to their clients historically also has resulted in growth of transaction and fee-based business that, in addition to generating relatively high margins, are expected to help the Company weather a down market due to recurring revenues generated by these types of services.

REVENUES

Revenues decreased significantly this period compared to the prior period. The $4.92 million, or 21.1%, decrease primarily came from commissionable revenues which dropped by $4.56 million as a result of the deepening financial markets crisis. Fees from advisory services also dropped from $2.75 million for quarter ended December 31, 2007 to $2.68 million, or 2.6%, for the quarter ended December 31, 2008; however, advisory services revenue would have dropped off an additional 10% had it not been for the relocation of assets from brokerage commission accounts to our investment advisor accounts due to the repeal of the regulatory rule commonly referred to as the Merrill Lynch rule.

The Merrill Lynch rule, which had previously allowed fees based on assets in a clients brokerage account (i.e., fee based commissions), was repealed and, effective October 1, 2007, assets had to be relocated to either commission-based brokerage accounts or investment advisor accounts.

There had been a recent trend of higher growth in our fee-based advisory services, compared to typically lower-margin commission-based services; however, that growth halted this quarter due to a significant decrease in the value of assets under management resulting from declining market prices and reduced influx of new investment dollars.

Management seeks a diversified revenue stream to provide a degree of protection from market risk and continues to emphasize retention and recruitment of representatives who seek to leverage the full range of our technology platforms.

Commissions

Revenues from commissions dropped in all major categories due to a significant decline in retail investment reflecting the setting in of consumer skepticism toward volatile and uncertain financial markets. Although the Companys revenue stream is diversified and does not entirely rely on new investment dollars, recurring brokerage revenues did not offset across-the-board declines in new investment.

|The following table details commission revenue by product type included in commissions: |  |             
|--------------------------------------------------------------------------------------- |  | ------------
|                                                                                        |  |             
|                                                                                        |  |             
|Product Type                                                                            |  | 2008        
|                                                                                        |  |             
|Variable Annuities                                                                      |  | $ 6,198,345 
|Brokerage (1)                                                                           |  | 5,237,223   
|Mutual Funds                                                                            |  | 1,247,252   
|Direct Participation Programs                                                           |  | 2,261,369   
|Other                                                                                   |  | 57,845      
|                                                                                        |  |             
|Total Commissions Revenue                                                               |  | $ 15,002,034
|                                                                                        |  |             

1. Revenue designated as brokerage includes revenue from mutual funds sold through our trading platform. Revenue from direct check and application sales of mutual funds are listed above under "Mutual Funds".

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Advisory Fees

Advisory revenues declined only moderately in a bear market, primarily due to an increase in recurring non-grid revenue stemming from growth in assets under management. Despite the downward pressure placed on advisory fees by current declines in the market value of financial assets under management, the Company remains focused on growing revenues in this sector to curtail any negative impact on other revenue sources from unpredictable market volatility.

Other Fee Income

Other fee income, primarily comprised of licensing and financial planning fees, were consistent with the prior periods results.

Marketing Revenue

Marketing revenues decreased by $0.16 million, or 52.3%, due primarily to the occurrence of our National Convention in the third quarter of the current fiscal year versus the second quarter of the prior fiscal year.

Other Income

Other income, primarily interest, declined by 48.4% to $0.12 million, compared to $0.23 million during the prior period. The decrease is directly attributable to a reduction in interest income earned on declining trade and related cash balances.

|GROSS MARGINS                                                                                                                                 |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | --------------------------- |  | ------------------------- |  | -------------- |  | ------ |  | ------ |  | --------
|                                                                                                                                              |  | Amount                    |  | % of Sales (Retention Rate) |  | % of Total Gross Margin   |  |               
|                                                                                                                                              |  | Quarter Ended December 31 |  | Quarter Ended December 31   |  | Quarter Ended December 31 |  | Percent Change
|                                                                                                                                              |  |                           |  |                             |  |                           |  |               
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  | 2008    
|                                                                                                                                              |  | 2008                      |  | 2007                        |  | 2008                      |  | 2007           |  | 2008   |  | 2007   |  | vs. 2007
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|Commissions:                                                                                                                                  |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|Check and Application                                                                                                                         |  | $ 1,261,906               |  | $ 1,615,955                 |  | 13.0%                     |  | 13.0%          |  | 31.7%  |  | 31.8%  |  | -21.9%  
|Brokerage                                                                                                                                     |  | 1,616,132                 |  | 1,956,135                   |  | 28.6%                     |  | 27.7%          |  | 40.6%  |  | 38.5%  |  | -17.4%  
|Fixed Insurance                                                                                                                               |  | 25,245                    |  | 45,174                      |  | 100.0%                    |  | 100.0%         |  | 0.6%   |  | 0.9%   |  | -44.1%  
|Underwriting                                                                                                                                  |  | 3,220                     |  | 800                         |  | 9.9%                      |  | 10.0%          |  | 0.1%   |  | 0.10%  |  | 302.5%  
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|Total                                                                                                                                         |  | 2,906,503                 |  | 3,618,064                   |  |                           |  |                |  | 73.0%  |  | 71.3%  |  | -19.7%  
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|Advisory Services:                                                                                                                            |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|A-MAP                                                                                                                                         |  | 342,228                   |  | 426,570                     |  | 23.3%                     |  | 23.1%          |  | 8.6%   |  | 8.4%   |  | -19.8%  
|Other                                                                                                                                         |  | 217,686                   |  | 229,128                     |  | n/a1                      |  | n/a1           |  | 5.5%   |  | 4.6%   |  | -5.0%   
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|Total                                                                                                                                         |  | 559,914                   |  | 655,698                     |  | 24.9%                     |  | 23.2%          |  | 14.1%  |  | 13.0%  |  | -14.6%  
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|Licensing                                                                                                                                     |  | 326,125                   |  | 342,193                     |  | n/a1                      |  | n/a1           |  | 8.2%   |  | 6.7%   |  | -4.7%   
|Marketing                                                                                                                                     |  | 150,000                   |  | 314,444                     |  | n/a1                      |  | n/a1           |  | 3.8%   |  | 6.1%   |  | -52.3%  
|Other Income                                                                                                                                  |  | 38,351                    |  | 149,744                     |  | n/a1                      |  | n/a1           |  | 0.9%   |  | 2.9%   |  | -74.4%  
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|Total Gross Margin                                                                                                                            |  | $ 3,980,893               |  | $ 5,080,143                 |  | 21.7%                     |  | 21.8%          |  | 100.0% |  | 100.0% |  | -21.6%  
|                                                                                                                                              |  |                           |  |                             |  |                           |  |                |  |        |  |        |  |         
|1. Due to account composition of the notated products, profit margin retention is not a relevant indicator of performance and is not tracked. |  |                           |  |                            

