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



                                    Form 10-Q



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                    Quarterly Period Ended December 31, 2005
                            Filed: February 14, 2006







                      INVESTORS CAPITAL HOLDINGS LTD - ICH











--------------------------------------------------------------------------------
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

                               TABLE OF CONTENTS
================================================================================
          PART I

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

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

          PART II

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

          EX-31.1

          EX-31.2

          EX-32.1

          EX-32.2



2

<PAGE>





                                  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, 2005


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

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

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

Number of shares  outstanding  of our only class of common  stock as of February
09, 2006:                         5,794,246


                                       1
<PAGE>



INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

                          PART 1 FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS
INVESTORS CAPITAL HOLDING, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
                                                                      December 31,      March 31,
                                                                          2005            2005
                                                                      ------------    ------------
Assets

Current Assets
<S>                                                                   <C>             <C>
     Cash and cash equivalents                                        $  8,953,767    $  8,618,261
     Deposit with clearing organization, restricted                        175,000         175,000
     Note receivable - sale of asset (current)                               8,336
     Accounts receivable                                                 3,582,460       3,003,459
     Accounts receivable - asset held for sale                                --           358,050
     Loans receivable from registered representatives (current)            376,562         173,875
     Prepaid income taxes                                                   94,089         100,889
     Marketable securities, at market value                                109,625         330,380
     Prepaid expenses                                                      385,992         247,421
                                                                      ------------    ------------
                                                                        13,685,831      13,007,335

Property and Equipment, Net                                                716,433         571,198

Long Term Investments
     Loans receivable from registered representatives                      230,196          77,270
     Note receivable - sale of asset                                       747,617
     Equity investments, at cost                                           190,000          40,000
     Investments                                                           146,429         142,816
     Cash surrender value life insurance policies                          163,278          91,882
                                                                      ------------    ------------
                                                                         1,477,520         351,968
Other Assets
     Other assets                                                           22,276          29,666
     Deferred tax asset, net                                               129,451         149,471
                                                                      ------------    ------------
                                                                           151,727         179,137

          TOTAL ASSETS                                                $ 16,031,511    $ 14,109,638
                                                                      ============    ============

Liabilities and Stockholders' Equity

Current Liabilities
     Accounts payable                                                 $  1,500,235    $  1,045,314
     Commissions payable                                                 2,209,740       1,885,340
     Accrued expenses                                                      104,610         552,088
     Notes payable                                                            --             9,433
     Unearned revenues                                                   1,803,130         106,775
     Securities sold, not yet purchased, at market value                    36,098         327,905
                                                                      ------------    ------------
                                                                         5,653,813       3,926,855
          TOTAL LIABILITIES                                              5,653,813       3,926,855
                                                                      ------------    ------------
Commitments and Contingencies

Stockholders' Equity:
     Common stock, $.01 par value, 10,000,000
      shares authorized; 5,792,746  issued and 5,788,861 outstanding
       in December 31,2005; 5,757,348 issued and 5,753,463
        outstanding in March 31, 2005                                       57,927          57,573
     Additional paid-in capital                                          8,728,896       8,691,566
     Retained earnings                                                   1,614,024       1,463,779
       less: Treasury stock, 3,885 shares at cost                          (30,135)        (30,135)
     Accumulated Other Comprehensive Income                                  6,986
                                                                      ------------    ------------
          Total stockholders' equity                                    10,377,698      10,182,783

          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $ 16,031,511    $ 14,109,638
                                                                      ============    ============
</TABLE>



See Notes to Condensed Consolidated Financial Statements.


                                       2

<PAGE>

INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED
                                                                     DECEMBER 31,

                                                                   2005          2004
         Revenues                                              -----------   -----------

<S>                                                            <C>          <C>
   Commission                                                  $14,944,156   $11,965,568
   Advisory fees                                                 1,313,676       904,241
   Other fee income                                                384,766       305,681
   Marketing revenue,net                                           202,639       153,453
   Other income                                                    159,179       251,918
                                                               -----------   -----------
       TOTAL REVENUE                                            17,004,416    13,580,861

Commission and advisory fees expenses                           13,204,912    10,527,798

                                                               -----------   -----------
           Gross profit                                          3,799,504     3,053,063

Operating expenses:

   Advertising                                                     201,912       179,561
   Communications                                                  159,127       137,802
                                                               -----------   -----------
       TOTAL SELLING EXPENSES                                      361,039       317,363

   Compensation and benefits                                     1,537,058     1,435,213
   Regulatory, legal and professional                            1,137,663       325,244
   Occupancy                                                       168,328       151,606
   Other administrative expenses                                   270,890       208,880
                                                               -----------   -----------
       TOTAL ADMINISTRATIVE EXPENSES                             3,113,939     2,120,943

       TOTAL OPERATING EXPENSES                                  3,474,978     2,438,306
                                                               -----------   -----------
           Operating  Income                                       324,526       614,757

Other expense and other income:
     Interest expense                                                8,992         8,218
                                                               -----------   -----------
       TOTAL OTHER EXPENSE                                           8,992         8,218
                                                               -----------   -----------
     Gain on sale of  asset                                         91,313            --
                                                               -----------   -----------
       TOTAL OTHER INCOME                                           91,313            --
                                                               -----------   -----------
Income before taxes                                                406,847       606,539
Provision for income taxes                                         205,363       251,316
                                                               -----------   -----------

Net Income                                                     $   201,484   $   355,223
                                                               ===========   ===========
Earnings per common share:

