UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, 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, 2006

                         Commission File Number: 1-16349

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

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


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

                                 (781) 477-4700
              (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, or a non-accelerated  filer (as defined in Rule 12b-2 of the
Exchange Act).
Large Accelerated Filer [ ]    Accelerated Filer [ ]   Non-Accelerated Filer [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]

Number of shares  outstanding  of our only class of common  stock as of February
12, 2007: 6,160,470
<PAGE>
                                Table of Contents


PART I

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



PART II

--------------------------------------------------------------------------------
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 6. EXHIBITS
SIGNATURES
CERTIFICATIONS




--------------------------------------------------------------------------------
<PAGE>
                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

                                                    Dec 31,     March 31,
                                                      2006          2006
                                                      ----          ----
Assets

Current Assets

Cash and cash equivalents                    $   5,613,958  $  7,718,682
Deposit with clearing organization,
 restricted                                        175,000       175,000
Accounts receivable                              4,144,997     4,163,658
Note receivable-sale of asset (current)              8,702         8,561
Loans receivable from registered
 representatives(current)                          534,298       379,222
Marketable securities, at market value             162,140        73,702
Investments(short term)                            991,658
Prepaid expenses                                   158,739       261,888

                                             -------------- -------------
                                                11,789,492    12,780,713

Property and equipment, net                      1,276,183       772,498

Long Term Investments
Loans receivable from registered
 representatives                                   198,891       223,019
Note Receivable-sale of asset                      747,617       747,617
Equity Investments,at cost                         190,000       190,000
Investments(long term)                           1,163,106       159,150
Cash surrender value life insurance policies       257,041       181,872
                                             -------------- -------------
                                                 2,556,655     1,501,658
Other Assets
Other assets                                        45,972        22,644
Deferred tax asset, net                            955,275       248,314
                                             -------------- -------------
                                                 1,001,247       270,958

TOTAL ASSETS                                 $  16,623,577  $ 15,325,827
                                             ============== =============

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable                             $   1,836,554  $  1,210,086
Accrued expenses                                   257,787       648,298
Notes payable                                            -        94,573
Unearned revenues                                1,720,264       104,779
Commissions payable                              2,609,715     2,432,596
Income taxes payable                                63,415       198,026
Securities sold, not yet purchased, at
 market value                                          687        51,386

                                             -------------- -------------
                                                 6,488,422     4,739,744
Long-Term Liabilities

Total Liabilities                                6,488,422     4,739,744
                                             -------------- -------------



Stockholders' Equity:

Common stock, $.01 par value, 10,000,000
 shares authorized; 6,189,238 issued and
 6,185,535 outstanding at December 31, 2006;
 5,794,246 issued and 5,790,361 outstanding
 at March 31, 2006.                                 61,892        57,942
Additional paid-in capital                       9,611,503     8,740,780
Retained earnings                                  464,185     1,797,789
less: Treasury stock, 3,885 shares at cost         (30,135)      (30,135)
Accumulated other comprehensive income              27,710        19,707

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

Total stockholders' equity                      10,135,155    10,586,083

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $  16,623,577  $ 15,325,827
                                             ============== =============

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

            See Notes to Condensed Consolidated Financial Statements.
<PAGE>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005
                                   (UNAUDITED)

                                               2006            2005
                                          ------------------------------
Revenue:

   Commissions                            $  17,982,588   $  14,944,156
   Advisory Fees                              1,888,576       1,313,676
   Other Fee Income                             402,410         384,766
   Marketing revenue                            427,425         202,639
   Interest, dividend and investment            212,627         159,179

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

Total Revenue                                20,913,626      17,004,416

Commission and Advisory Fee Expenses         16,498,437      13,204,912

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

Gross Profit                                  4,415,189       3,799,504

Operating Expenses:

   Advertising                                  138,302         201,912
   Communications                               123,922         159,127

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

Total Selling Expenses                          262,224         361,039

   Compensation and benefits                  2,203,390       1,537,058
   Regulatory, legal and professional         1,830,647       1,137,663
   Occupancy                                    255,928         168,328
   Other administrative                         286,064         270,890

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

Total Administrative Expenses                 4,576,029       3,113,939

Total Operating Expenses                      4,838,253       3,474,978

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

Operating (Loss) income                        (423,064)        324,526

Other (Expense) and Other Income

   Gain On Sale of Asset                              -          91,313
   Interest Expense                              (4,621)         (8,992)

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

Total Other (Expense) and Other Income           (4,621)         82,321

Net (Loss) Income Before Taxes                 (427,685)        406,847

Benefit (Provision) for Income Taxes            106,756        (205,363)

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

Net(Loss) Income                               (320,929)        201,484

                                          ==============  ==============

Earnings per common share:

Basic earnings per common share                   (0.05)           0.03

Diluted earnings per common share                 (0.05)           0.03

Share data:

Weighted average shares used in basic
 earnings per common share calculations       6,141,964       5,767,801

Incremental shares from assumed exercise
 of stock options                               190,062         134,836

Weighted average shares used in diluted
 earnings per common share calculations       6,332,026       5,902,637

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

            See Notes to Condensed Consolidated Financial Statements.

<PAGE>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  NINE MONTHS ENDED DECEMBER 31, 2006 AND 2005
                                   (UNAUDITED)

                                                  2006            2005

Revenue:

   Commissions                               $   50,730,928  $   42,671,689
   Advisory Fees                                  4,901,072       3,769,457
   Other Fee Income                                 598,443         586,644
   Marketing revenue                                956,371         872,173
   Interest, dividend and investment                584,902         467,934

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

Total Revenue                                    57,771,716      48,367,897

Commission and Advisory Fee Expenses             46,453,981      38,495,624

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

Gross Profit                                     11,317,735       9,872,273

Operating Expenses:

   Advertising                                      639,727         626,575
   Communications                                   324,323         460,561

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

                                                    964,050       1,087,136

   Compensation and benefits                      6,629,987       4,656,097
   Regulatory, legal and professional             3,763,689       2,486,521
   Occupancy                                        721,436         492,310
   Other administrative                             774,963         699,730

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

Total Administrative Expenses                    11,890,075       8,334,658

Total Operating Expenses                         12,854,125       9,421,794
                                             --------------- ---------------

Operating (Loss)Income                           (1,536,390)        450,479

Other (Expense) and Other Income :
   Gain On Sale of Asset                                             91,313
   Interest Expense                                 (20,223)        (27,843)

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

Total Other (Expense) and Other Income              (20,223)         63,470


Net (Loss) Income Before Taxes                   (1,556,613)        513,949



Benefit (Provision) for Income Taxes                468,227        (248,076)

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

Net(Loss) income                             $   (1,088,386) $      265,873

                                             =============== ===============

Earnings per common share:

Basic Earnings per common share              $        (0.18) $         0.05

Diluted Earnings Per Share                   $        (0.18) $         0.04

Share data:

Weighted average shares used in basic
 earnings per common share calculations           5,907,169       5,759,003

Incremental shares from assumed exercise of
 stock options                                      166,256         156,851

Weighted average shares used in diluted
 earnings per common share calculations           6,073,425       5,915,854

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

           See Notes to Condensed Consolidated Financial Statements.
<PAGE>

<TABLE>
<CAPTION>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  NINE MONTHS ENDED DECEMBER 31, 2006 AND 2005
                                   (UNAUDITED)

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

Balance at April 01, 2005    5,757,348  $57,573  $8,691,566             -  $ 1,463,779  $(30,135)            -  $10,182,783
                             ===============================================================================================

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

Comprehensive income:
  Net income                                                      265,873      265,873
Other Comprehensive Income:
  Unrealized gain on
   securities:
    Unrealized holding gains
     arising during period
     no tax effect                                                  6,986
                                                             -------------

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

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

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

  Dividend payment to
   shareholders                                                               (115,628)                            (115,628)

                                                             -------------                        -------------
Balance at December 31, 2005 5,792,746  $57,927  $8,728,896             -  $ 1,614,024  $(30,135)        6,986  $10,377,698
                             ===============================================================================================

Balance at April 01, 2006    5,794,246  $57,942  $8,740,780             -  $ 1,797,789  $(30,135) $     19,707  $10,586,083
                                                                                                                ============

Stock based compensation       394,992    3,950     870,723                                                         874,673

Comprehensive income:
  Net loss                                                     (1,088,386)  (1,088,386)

Other Comprehensive Income:
  Unrealized gain on
   securities:
    Unrealized holding gains
     arising during period
     no tax effect                                                  8,003

No reclassification
 adjustment required                                                    -
                                                             -------------

                                                                                                  -------------
Other Comprehensive Income                                          8,003                                8,003
                                                             =============                        -------------

                                                             -------------
  Comprehensive Income                                         (1,080,383)                                       (1,080,383)
                                                             =============

  Dividend payment to
   shareholders                                                               (245,218)                            (245,218)

                             -----------------------------------------------------------------------------------------------
Balance at December 31, 2006 6,189,238  $61,892  $9,611,503             -  $   464,185  $(30,135) $     27,710  $10,135,155
                             ===============================================================================================

</TABLE>

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

            See Notes to Condensed Consolidated Financial Statements.
<PAGE>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED DECEMBER 31, 2006 AND 2005
                                   (UNAUDITED)


                                                       2006         2005
                                                       ----         ----

Cash flows from operating activities:

Net (loss) income                                  $(1,088,386)      265,873
Adjustments to reconcile net (loss) income to net
 cash provided by used in operating activities:
  Depreciation and amortization                        206,456       157,473
  Change in deferred taxes                            (706,961)       20,021
  Stock Based Compensation                             707,080        21,830
  Cash surrender value life insurance policy           (75,169)      (71,396)
  Stock option compensation                             96,100        11,614
  Change in marketable securities                     (139,137)      (71,052)
  Loss on investment                                    (3,311)        3,373
  (Increase) in accounts receivable-asset held
   for sale                                                  0      (397,903)
  Change in operating assets and liabilities:
    Decrease(increase) in accounts receivable           18,661      (579,001)
    Decrease(increase) in prepaid expenses and
     other assets                                       79,821      (131,181)
    (Decrease) increase in income taxes and
     payable                                          (134,611)        6,801
    Increase in accounts payable                       626,468       454,921
    Decrease in accrued expenses                      (390,511)     (447,478)
    Increase in commissions payable                    177,119       324,399
    Increase in unearned revenues                    1,615,485     1,696,354
                                                  ------------- -------------

       Net cash provided by operating activities       989,104     1,264,648
                                                  ============= =============

Cash flows from investing activities:

Purchases of property and equipment                   (710,141)     (302,708)
Investments                                                  -      (150,000)
Changes in Note Receivable                                (140)            -
Loans receivable from registered representatives      (130,948)     (355,612)
Investments in US Treasury Notes, Bills; etc.       (1,984,300)            -
                                                  ------------- -------------

       Net cash used in investing activities        (2,825,529)     (808,320)
                                                  ============= =============

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

            See Notes to Condensed Consolidated Financial Statements.
<PAGE>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
            NINE MONTHS ENDED DECEMBER 31, 2006 AND 2005 (CONTINUED)


                                           Nine Months Ended December 31,
                                                2006            2005
                                                ----            ----

Cash flows from financing activities:

Payment of Note Payable                    $      (94,573) $      (9,433)
Payment of dividends                             (245,218)      (115,629)
Exercise of stock options                          71,492          4,240
                                           --------------- --------------

       Net cash used in financing
        activities                               (218,299)      (120,822)
                                           --------------- --------------

Net Decrease in cash and cash equivalents      (2,104,724)       335,506

Cash and cash equivalents, beginning of
 period                                         7,718,682      8,618,261
                                           --------------- --------------

Cash and cash equivalents, end of period   $    5,613,958  $   8,953,767
                                           =============== ==============


Supplemental disclosures of cash flow
 information:

Interest paid                              $       17,715  $      27,843
Income taxes paid                          $      373,825  $     217,256

Non-Cash Financing Transactions
Financing Sale Accounts Receivable         $            -  $     747,617

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

            See Notes to Condensed Consolidated Financial Statements.