Gross margin decreased by $1.10 million, or 21.6%, to $3.98 million for the current period. Principal components of this decline include $0.34 million in brokerage, $0.35 million in direct check and application, and $0.16 million in marketing.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Commissions

The combined $0.69 million decrease in gross profit in commissions from brokerage and check and application was the result of a contraction in commissionable revenues attributed to the market deterioration which directly correlated to a decline in new investment dollars provided in the current period versus the prior period.

Net commissions from equity trades decreased by $0.41 million as uncertainty in the financial markets continue to impact our profit margins in this sector. There also was a $0.13 million dollar increase in profit margin from recurring brokerage, which helped to offset the overall decrease in net commissions. Finally, we experienced a $0.35 million decline in profit margin from our direct check application segment resulting from a $2.72 million reduction in gross dealer concessions driven by current market conditions.

Advisory Services

We experienced a $0.09 million, or 19.8%, decrease in gross margin from our A-MAP rep-directed managed assets program reflecting a fall in the value of assets under management values attributable principally to the stock market decline and a contraction in new investment dollars. However, profit margin from non-AMAP advisory programs remained relatively flat for the comparative quarters.

Commission and Advisory Fees Expenses

Profit margins are inversely aligned with payout of commission and advisory fees to our representatives as a percentage of revenue generated by them. We strive to recruit quality independent representatives who generate recurring revenues that do not flow through the commission and advisory expense payout grid, primarily as brokerage commissions and advisory fees. Management continuously monitors the amount of revenue an independent representative brings in compared to its payout on that revenue.

Commission and advisory fees expenses during the current period were $14.37 million versus $18.19 million in the prior period. As a percentage of revenue generated by representatives (i.e., commissions, advisory fees and other fees), commission and advisory expenses decreased slightly from 80.0% in the prior period to 79.5% in the current period. These expenses include commissions to representatives, clearing costs and other direct costs that are necessary to produce revenue. Management continuously monitors these costs as they have a substantial effect on our profit margin.

OPERATING EXPENSES

Operating expenses declined by 3.1% to $4.79 million as described below.

Compensation and Benefits

The largest component of operating expense, compensation and benefits, decreased by $0.93 million or 29.7% . The drop in compensation can be attributed principally to a lack of bonus grants during the current period while in the prior period bonuses to executives and employees totaled $0.83 million. In addition, there were savings of $0.22 million related to employee layoffs and the resignation of an officer offset by an increase of $0.12 million in stock compensation.

Regulatory, Legal and Professional

Regulatory, legal and professional expenses increased by $0.83 million or 144.0% . The largest component of this increase was a $0.48 million rise in accrued estimated legal settlement costs for a court case that has not settled. The Company also experienced a $0.37 million increase in settlement costs and an additional $0.12 million increase in legal fees incurred in connection with various legal proceedings.

The Company will continue to incur legal fees and settlement costs as it operates in a litigious industry embedded with regulation. In addition to incurring costs in the defense of legal proceedings, the Company also will continue to invest significant resources to reduce the likelihood of future litigation exposure by promoting accuracy, ensuring sound operational techniques and applying appropriate supervisory measures.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Advertising

Advertising, which includes related marketing and recruiting expenses, decreased by $0.19 million or 41.8% . Beginning in our prior fiscal year, the Company began aggressively branding, placing advertisements in financial services trade publications, to communicate to potential representative recruits the key role that our customer service, technology infrastructure and back office support can play in maintaining and growing their businesses. Reflecting prevailing economic conditions, during the current period we reduced our advertising exposure in publications as part of a general effort to cut non-essential costs.

Communications

Communications expenses increased by $0.07 million, or 35.3%, primarily due to holding a top producers conference during the third quarter that had been held in the second quarter of the previous fiscal year.

Occupancy

Occupancy expenses, which include depreciation, decreased $0.03 million, or 10.8%, reflect savings from the closing our Braintree, Massachusetts and Manhattan, New York investment centers.