   Basic earnings per common share                             $      0.03   $      0.06
   Diluted earnings per common share                           $      0.03   $      0.06

Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                   5,767,801     5,736,916

   Incremental shares from assumed exercise of stock options       134,836       171,466

   Weighted average shares used in diluted earnings per
     common share calculations                                   5,902,637     5,908,382
</TABLE>


                                       3

<PAGE>

INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

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

<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                                     December 31,
                                                               -------------------------
                                                                   2005          2004
                                                               -----------   -----------
                           Revenues
<S>                                                            <C>           <C>
   Commission                                                  $42,671,689   $35,853,473
   Advisory fees                                                 3,769,457     2,711,173
   Other fee income                                                586,644       727,353
   Marketing revenue,net                                           872,173       706,869
   Other income                                                    467,934       337,379
                                                               -----------   -----------
       Total Revenue                                            48,367,897    40,336,247

Commission and advisory fees expenses                           38,495,624    32,416,497
                                                               -----------   -----------
           Gross profit                                          9,872,273     7,919,750

Operating expenses:

   Advertising                                                     626,575       583,438
   Communications                                                  460,561       379,756
                                                               -----------   -----------
       Total Selling Expenses                                    1,087,136       963,194

   Compensation and benefits                                     4,656,097     4,065,595
   Regulatory, legal and professional                            2,486,521     1,049,054
   Occupancy                                                       492,310       433,891
   Other administrative expenses                                   699,730       659,206
                                                               -----------   -----------
       Total Administrative Expenses                             8,334,658     6,207,746

       Total Operating Expenses                                  9,421,794     7,170,940
                                                               -----------   -----------
           Operating income                                        450,479       748,810

Other expense and Other income:

   Interest expense                                                 27,843        32,091
                                                               -----------   -----------
       Total other expense                                          27,843        32,091

   Gain on sale of Asset                                            91,313          --
                                                               -----------   -----------
       Total other revenue                                          91,313          --
                                                               -----------   -----------
Income before taxes                                                513,949       716,719

Provision for income taxes                                         248,076       306,977
                                                               -----------   -----------
           Net income                                          $   265,873   $   409,742
                                                               ===========   ===========

Earnings per common share:

   Basic earnings per common share                             $      0.05   $      0.07

   Diluted earnings per common share                           $      0.04   $      0.07


Share data:

   Weighted average shares used in basic earnings per
     common share calculations                                   5,759,003     5,732,367

   Incremental shares from assumed exercise of stock options       156,851       185,882

   Weighted average shares used in diluted earnings per
     common share calculations                                   5,915,854     5,918,249
</TABLE>



See Notes to Condensed Consolidated Financial Statements.

                                       4

<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
NINE MONTHS ENDED DECEMBER 31, 2005

<TABLE>
<CAPTION>
                                                                                                          Accumulated
                                                                                                          Other
                                                                                                          Compre-
                                        Common                 Additional  Compre-  Retained              hensive
                                        Stock                   Paid-In    hensive  Earnings    Treasury  Income
                                        Shares     Amount       Capital    Income   (Deficit)    Stock     (Loss)       Total
                                       --------- ----------- ------------ -------- ------------ --------- ---------- ------------

                                                 --------------------------------------------------------------------------------
<S>                                   <C>          <C>       <C>                     <C>        <C>       <C>       <C>
Balance at April 1, 2004               5,731,598    $ 57,316  $ 8,520,931        0    $ 844,670  $(30,135) $12,157   $ 9,404,939
                                                 ================================================================================
Stock based compensation                  10,700         107       74,803                                                 74,910

Comprehensive income:
   Net income                                                              409,742      409,742
Other Comprehensive Income:
    Unrealized gain on securities:
     unrealized holding losses
       arising during
      period no tax effect                                                 (385.00)

Less: reclassification adjustment
 for gain included in net income
   no tax effect                                                           (11,772)
                                                                          --------
Other Comprehensive Income                                                 (12,157)                        (12,157)
                                                                          --------                         -------
   Comprehensive Income                                                    397,585                                       397,585
                                                                          ========
                                                 --------------------------------------------------------------------------------
Balance at December 31, 2004           5,742,298    $ 57,423  $ 8,595,734        0  $ 1,254,412  $(30,135) $     0   $ 9,877,434
                                                 ================================================================================
Balance at April 1, 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        0  $ 1,614,024  $(30,135) $ 6,986   $10,377,698
                                                 ================================================================================
</TABLE>


See Notes to Condensed Consolidated Financial Statements.



                                        5
<PAGE>

INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

INVESTORS CAPITAL HOLDINGS, LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED


<TABLE>
<CAPTION>

                                                                             Nine Months Ended
                                                                                December 31,
CASH FLOWS                                                          ----------------------------------
                                                                        2005                   2004
                                                                    -----------            -----------
Cash flows from operating activities:

<S>                                                                 <C>                    <C>
     Net income                                                     $   265,873            $   409,742
     Adjustments
       in operating activities:

         Depreciation and amortization                                  157,473                125,337
         Change in deferred taxes                                        20,021                  5,458
         Issuance of unrestricted stock                                  19,263                 45,640
          Issuance of  restricted stock                                   2,567                   --
         Stock option compensation                                       11,614                 11,899
         Change in marketable securities                                (71,052)                37,967
         Change in investments                                            3,373                (22,265)

Changes in operating assets and liabilities:

     (Increase)Decrease in accounts receivable                         (579,001)               386,752
     (Increase) in accounts receivable-asset held for sale             (397,903)              (111,314)
     (Increase)Decrease prepaid expenses and other assets              (131,181)               159,139
     Decrease in loans receivable from officers                            --                   27,322
     Decrease(Increase)  in prepaid income taxes                          6,801                   --
     Increase(decrease) in taxes payable                                   --                 (482,874)
    (Decrease) increase in accounts payable                             454,921                183,996
    (Decrease) in accrued expenses                                     (447,478)              (343,007)
     Increase(Decrease) in commissions payable                          324,399               (558,641)
     Payments on notes payable and NASD settlement                         --                 (148,679)
     Increase in unearned revenues                                    1,696,354              1,583,010
    (Increase) in Cash Surrender Value of Life Insurance Policies       (71,396)
                                                                    -----------            -----------
             Net cash (used in)provided by operating activities       1,264,648              1,309,482


Cash flows from investing activities:

     Purchases of property and equipment                               (302,708)              (195,480)
     Loans receivable from registered representatives                  (355,612)              (211,961)
     Investments                                                       (150,000)
                                                                    -----------            -----------
             Net cash used in investing activities                     (808,320)              (407,441)

Cash flows from financing activities:

     Proceeds from exercise of stock options                              4,240                 17,372
     Principal payment notes payable                                     (9,433)               (62,624)
     Payment of cash dividends                                         (115,629)                  --
                                                                    -----------            -----------
             Net cash used in financing activities                     (120,822)               (45,252)


Net (decrease)increase in cash and cash equivalents                     335,506                856,789

Cash and cash equivalents, beginning of period                        8,618,261              8,112,567
                                                                    -----------            -----------
Cash and cash equivalents, end of period                            $ 8,953,767            $ 8,969,356
                                                                    ===========            ===========
Supplemental disclosures of cash flow information:

     Interest paid                                                  $    27,843            $    32,091
     Income taxes paid                                              $   217,256            $   780,000

Non-cash Transactions
     Financial Sale Accounts Receivable                                 747,617
</TABLE>


See Notes to Condensed Consolidated Financial Statements.



                                       6
<PAGE>



INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)





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


ORGANIZATION

   Incorporated in July 1995,  Investors  Capital  Holdings,  Ltd.  ("ICH") is a
financial   services   holding  company  that  operates  through  three  of  its
subsidiaries,  Investors Capital  Corporation  ("ICC"),  Eastern Point Advisors,
Inc.  ("EPA") and ICC Insurance  Agency,  Inc., in two segments of the financial
services  industry.   These  two  segments  provide  for  the  offering  of  (1)
broker-dealer  services  in  support of  trading  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   on-line  trading,   portfolio   tracking  and  records
management, and (2) investment advisory and asset management services, including
management of two retail mutual funds.  These  products and services are offered
throughout  the United  States  primarily  through  our  network of  independent
registered representatives.

   Investors Capital Holdings Securities  Corporation ("ICH Securities"),  a new
subsidiary,  was formed in March 2005 to hold cash, cash  equivalents,  interest
income and dividend income for ICH. Additionally,  the Company ceased its mutual
fund  management  services,  which had been  provided  by EPA,  during the third
quarter of the  current  fiscal  year.  See "Note 5. Note  Receivable  - Sale of
Asset."

     On October 24, 2005 Eastern Point Advisors,  Inc.  ("EPA"),  a wholly-owned
subsidiary of Investors Capital Holdings,  Ltd. (the "Company"),  entered into a
definitive agreement (the "Transition Agreement") with Dividend Growth Advisors,
LLC ("DGA").  Pursuant to the Transition Agreement,  EPA 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  EPA as the Trust's  investment  advisor.  EPA 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 EPA. DGA entered into a new advisory  agreement  directly
with the Trust.



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  periods ended
December  31, 2005 are not  necessarily  indicative  of the results  that may be
expected for the year ending March 31, 2006. The balance sheet at March 31, 2005
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, 2005 filed with the Securities and Exchange Commission.



USE OF ESTIMATES

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




                                       7
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)


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

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

   The Company has  established  revenue  recognition  policies  for each of its
income items including Mutual Funds/Variable Annuities,  Trading, Advisory Fees,
Administration Fees on Errors and Omissions ("E&O") and Renewals,  and Marketing
Revenues on production  and for regional and national  events.  A description of
the revenue recognition process related to each category is presented below. The
revenue  recognition  policies the Company  maintains are in compliance with SEC
Staff  Accounting  Bulletin  ("SAB")  104  "Revenue   Recognition  in  Financial
Statements".

   MUTUAL FUNDS/VARIABLE ANNUITIES. The Mutual Funds/Variable Annuity revenue is
recognized upon receipt of commissions  related to each sale, which generally is
settled on the trade date. The earnings process is substantially complete at the
point that the fund company distributes payment to the Company.

   TRADING.  The Company  earns  commissions  through  stock  purchases and sale
transactions,   mutual  fund   purchases,   government   and   corporate   bonds
transactions,  fee-based managed accounts,  and ticket charges. The Company also
earns  revenue in the form of 12b1 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  adjustments 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  quarterly as and when billed,  and any portion  remaining
uncollected at the end of the subsequent quarter are charged against earnings at
that time.