<PAGE>
                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2006
                                   (UNAUDITED)

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

ORGANIZATION:

Incorporated in July 1995, Investors Capital Holdings, Ltd. ("ICH") is a holding
company whose 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:

     o    Investors Capital Corporation ("ICC") provides  broker-dealer services
          and investment  advisory/asset  management  services,  the latter as a
          registered  investment  advisor  doing  business as Investors  Capital
          Advisors ("ICA"). As a registered  broker-dealer in all 50 states, ICC
          provides   services   in   support  of  the   purchase   and  sale  by
          Representatives' customers of corporate, U.S. Government and municipal
          securities  and mutual  funds,  variable  annuities  and variable life
          insurance,  including market  information,  an internet-based  on-line
          trading and portfolio tracking platform and records management. In its
          increasingly  competitive  business  environment,  ICC has  sought  to
          distinguish itself from competitors by not only competing on price but
          by striving to consistently  provide  superior  service and support to
          its customer.

     o    Eastern  Point  Advisors,  Inc.  ("EPA")  in the past was the  primary
          provider of investment  advisory/asset  management  services now being
          rendered by ICA. In addition, until October 2005 EPA served as advisor
          to two mutual funds.

     o    ICC Insurance  Agency,  Inc. was  established  primarily  because,  in
          certain states, a separately  licensed insurance entity is required in
          order for ICC broker-dealer representatives to sell life insurance and
          annuity   products  to  their   clients.   Accordingly,   the  Company
          established ICC Insurance Agency,  Inc., a wholly-owned  subsidiary of
          ICH that is duly  licensed  for such  purposes  in all states in which
          such  licensing  is  required.  One  hundred  percent  of all  revenue
          realized by this entity flow through as revenue to ICC.

     o    Investors Capital Holdings  Securities  Corporation ("ICH Securities")
          holds cash, cash equivalents,  interest income and dividend income for
          ICH.

BASIS OF PRESENTATION:

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
Investors Capital Holdings,  Ltd. and its subsidiaries (the "Company") have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America (GAAP) for interim  financial  information and with the
instructions  to Form  10-Q.  In the  opinion  of  management,  these  financial
statements  contain all of the adjustments  necessary for a fair presentation of
the results of these interim  periods.  Certain  footnote  disclosures  normally
included in  financial  statements  prepared in  accordance  with GAAP have been
condensed or omitted,  although the Company  believes the  disclosures  in these
financial  statements  are  adequate  to  make  the  information  presented  not
misleading.  Operating  results for the three-month and nine-month  period ended
December  31, 2006 are not  necessarily  indicative  of the results  that may be
expected for the year ending March 31, 2007. The balance sheet at March 31, 2006
has been derived from the audited  financial  statements at that date,  but does
not include all of the information  and footnotes  required by GAAP for complete
financial   statements.   These  unaudited  condensed   consolidated   financial
statements  should be read in  conjunction  with the  Company's  annual  audited
financial  statements  included in the  Company's  Form 10-K for the fiscal year
ended March 31, 2006 filed with the Securities and Exchange Commission.

USE OF ESTIMATES AND ASSUMPTIONS:

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

RECLASSIFICATIONS:

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

SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

Company revenue recognition policies are summarized below.

Mutual  Funds/Variable  Annuities.  Mutual  Funds/Variable  Annuity  revenue  is
recognized upon receipt of commissions  related to each sale, which is generally
the date of settlement.  The earnings process is  substantially  complete at the
point that the fund company distributes payment to the Company.

<PAGE>

Trading.   The  Company  earns  commissions  through  stock  purchase  and  sale
transactions, mutual fund purchases, government and corporate bond transactions,
fee-based management of investment accounts and ticket charges. The Company also
earns  revenue in the form of 12b-1 fees and interest on account  balances.  The
earnings process is substantially  complete at trade date in accordance with the
rules  of the  National  Association  of  Securities  Dealers  ("NASD")  and the
Securities and Exchange Commissions ("SEC").

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

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

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

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

Administration   Fees.   Administration   fees  for  services  rendered  to  its
Representatives  respecting  annual NASD license  renewals and E&O insurance are
recognized  as revenue upon  registration  of the  Representative  with NASD and
listing of the Registered  Representative  with the E&O insurance  carrier.  The
funds  received from the  Registered  Representative  are initially  recorded as
unearned  revenue.  The  amounts,  if  any,  collected  in  excess  of the E & O
insurance premium and/or fees due NASD are recognized as revenue.

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

Accounts Receivable - Allowance for Doubtful Accounts

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

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

Waived Advisory Fees from Mutual Funds.  Effective October 18, 2005, the Company
no  longer  provides  advisory  services  to mutual  funds.  Prior  thereto,  as
disclosed in the respective mutual funds' prospectuses, the Company attempted to
recoup waived advisory  service fees within a three-year  period.  See "Note 1 -
Significant  Accounting  Policies - Revenue Recognition - Advisory Fees," above,
for an  explanation  of such  fee  waivers.  If  management  believed  that  the
likelihood of collecting a waived  receivable  within the three-year  period was
doubtful, the Company provided for an allowance. Determinations whether to write
off such fees were made  annually.  By  agreement,  the  Company is  entitled to
payment  of all  uncollected  waived  advisory  fees  by its  successor  as fund
advisor.

Advisory Fees on Asset Managed  Accounts.  Uncollected  balances are written off
before the subsequent quarter billing.

Trade  Receivables.  As prescribed by the SEC, trade receivables  usually settle
within three days. If a trade error results, the Company will pursue remedies to
collect on 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.

Income Taxes

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

Recently Issued Accounting Standards

In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
in Income Taxes" (FIN 48), which  clarifies the  accounting  for  uncertainty in
income taxes  recognized in an enterprise's  financial  statements in accordance
with  SFAS  No.  109,  "Accounting  for  Income  Taxes."  FIN 48  establishes  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.  This  interpretation  also  provides  guidance  on  derecognition,

<PAGE>

classification,   interest  and  penalties,   accounting  in  interim   periods,
disclosure and transition.  FIN 48 is effective for fiscal years beginning after
December 15, 2006.  The Company is currently  evaluating the impact the adoption
of this interpretation will have on its consolidated financial statements.

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

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

NOTE 2. SEGMENT INFORMATION

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

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

The Company's  reportable  segments include investment  services offered through
ICC and asset  management  services offered through ICA,  including  securities,
insurance,  financial planning and related services.  ICC earns commissions as a
broker  for its  customers  in the  purchase  and  sale of  securities  on major
exchanges. Asset management services generate recurring annual revenue from fees
received on the management of customer accounts.

EPA had provided money  management  services to a variety of investors (See Part
1. Item 1 of March 31, 2006 10-K  "Investment  Advisory  Services")  and,  until
October 18, 2005, provided asset management and portfolio design services to two
mutual funds. ICA's primary mission is to offer clients investment  advisory and
asset management  procedures  grounded on sound  investment  principles of asset
allocation, performance monitoring, and portfolio rebalancing.

Under the  guidelines of FAS 131,  "Disclosures  about Segments of an Enterprise
and Related  Information",  commencing with the quarter ended December 31, 2005,
management reports its segments on a management approach whereby our business is
presented in segments  reflecting the way we make operating decisions and assess
performance.  Accordingly,  ICA is now reported as part of the asset  management
services  segment.  Segments  are  currently  reported  based upon the  services
provided, whereas they were previously segmented according to legal entity.

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

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


                                                          December 31,
                                                       2006          2005
                                                   ------------- -------------

     Inter-company eliminations                    $  1,289,604  $  2,521,036
     Classification items (stand alone)                          $   (219,565)
     Deferred income taxes                               25,071        64,962
     Income Taxes                                       177,025       (94,089)
                                                   ------------- -------------

     Total Corporate items and eliminations        $  1,491,700  $  2,272,344
                                                   ============= =============

<PAGE>
Segment reporting is as follows:

                                                Quarter Ended December 31,
                                                    2006           2005
                                               -------------- --------------
Non-interest revenues:
ICC brokerage services                         $  18,753,502  $  15,484,657
EPA, ICA asset management services.                1,948,396      1,365,579
ICH investments (loss)                                     -         (6,998)
                                               -------------- --------------

         Total                                 $  20,701,898  $  16,843,238
                                               ============== ==============

Revenues from transaction with other operating
 segments:
ICC brokerage services                               458,892  $     (41,411)
EPA, ICA asset management services.                        -         35,843
                                               -------------- --------------

         Total                                 $     458,892  $      (5,568)
                                               ============== ==============

Interest and dividend income,net:
ICC brokerage services                         $     157,828  $     113,521
EPA, ICA asset management services.                   13,354          8,851
ICH                                                    3,139            225
ICH Securities                                        37,407         38,581
                                               -------------- --------------

        Total                                  $     211,728  $     161,178
                                               ============== ==============

Depreciation and amortization expenses:
ICC brokerage services                         $      70,717  $      52,282
EPA, ICA asset management services.                      691          1,095
                                               -------------- --------------

        Total                                  $      71,408  $      53,377
                                               ============== ==============

Income tax (provision) benefit:
ICC brokerage services                         $     238,624  $    (287,050)
EPA, ICA asset management services.                 (127,473)       (86,027)
ICH                                                   (4,395)       167,714
                                               -------------- --------------

        Total                                  $     106,756  $    (205,363)
                                               ============== ==============

Income (loss) :
ICC brokerage services                         $    (627,043) $     281,592
EPA, ICA asset management services.                  272,770         84,390
ICH                                                   (4,063)      (203,059)
ICH Securities                                        37,407         38,561
                                               -------------- --------------

        Total                                  $    (320,929) $     201,484
                                               ============== ==============

Period end total assets:
ICC brokerage services                         $  12,738,283  $  11,721,616
EPA, ICA asset management services.                1,382,027      1,050,666
ICH                                                2,062,933        664,532
ICH Securities                                     1,932,034      4,867,041
Corporate items and eliminations                  (1,491,700)    (2,272,344)
                                               -------------- --------------