Other Administrative

Other administrative expenses, which include various insurance, postage, office and computer-related expenses, increased by $0.10 million, or 32.8%, primarily due to the increase in the allowance and the write off of loans to representative deemed to be uncollectible, as well as fees paid to our independent Board Members for serving in various capacities on the Board of Directors and its committees.

OPERATING AND NET INCOME AND LOSS

Net loss totaled $0.62 million, or $0.10 loss per basic, compared to net income of $0.05 million, or $.01earnings per basic share for the prior period. The deterioration in after-tax results was due to an unfavorable $0.95 million swing in operating income/loss that was partially offset by a $0.20 million benefit for income taxes. The decline in operating income was driven primarily by a $1.10 million drop in gross profit. Total operating expenses also decreased, by $0.15 million, despite substantial increases in regulatory, legal and professional and other administrative expense, due primarily to cost cutting compensation and benefits and advertising.

Management attributes the current contraction in revenue primarily to widespread turmoil in financial markets that initially was triggered by the sub-prime mortgage crisis. The reduction in revenues reflects a significant decline in equity investments and underlying advisory asset values.

Based upon various factors including the quarterly and year-to-date financial results, management has revised its internal financial projections annual projections during the period from profitability, to a projected break-even performance. The revised projections pretax profit significantly impacted the Companys tax rate when compared to the projected pretax profit as of the end of the prior quarter. Also, the Company has sizable permanent differences, due to meals and entertainment charges and disallowance of projected excess executive compensation that negatively impacted federal tax rates, resulting in a tax benefit for the three months ended December 31, 2008.

The Company cannot forecast the severity or longevity of the impact on the Companys financial position and results that may result from a continuation of unfavorable economic and market conditions. Further, much of such future impact inherently beyond the Companys control. However, management believes that we are properly positioned to minimize negative impact on revenues by continuing our aggressive efforts to attract and retain productive representatives who offer diversified managed portfolios of investments that will encourage clients to remain invested in potentially volatile and down markets. In addition, we continue to seek to identify and implement cost control measures, such as our July 2008 workforce reduction and recent cuts in advertising costs that will help us retain cash over the near term without impairing our ability to generate needed revenue and, over the longer term, to return to revenue growth and profitability Management also is organizing and undertaking various initiatives to encourage the use of best practices to improve operational efficiency, grow revenues and continue building a strong culture of compliance with applicable laws, rules and regulations.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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COMPARISON OF THE NINE MONTH PERIODS ENDED DECEMBER 31, 2008 AND 2007

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

|RESULTS OF OPERATIONS                |  |                                |  |              |  |                    |  |         |  |         
|------------------------------------ |  | ------------------------------ |  | ------------ |  | ------------------ |  | ------- |  | --------
|                                     |  |                                |  |              |  | Percent of Revenue |  |        
|                                     |  |                                |  |              |  | Nine Months Ended  |  | Percent
|                                     |  | Nine Months Ended December 31, |  | December 31, |  | Change            
|                                     |  |                                |  |              |  |                   
|                                     |  |                                |  |              |  |                    |  |         |  | 2008    
|                                     |  | 2008                           |  | 2007         |  | 2008               |  | 2007    |  | vs. 2007
|                                     |  |                                |  |              |  |                    |  |         |  |         
|                                    
|Revenues:                            |  |                                |  |              |  |                    |  |         |  |         
|Commission                           |  | $ 53,740,265                   |  | $ 59,227,984 |  | 83.5%              |  | 85.7%   |  | -9.3%   
|Advisory fees                        |  | 8,728,455                      |  | 7,459,340    |  | 13.6%              |  | 10.8%   |  | 17.0%   
|Other fee income                     |  | 676,855                        |  | 694,399      |  | 1.1%               |  | 1.0%    |  | -2.5%   
|Marketing revenue                    |  | 756,465                        |  | 1,043,808    |  | 1.2%               |  | 1.5%    |  | -27.5%  
|Other income                         |  | 451,173                        |  | 679,424      |  | 0.6%               |  | 1.0%    |  | -33.6%  
|                                     |  |                                |  |              |  |                    |  |         |  |         
|Total revenue                        |  | 64,353,213                     |  | 69,104,955   |  | 100.0%             |  | 100.0%  |  | -6.9%   
|                                    
|Commission and advisory expenses     |  | 51,595,479                     |  | 55,343,761   |  | 80.2%              |  | 80.1%   |  | -6.8%   
|                                     |  |                                |  |              |  |                    |  |         |  |         
|Gross profit                         |  | 12,757,734                     |  | 13,761,194   |  | 19.8%              |  | 19.9%   |  | -7.3%   
|                                    
|Operating expenses:                  |  |                                |  |              |  |                    |  |         |  |         
|                                    
|Advertising                          |  | 1,032,823                      |  | 1,155,808    |  | 1.6%               |  | 1.7%    |  | -10.6%  
|Communications                       |  | 902,096                        |  | 712,370      |  | 1.4%               |  | 1.0%    |  | 26.6%   
|                                     |  |                                |  |              |  |                    |  |         |  |         
|Total selling expenses               |  | 1,934,919                      |  | 1,868,178    |  | 3.0%               |  | 2.7%    |  | 3.6%    
|                                     |  |                                |  |              |  |                    |  |         |  |         
|                                    
|Compensation and benefits            |  | 7,197,913                      |  | 7,181,897    |  | 11.2%              |  | 10.4%   |  | 0.2%    
|Regulatory, legal and professional   |  | 3,240,607                      |  | 1,500,833    |  | 5.0%               |  | 2.2%    |  | 115.9%  
|Occupancy                            |  | 822,827                        |  | 877,545      |  | 1.3%               |  | 1.3%    |  | -6.2%   
|Other administrative expenses        |  | 1,168,040                      |  | 876,838      |  | 1.8%               |  | 1.3%    |  | 33.2%   
|Interest expense                     |  | 25,972                         |  | 38,147       |  | 0.0%               |  | 0.1%    |  | -31.9%  
|                                     |  |                                |  |              |  |                    |  |         |  |         
|Total administrative expenses        |  | 12,455,359                     |  | 10,475,260   |  | 19.3%              |  | 15.3%   |  | 18.9%   
|                                     |  |                                |  |              |  |                    |  |         |  |         
|                                    
|Total operating expenses             |  | 14,390,278                     |  | 12,343,438   |  | 22.3%              |  | 18.0%   |  | 16.6%   
|                                     |  |                                |  |              |  |                    |  |         |  |         
|                                    
|Operating (loss) income              |  | (1,632,544)                    |  | 1,417,756    |  | -2.5%              |  | 2.0%    |  | -215.1% 
|                                    
|(Loss) income before income taxes    |  | (1,632,544)                    |  | 1,417,756    |  | -2.5%              |  | 2.0%    |  | -215.1% 
|                                    
|(Benefit) provision for income taxes |  | (251,360)                      |  | 639,919      |  | -0.4%              |  | 0.9%    |  | -139.3% 
|                                     |  |                                |  |              |  |                    |  |         |  |         
|                                    
|Net (loss) income                    |  | $ (1,381,184)                  |  | $ 777,837    |  | -2.1%              |  | 1.1%    |  | -277.6% 
|                                     |  |                                |  |              |  |                    |  |         |  |         