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


                                       8
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)


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

   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.  In accordance with SFAS No. 5, we perform periodic
credit evaluations and provide allowance based on our assessment of specifically
identified   unsecured   receivables   and   other   factors,    including   the
representative's payment history. Once it is determined that it is both probable
that a loan  has  been  impaired  and the  amount  of  loss  can  reasonably  be
estimated,  the portion of the loan balance  estimated to be uncollectible is so
classified and written off.

   ADVISORY FEES FROM OUR MUTUAL FUNDS.  As disclosed in the  respective  mutual
funds'  prospectuses,  the Company has  attempted to recoup all waived  advisory
service  fees  within a  three-year  period.  If  management  believed  that the
likelihood  of  collecting  that  receivable  within the  three-year  period was
doubtful, then the Company provided for an allowance in accordance with SFAS No.
5. Determinations  whether to write off such fees were made annually.  Effective
October 18, 2005,  the Company no longer  provides  advisory  services to mutual
funds and is entitled to payment of all previously  waived  advisory fees by its
successor as fund advisor. See "Note 5. Note Receivable - Sale of Asset."

   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 that 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.


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
different technology and marketing strategies.



                                       9
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)

NOTE 2.  SEGMENT INFORMATION (CONTINUED)

   The Company's reportable segments include investment services offered through
Investors  Capital  Corporation  (ICC) and  asset  management  services  offered
through Eastern Point Advisors,  Inc. (EPA). Asset management  services are also
offered through ICC which, in addition to being a broker-dealer, is a registered
investment advisor doing business as Investors Capital Advisors (ICA).

   This investment services segment includes  securities,  insurance,  financial
planning  and  related  services.  ICC  earns  commissions  as a broker  for its
customers in the  purchase  and sale of  securities  on major  exchanges.  Asset
management  services generate recurring annual revenue from fees received on the
management of customer accounts.

   EPA provides money  management  services to a variety of investors 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  began  reporting its segments on a management  approach  whereby our
business  is  organized  into  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.



                                       10
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2.  SEGMENT INFORMATION (CONTINUED)



                                                        Nine Months Ended
                                                           December 31,
                                                    ---------------------------
                                                       2005             2004
                                                    -----------     -----------
Inter-company eliminations                          $ 2,521,036      $ 2,322,622
Classification items (stand alone)                     (219,565)
Deferred income taxes                                    64,962           45,727
Income Taxes                                            (94,089)            --
                                                    -----------      -----------
Total Corporate items and eliminations              $ 2,272,344      $ 2,368,349
                                                    ===========      ===========




                                       11
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2.  SEGMENT INFORMATION (CONTINUED)

Segment reporting is as follows:

                                                   Three Months Ended
                                                      December 31,
                                              ---------------------------
                                                  2005           2004
                                              ------------   ------------
Non-interest revenues:

  ICC, investment services                   $ 15,484,657    $ 12,503,994
  EPA, ICA asset management services            1,365,579         943,414
  ICH investments (loss)gain                       (6,998)         27,211
                                             ------------    ------------
       Total                                 $ 16,843,239    $ 13,474,619
                                             ============    ============
Revenues from transactions with other
  operating segments:
  ICC                                        $    (41,411)   $    263,710
  EPA                                              35,843          29,301
                                             ------------    ------------
       Total                                 $     (5,568)   $    293,011
                                             ============    ============
Interest and dividend income,net:
  ICC                                        $    113,521    $     65,153
  EPA,ICA                                           8,851             300
  ICH                                                 225          40,790
  ICH Securities                                   38,581            --
                                             ------------    ------------
       Total                                 $    161,178    $    106,243
                                             ============    ============
Depreciation and amortization expense:
  ICC                                        $     52,282    $     42,685
  EPA                                               1,095           2,306
                                             ------------    ------------
       Total                                 $     53,377    $     44,991
                                             ============    ============



                                       12
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2.  SEGMENT INFORMATION (CONTINUED)


                                                Three Months Ended
                                                   December 31,
                                           ------------------------------
                                               2005               2004
                                           ------------      ------------
Income tax provision (benefit):

  ICC                                      $    287,050      $    193,239
  EPA,ICA                                        86,027            33,189
  ICH                                          (167,714)           24,888
                                           ------------      ------------
       Total                               $    205,363      $    251,316
                                           ============      ============
Income (loss):
  ICC                                      $    281,592      $    273,184
  EPA,ICA                                        84,390            46,920
  ICH                                          (203,059)           35,119
  ICH Securities                                 38,561              --
                                           ------------      ------------
       Total                               $    201,484      $    355,223
                                           ============      ============
Period end total assets:
  ICC                                      $ 11,721,616      $ 10,145,055
  EPA,ICA                                     1,050,666           613,494
  ICH                                           664,532         5,684,044
  ICH Securities                           $  4,867,041              --
  Corporate items and eliminations           (2,272,344)       (2,368,349)
                                           ------------      ------------
       Total                               $ 16,031,511      $ 14,074,244
                                           ============      ============



                                       13
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2.  SEGMENT INFORMATION (CONTINUED)




                                              Nine Months Ended
                                                 December 31,
                                         --------------------------
                                            2005           2004
                                         -------------   ------------
Non-interest revenues:

  ICC, investment services               $ 44,147,259    $ 37,182,593
  EPA,ICA asset management services         3,912,215       2,836,276
  ICH investments (loss)gain                   (4,135)         22,214
                                         ------------    ------------
       Total                             $ 48,055,339    $ 40,041,082
                                         ============    ============