        Total                                  $  16,623,577  $  16,031,511
                                               ============== ==============

<PAGE>
                                               Nine Months Ended December 31,
                                                    2006            2005
                                               --------------- --------------
Non-interest revenues:
ICC brokerage services                         $   52,191,975  $  44,147,259
EPA, ICA asset management services.                 5,004,175      3,912,215
ICH investments (loss)                                      -         (4,135)
                                               --------------- --------------

         Total                                 $   57,196,150  $  48,055,339
                                               =============== ==============

Revenues from transaction with other operating
 segments:
ICC brokerage services                         $    1,968,267  $     727,917
EPA, ICA asset management services.                         -        121,324
                                               --------------- --------------

         Total                                 $    1,968,267  $     849,241
                                               =============== ==============

Interest and dividend income, net:
ICC brokerage services                         $      429,813  $     284,882
EPA, ICA asset management services.                    45,878          9,381
ICH                                                     3,594          9,377
ICH Securities                                         96,281        113,428
                                               --------------- --------------

        Total                                  $      575,566  $     417,068
                                               =============== ==============

Depreciation and amortization expenses:
ICC brokerage services                         $      204,386  $     151,259
EPA, ICA asset management services.                     2,070          6,214
                                               --------------- --------------

        Total                                  $      206,456  $     157,473
                                               =============== ==============

Income tax (provision) benefit:
ICC brokerage services                         $      856,619  $    (152,009)
EPA, ICA asset management services.                  (364,680)      (214,510)
ICH                                                   (23,712)       118,443
                                               --------------- --------------

        Total                                  $      468,227  $    (248,076)
                                               =============== ==============

Income (loss) :
ICC brokerage services                         $   (1,804,345) $     162,905
EPA, ICA asset management services.                   661,756        229,886
ICH                                                   (42,058)      (240,315)
ICH Securities                                         96,261        113,397
                                               --------------- --------------

        Total                                  $   (1,088,386) $     265,873
                                               =============== ==============

Period end total assets:
ICC brokerage services                         $   12,738,283  $  11,721,616
EPA, ICA asset management services.                 1,382,027      1,050,666
ICH                                                 2,062,933        664,532
ICH Securities                                      1,932,034      4,867,041
Corporate items and eliminations                   (1,491,700)    (2,272,344)
                                               --------------- --------------

        Total                                  $   16,623,577  $  16,031,511
                                               =============== ==============

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.

An  administrative  proceeding and  investigation  pending before the Securities
Division  of  the  Secretary  of  the   Commonwealth   of   Massachusetts   (the
"Massachusetts Proceedings") was settled on December 19, 2006. Reference is made
to the following  reports filed with the SEC by the Company for  descriptions of
said  matters  and the terms of  settlement,  to wit:  (i) Report on Form 10-Q/A
(Amendment  No. 1) for the quarter  ended  December  31, 2005 in Part II, Item 1
"Legal  Proceedings";  (ii)  Report on Form 10-K for the fiscal year ended March
31, 2006 in Footnote 15 "Litigation" to the Company's financial statements;  and
(iii) Report on Form 8-K filed December 22, 2006.

At December 31, 2006, the Company was the defendant or  co-defendant  in various
legal proceedings other than the Massachusetts Proceedings. Management believes,
based on currently  available  information,  that the results of said additional
proceedings,  in the aggregate,  will not have a material  adverse effect on the
firm's financial  condition.  The Company maintains Errors and Omissions ("E&O")
insurance to protect itself from potential damages and/or legal costs associated
with certain  lawsuits  and  arbitrations  and, as a result,  in the majority of
cases the  Company's  exposure is limited to between  $75,000 and  $100,000  per
case, subject to policy limitations and exclusions. In accordance with Financial
Accounting   Standards   Board  ("FASB")   Statement  No.  5,   "Accounting  for
Contingencies",  the Company had accrued expenses of approximately $1.30 million
for the quarter  ended  December  31, 2006  related to legal fees and  estimated
probable  settlement costs relating to the Company's defense in various lawsuits
including the Massachusetts Proceedings.

<PAGE>

NOTE 4.  STOCK BASED COMPENSATION

The Company  adopted  Statement of Financial  Accounting  Standard  ("SFAS") No.
123(R), Share-Based Payment on April 1, 2006. The adoption of this statement did
not have a material impact on the Company's  consolidated  financial  statements
given that the Company adopted the fair value recognition provisions of SFAS No.
123  effective  September  28, 2002 using the modified  prospective  application
transition  method  within  the  provisions  of SFAS No.  148,  "Accounting  for
Stock-Based  Compensation - Transition and Disclosure".  A summary of the status
of the  Company's  employee and director  fixed stock options as of December 31,
2006 and December 31, 2005 follows:
<TABLE>
<CAPTION>

       Employee                                                    2006                              2005
                                                      -----------------------------     ----------------------------
       Fixed Options                                               Weighted-Average                  Weighted-Average
                                                         Shares    Exercise Price          Shares    Exercise Price
       <S>                                                 <C>          <C>                  <C>         <C>

       Outstanding at beginning of year                    153,332      $1.02                198,934     $2.46

       Granted                                                   -                                 -
       Forfeited                                                 -      $0.00                (40,256)    $8.00
       Exercised                                                 -                                 -
       Reclassified(non-employee)                                -      $0.00                 (5,346)    $1.91
                                                      --------------------------------------------------------------

       Outstanding at period ended                         153,332      $1.02                153,332     $1.02

       Options exercisable at period ended                 152,666                           152,666
</TABLE>

The fair value of options  granted to employees in 2006 and 2005 is estimated as
of the  dates of grant  using  the  Black-Scholes  option-pricing  model and the
following assumptions:
                                               2006                     2005
                                               ----                     ----

       Dividend                               0.19%                    0.17%
       Volatility                            47.00%                   32.00%
       Risk-free interest rate                4.85%                    4.39%
       Expected Life in years                 1.00                     1.75


The following  table  summarizes  information  about employee and director fixed
stock options outstanding as of December 31, 2006:
<TABLE>
<CAPTION>

               Options Outstanding                                                Options Exercisable
  -----------------------------------------    ---------------------------------------------------------------------------------

                                                  Weighted-Average
         Range Of              Number                 Remaining                              Number         Weighted-Average
      Exercise Prices       Outstanding           Contractual Life      Exercise Price     Exercisable       Exercise Price

           <S>                  <C>              <C>                         <C>              <C>                <C>

           $1.00                150,000.00       No Stated Maturity          $1.00            150,000.00         $1.00

           $1.91                  3,332.00              1.00                 $1.91              2,666.00         $1.91

                                153,332.00             1.00(1)               $1.02            152,666.00         $1.02

(1) Includes only stock options with a stated maturity.
</TABLE>

Stock Option Grants

The  Company had granted  options  prior to the  adoption of SFAS 123(R) and had
previously  reported in a footnote  disclosure the proforma  effect as if we had
reported  an  expense  under the  guidelines  of SFAS No.  123.  There was $0.00
expense reported as a proforma for quarter ended December 31, 2005.

In adopting  the SFAS No.  123(R)  there was no expense to be  reported  for the
fiscal quarter ended December 31, 2006.

Restricted Stock Grants

Under the Company's 2005 Equity Incentive Plan (the "2005 Plan"), the Company is
authorized  to award  options to  purchase  common  stock,  and shares of common
stock, to employees, independent representatives and others who have contributed
to or are expected to contribute to the Company,  its  businesses and prospects.
Under the 2005 Plan, stock options and restricted stock  customarily are granted
by the Company in connection with initial  employment or under various retention
plans.  The Company  has not granted any options  under the 2005 Plan and has no
current plans to do so.  Restricted  shares of stock granted under the 2005 Plan
typically vest over a three year period,  and unvested shares are forfeitable 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. The following
activity under the 2005 Plan occurred  during the nine months ended December 31,
2006:

<PAGE>

                                                         Weighted
                                                         Average
                                                        Grant Date
                                                        Fair Value
                                           Shares           ($)
                                       ---------------------------
                       Non-vested at
                       4/1/2006             26,785        $ 3.08

                       Granted             368,859          3.85
                       Vested             (194,638)         3.64
                       Canceled             (4,689)         3.32
                                       ---------------------------
                       Non-vested at
                       12/31/2006           196,317       $ 3.96


The  Company's  net loss for the three months ended  December 31, 2006  includes
$30,797 of compensation  costs related to restricted  stock grants to employees,
and $14,139 for restricted  stock grants to independent  representatives,  under
the 2005 Plan.  The Company's net income for the three months ended December 31,
2005 reflects $21,830 of compensation for grants to independent  Representatives
related to this plan.

For the nine months ended  December 31, 2006 the  compensation  costs related to
the 2005 Plan  includes  $618,790 for stock grants to employees  and $88,261 for
stock grants to directors,  consultants and independent  representatives.  There
was $21,830 of compensation for grants to independent Representatives associated
with this plan for the nine months ended December 31, 2005.

As of December 31, 2006,  there was $777,369 of unrecognized  compensation  cost
related to grants under the 2005 Plan. These costs are expected to be recognized
over a weighted average period of approximately 4.01 years. The total fair value
of shares vested under this plan during the nine months ended  December 31, 2006
was $708,482.

NOTE 5 - NOTE RECEIVABLE

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

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

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

NOTE 6 - CERTAIN RELATED PARTY TRANSACTIONS

The  Company  typically  engages  in  transactions  with a  related  party,  IMS
Insurance Agency,  Inc. ("IMS Insurance"),  in connection with the promotion and
servicing of fixed  insurance  products  produced by the  Company's  independent
Representatives.  Payments made by the Company to IMS  Insurance,  when combined
with  payments  received by the Company from IMS  Insurance,  totaled  $0.00 and
$29,989  respectively,  for the quarters  ended  December 31, 2006 and 2005, and
$4,942 and $102,741, respectively, for the nine month periods ended December 31,
2006 and  2005.  Reference  is made to the  Company's  Report  on Form 8-K filed
December 22, 2006 for a more complete description of these transactions.

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, 2006 and March 31, 2006, the  consolidated  results
of  operations  for the three and nine months  ended  December 31, 2006 and 2005
and, where  appropriate,  factors that may affect future financial  performance.
The discussion  should be read in conjunction  with the  consolidated  financial
statements  and  related  notes  included  elsewhere  in this Form 10-Q.  Unless
context requires otherwise, as used in this Management's Discussion and Analysis
(i) the "current  period" means the fiscal  quarter or  nine-month  period ended
December  31,  2006,  (ii) the  "prior  period"  means  the  fiscal  quarter  or
nine-month  period  ended  December  31,  2005,  (iii) an increase  and decrease
compares the current  period to the prior period,  and (iv) all  non-comparative
amounts refer to the current period.

<PAGE>

The  statements,  analyses and other  information  contained  herein relating to
trends in our  operations and financial  results,  the markets for our products,
the future development of our business,  and the contingencies and uncertainties
to which we may be subject, 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, asset management,  financial planning,
insurance and related services. We operate in a highly regulated,  litigious 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 any one or more external factors.