Average Production per Representative

Management believes that improving the overall quality of our independent representatives is a key to achieving growth in revenues and net income. We believe that upgrading the business practices of our representatives not only generates more revenue, but assists in limiting the cost of overhead functions and representative noncompliance. We strive to continually improve the overall quality of our force of representatives by:

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

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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A key metric that we use to assess the quality of our representatives is per capita revenue based on a rolling 12-month period. This metric is based on the number of producing representatives, which is derived by subtracting home office staff and administrative representatives from the total number of representatives. There were 786 and 759 total representatives at December 31, 2008 and 2007, respectively.

|                                             |  | Twelve Month Period |  | Percentage       
|-------------------------------------------- |  | ------------------- |  | -----------------
|                                             |  | December 31, 2008   |  | December 31, 2007
|                                             |  |                     |  |                  
|                                            
|Commission                                   |  | $ 72,057,772        |  | $ 78,770,871     
|Advisory                                     |  | 11,773,146          |  | 9,325,404        
|Other fee income                             |  | 1,042,961           |  | 1,037,925        
|                                             |  |                     |  |                  
|                                             |  | $ 84,873,879        |  | $ 89,134,200     
|                                             |  |                     |  |                  
|                                            
|Number of Producing Representatives          |  | 646                 |  | 674              
|Average Revenue Per Producing Representative |  | $ 131,384           |  | $ 132,247        

Although total revenues dropped for the nine month comparative year to date periods, the average revenue per producing representative remained relatively flat for the comparative rolling 12-month period ended December 31, 2008 versus December 31, 2007. This is a refection of our productive representatives withstanding a contentious market.

REVENUES

Revenues decreased by $4.75 million, or 6.9%, as explained below. Recurring revenues, which includes our advisory segment as well as interest and quarterly fees from mutual funds and variable annuities, increased by 2.1% from $17.3 to $17.7 million.

Commissions

The Company experienced a 9.3%, or $5.49 million, drop in commission revenues due to deteriorating market conditions. $0.77 million of the decrease was due to the relocation of assets from brokerage commission accounts to advisory services accounts due to the repeal of the Merrill Lynch rule.

|                              |  |                                              |  | Commission Revenue |  |               |  |              |  |            
|----------------------------- |  | -------------------------------------------- |  | ------------------ |  | ------------- |  | ------------ |  | -----------
|                              |  | Nine Months Ended December 31, 2008 and 2007 |  |                    |  |              
|                              |  |                                              |  |                    |  |              
|                              |  |                                              |  |                    |  |               |  |              |  | Percentage 
|                              |  |                                              |  |                    |  |               |  | Percent of   |  | change 2008
|Product Type1:                |  | 2008                                         |  | 2007               |  | 2008 vs. 2007 |  | total change |  | vs 2007    
|                              |  |                                              |  |                    |  |               |  |              |  |            
|Variable Annuities            |  | $ 21,845,751                                 |  | $ 22,953,332       |  | $ (1,107,581) |  | -20.2%       |  | -4.8%      
|Brokerage                     |  | 17,487,207                                   |  | 19,273,273         |  | (1,786,066)   |  | -32.5%       |  | -9.3%      
|Mutual Funds                  |  | 5,770,950                                    |  | 8,345,071          |  | (2,574,121)   |  | -47.0%       |  | -30.8%     
|Direct Participation Programs |  | 8,434,054                                    |  | 8,463,467          |  | (29,413)      |  | -0.4%        |  | -0.3%      
|Other                         |  | 202,303                                      |  | 192,841            |  | 9,462         |  | 0.1%         |  | 4.9%       
|                              |  |                                              |  |                    |  |               |  |              |  |            
|Total Commission Revenue      |  | $ 53,740,265                                 |  | $ 59,227,984       |  | $ (5,487,719) |  | -100.0%      |  | -9.3%      
|                              |  |                                              |  |                    |  |               |  |              |  |            

1. Revenue designated as Brokerage includes revenue from mutual funds sold through our trading platform. Revenue from direct check and application sales of mutual funds are listed above under "Mutual Funds".