Revenues from transactions with
   other operating segments:
  ICC                                    $    727,917    $    822,625
  EPA                                         121,324          91,403
                                         ------------    ------------

       Total                             $    849,241    $    914,028
                                         ============    ============

Interest and dividend income,net:
  ICC                                    $    284,882    $    171,486
  EPA,ICA                                       9,381             504
  ICH                                           9,377         123,175
  ICH Securities                              113,428            --
                                         ------------    ------------
       Total                             $    417,068    $    295,165
                                         ============    ============

Depreciation and amortization expense:
  ICC                                    $    151,259    $    118,958
  EPA                                           6,214           6,379
                                         ------------    ------------

       Total                             $    157,473    $    125,337
                                         ============    ============


                                       14
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)



NOTE 2.  SEGMENT INFORMATION (CONTINUED)



                                          Nine Months Ended
                                             December 31,
                                     ---------------------------
                                         2005              2004
                                     ------------    -------------
Income tax provision (benefit):

  ICC                                $    152,009    $    162,214
  EPA,ICA                                 214,510          85,909
  ICH                                    (118,443)         58,854
                                     ------------    ------------
       Total                         $    248,076    $    306,977
                                     ============    ============
Income (loss):
  ICC                                $    162,905    $    216,527
  EPA,ICA                                 229,886         114,672
  ICH                                    (240,315)         78,543
  ICH Securities                          113,397            --
                                     ------------    ------------
       Total                         $    265,873    $    409,742
                                     ============    ============
Period end total assets:
  ICC                                $ 11,721,616    $ 10,145,055
  EPA,ICA                               1,050,666         613,494
  ICH                                     664,532       5,684,044
  ICH Securities                     $  4,867,041            --
  Corporate items and eliminations     (2,272,344)     (2,368,349)
                                     ------------    ------------
       Total                         $ 16,031,511    $ 14,074,244
                                     ============    ============


                                       15
<PAGE>




INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)

NOTE 3. LITIGATION

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






MASSACHUSETTS PROCEEDINGS

By  administrative  complaint  dated November 16, 2005, the Securities  Division
(the  "Division") of the Secretary of the  Commonwealth  of  Massachusetts  (the
"State")  brought  an  adjudicatory   proceeding   against   Investors   Capital
Corporation  ("ICC")  alleging  violation of its supervisory  obligations  under
State  securities laws in connection  with a handful of sales of  equity-indexed
annuities  by  a  few  of  ICC's  independent  registered  representatives.  The
complaint,   which   claims  that  ICC  failed  to  properly   supervise   these
representatives,  thereby allowing allegedly unsuitable sales of these insurance
products,  seeks an order instructing ICC to cease such violations and to pay an
unspecified administrative fine.


An action  commenced by ICC on December 14, 2005 in the State's  Suffolk  County
Superior Court to enjoin the  administrative  proceeding brought by the Division
has been  effectively  stayed  while ICC  pursues  its  remedies  in the  latter
proceeding.  No  substantive  hearings  have  been  scheduled  to date in either
proceeding, the outcomes and impact of which cannot be determined at the present
time. Please refer to part II item 1.Legal Proceedings.



OTHER PROCEEDINGS


   At December  31,  2005,  the Company was the  co-defendant  in various  other
lawsuits.  Management believes,  based on currently available information,  that
the  results of such  proceedings,  in the  aggregate,  will not have a material
adverse  effect on the firm's  financial  condition.  The Company has Errors and
Omissions  ("E&O")  insurance to protect  itself from  potential  damages and/or
legal costs associated with the aforementioned lawsuits and, as a result, in the
majority  of cases the  Company`s  exposure  is limited to between  $75,000  and
$100,000 per case, subject to policy  limitations and exclusions.  In accordance
with Financial  Accounting Standards Board ("FASB") Statement No. 5, "Accounting
for Contingencies",  the Company had accrued expenses of approximately  $791,000
for the quarter  ended  December 31, 2005 of which  $390,000 is related to legal
defense  fees  incurred  as a result of the State proceeding as noted above. In
addition,  this accrual includes estimated probable settlement costs relating to
the Company's defense in such lawsuits.


         NOTE 4.  STOCK-BASED COMPENSATION

     The Company applies Accounting  Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
stock  incentive  plans.  During the first  quarter of fiscal 2005,  the Company
adopted the disclosure  provisions of SFAS No. 148,  "Accounting for Stock-Based
Compensation  -Transition and Disclosure".  The following table  illustrates the
effect on net  earnings and  earnings  per share of  activities  under its stock
incentive  plans  had  the  Company  adopted  the  fair  value-based  method  of
accounting for stock-based employee compensation for all periods presented.



                                       16
<PAGE>




INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


                INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE QUARTER ENDED DECEMBER 31, 2005
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                         Three Months Ended             Nine Months Ended
                                             December 31                    December 31
                                     --------------------------     ---------------------------
                                         2005           2004            2005           2004
                                     ------------   -----------      -----------   ------------
<S>                                   <C>           <C>              <C>           <C>
Net income as reported                $   201,484   $  355,223       $   265,874   $    409,742

Deduct:  Total stock-based employee
 compensation expense determined
 under fair value-based method for
 all awards, net of related tax
 effects                                       --            --               --             --
                                     ------------   -----------      -----------   ------------
Pro forma net income(loss)            $   201,484   $   355,223      $   265,874   $    409,742
                                     ============   ===========      ===========   ============