OUR BUSINESS

The  Company  operates  primarily  through  its  subsidiary,   ICC/ICA,  in  the
broker-dealer  and  investment  advisory  services  segments  of  the  financial
services industry.

Broker-Dealer Services

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

Investment Advisory Services

The Company provides  investment  advisory services,  including asset allocation
and portfolio  rebalancing,  for its  Representative's  customers.  In the past,
investment  advisory  services were  performed by both ICC and EPA. To avoid the
duplication of effort involved in supporting two advisory services entities, the
Company has consolidated its investment advisor services in ICC d/b/a ICA.

Recruitment and Support of Representatives

A key  component of our business  strategy is to recruit  more  established  and
productive  Representatives who increasingly  generate revenues in higher margin
services  and  products.  Additionally  we assist our  existing  sales  force to
further  develop and expand  their  business by offering  both a wide variety of
support  services  and a  diversified  range  of  investment  products  to their
clients.  The  Company  focuses  on  providing  substantial  added  value to our
Representatives  that enables them to be more  productive,  particularly in high
margin lines such as advisory services and trading/brokerage.

Support provided to assist Representatives in pursuing consistent and profitable
sales growth takes many forms,  including:  hi-tech  trading  systems,  targeted
financial  assistance  and a network  of  communication  links  with  investment
product companies such as regional and national  conventions that provide forums
for interaction to improve product knowledge,  sales and client satisfaction.  A
newly formed business  development unit will focus on providing  Representatives
with  programs  and tools to grow  their  businesses  both  through  new  client
acquisitions and the advancement of their existing client  relationships.  These
programs  are also  designed  to enhance  our ability to attract and retain new,
productive Representatives.

OUR PROCESS

Check and Application

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

Online Trading

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

<PAGE>

Bond Trading

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

Asset Allocation

Asset  Allocation  services  are  made  available  through  ICA,  the  Company's
registered  investment  advisor  subsidiary.  Our  services  include the design,
selection and  rebalancing of  investments on behalf of our advisors  clients in
addition to providing the tools,  services and guidance that enable our advisors
to provide these investment services directly to their clients.  These services,
for the most part,  are conducted  through our online  trading  platform.  Other
allocation services are performed directly by the fund company.

KEY INDICATORS OF FINANCIAL PERFORMANCE

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

Three Months Ended  December 31, 2006 Compared with Three Months Ended  December
31, 2005:
--------------------------------------------------------------------------------

RECRUITING

The  Company  experienced  a 150%  increase  in the  number  of  Representatives
recruited compared to the prior period.

<TABLE>
<CAPTION>

Recruiting Statistics              Quarter Ended
                                    December 31
                            ---------------------------     Change      Percent Change
                                2006          2005       2006 vs. 2005  2006 vs. 2005
                            -------------  ------------  -------------  --------------
<S>                              <C>            <C>           <C>           <C>

Representatives Recruited        20             8             12            150.0%
-------------------------
</TABLE>

<PAGE>

RESULTS OF
OPERATIONS
<TABLE>
<CAPTION>

                                                                            Percent of Revenue
                                            Quarter Ended December 31,  Quarter Ended December 31,
                                            --------------------------- --------------------------   Percent
                                                                                                      Change
                                                2006          2005          2006         2005      2006 vs. 2005
                                            ------------- ------------- ------------- ------------ -------------

<S>                                         <C>           <C>               <C>          <C>            <C>
Revenues:

  Commission                                $ 17,982,588  $ 14,944,156      85.99%       87.88%         20.3%
  Advisory                                     1,888,576     1,313,676       9.03%        7.73%         43.8%
  Other fee income                               402,410       384,766       1.92%        2.26%          4.6%
  Marketing revenue                              427,425       202,639       2.04%        1.19%         110.9%
  Other income                                   212,627       159,179       1.02%        0.94%         33.6%

        Total Revenue                         20,913,626    17,004,416      100.00%      100.00%        23.0%
                                            ============= =============

Commission and advisory expenses              16,498,437    13,204,912      78.89%       77.66%         24.9%

     Gross Profit                              4,415,189     3,799,504      21.11%       22.34%         16.2%

Operating Expenses:

  Advertising                                    138,302       201,912       0.66%        1.19%        -31.5%
  Communications                                 123,922       159,127       0.59%        0.94%        -22.1%
                                            ------------- -------------

     Total Selling Expenses                      262,224       361,039       1.25%        2.12%        -27.4%

  Compensation and benefits                    2,203,390     1,537,058      10.54%        9.04%         43.4%
  Regulatory, legal and professional           1,830,647     1,137,663       8.75%        6.69%         60.9%
  Occupancy                                      255,928       168,328       1.22%        0.99%         52.0%
  Other administrative expenses                  286,064       270,890       1.37%        1.59%          5.6%
                                            ------------- -------------

     Total Administrative Expenses             4,576,029     3,113,939      21.88%       18.31%         47.0%

        Total Operating Expenses               4,838,253     3,474,978      23.13%       20.44%         39.2%
                                            ============= =============

Operating Loss                                  (423,064)      324,526      -2.02%        1.91%        -230.4%

Other (Expense) and Other Income :
  Gain on Sale Of Asset                                -        91,313        N/A          NA            NA
  Interest expense                                (4,621)       (8,992)     -0.02%       -0.05%        -48.6%

                                            ------------- -------------
Total Other (Expense) Other Income:               (4,621)       82,321      -0.02%        0.48%        -105.6%

(Loss) income before taxes                      (427,685)      406,847      -2.05%        2.39%        -205.1%

Benefit (Provision) for income taxes             106,756      (205,363)      0.51%       -1.21%        -152.0%
                                            ------------- -------------
Net Loss                                    $   (320,929) $    201,484      -1.53%        1.18%        -259.3%
                                            ============= =============
</TABLE>
<PAGE>

REVENUES

Revenues  rose $3.91  million,  or 23.0%,  to $20.91  million as we continue our
efforts to increase top line  revenues in  commissions  and  advisory  services.
Leading this  performance  was a $3.04 million or 20.3%  increase in commissions
and a $0.57 million or 43.8% increase in advisory  services  revenue between the
comparative periods. The continued trend demonstrated with this period's revenue
growth from mutual funds,  variable annuities and direct participation  programs
relative to trading services is consistent with  management's  plan to diversify
their source of revenue within their brokerage business. Much like a diversified
client portfolio,  management  believes a diversified  revenue stream provides a
degree of protection from market risk.

Average revenue per Representative  increased by 25.8%,  reflecting management's
emphasis on quality over quantity as we remain  committed to our business  model
of recruiting established and successful  Representatives.  We look forward to a
continuation  of  this  trend  as  we  maintain  our  efforts  to  increase  the
productivity  of our  existing  sales  force and  further  focus our  recruiting
efforts on Representatives who are already successful but seek a higher level of
service than they experience from their existing brokerage firm.

<TABLE>
<CAPTION>

                                Quarter Ended     Quarter Ended
                              December 31, 2006 December 31, 2005 Incease/decrease Percentage Increase/decrease
                              ----------------- ----------------- ---------------- ----------------------------
<S>                           <C>               <C>               <C>                        <C>
Revenue:
   Commission                 $     17,982,588  $     14,944,156
   Advisory                          1,888,576         1,313,676
   Other fee income                    402,410           384,766
                              ----------------- -----------------
                              $     20,273,574  $     16,642,598  $     3,630,976             21.8%


Number of Representatives                  705               728              -23             -3.2%

Average Revenue Per Rep       $         28,757  $         22,861  $      5,896.13             25.8%

</TABLE>

Commissions

Commissions  from variable  annuities  increased  $1.09 million,  or 35.8% of an
overall  $3.04  million  increase in  commission  revenue  compared to the prior
period.  Commissions from direct  participation  programs,  which  predominantly
include  REIT's  (Real  Estate  Investment  Trusts)  and oil  and gas  programs,
increased by $1.70 million or 55.9%.

<TABLE>
<CAPTION>

                                     Quarter Ended                                 Percentage         Percentage
                                       December 31,          Increase/decrease      of Total       Increase/decrease
                                   2006           2005         2006 vs. 2005    Increase/decrease    2006 vs. 2005
                               -------------------------------------------------------------------------------------
<S>                            <C>            <C>            <C>                      <C>                <C>

Commission Revenue:
-------------------
  Variable Annuities           $  6,333,123   $  5,244,835   $      1,088,288         35.8%              20.7%
  Trading (brokerage)(1)          5,367,976      4,740,136            627,840         20.7%              13.2%
  Mutual Funds                    2,618,721      2,826,759           (208,038)        -6.8%              -7.4%
  Direct Participation Programs   3,584,515      1,884,861          1,699,654         55.9%              90.2%
  Other                              78,253        247,565           (169,312)        -5.6%             -68.4%
                               -------------------------------------------------------------------------------------

Total Commission Revenue       $ 17,982,588   $ 14,944,156   $      3,038,432        100.0%              20.3%
                               =====================================================================================
</TABLE>

1. Revenue designated as Trading (brokerage)  includes revenue from mutual funds
sold through our trading platform.

Commissions from variable  annuities  continue to comprise the largest component
of  commission  revenue.  Commissions  in  direct  participation  programs  grew
primarily as a result of increased sales volume in the oil and gas programs. The
Company's  commission  revenue from mutual funds  decreased  marginally  for the
current period. Although mutual fund commissions decreased slightly this current
period,  it continued to constitute the fourth  largest  component of commission
revenue.

Over recent periods,  trading revenue  generally has maintained its share of the
revenue.  Supporting this  historical  trend is our recruitment and retention of
Representatives who conduct transactional business as well as utilization of our
clearing firm's trading platform to enable us to conduct more brokerage business
in an efficient fashion. The recent trend of higher growth in fee-based advisory
services compared to  commission-based  services  reflects  concerted efforts by
management to grow revenues in the higher margin advisory services area.

<PAGE>

Advisory Fees. Advisory services typically provide  significantly higher margins
than traditional  non-trading  broker-dealer products such as variable annuities
and mutual funds. See " - Gross Margins".  Accordingly, we have been encouraging
our Representatives to transition more of their non-trading business to advisory
services.  Although we do not dictate the nature or extent of advisory  services
our  Representatives  provide for their  clients,  we continue to make concerted
efforts to attract them to our proprietary  advisory  services  programs through
education, seminars, trade shows and direct telemarketing.

Fees  from  our  Rep-directed   asset-management   A-MAP  Program,  where  asset
allocation and other investment  advisory  services are provided directly by our
independent  Representatives,  continue to be the  leading  source of revenue in
this  category.  Revenues from this  program,  which have been  contributing  an
increasing  proportion of advisory  services  revenue,  grew by $0.53 million or
74.2% to $1.25 million compared to $0.72 million for the prior period. Supported
by our Net Exchange Pro and Pershing direct on-line mainframe trading platforms,
this program is popular with our Representatives because of the opportunities it
provides to deliver to their clients  superior  asset  management  services at a
potentially  lower cost,  and the  potential for  increased  overall  investment
performance.  Resulting  transactional  cost  savings have been passed on to our
Representatives' clients in the form of lower fees for improved service.