Commissions decreased considerably during the current period. Commissions from variable annuities and mutual funds, which combined to account for 67.1 % of the decrease, are usually generated when there is new investment. Although commissions from brokerage in part are derived from recurring revenues, these revenues were not sufficient to prevent a 32.5% drop in commissions from brokerage.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Advisory Fees

Advisory fees grew by 17.0% during the current period versus the prior period, driven by a $1.28 million increase in non-A-MAP (ICA-directed) fees of which $1.01 million came from relocation of assets from fee based commission accounts into investment advisory accounts. Offsetting this increase was a slight decrease in A-MAP revenues due primarily to contraction in the financial markets which reduced the market value of assets under management.

Other Fee Income

Other fee income remained relatively flat for the comparative periods.

Marketing Revenue

Marketing revenues decreased by 27.5 %, or $0.29 million, over the prior period. This decrease was primarily attributed to a decrease in marketing support revenue earned from product sales.

Other Income

Other income decreased by 33.6%, or $0.23 million, over the year ago period reflecting a decrease in interest income due to reduced trading and cash account balances.

|GROSS MARGINS                                                                                                              |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------------- |  | --------------------------- |  | ----------------------- |  | ------ |  | ------ |  | --------
|                                                                                                                           |  |                   |  |                   |  | % of Sales (Retention Rate) |  | % of Total Gross Margin |  |       
|                                                                                                                           |  | Nine Months Ended |  | Nine Months Ended |  | Nine Months Ended           |  |                        
|                                                                                                                           |  | December 31,      |  | December 31,      |  | December 31,                |  | % Change               
|                                                                                                                           |  |                   |  |                   |  |                             |  |                        
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  | 2008    
|                                                                                                                           |  | 2008              |  | 2007              |  | 2008                        |  | 2007                    |  | 2008   |  | 2007   |  | vs. 2007
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|Commissions:                                                                                                               |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|Check & Application                                                                                                        |  | $ 4,686,597       |  | $ 5,169,040       |  | 13.0%                       |  | 13.0%                   |  | 36.7%  |  | 37.4%  |  | -9.3%   
|Brokerage                                                                                                                  |  | 4,681,488         |  | 4,789,497         |  | 24.7%                       |  | 24.9%                   |  | 36.7%  |  | 34.8%  |  | -2.3%   
|Fixed Insurance                                                                                                            |  | 80,702            |  | 130,654           |  | 100.0%                      |  | 100.0%                  |  | 0.6%   |  | 0.9%   |  | -38.2%  
|Underwriting                                                                                                               |  | 22,262            |  | 6,219             |  | 18.3%                       |  | 10.0%                   |  | 0.2%   |  | 0.1%   |  | 258.0%  
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|Total                                                                                                                      |  | 9,471,050         |  | 10,095,410        |  |                             |  |                         |  | 74.2%  |  | 73.2%  |  | -6.2%   
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|Advisory Services:                                                                                                         |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|A-MAP                                                                                                                      |  | 1,159,681         |  | 1,120,785         |  | 23.1%                       |  | 22.3%                   |  | 9.2%   |  | 8.1%   |  | 3.5%    
|Other                                                                                                                      |  | 707,788           |  | 567,810           |  | n/a1                        |  | n/a1                    |  | 5.5%   |  | 4.1%   |  | 24.7%   
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|Total                                                                                                                      |  | 1,867,469         |  | 1,688,595         |  | 25.0%                       |  | 22.0%                   |  | 14.7%  |  | 12.2%  |  | 10.6%   
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|Licensing                                                                                                                  |  | 453,517           |  | 471,261           |  | n/a1                        |  | n/a1                    |  | 3.7%   |  | 3.4%   |  | -3.8%   
|Marketing                                                                                                                  |  | 756,465           |  | 1,043,808         |  | n/a1                        |  | n/a1                    |  | 5.8%   |  | 7.7%   |  | -27.5%  
|Other income                                                                                                               |  | 209,234           |  | 462,120           |  | n/a1                        |  | n/a1                    |  | 1.6%   |  | 3.5%   |  | -54.7%  
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|Total Gross Margin                                                                                                         |  | $ 12,757,734      |  | $ 13,761,194      |  | 19.8%                       |  | 19.9%                   |  | 100.0% |  | 100.0% |  | -7.3%   
|                                                                                                                           |  |                   |  |                   |  |                             |  |                         |  |        |  |        |  |         
|                                                                                                                          
|1. Due to account composition, profit margin retention for these products is not deemed a useful indicator of performance. |  |                   |  |                  

Check and Application

Gross profit from our check and application business decreased by 9.3% or $0.48 million primarily due to a drop in revenues as investment dollars in our direct business have stalled.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Brokerage Services

Brokerage services profit margin experienced a $0.11 million decrease due, in part, to the relocation of assets from the fee based commission accounts to investment advisor accounts per the repeal of the Merrill Lynch Rule. In addition, the significant drop in equities being traded in our most recent quarter has impacted our profit margin in this sector as the uncertainty in the market and overall economy has slowed down trading volume.