Earnings per share:
    Basic- as reported                $      .03    $       .06      $       .05   $        .07
    Diluted-as reported               $      .03    $       .06      $       .04   $        .07

    Basic   - pro forma               $      .03    $       .06      $       .05   $        .07
    diluted - pro forma               $      .03    $       .06      $       .04   $        .07
</TABLE>


                                       17
<PAGE>




INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

NOTE 5.  NOTE RECEIVABLE - SALE OF ASSET

     On October 24, 2005 Eastern Point Advisors,  Inc.  ("EPA"),  a wholly-owned
subsidiary of Investors Capital Holdings,  Ltd. (the "Company"),  entered into a
definitive agreement (the "Transition Agreement") with Dividend Growth Advisors,
LLC ("DGA").  Pursuant to the Transition Agreement,  EPA 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  EPA as the Trust's  investment  advisor.  EPA 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 EPA. 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 EPA was  assigned  to DGA,  and DGA
agreed  to pay to EPA an  amount  equal to the  total  of all fees  that EPA had
waived or remitted to a fund in the Trust  through  October 18,  2005.  The note
provides  for a principle  amount of  $747,617,  quarterly  payments of interest
accruing  thereon at a 5.5% annual rate, and full payment of the principle on or
before October 31, 2010. Prepayments are permitted without penalty.


     In its  anticipated  capacity as the new investment  advisor for the Trust,
DGA also agreed  under the  Transition  Agreement  to pay to  Investors  Capital
Corporation,  the Company's  wholly-owned  securities  broker/dealer  subsidiary
("ICC"),  the full dealer re-allowance on further sales by ICC of Class A Shares
of the Trust's funds and, for a period of three years,  quarterly payments equal
to 0.10% of the then market value (which is approximately  $44 million) of Trust
shares sold by ICC as of the date of the Transition Agreement.

     The president of DGA, C. Troy Shavers,  Jr.,  resigned as a director of the
Company  effective  October  18, 2005 to avoid any  appearance  of a conflict of
interest.


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, 2005 and March 31, 2005, the  consolidated  results
of operations  for the three months and nine months ended  December 31, 2005 and
2004  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,  when discussing year to date information) ended December 31, 2005, (ii)
the  "prior  period"  means the  fiscal  quarter  (or nine  month  period,  when
discussing year to date information) ended December 31, 2004, (iii) reference to
an increase or decrease  compares the current  period to the prior  period,  and
(iv) all non-comparative amounts refer to the current period.

   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 to, 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 advised to read and
consider 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 securities trading, investment advisory, insurance,  financial planning
and related services.  We operate in a highly regulated and competitive industry
that is  influenced  by numerous  external  factors such as general and industry
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 of these external factors.


OUR BUSINESS

   A key component of our business strategy is to recruit and provide productive
support to independent  representatives  who generate  comparatively large sales
volumes and are motivated to continually  grow their business by offering a wide
variety of services  and a  diversified  range of  investment  products to their
clients. Consistent with the Company's marketing theme of being "in the business
of building your business", we focus on providing substantial added value to our
representatives  to  enable  them to be more  productive,  particularly  in high
margin   lines  such  as   advisory   services.   Support   provided  to  assist
representatives  in pursuing  consistent and profitable  sales growth takes many
forms.   These  forms  include  hi-tech  trading  systems,   targeted  financial
assistance  and  a  network  of  communication  links  with  investment  product
companies  including  regional and national  conventions that provide forums for
interaction to improve products, sales and client satisfaction.


                                       18
<PAGE>

INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


<TABLE>
<CAPTION>
                                                                            Percent of Revenue
                                                  Quarter Ended             Quarter Ended        Percent
                                                   December 31,              December 31,        Change
                                          -----------------------------------------------------------------
                                                                                                    2005
                                              2005            2004        2005         2004       vs. 2004
                                          ------------    ------------  --------    --------   ------------
RESULTS OF OPERATIONS

Revenues:
<S>                                       <C>             <C>              <C>          <C>           <C>
     Commission                           $ 14,944,156    $ 11,965,568     87.9%        88.1%         24.9%
     Advisory                                1,313,676         904,241      7.7%         6.7%         45.3%
     Other fee income                          384,766         305,681      2.3%         2.3%         25.9%
     Marketing revenue,net                     202,639         251,918      1.2%         1.8%        -19.6%
     Other income                              159,179         153,453      0.9%         1.1%          3.7%
                                          -------------   ------------
Total Revenue                               17,004,416      13,580,861    100.0%       100.0%         25.2%
                                          =============   ============
Commission and advisory expenses                            10,527,798     77.7%        77.5%         25.4%

          Gross Profit                       3,799,504       3,053,063     22.3%        22.5%         24.4%

Operating Expenses:

     Advertising                               201,912         179,561      1.2%         1.3%         12.4%
     Communications                            159,127         137,802      0.9%         1.0%         15.5%
                                          -------------   ------------
Total Selling Expenses                         361,039         317,363      2.1%         2.3%         13.8%

     Compensation and benefits               1,537,058       1,435,213      9.0%        10.6%          7.1%
     Regulatory, legal and professional                      1,325,244      6.7%         2.4%        249.8%
     Occupancy                                 168,328         151,606      1.0%         1.1%         11.0%
     Other administrative expenses             270,890         208,880      1.6%         1.5%         29.7%
                                          -------------   ------------
Total Administrative Expenses                3,113,939       2,120,943     18.3%        15.6%         46.8%