Revenues  from  our  Rep-directed  asset  managed  program,   A-MAP,  have  been
contributing  to an  increasing  proportion  of our  overall  advisory  services
revenue  growth.  Our current  success in promoting our A-MAP advisory  services
program is due in large part to  providing  an enhanced  online  platform to our
Representatives  that enables them to perform their asset allocation services in
a more cost effective  manner.  Resulting  transactional  cost savings have been
passed on to our Representatives' clients in the form of lower fees for improved
service.

Other Fee  Income.  Other fee  income,  primarily  comprised  of  licensing  and
financial planning fees, remained relatively level for the comparative quarters.

Marketing Revenue.  Net marketing revenues increased by $0.22 million or 110.9%.

Other Income.  Other income,  consisting primarily of interest and dividends and
gains/losses  on  investments,  increased by $0.05 million.  The majority of the
increase came from interest earned on account balances due to an increase in the
average daily balance in our trading accounts.

<TABLE>
<CAPTION>
GROSS MARGINS

                                                              Gross Margin Retention  Percent of Gross Margin
                                           Gross Margin            Quarter Ended           Quarter Ended       Gross Margin
                                       Quarter Ended Dec 31,         Dec, 31,                 Dec 31,         Percent Change
                                      ----------------------- ----------------------- ----------------------- --------------
                                         2006        2005       2006         2005        2006        2005     2006 vs. 2005
                                      ----------- ----------- ----------  ----------- ----------- ----------- --------------
<S>                                   <C>         <C>           <C>          <C>        <C>         <C>           <C>

Commission - (Check and Application ) $1,629,726  $1,264,551    13.0%        12.5%       36.9%       33.3%        28.9%


Commission - Trading                   1,307,618   1,372,402    24.4%        29.0%       29.6%       36.1%        -4.7%

Commission - Insurance Products           59,798      31,157    97.3%        73.5%       1.4%        0.8%         91.9%

Commission - Underwriting                  1,679       2,900    10.0%        10.0%       0.0%        0.1%         -42.1%

Advisory Services A-MAP (rep direct)     367,618     111,266    31.9%        29.4%       8.2%        2.9%         230.4%

Advisory Services Other                  103,777     352,041     n/a         n/a         2.4%        9.3%         -70.5%

Licensing                                328,951     326,052    100.0%      100.0%       7.5%        8.6%          0.9%

Marketing                                427,425     202,639     n/a         n/a         9.7%        5.3%         110.9%

Other income                             188,597     136,496     n/a         n/a         4.3%        3.6%         38.2%
                                      ----------- -----------

Total Gross Margin                    $4,415,189  $3,799,504    21.1%        22.3%      100.0%      100.0%        16.2%
                                      =========== ===========
</TABLE>

Gross  margin  rose by $0.62  million or 16.2% to $4.42  million for the current
period  primarily  due to a $0.37  million  or 28.9%  increase  in gross  margin
derived from our check and application programs.  Also contributing to this rise
was a $0.22  million  increase  from our  marketing  support  programs and $0.05
million  from other  income.  Offsetting  these  increases  was a $0.06  million
decease in gross margins from trading services.

Mutual Funds, Variable Annuities, Etc.

The  increase  in gross  margin  from our check and  application  business  came
directly  from an increase in sales  volume of our  variable  annuity and direct
participation  components. As a result of a $2.79 million increase in sales from
these  product  types,  we achieved  an increase of $0.36  million in our profit
margin in comparing the current period to the prior period.  Please refer to the
commission revenue chart above for the comparative quarters.

<PAGE>

Profit  margins  from  mutual  fund  sales,   variable  annuity  sales,   direct
participation  programs and other check and  application  distribution  programs
generated  $1.63  million or nearly 37% of the total  gross  margin  compared to
$1.26  million or 33.3%  during the prior  period.  As presented in the previous
gross margin table, margin from our check and application  distribution programs
comprised  the greatest  portion of our overall  profit margin and profit margin
from trading was the next leading  component in our  principal  categories.  Our
investments  in  technology  have allowed us to process this  additional  volume
without adding a commensurate level of staff.

Advisory Services

The  Company's  continued  emphasis on A-MAP,  our  Rep-directed  asset  managed
program,  is clearly  reflected  in our gross  margin table as gross margin from
this program increased by $0.26 million or 230.4%. This gross margin improvement
resulted  directly from growth in assets under  management in the program due to
lower fees, improved services and increased awareness of this program.

Management's primary focus in the advisory services program has been to increase
client  assets under  management in the belief that it will generate an increase
in the overall  profit margin in advisory  services  even though the  percentage
retention  rate may decrease as a result of lower fees.  Although our  retention
rate from advisory services decreased compared to the prior period, it continues
to exceed the rates  generated by most of the other products and services we and
our Representatives  provide. (See -"Gross Margin Table",  above).  Management's
emphasis on delivering  our A-MAP Program is reflected in the gross margin table
with a concomitant  $0.25 million,  or 70.5%,  decrease in gross margin in Other
Advisory Services including the older wrap fee programs.

Trading Services

Trading Services profit margin decreased slightly,  despite increases in trading
revenues, due primarily to an increasing portion of sales being generated by top
producing  Representatives  who are  entitled to receive a higher  than  average
percentage  of earned  commissions  ("payouts").  As a result,  the  portion  of
commissions retained by the Company (our "retention rate") dropped from 29.0% to
24.4%.  During the current  period we retained $1.31 million on $5.37 million in
sales  compared  to $1.39  million on $4.74  million  in sales  during the prior
period.

Partially  offsetting the increase in payout, the Company experienced a combined
increase of $0.1 million in the margin from our fees on account  balances.  As a
percentage  of  Brokerage  Revenue  Clearing  fees  went  down  due to a  larger
percentage of trades being conducted on less costly exchanges.

Despite a decrease on a comparative  basis from 29.0% to 24.4%,  the  percentage
retention rate generated by trading services and advisory  services  continue to
exceed those generated by our check and application  business  respecting mutual
funds and variable annuities.

Payout and Retention Rates

Payouts to our  independent  Representatives,  as a percentage of all commission
and fee  income,  increased  to 81.4%  compared  to 79.3% for the prior  period,
corresponding to a decrease in our overall retention rate on revenues from 20.7%
to 18.6%. The decrease in our overall retention rate to a large extent is due to
an  overall  higher  quality of  Representative  that is  deserving  of a higher
payout.  While management  carefully  monitors the percentage points relative to
our  retention we have chosen to focus more on actual  dollars of  retention.  A
consequence of increased competition for higher producing  Representatives is an
increase in payouts to the Representatives with the offset being greater overall
contributions to margin and increased firm profitability.

Management  is  continuing  their  efforts to  improve  margin  contribution  by
recruiting and retaining  sophisticated  Representatives  who offer a variety of
brokerage and advisory  products and services that generate a higher  commission
retention rate than those obtained from mutual funds and variable annuities.  We
experienced  higher  margins from trading as a result of ticket charges and fees
pertaining  to increases in account  balances  that flow  entirely to the profit
margin.  From  advisory  services  we receive  fees on the asset  balance in the
account that flow directly to the firm. Refer to Note 1 --"Revenue Recognition -
Advisory Fees" to our Condensed Consolidated Financial Statements.

<PAGE>

OPERATING EXPENSES

Operating  expenses,  which  experienced a $1.36 million or 39.2% increase,  are
discussed in detail below:

Compensation  and  Benefits.  The largest  component  of  operating  expenses is
compensation  and benefits,  which increased by $0.67 million or 43.4%.  General
salaries,  which grew by 28.2%,  accounted for $0.31 million of the increase. In
addition,  we  experienced  a $0.27  million  increase in  compensation  paid to
officers.  The increase in general salaries  resulted  primarily from the hiring
and retention of additional personnel in such functions as:

     o    Trading  and  Operations  -- to  continue  to provide an  increasingly
          higher level of service to our sophisticated Representative force as a
          differentiator in the face of increasing competition,

     o    Compliance  -- to meet the  growing  needs  within  the  industry  for
          internal control,  quality supervision and continuing education to our
          independent Representatives, as well as to reduce legal and settlement
          expenses,

     o    Representative recruitment -- to enhance our ability to recruit higher
          quality Representatives,

     o    Legal  Department  -- to help  reduce  the  need  for  typically  more
          expensive outside counsel,  and to provide additional  services to our
          representatives and

     o    other general administrative areas.

Regulatory, Legal and Professional.  Regulatory, Legal and Professional expenses
increased by $0.70 million or 60.9%. The largest  component of this increase was
a $1.16  increase  in  legal  fees  and  settlement  costs  associated  with the
Massachusetts   Proceedings   referred  to  in  footnote  3  to  our   Condensed
Consolidated  Financial  Statements.  We have  taken and will  continue  to take
measures  calculated to limit our ongoing exposure to legal proceedings  arising
from our operations. In this regard, there was a $0.46 million decrease compared
to the prior  period in legal  fees and  settlement  costs  associated  with the
Massachusetts   Proceedings,   which  management  believes  to  be  atypical  of
litigation that will be associated with our on-going business.

The Company's legal expenses, other than those associated with the Massachusetts
Proceedings, significantly decreased for the comparative period as a result of a
risk-based management approach applied on a firm wide basis. Management believes
this result is directly  attributable to the Company's  efforts to minimize risk
by improving  the quality of its  associated  registered  Representatives  while
committing   significant  resources  to  educate  and  train  our  sales  force,
efficiently and accurately process their business,  and appropriately  supervise
their business activities.

The  Company's  legal  accrual  increased by $.51 million to $1.30 million as of
December 31, 2006 from $0.79  million as of December 31, 2005 as a result of the
settlement  in the  Massachusetts  Proceeding.  The  Company  also  had  various
arbitration  claims  filed  against  it that  warranted  an  additional  accrual
increase.  As we operate in an  increasingly  litigious  industry  embedded with
regulation,  we will  continue  to invest  significant  resources  to reduce the
likelihood of future litigation exposure by promoting  accuracy,  ensuring sound
operational techniques and applying appropriate compliance measures.

Advertising.  Advertising,  including related marketing  expenses,  decreased by
$0.06  million or 31.5%,  reflecting  decreased  spending  on officer  travel to
promote  and grow the  company  due to the  fiscal  constraints  imposed  by the
above-mentioned Massachusetts Proceedings.

Communications.  Communications  expenses  decreased by $0.04  million or 22.1%,
primarily  due to a decrease in printing and website costs offset by an increase
in telephone  expenses.  The costs savings in printing expenses were achieved by
communicating  to  our  prospective  Representatives  by  emailing  our  product
literature instead of direct mailing. The Company's website is currently used to
target new  revenue  streams by  providing  access to  information  through  the
website  and other  Internet  publications.  Communication  efforts  and related
expenses,  which  also  include  investor/public   relations,   conference,  and
telephone,  have historically been positively correlated with the overall growth
of our  business.  Our website and  newsletter,  "The  Capitalist",  have become
effective  media to communicate  to qualified  Representatives  for  recruitment
purposes.