Advisory Services

Advisory services profit margin grew by 10.6%, or $0.18 million, reflecting a 24.7%, or $0.14 million, increase in fees from advisory programs other than A-MAP. The growth in this area primarily came from ICA-directed advisory programs.

Commission and Advisory Fees Expenses

Commission and advisory fees expenses during the current nine-month period were $51.60 million versus $55.34 million in the prior period. As a percentage of revenue generated by representatives (i.e., commissions, advisory fees and other fees), commission and advisory expenses decreased slightly from 82.1% to 81.7% . These expenses include commissions to representatives, clearing costs and other direct costs that are necessary to produce revenue. Management continuously monitors these costs as they have a substantial effect on our profit margin.

OPERATING EXPENSES

Operating expenses, which increased by 16.6% to $14.4 million, are discussed in detail below.

Compensation and Benefits

Compensation and benefits remained relatively flat for the comparative periods as the $0.42 million or 7.2% decrease in compensation in the form of bonuses, cost cuts from employee layoffs, and the resignation of one of our officers were offset in part from the 170%, or $0.43 million increase in compensation related to restricted stock awards.

Regulatory, Legal and Professional

Regulatory, legal and professional expenses posted a 115.9%, or $1.74 million, increase stemming mostly from the settlement of various legal proceedings, an increase in legal fees pertaining to other corporate matters, and an increase in an accrual for estimated expenses pertaining to one of our legal proceedings that has not settled.

Advertising

The Companys advertising expenses decreased by 10.6% compared to the prior period in which we aggressively spent advertising dollars promoting our brand of quality customer service to independent financial representatives.

Communications

Communication expenses rose by 26.6% principally due to an increase in costs incurred for hosting our email server domain to meet regulatory and compliance requirements, as well as webinars to educate our representatives.

Occupancy

Occupancy expenses decreased by 6.2 % in the current period versus the year ago nine-month period reflecting the closing of various investment centers.

Other Administrative

Other administrative expenses increased in the current period by 33.2% to $0.40 million primarily due to an allowance for uncollectible accounts from loans granted to representatives of $0.17 million, as well as a $0.12 million increase in independent director fees for serving on the Board and its committees.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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OPERATING AND NET LOSS

Net loss totaled $1.38 million, or $0.22 per basic and diluted share, compared to net income of $0.78 million, or $0.13 per basic share, for the prior period. The deterioration of operating income was due primarily to a $2.05 million increase in operating expenses consisting mostly of legal fees and estimated settlement costs and accruals with respect to various legal proceedings. The decline in operating income for the nine months ended December 31, 2008 reflects substantial increases in professional fees for corporate matters, as well as compensation for vesting of previously granted stock to executives offset by the decrease in revenues from our recent quarter. The Company is beginning to feel the ill effects of an economic recession that has impacted the financial markets substantially. Accordingly, the Company is stepping up its cost cutting efforts and is actively exploring potential initiatives to ensure operational excellence, financial stability and adequate capital reserves.



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

The Company believes that achieving a return on equity goals requires the efficient use of capital. Historically, we have financed our operations primarily with internally generated cash flow from our core broker-dealer and investment advisory services. Market fluctuations, general uncertainty and negative sentiment in financial markets can have a negative impact on this cash flow. The Company works to minimize this impact by aggressively recruiting and retaining sophisticated representatives who can offer diversified products that continue to meet the needs of their clients despite changing market conditions.

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

As of December 31, 2008, cash and cash equivalents totaled $6.32 million compared to $4.34 million as of March 31, 2008. Working capital as of December 31, 2008 was $6.21 million compared to $6.89 million as of March 31, 3008. The ratio of current assets to current liabilities was 2.00 to 1 as of December 31, 2008 compared to 2.10 to 1 as of March 31, 2008.

Operations provided cash flow of $1.65 million for the nine months ended December 31, 2008 compared to $0.61 million of cash provided for the nine months ended December 31, 2007. Cash flow from operations, in comparing the current period cash flows to the prior period, generated an increase of $1.04 million as a result of several factors, noted below.

We experienced a $2.16 million decrease in cash flows because of the change in net income as the Company reported a $1.38 million loss in the current nine-month period versus a $0.78 million profit in the prior period. Offsetting this decrease was a $1.25 million increase in cash flow from the change in accrued expenses, primarily related to litigation, in the current period versus an increase in accrued expenses in the prior period pertaining to the Massachusetts Proceedings. We experienced a $1.47 increase from a change in prepaid income taxes, primarily as a result of an income tax refund of $0.67 million in the current period versus $1.31 million in income taxes paid in the prior period. Finally, we had a $0.48 million increase from other changes in cash flow from operating activities.

Cash inflows from investing activities for the current period totaling $1.07 million were derived principally from investments in treasury notes and certificate of deposits maturing in the current period whereas, in the prior period, we had $0.23 in capital expenditures and $0.50 million in cash inflows from similar investments.

Finally, cash flow for financing activities in the current period paralleled the prior period as we disbursed $0.85 million in loan payments to finance insurance premiums for the nine month period ended December 31, 2008 versus $0.84 million for the same nine month period last year.



|NET CAPITAL
|-----------

Cash disbursements can have a material impact on our brokerage firms net capital. The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that ICC, our broker-dealer subsidiary, maintain net capital of $100,000 and a ratio of aggregate indebtedness to net capital (a net capital ratio) not to exceed 15 to 1. Under the rule, indebtedness generally includes all

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
|--------------------------------------------------------------------------

money owed by ICC, and net capital includes ICC cash and assets that are easily converted into cash. SEC rules also prohibit "equity capital" (which, under the net capital rule, includes subordinated loans) from being withdrawn, cash dividends from being paid and other specified actions of similar effect from being taken, if, among other specified contingencies, ICCs net capital ratio would exceed 10 to 1 or if ICC would have less than 120% of its minimum required net capital.