Total Operating Expenses                     3,474,978       2,438,306     20.4%        18.0%         42.5%
                                          =============   ============
          Operating Income                     324,526         614,757      1.9%         4.5%        -47.2%

Other Income and Expense:

    Gain on sale of asset                      (91,313)              -     -0.5%         0.0%          N/A
     Interest expense                            8,992           8,218      0.1%         0.1%          9.4%
                                          -------------   ------------
Total Other Income and Expenses                (82,321)        (88,218)    -0.5%         0.1%      -1101.7%
                                          -------------   ------------
Income before taxes                            406,847         606,539      2.4%         4.5%        -32.9%

Provision for income taxes                     205,363         251,316      1.2%         1.9%        -18.3%
                                          -------------   ------------
Net Income (Loss)                            $ 201,484       $ 355,223      1.2%         2.6%        -43.3%
                                          =============   ============
</TABLE>


                                       19

<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


THREE MONTHS ENDED DECEMBER 31, 2005 COMPARED WITH
THREE MONTHS ENDED DECEMBER 31, 2004:


REVENUES

 The Company  continues to observe revenue growth in the diversified  investment
sector of the financial services industry.  Our revenues rose $3.42 million,  or
25.2%,  to $17.0  million  despite the effects on the  economy of  increases  in
interest rates and energy prices.  Revenues from commissions  increased by $2.98
million or 24.9% for the current period  compared to the prior period.  Advisory
services  revenue  also  increased  by $0.41  million or 45.3%  between the same
comparative periods.

   COMMISSIONS.  Commissions  from  mutual  funds,  variable  annuities,  direct
participation  programs and other  programs  increased by $2.00 million or 24.4%
during  the  current  period  when  compared  to the  prior  period.  Of  these,
commissions from direct  participation  programs,  which  predominantly  include
REITs (Real Estate  Investment  Trusts),  increased  by $0.67  million or 55.0%.
Commissions from trading increased by $0.98 million or 26.1%.

<TABLE>
<CAPTION>
                                             Three Months Ended December 31,             Change in %
                                         2005            2004        2005 vs 2004        2005 vs 2004
Product Type
<S>                                  <C>             <C>              <C>                <C>
Variable Annuities                   $ 5,244,835     $ 4,244,214      $ 1,000,621        23.58%
Trading                                4,740,136       3,757,629          982,507        26.15%
Mutual Funds                           2,826,759       2,345,164          481,595        20.54%
Direct Participation Programs          1,884,861       1,216,407          668,454        54.95%
Other                                    247,565         402,154         (154,589)      -38.44%
                                     ------------ ---------------    -------------
Total Commission Revenue              14,944,156      11,965,568      $ 2,978,588        24.89%
                                     ============ ===============    =============
</TABLE>


   Although  commissions from mutual funds and variable  annuities  comprise the
largest  component of commission  revenue,  the company's  revenue base has been
shifting   toward  the  area  of  brokerage.   An   increasing   number  of  our
representatives  conduct  their  business in  brokerage  accounts  which in turn
improves our margins. This business includes listed and over-the-counter  stocks
as well as corporate and government bonds including high-yield issues. The trend
towards   brokerage   reflects  a  concerted  effort  on  our  part  to  recruit
sophisticated  representatives  with series 7 licenses who utilize our brokerage
platform.  As a consequence of the shift toward brokerage products,  the Company
enjoyed higher  overall  profit margins from sales of the resulting  product mix
during the current period  compared to the prior period.  See "-- Gross Margins"
below.

   ADVISORY FEES. Advisory services typically provide significantly higher
margins than traditional broker-dealer products such as variable annuities and
mutual funds. See " - Gross Margins". Accordingly, we have been encouraging our
representatives to convert more of their business to advisory services.
Reflecting these efforts, the number of our representatives we have to sell
advisory service products increased from 160 representatives on December 31,
2004 to 305 representatives on December 31, 2005.Although we do not control
which advisory services our representatives provide for their clients, we
continue to make concerted efforts to attract them to our proprietary advisory
services programs through seminars, trade shows and direct telemarketing.

   Fees  from  our  rep-directed   asset-managed   program,  A-MAP  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  grew by $0.25  million or 44.0% to
$0.82 million  compared to $0.57 million the prior period.  Supported by our Net
Exchange Pro and Pershing direct mainframe  trading  platforms,  this program is
becoming   increasingly   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
market performance.

                                       20
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

   Revenues from our  fund-managed,F-MAP  or separately  managed S-MAP  accounts
where investment  advisory  services are provided by EPA and ICA, instead of our
independent  representatives,  increased  by .079  million or 32.3%  between the
comparative  periods.  Over  recent  quarters  revenues  from the  fund  managed
category have slightly  declined due to the  termination of accounts where asset
values  have  fallen  below a  minimum  level.  Also,  management  has not  been
aggressively  marketing this program compared to the rep-directed  asset-managed
program and S-MAP program .

   Revenues from asset managed  programs  provided from  third-party  investment
advisors, where investment services are provided by outside advisors,  decreased
slightly for the quarter ended December 31, 2005.EPA or ICA have been continuing
their marketing efforts away from these third party management programs and more
toward their internal  proprietary  asset-managed  models.  EPA or ICA have been
providing sales,  marketing,  a trading platform and other technical  support to
our  representatives  to enable  them to deliver  improved  investment  advisory
services.  A key to our  strategy  is to  encourage  sales  volume  growth  over
maintaining or increasing scheduled investor fee levels.