Occupancy. Occupancy expenses increased by $0.09 million or 52.0% primarily as a
result of  opening  Investment  Centers  in  Braintree,  MA,  Manhattan,  NY and
Bedford,  NH and a new  Business  Center in Miami,  FL.  Furthermore,  we leased
additional  space  for  senior  management  and our  marketing  department  at a
separate  Lynnfield,  MA location.  The Company also  experienced an increase in
depreciation as a result of acquiring additional fixed assets in the form of new
computers  for the  additional  staff,  leasehold  improvements  and  additional
furniture and fixtures for the home office in Lynnfield,  MA to accommodate  the
increased number of employees.

Other  Administrative.  Other  administrative  expenses,  which include  various
insurance,  postage, office and computer-related expenses, increased slightly by
$0.02  million or 5.6%.  Management  continues  to mount a  concerted  effort to
reduce general office and postage expenses through several cost saving methods.

OPERATING AND NET LOSSES

<PAGE>

The Company's operating and net losses, compared to the operating and net profit
during  the prior  period,  can be  attributed  primarily  to the  Massachusetts
Proceedings  and resulting  settlement and legal costs.  Had we not incurred the
costs  associated  with these  proceedings and settlement we would have reported
operating  income of $0.74  million  versus an  actual  operating  loss of $0.43
million.

We are  continuing  to commit  significant  resources to  improving  our overall
marketing efforts, and at the same time investing in technology to assist us and
our Representatives to process their business more efficiently.  Improvements to
our  automated  business  processes  are  calculated  (i) to reduce  reliance on
personnel to process business,  thereby fostering  administrative  cost savings,
and (ii) to improve accuracy and productivity,  thereby improving service levels
to our  Representatives,  whose service  expectations we continue to endeavor to
exceed.

We intend to  continue  to invest in our  selling  and  administrative  services
capabilities,   including   additions  to  management,   personnel  and  service
infrastructure,  as  part of a  concerted  strategy  to  increase  revenues  and
profitability.  Management  firmly  believes that a sustained focus on enhancing
our  clearing  firm's   state-of-the-art   business   platform  will  facilitate
accelerated  recruitment  of  independent  Representatives  that are  focused on
growing revenues, particularly in high margin lines such as advisory and trading
services.  Management  believes  that  continued  focus  on  implementation  and
incremental  improvement of our business plan help will foster continuing strong
revenue growth and renewed  profitability as we transition beyond atypical legal
costs that have been depressing recent financial results.

Nine Months Ended December 31, 2006 Compared with Nine Months Ended December 31,
2005:
--------------------------------------------------------------------------------

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

RECRUITING

There was a 23.7% growth in new recruits in the current  period versus the prior
period as  management  continues  to  aggressively  pursue and  attract  quality
producing representatives to their firm.

Recruiting Statistics          Nine Months Ended
                                  December 31           Change    Percent Change
                               2006        2005     2006 vs. 2005 2006 vs. 2005
                            ----------- ----------- ------------- --------------


Representatives Recruited           73          59            14       23.7%

<PAGE>

<TABLE>
<CAPTION>
RESULTS OF OPERATIONS

                                                                           Percent of Revenue
                                     Nine Months Ended December 31,  Nine Months Ended December 31,
                                     ------------------------------  ------------------------------     Percent
                                                                                                        Change
                                          2006            2005           2006            2005        2006 vs. 2005
                                     --------------  --------------  --------------  --------------  -------------
<S>                                  <C>             <C>                <C>             <C>             <C>

Revenues:

  Commission                         $  50,730,928   $  42,671,689       87.81%          88.22%          18.9%
  Advisory                               4,901,072       3,769,457       8.48%           7.79%           30.0%
  Other fee income                         598,443         586,644       1.04%           1.21%           2.0%
  Marketing revenue                        956,371         872,173       1.66%           1.80%           9.7%
  Other income                             584,902         467,934       1.01%           0.98%           25.0%
                                     --------------  --------------

Total Revenue                           57,771,716      48,367,897      100.00%         100.00%          19.4%
                                     ==============  ==============

Commission and advisory expenses        46,453,981      38,495,624       80.41%          79.59%          20.7%

Gross Profit                            11,317,735       9,872,273       19.59%          20.41%          14.6%

Operating Expenses:

  Advertising                              639,727         626,575       1.11%           1.30%           2.1%
  Communications                           324,323         460,561       0.56%           0.95%          -29.6%
                                     --------------  --------------

       Total Selling Expenses              964,050       1,087,136       1.67%           2.25%          -11.3%

  Compensation and benefits              6,629,987       4,656,097       11.48%          9.63%           42.4%
  Regulatory, legal and professional     3,763,689       2,486,521       6.51%           5.14%           51.4%
  Occupancy                                721,436         492,310       1.25%           1.02%           46.5%
  Other administrative expenses            774,963         699,730       1.34%           1.45%           10.8%
                                     --------------  --------------

       Total Administrative Expenses    11,890,075       8,334,658       20.58%          17.23%          42.7%

Total Operating Expenses                12,854,125       9,421,794       22.25%          19.48%          36.4%
                                     ==============  ==============

Operating (Loss) Income                 (1,536,390)        450,479       -2.66%          0.93%          -441.1%

Other (Expense) and Other Income:
 Gain On Sale of Asset                           -          91,313
  Interest expense                         (20,223)        (27,843)      -0.04%          -0.06%         -27.4%
                                     --------------  --------------
Total Other (Expense) and Other
 Income                                    (20,223)         63,470       -0.04%          0.13%          -131.9%

(Loss) Income before taxes              (1,556,613)        513,949       -2.69%          1.06%          -402.9%

Benefit (Provision) for income taxes       468,227        (248,076)      0.81%           -0.51%         -288.7%
                                     -------------   --------------
Net (Loss) Income                    $  (1,088,386)  $     265,873       -1.88%          0.55%          -509.4%
                                     ==============  ==============

</TABLE>
<PAGE>

REVENUES

The Company  continues to grow revenues in the diversified  investment sector of
the financial services industry.  Our revenues rose $9.40 million,  or 19.4%, to
$57.8  million as we  continue  our  efforts to  increase  top line  revenues in
commissions and advisory services. Leading this performance was an $8.06 million
or 18.9%  increase  in  commissions  and a $1.13  million or 30.0%  increase  in
advisory services revenue between the comparative periods. These results reflect
the diversified nature of our revenues.

Average Revenue Per Representative
<TABLE>
<CAPTION>

                          Nine Months Ended   Nine Months Ended  Change 2006 vs, 2005  Percentage Increase
                           December 31, 2006  December 31, 2005
                          ---------------------------------------------------------------------------------
<S>                       <C>                 <C>                <C>                          <C>

Commission                $      50,730,928   $     42,671,689   $         8,059,239          18.9%
Advisory                          4,901,072          3,769,457             1,131,615          30.0%
Other fee income                    598,443            586,644                11,799           2.0%
                          ------------------  -----------------  ------------------------------------------
                          $      56,230,443   $     47,027,790   $         9,202,653          19.6%


Number of Representatives               705                728                   (23)         -3.2%

Average Revenue Per Rep   $          79,759   $         64,599   $            15,161          23.5%
</TABLE>

Compared to the prior period, our average revenue per  Representative  increased
23.5%,  reflecting  our  continuing  initiative  to recruit  and retain  quality
producing Representatives.

Commissions.  Commissions  from  variable  annuities  and  direct  participation
programs provided $7.54 million,  or 93.6%, of an overall $8.06 million increase
in  commission  revenue  compared to the prior period.  Commissions  from direct
participation   programs,   which  predominantly   include  REITs  (Real  Estate
Investment  Trusts)  and oil and gas  programs,  increased  by $3.01  million or
37.4%.

<TABLE>
<CAPTION>

                                      Nine Months Ended                         Percentage         Percentage
                                         December 31                             of Total       Increase/decrease
                                     2006           2005      2006 vs. 2005  Increase/decrease    2006 vs. 2005
                                 --------------------------------------------------------------------------------
<S>                             <C>             <C>           <C>                 <C>                <C>
Commission Revenue:
-------------------
   Variable Annuities            $ 19,479,259   $14,946,320   $  4,532,939         56.2%              30.3%
   Trading (brokerage)(1)          15,196,897    12,968,013      2,228,884         27.7%              17.2%
   Mutual Funds                     7,469,907     8,461,624       (991,717)       -12.3%             -11.7%
   Direct Participation Programs    8,194,152     5,183,149      3,011,003         37.4%              58.1%
   Other                              390,713     1,112,583       (721,870)        -9.0%             -64.9%

Total Commission Revenue         $ 50,730,928   $42,671,689   $  8,059,239        100.0%              18.9%
                                 ================================================================================

1. Revenue designated as Trading (brokerage)  includes revenue from mutual funds
sold through our trading platform.
</TABLE>

The growth in commissions historically has been dominated by variable annuities.
However, revenue from our brokerage business maintained its share of the revenue
base as the second largest revenue component  generated from commissions due, in
part, to recruitment of sophisticated  Representatives  who are licensed to sell
equities.

Advisory Fees.  Fees from our  Rep-directed  asset-managed  program  A-MAP,  our
leading  source of revenue in this  category,  grew by $1.17 million or 56.1% to
$3.25  million  compared  to $2.08  million  the  prior  period.  Management  is
committed  to growing  assets  under  management  in this  program  by  offering
superior service at costs lower than the Other Advisory Services,  primarily the
predecessor wrap fee programs.

Other Fee Income.  Other fee income,  which  primarily is comprised of licensing
and financial planning fees, increased slightly by $0.01 million or 2.0%.

Marketing Revenue.  Net marketing revenues increased by $0.08 million or 9.7%.


<PAGE>

Other Income.  Other income,  consisting primarily of interest and dividends and
gains/losses  on  investments,  increased by $0.12  million for the  comparative
current  period to the prior  period.  The  majority of the  increase  came from
interest  earned on account  balances  due to an increase  in the average  daily
balance in our trading accounts.