As of December 31, 2008, ICC had net capital of $2.17 million (an excess of $1.71 million) and a 3.2 to 1 net capital ratio as compared to net capital of $1.29 million (an excess of $0.80 million) and a 5.70 to 1 net capital ratio as of March 31, 2008. The significant change was the result of ICH infusing $1.29 million of capital into the broker-dealer through the conversion of the inter-company indebtedness.

The nine month period loss reported was not fully reflected in our net capital due to non-cash expenses including $0.68 from the vesting of the restricted stock awards that were issued to executives, $0.29 million from depreciation, and $0.17 million from other non-cash expenses.

Given the current unsettled economic and financial market conditions, the Company is focused on rapidly implementing measures designed to ensure the continued maintenance of adequate capital, facilitate growth and improve profitability.



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

The Company is obligated under various lease agreements covering offices and equipment. These agreements are considered to be operating leases in accordance with the requirements under FASB No. 13 "Accounting for Leases". The terms of the leases expire between fiscal year 2009 and 2014. Options to renew for additional terms are included under the lease agreements. Certain leases contain provisions for escalation of minimum lease payments contingent upon increases in real estate taxes. While management has no plans to cancel, the Company is contractually obligated in the short-term for costs associated with hosting national events at various hotels and those contingent liabilities are included in the table below for the year ending March 31, 2009.

The total minimum rental due in future periods under these existing agreements is as follows as of December 31, 2008:

|Year ending March 31, 2009   |  | $ 528,235  
|---------------------------- |  | -----------
|Year ending March 31, 2010   |  | 415,560    
|Year ending March 31, 2011   |  | 375,186    
|Year ending March 31, 2012   |  | 350,533    
|Year ending March 31, 2013   |  | 24,000     
|2014 and thereafter          |  | 72,000     
|                             |  |            
|                            
|Total minimum lease payments |  | $ 1,765,514
|                             |  |            

Total lease expense approximated $0.13 and $0.16 million for each of the three months ended December 31, 2008 and 2007, respectively. Total lease expense approximated $0.45 and $0.53 million for each of the nine months ended December 31, 2008 and 2007, respectively.

ITEM 4T. CONTROLS AND PROCEDURES

Disclosure controls are procedures designed to ensure that information required to be disclosed in the Company's reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, as the Company's are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of the Companys management, including the Chief Executive and Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive and Financial Officer have concluded that these disclosure controls and procedures are effective.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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Changes in Internal Controls

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



|PART II. OTHER INFORMATION
|--------------------------

ITEM 1. LEGAL PROCEEDINGS

The Company operates in a highly litigious and regulated business, and the Company often is made a defendant in various lawsuits and arbitrations that are incidental to our securities business. The Company typically vigorously contests the allegations of the complaints and believes that there are meritorious defenses in these matters. From time to time the Company also is the subject of regulatory investigations and proceedings. Counsel is unable to respond concerning the likelihood of outcomes, whether favorable or unfavorable, in these matters because of routine and inherent uncertainties.

The Company's errors and omissions (E&O) policy frequently limits the Companys maximum exposure in any one case to $75,000, subject to policy limitations and exclusions ($100,000 for claims filed after December 31, 2008). The Company also maintains a fidelity bond to protect itself from potential damages and/or legal costs related to fraudulent activities pursuant to which the Companys exposure is usually limited to $200,000 per case, subject to policy limitations and exclusions. In certain of these cases, the Company has the contractual right to seek indemnity from related parties. Despite these mitigating factors, total expenses incurred in connection with legal proceedings have been significant in prior periods and may so continue.

ITEMS 2  5.

None.

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
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|ITEM 6. EXHIBITS |  |                                                                          |  |               
|---------------- |  | ------------------------------------------------------------------------ |  | --------------
|Exhibit          |  |                                                                          |  |               
|Number           |  | Description                                                              |  | Location      
|3.1              |  | Articles of Organization, as amended                                     |  |               
|3.2              |  | By-Laws                                                                  |  |               
|4.1              |  | Form of Stock Certificate                                                |  |               
|10.1             |  | Employment Agreement with Theodore E. Charles (3)                        |  | (2)(Exh. 10.1)
|10.2             |  | Employment Agreement with Timothy B. Murphy (3)                          |  | (2)(Exh. 10.2)
|10.3             |  | The 1994 Stock Option Plan (3)                                           |  |               
|10.4             |  | The 1996 Stock Incentive Plan (3)                                        |  |               
|10.6             |  | The 2001 Equity Incentive Plan (3)                                       |  |               
|10.7             |  | The 2005 Equity Incentive Plan (3)                                       |  |               
|10.8             |  | Form of June 2006 Stock Grant Agreement (3)                              |  | (4)(Exh. 10.8)
|10.9             |  | Form of February 2008 Stock Grant Agreement (3)                          |  | (4)(Exh. 10.9)
|31.1             |  | Certification of Timothy B. Murphy pursuant to Rule 13a-14(a)            |  | (1)           
|31.2             |  | Certification of Kathleen L. Donnelly pursuant to Rule 13a-14(a)         |  | (1)           
|32.1             |  | Certification of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350    |  | (1)           
|32.2             |  | Certification of Kathleen L. Donnelly pursuant to 18 U.S.C. Section 1350 |  | (1)           