<TABLE>
<CAPTION>
GROSS MARGINS

                                                           Gross Margin Retention  Percent of Gross Margin
                                      Gross Margin           Nine Months Ended        Nine Months Ended      Gross Margin
                                Nine Months Ended Dec 31,         Dec 31,                  Dec 31,          Percent Change
                                -------------------------  ----------------------  -----------------------  --------------
                                                                                                                2006
                                    2006         2005        2006        2005         2006        2005         vs. 2005
                                ------------  -----------  ----------  ----------  -----------  ----------  --------------
<S>                             <C>           <C>            <C>         <C>          <C>         <C>           <C>
Commissions (Check and
 Application)                   $ 4,506,219   $3,497,355     12.9%       11.9%        39.8%       35.6%         28.8%

Commission - Trading              3,298,600    2,883,151     21.7%       22.2%        29.1%       29.2%         14.4%

Commission - Insurance Products     189,551      224,761     99.0%       94.8%        1.7%         2.2%         -15.7%

Commission - Underwriting            19,917        4,407     10.0%       10.0%        0.2%         0.0%         351.9%

Advisory Services A-MAP (rep
 direct)                            761,736      548,644     26.0%       29.4%        6.7%         5.6%         38.8%

Advisory Services Other             615,204    1,008,978      n/a         n/a         5.4%        10.2%         -39.0%

Licensing                           465,575      414,479     100.0%      100.0%       4.1%         4.2%         12.3%

Marketing                           956,372      872,173      n/a         n/a         8.5%         8.8%          9.7%

Other income                        504,561      418,325      n/a         n/a         4.5%         4.2%         20.6%
                                ------------  -----------

Total Gross Margin              $11,317,735   $9,872,273     19.6%       20.4%       100.0%       100.0%        14.6%
                                ============  ===========
</TABLE>


Gross  margin  rose by $1.45  million or 14.6% to $11.3  million for the current
period  primarily  due to a $1.01  million  or 28.8%  increase  in gross  margin
derived from our check and application distribution over the prior period.

Trading.  The  increase  in gross  margin from  trading  reflects an increase in
brokerage commissions as well as increased fee income within corporate accounts.

Contributing  to this  improvement  in gross margins from trading was a combined
increase of $0.29 million in the margin from our fee income on account balances.
Another contributing factor was a reduction in clearing costs as a percentage of
Brokerage Revenue due to trades executed on lower cost exchanges.

The retention rate from trading  remained  relatively  level for the comparative
periods,  despite an  increase  in  trading  sales,  primarily  due to a greater
portion of sales being  generated by top producing  Representatives  who command
higher payout rates.

Advisory Services. Advisory services profit margin decreased by $0.18 million or
11.6% for the current period compared to the prior period mostly  resulting from
the $0.18 million  decrease in the loss in margins from  asset-managed  services
under our former investment advisory agreement with Eastern Point Advisors Funds
Trust that was  terminated in October 2005. See Footnote 1 - "Advisory Fees from
Mutual Funds" to our Condensed Consolidated  Financial Statements.  However, our
gross margin in the  Rep-directed  A-MAP  Program  increased by $0.21 million or
38.8%  resulting  from the  increase  in  investment  volume  and  assets  under
management due in part to lower fees.

Gross  Margins from the Other  Advisory  Services was down as a direct result of
Management's  strategy to grow assets under management  through our Rep-directed
A-MAP Program, as opposed to our older wrap fee programs.

Mutual Funds,  Variable  Annuities,  Etc. Profit margins from mutual fund sales,
variable  annuity  sales,  direct  participation  programs  and other  check and
application  distribution programs generated $4.52 million or 39.9% of the total
gross  margin  compared to $3.50  million or 35.4% during the prior  period.  As
presented  in the gross  margin  table,  margin  from our check and  application
distribution  programs  comprised  the  greatest  portion of our overall  profit
margin.  Profit  margins in trading  made up the next  largest  component of our
total gross margin for the current period.

Commission Retention

Commission  payouts  to our  independent  Representatives,  as a  percentage  of
advisory and  commissioned  revenues,  decreased  slightly  for the  comparative
periods ended December 31, 2006 versus December 31, 2005.Ultimately,  management
is  continuing  their  efforts  to  improve  margin   contribution  even  though
commission  retention rates decreased resulting from the lower fee base. Through
the  continued  recruitment  and  retention  of  sophisticated   Representatives
management is striving to reach their optimum levels of margin contribution.

<PAGE>

Sophisticated  Representatives  can offer a variety of  brokerage  and  advisory
products  and  services  that  provide  for  higher  margin   contributions  and
commission  retention  rates than those  obtained from mutual funds and variable
annuities.  We  experienced  higher  margins  from trading as a result of ticket
charges and fees pertaining to increases in account  balances that flow entirely
to the profit  margin.  From  advisory  services  we  receive  fees on the asset
balance in the account that go directly to the firm.  Refer to Note 1 --"Revenue
Recognition - Advisory Fees" to our Condensed Consolidated Financial Statements.

OPERATING EXPENSES

Operating expenses,  which experienced a $3.43 million or 36.4% increase for the
nine months ended December 31, 2006 compared to December 31, 2005, are discussed
in detail below:

Compensation  and  Benefits.  The largest  component  of  operating  expenses is
compensation and benefits,  which increased by $1.97 million or 42.4% during the
current period. This change was due primarily to (i) a $0.69 million increase in
stock-based  compensation resulting from the issuance of restricted common stock
to employees,  directors,  and registered  representatives under our 2005 Equity
Incentive  Plan,  and (ii) a $0.81  million  increase in general  salaries.  The
general  salaries  increase  resulted  primarily  from the hiring of  additional
personnel to support continued growth, as generally described in our comparative
analysis of the current quarter, above.

Regulatory, Legal and Professional.  Regulatory, Legal and Professional expenses
increased by $1.28 million or 51.4%. The largest  component of this increase was
a $0.77 million or 196.51%  increase in outside legal fees,  and a $1.00 million
settlement of the  Massachusetts  Proceedings  (referred to in Footnote 3 to our
Condensed  Consolidated Financial Statements) entered into on December 19, 2006.
Partially  offsetting these increases was a $0.73 million decrease in legal fees
and  settlements  resulting  from the non  recurrence of  commercial  litigation
settled  in the prior  period  that was not  related  to our  ordinary  business
activities.  The Company's  legal expenses would have been  consistent  with the
prior period absent the Massachusetts Proceedings.

Advertising.  Advertising,  including related marketing expenses, was relatively
flat for the comparative periods.

Communications.  Communications  expenses  decreased by $0.14  million or 29.6%,
primarily due to decreases in printing and website expenses.

Occupancy. Occupancy expenses increased by $0.23 million or 46.5% primarily as a
result of $0.09  million in leasing  costs for our new  locations.  The  Company
added Investment Centers in Braintree,  MA , Manhattan, NY and Bedford, NH and a
Business Center in Miami,  FL. The Company also experienced an increase of $0.05
million in depreciation from aquiring additional fixed assets in the form of new
computers  for the  additional  staff,  leasehold  improvements  and  additional
furniture and fixtures to the home office in Lynnfield,  MA to  accommodate  the
increased number of employees.

Other  Administrative.  Other  administrative  expenses,  which include  various
insurance,  postage,  office and computer-related  expenses,  increased by $0.07
million or 10.8%.

OPERATING INCOME / LOSS

Operating  income decreased by $1.99 million,  or 441.1%,  due to an increase in
operating expenses of $3.43 million or 36.4%. The most significant  contributors
to the increase in operating  expenses  were a $0.69  million  increase in stock
based compensation, a $0.81 million increase in general salary compensation from
the  hiring  of new  personnel,  and a $1.77  million  increase  in legal  costs
incurred  primarily  in  connection  with  the  Massachusetts   Proceedings  and
settlement.  Partially  offsetting  these increases in operating  overhead was a
$1.45 million increase in our gross margin, primarily in brokerage business.

The Company would have reported  operating  income of $0.23  million,  versus an
actual $1.54 million operating loss, but for the  Massachusetts  Proceedings and
settlement. We believe that our brand is defined by, and future profitability is
dependent   upon,  a  commitment  to  the  best  interests  of  our  independent
Representatives and their clients. Accordingly we remain focused on a risk-based
management  approach  in support of our  business  model of  recruiting  quality
independent Representatives and allocating the resources we believe are required
to  provide  them  with  exceptional   customer   service,   state  of  the  art
technological  support, and a nurturing  educational and marketing  environment.
Concurrently,  we  strive to  minimize  risk by  improving  the  quality  of our
associated registered  representatives while committing the resources we believe
necessary  to educate  and train our sales  force,  efficiently  and  accurately
process their business and  effectively  supervise  their  business  activities.
Management believes initial fruits of this strategy are reflected in our success
during the current  period in  recruiting  quality  Representatives  and growing
revenues and gross margins, and we look forward to returning to profitability in
the future.

NET INCOME

Net income for the nine months ended  December  31,  2006,  compared to the nine
months ended December 31, 2005,  decreased by $1.35 million,  or $0.23 per basic
and $0.22 per diluted share, as the Company reported a $1.09 million dollar loss
this  current  period  compared  to a net  profit of $0.27  million in the prior
period.  This was the  result of a decrease  in  operating  income  offset by an
income tax benefit of $0.47 million.  The decrease in operating  income resulted
from  increases  in  operating  expenses,  primarily  compensation  expenses and
expenses  related  to  the  Massachusetts   Proceedings  and  settlement,   that
outweighed  increases in revenues and gross profit margins.  But for the expense
associated with the Massachusetts Proceedings and settlement, we would have been
profitable for the nine months ended December 31, 2006.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

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

Cash inflows  historically  come mainly from the  profitability of the Company's
core services and investment products. For the last several years, profitability
has  typically  followed an annual  cycle of  relatively  average  profitability
during the first and third fiscal quarters,  relatively low profitability during
the second fiscal  quarter (when many  Representatives  and their clients are on
summer  vacation),  and relatively high  profitability  during the fourth fiscal
quarter  (when many  Representatives  and their clients enter a new business and
investment year).

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

The Company takes a proactive  approach to minimizing,  if not  preventing,  the
occurrence of other events that may lead to unexpected cash outflows,  including
lawsuits,  trade  errors  and  fines  from  regulatory  agencies.  A key to this
approach is ensuring that adequate controls over our operations and those of our
Representatives  are implemented,  tested and periodically  updated.  As part of
this  effort,  substantial  resources  have  been  committed  to  enhancing  the
capabilities  of our  compliance  team members,  whose tasks include  reasonably
assuring that our  Representatives  give proper weight to the  circumstances and
interests of their clients when  recommending  investment  options.  The Company
also  allocates  resources to stay  current with the many rules and  regulations
applicable  to our business by assisting  in the  education  and training of our
Representatives and staff.

As of December 31, 2006,  cash and cash  equivalents  totaled  $5.61  million as
compared to $7.72 million as of March 31, 2006.  Working  capital as of December
31, 2006 was $5.30  million as compared to $8.04  million as of March 31,  2006.
The ratio of current assets to current  liabilities was 1.82 to 1 as of December
31, 2006 as compared to 2.70 to 1 as of March 31, 2006,  principally due to cash
disbursements  of $1.3  million over the nine month  period  resulting  from the
Massachusetts Proceedings and settlement.

Operations provided $0.99 million in cash for the nine months ended December 31,
2006 as compared to $1.26  million in cash  provided  for the nine months  ended
December 31, 2005. Cash flow from operations, in comparing the current period to
the prior period decreased by $0.27 million.

In  comparing  cash flow from  operating  activities  for  December  31, 2006 to
December  31,  2005,  we can see that net  income  decreased  cash flow by $1.35
million  as a result of the net loss of $1.01  million  for the  current  period
versus net income of $0.27 million in the prior period.  In addition,  we issued
stock based compensation in the form of restricted stock which increased cash by
$0.69 million as a non-cash add back  adjustment in comparing the current to the
prior period.

Cash outflows from  investing  activities  for the current  period  comprised of
$2.82  million of which $0.71  million was for  purchasing  equipment as well as
technology and leasehold improvements. In addition, we experienced cash outflows
of $0.13  million in the form of loans to  Registered  Representatives,  to help
develop their businesses, as well as $1.99 million invested in US Treasury Bills
and Notes.

Finally, from financing activities we paid a $0.25 million cash dividend on June
29, 2006 to shareholders of record as of June 15, 2006.

By  comparison,  for the nine  months  ended  December  31,  2005,  cash used in
investment activities comprised of cash outflows of $0.30 million for purchasing
equipment,  technology,  and leasehold  improvements  and $0.36 million used for
granting loans to registered  Representatives.  Finally, in financing activities
we paid a dividend of $0.12 million on May 16, 2005 to shareholders of record as
of May 2, 2005.

Cash  disbursements  for the nine months ended  December  31, 2005  consisted of
$1.10  million  for legal  related  matters,  $0.10  million for  insurance  and
professional fees, $0.14 million for membership and NASD dues, $0.11 million for
mutual  fund  administration  costs,  $0.20  million  for  loans  to  registered
Representatives and $0.21 million for income tax related items. Finally, a $0.12
million cash dividend was paid on May 16, 2005 to  shareholders  of record as of
May 2, 2005.

Cash  disbursements  during nine months ended  December 31. 2006 included  $1.77
million  for legal  related  matters of which  $0.82  million was for legal fees
relating  to the  Massachusetts  Proceedings  and $0.50  million for the initial
payment  pertaining  to the  settlement  of the  Massachusetts  Proceedings.  In
addition,  the Company paid out $0.50 million to the NASD for licensing renewals
and routine  assessments.  The Company also disbursed $0.48 million in corporate
credit card purchases that primarily consisted of travel and entertainment along
with computer related expenses.  Finally, a $0.25 million cash dividend was paid
on June 29, 2006 to shareholders of record as of June 15, 2006.

Management  believes that the current  period net cash outflow is not indicative
of future cash outflow trends but, rather,  reflects extraordinary  expenditures
to defend and settle the  Massachusetts  Proceedings  that, in nature and scope,
were atypical of legal proceedings that the Company has experienced in the past.
These  unprecedented  disbursements  during the current quarter and year to date
have had a  significant  negative  impact on our  brokerage  firm's net  capital
ratio.

The  SEC  Uniform  Net  Capital  Rule  (Rule  15c3-1)  requires  that  ICC,  our
broker-dealer  subsidiary,  maintain  net  capital  of  $100,000  and a ratio of
aggregate  indebtedness  to net capital (a "net capital ratio") not to exceed 15
to 1.  Under the  rule,  indebtedness  generally  includes  all money  owed by a
company, and net capital includes cash and assets that are easily converted into
cash. SEC rules also prohibit  "equity  capital"  (which,  under the net capital

<PAGE>

rule,  includes  subordinated  loans) from being withdrawn,  cash dividends from
being paid and other specified  actions of similar effect from being taken,  if,
among other  specified  contingencies,  the  Company's  net capital  ratio would
exceed 10 to 1 or if we would have less than 120% of our  minimum  required  net
capital.

In December  2006, ICH infused $1.3 million in capital to ICC to offset the cash
drain resulting from the Massachusetts Proceedings and settlement. Consequently,
as of December 31, 2006 ICC had net capital of $1.16 million (i.e., an excess of
$0.63  million) and a 6.90 to 1 net capital  ratio as compared to net capital of
$0.96  million  (i.e.,  an excess of $0.53  million) and a 6.63 to 1 net capital
ratio as of March 31, 2006.

The Company's legal accrual  increased  slightly to $0.85 million as of December
31, 2006 from $0.79 million as of December 31, 2005 primarily as a result of the
settlement of the Massachusetts Proceedings.  The Company also had other various
arbitrations filed against it that warranted a portion of the accrual increase.

During the current  period the increase in our legal accrual  impacted ICC's net
capital ratio and excess net capital. The Company does not consider this to be a
trend and does not currently anticipate that similar accrual increases will be a
recurring  necessity.  See Footnote 3 to our  Condensed  Consolidated  Financial
Statements.

The  Company  currently  has  ample  cash  to  cover  additional   accruals  and
disbursements  that may result  from these  various  arbitrations.  Despite  the
arbitrations and legal proceedings that increased our legal accrual, the Company
remains  focused on committing  the resources we believe are necessary to assure
continued growth and effectively manage our business risks.

In its role as  Investment  Advisor to the Eastern  Point  Advisors  Funds Trust
family of mutual funds,  Company  disbursements to pay fund expenses that exceed
their  respective  ceiling caps averaged $0.18 million per fiscal quarter during
the previous fiscal year. As previously  noted,  the Company agreed to terminate
its management contract with the Trust and, accordingly,  the Company received a
relative cash flow infusion of $0.04 million for the nine months ended  December
31, 2006 versus a $0.38 million cash outflow for the nine months ended  December
31, 2005.  See  condensed  Footnote 5 to our  Condensed  Consolidated  Financial
Statements.

<TABLE>
<CAPTION>
CONTRACTUAL OBLIGATIONS

Contractual Obligations                   Payments Due by Period
------------------------------------------------------------------------------------------------------------------------

Period                                        April 1, 2006-      April 1, 2007-    April 1, 2010-      April 1, 2012
                                              March 31, 2007      March 31, 2010    March 31, 2012     and thereafter
                                Total        less than 1 year        1-3 years         4-5 years        After 5 years
Fiscal Years Ended March 31,                       2007              2008-2010         2011-2012     2013 and thereafter
------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                     <C>              <C>                <C>                     <C>

Operating leases:             1,059,819               144,261          833,278            82,280                    -

                              ---------------------------------------------------------------------
Total Contractual Obligations 1,059,819               144,261          833,278            82,280                    -
                              ---------------------------------------------------------------------
</TABLE>

COMMITMENTS AND CONTINGENCIES

The Company is obligated  under various lease  agreements  covering  offices and
equipment.  These agreements are considered to be operating leases in accordance
with the  requirements  under FASB 13 "Accounting for Leases".  The terms of the
leases expire between fiscal year 2007 and 2009. Options to renew for additional
terms are included under the lease  agreements.  The total minimum rental due in
future periods under these existing  agreements is as follows as of December 31,
2006:

Year Ending March 31 ,2007                               $144,261
Year Ending March 31 ,2008                                530,940
Year Ending March 31 ,2009                                213,994
Year Ending March 31 ,2010                                 88,344
Year Ending March 31 ,2011                                 49,368
Year Ending March 31 ,2012                                 32,912
                                                    --------------

Total Minimum Lease Payments                           $1,059,819
                                                    ==============


Certain leases contain provisions for minimum lease payments that are contingent
upon increases in real estate taxes. The total lease expenses  amounted to $0.16
million for quarter  ended  December  31, 2006 and $0.1  million for the quarter
ended  December 31, 2005.  The related  party  leases to Investors  Realty,  LLC
amounted to $0.09  million and $0.06  million,  respectively,  for the  quarters
ended December 31, 2006 and 2005.

The Company had total lease  expenses of $0.46 million and $0.30 million for the
nine months ended  December 31, 2006 and 2005,  respectively.  The related party
leases to Investors  Realty,  LLC amounted to $0.27  million and $0.18  million,
respectively for the nine months ended December 31, 2006 and 2005.

<PAGE>

RISK MANAGEMENT

Risk is an inherent part of the  Company's  business and  activities.  Effective
risk   management   is  critical  to  the  Company's   financial   strength  and
profitability  and requires  robust  auditing,  constant  communications,  sound
judgment  and in depth  knowledge  of both  pertinent  financial  trends and the
economy as a whole.  Senior management takes an active and committed role in the
risk management process.  The principal risks involved in the Company's business
activities are market, operational, regulatory and legal.

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

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

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

EFFECTS OF INFLATION

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Based on an  evaluation by our  management  in which they or persons  performing
similar functions  participated,  our principal executive and financial officers
have concluded that reasonably  effective  controls and procedures were in place
as of the end of the period  covered by this report to ensure  that  information
required to be disclosed in our reports filed under the Securities  Exchange Act
of 1934 is recorded, processed,  summarized and reported within the time periods
specified in the rules and forms of the Securities and Exchange  Commission.  No
changes in our internal  control over financial  reporting  occurred  during the
fiscal  quarter  covered by this report that have  materially  affected,  or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

ICC is required  per the rules and  regulations  of the SEC and NASD (17A-5) AND
(17A-5G) to have adequate  controls as a registered broker dealer and investment
advisor. These regulating bodies audit ICC on a regular basis and ensure that it
is in compliance with the rules for a broker dealer and investment  advisor.  In
addition, ICC supplementally reports on the adequacy of its internal controls in
annual financial  statements  presented to state securities oversight bodies, we
report on the adequacy of our internal controls.

<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 6.  EXHIBITS

Exhibit
Number                   Description                                    Location
------                   -----------                                    --------

3.1       Articles of Organization, as amended . . . . . . . . . . (2)(Exh. 3.1)

3.2       By-Laws . . . . . . . . . . . . . .  . . . . . . . . . . (2)(Exh. 3.2)

4.1       Form of Stock Certificate . . . . . . . . . . . . . . . .(2)(Exh. 4.1)

10.1      Employment Agreement with Theodore E. Charles  . . . . .(2)(Exh. 10.1)

10.2      Employment Agreement with Timothy B. Murphy . . . . . . (2)(Exh. 10.2)

10.3      The 1994 Stock Option Plan . . . . . . . . . . . . . . .(3)(Exh. 10.3)

10.4      The 2005 Equity Incentive Plan . . . . . . . . . . . . . (4)(Exh. 4.5)

31.1      Certification of Theodore E. Charles pursuant to Rule
          13a-14(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1)

31.2      Certification of Timothy B. Murphy pursuant to Rule
          13a-14(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1)

32.1      Certification of Theodore E. Charles pursuant to 18
          U.S.C. Section 1350 . . . . . . . . . . . . . . . . . . . . . . . .(1)

32.2      Certification of Timothy B. Murphy 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 August
          14, 2000.

(3)       Incorporated by reference to the indicated exhibit to the Registrant's
          Annual Report on Form 10-K for the year ended March 31, 2005.

(4)       Incorporated by reference to the indicated exhibit to the Registrant's
          Registration  Statement on Form S-8 (File No. 333-43664) filed June 9,
          2006

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

<PAGE>

                                   SIGNATURES

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


                                                INVESTORS CAPITAL HOLDINGS, LTD.

                                                By: /s/ Timothy B. Murphy

                                                Chief Financial Officer


                                                Date: February 14, 2007