|(1) | Filed herewith.                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Incorporated by reference to the indicated exhibit to the Registrant's Registration Statement on Form SB-2 (File No. 333-05327) filed November 14, 2000.
|   
|(3) | A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of this report.                     
|   
|(4) | Incorporated by reference to the indicated exhibit to the Registrants Annual Report on Form 10-K filed June 30, 2008.                                  
|   
|(5) | Incorporated by reference to the indicated exhibit to the Registrants Annual Report on Form 10-K filed June 30, 2005.                                  
|   
|(6) | Incorporated by reference to the indicated exhibit to the Registrants Registration Statement on Form S-8 (File No. 333-117807) filed July 30, 2004.    
|   
|(7) | Incorporated by reference to the indicated exhibit to the Registrants Registration Statement on Form S-8 (File No. 333-134885) filed June 9, 2006.     
|   

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

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
|--------------------------------------------------------------------------



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

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



| | INVESTORS CAPITAL HOLDINGS, LTD.By:/s/ Timothy B. MurphyChief Executive OfficerDate: February 17, 2009
| | ------------------------------------------------------------------------------------------------------

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
|--------------------------------------------------------------------------



|Exhibit 31.1CERTIFICATION
|-------------------------



|I, Timothy B. Murphy, certify that:
|-----------------------------------

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

|   | a)                                                                                                                                                                                                                                                                                                                                              | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
the smaller reporting company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | b)                                                                                                                                                                                                                                                                                                                                              | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.                                                                     
|  
|   | c)                                                                                                                                                                                                                                                                                                                                              | Evaluated the effectiveness of the smaller reporting company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and                                                                                                                                          
|  
|   | d)                                                                                                                                                                                                                                                                                                                                              | Disclosed in this report any change in the smaller reporting company's internal control over financial reporting that occurred during the smaller reporting company's most recent
fiscal quarter (the smaller reporting company's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the smaller reporting company's internal control over financial reporting;
and
|  
|5. | The smaller reporting company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the smaller
reporting company's auditors and the audit committee of the smaller reporting company's board of directors (or persons performing the equivalent functions):
|  
|   | a)                                                                                                                                                                                                                                                                                                                                              | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
smaller reporting company's ability to record, process, summarize and report financial information; and                                                                                                                                                    
|  
|   | b)                                                                                                                                                                                                                                                                                                                                              | Any fraud, whether or not material, that involves management or other employees who have a significant role in the smaller reporting company's internal control over financial
reporting.                                                                                                                                                                                                                                                   
|  



|Date: February 17, 2009By: /s/ Timothy B. MurphyTimothy B. Murphy, President,Chief Executive Officer and Director(Principal executive officer)
|----------------------------------------------------------------------------------------------------------------------------------------------

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
|--------------------------------------------------------------------------



|Exhibit 31.2CERTIFICATION
|-------------------------



|I, Kathleen L. Donnelly, certify that:
|--------------------------------------

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

|   | a)                                                                                                                                                                                                                                                                                                                                              | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
the smaller reporting company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | b)                                                                                                                                                                                                                                                                                                                                              | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.                                                                     
|  
|   | c)                                                                                                                                                                                                                                                                                                                                              | Evaluated the effectiveness of the smaller reporting company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and                                                                                                                                          
|  
|   | d)                                                                                                                                                                                                                                                                                                                                              | Disclosed in this report any change in the smaller reporting company's internal control over financial reporting that occurred during the smaller reporting company's most recent
fiscal quarter (the smaller reporting company's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the smaller reporting company's internal control over financial reporting;
and
|  
|5. | The smaller reporting company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the smaller
reporting company's auditors and the audit committee of the smaller reporting company's board of directors (or persons performing the equivalent functions):
|  
|   | a)                                                                                                                                                                                                                                                                                                                                              | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
smaller reporting company's ability to record, process, summarize and report financial information; and                                                                                                                                                    
|  
|   | b)                                                                                                                                                                                                                                                                                                                                              | Any fraud, whether or not material, that involves management or other employees who have a significant role in the smaller reporting company's internal control over financial
reporting.                                                                                                                                                                                                                                                   
|  



|Date: February 17, 2009By: /s/ Kathleen L. DonnellyKathleen L. DonnellyChief Financial Officer(Principal financial officer)
|---------------------------------------------------------------------------------------------------------------------------

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
|--------------------------------------------------------------------------



|Exhibit 32.1CERTIFICATION
|-------------------------

I, Timothy B. Murphy, certify that this report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Investors Capital Holdings, Ltd.

Date: February 17, 2009

By: /s/ Timothy B. Murphy



|Timothy B. Murphy, President,Chief Executive Officer and Director(Principal executive officer)
|----------------------------------------------------------------------------------------------

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|Investors Capital Holdings, Ltd. report on form 10-QQuarter Ended 12/31/08
|--------------------------------------------------------------------------



|Exhibit 32.2CERTIFICATION
|-------------------------

I, Kathleen L. Donnelly, certify that this report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Investors Capital Holdings, Ltd.

Date: February 17, 2009

By: /s/ Kathleen L. Donnelly



|Kathleen L. DonnellyChief Financial Officer(Principal financial officer)
|------------------------------------------------------------------------

---