   Finally,  revenues from advisory  services provided to mutual funds decreased
by $0.07 million when compared to the prior period.  During the current quarter,
the Company  terminated the management  agreement  pursuant to which it had been
providing such advisory services to mutual funds. Going forward, the fall off in
revenue from this component  should be minimal as advisory  service revenue from
our mutual funds  constituted  only $0.07 million or 7.9% of the total  advisory
services revenue category for the quarter ended December 31, 2004.

OTHER FEE  INCOME.  Other fee  income  increased  by  $0.079  million  or 25.9%,
resulting mostly from administrative  fees for providing  regulatory services to
our representatives in connection with annual renewals of their NASD licenses.

   MARKETING  REVENUE.  Net  marketing  revenues  decreased by $0.05  million or
19.6%, reflecting an increase in the cost to host our annual national convention
which was held in Boston in October 2005.

   OTHER INCOME.  Other income,  consisting  primarily of interest and dividends
and gains or losses on  investments,  was  relatively  flat for the  comparative
periods.


GROSS MARGINS

   Gross margin rose by $0.75  million or 24.4% to $3.80 million for the current
period  primarily  due to a $0.60  million  or 78.8%  increase  in gross  margin
derived from brokerage over the prior period.  The increase in gross margin from
brokerage  reflects an  increase in  brokerage  commissions  and a reduction  in
clearing charges due to increased sales volume,  increased  commission retention
rates, and more fee income within corporate accounts.

Supporting this analysis was a $0.105 million dollar increase to the margin from
our money market and trails on account  balances.  We had a $0.5 million  dollar
increase to the margin as a result of increased  trade revenue from lower payout
producing  representatives.  This  increased  our payout  retention in brokerage
services  from  24% in the  prior  period  to 38% in the  current  period.  This
retention  increase  improved our gross margin  retention in brokerage  services
from 29.0% in the current  period to 20.04% in the prior period.  Refer to Gross
Margin Table below

 Finally,  in the prior period we had received a settlement  from our  insurance
company for a trade  error that  incurred in April of  2004.This  increased  our
margin from trading by $0.147 million in the prior period.

In addition,  investments  in personnel and technology to expand and upgrade the
capabilities  of our trading and operations  department  have enabled us to more
efficiently  service the increase in trading volume.  Through our efforts we are
continuing to recruit more capable and experienced representatives who can offer
a broader range of brokerage products (see "--Commissions", above).

   Advisory  services  profit  margins   decreased   slightly  as  a  result  of
terminating  the  management  agreement  associated  with the mutual  funds (see
condensed  footnote 5 to our consolidated  financial  statements).  In addition,
advisory fees derived from rep-directed  business declined slightly,  reflecting
decreases in the commission  retention  rate for client  accounts whose balances
reached levels that trigger automatic retention rate reductions.

                                       21
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

   The above-discussed increase in advisory services rendered by our third party
money managers  resulted in less margin  retention than if the services had been
performed  by EPA  or  ICA.  Although  profit  margins  from  advisory  services
marginally   decreased  compared  to  the  prior  period,  this  category  on  a
percentage-retention basis still retains a higher profit margin than most of the
other products or services we and our representatives provide.

   The  majority  of the  profit  margin in  advisory  services  stems  from our
rep-directed  asset-managed  programs that makes it possible for representatives
managing  client  accounts to trade  directly  online for clients  utilizing our
automated trading platform.  Resulting increases in the representative's trading
volume  effectively  boost the Company's  commission  revenues and gross margin.
Additionally,  by  processing  more  transactions  at a stable  fixed cost,  our
enhanced trading  technology  fosters  economies of scale that control operating
expenses required to process the increased trade volume.

   Profit  margins  from mutual  fund  sales,  variable  annuity  sales,  direct
participation  programs and other check and  application  distribution  programs
contributed  $1.26 million or 33.3% of the total gross margin  compared to $1.05
million or 34.5% during the prior period.  As presented in the  following  gross
margin table,  margin from trading constituted the largest percentage (36.1%) of
the overall gross profit during the current period.

<TABLE>
<CAPTION>
GROSS MARGIN:
                                              Gross Margin         Gross Margin Retention  % of Total Gross Margin
                                              Quarter Ended               Quarter Ended         Quarter Ended      Gross Margin
                                                December 31,               December 31,          December 31,     Percent Change
                                           -------------------------     ----------------     ----------------    ---------------
                                               2005          2004          2005     2004        2005        2004     vs. 2004
                                           -----------   -----------     --------- ------     -------     --------   -------
<S>                                        <C>           <C>                 <C>    <C>         <C>          <C>       <C>
Comm - Mutual Funds, Variable Annuities    $ 1,264,551   $ 1,052,193         12.5%  13.0%       33.3%        34.5%     20.2%

Commission - Trading                         1,372,402       767,774         29.0%  20.4%       36.1%        25.1%     78.8%

Commission - Insurance Products                 31,157        82,774         73.5%  99.0%        0.8%         2.7%    -62.4%

Commission - Underwriting                        2,900         4,432         10.0%  14.5%        0.1%         0.2%    -34.6%

Advisory Services                              463,307       474,011         33.8%  50.2%       12.2%        15.5%     -2.3%

Licensing                                      326,052       266,509        100.0% 100.0%        8.6%         8.7%     22.3%
                                                                   -
Marketing                                      202,639       251,918          n/a     n/a        5.3%         8.3%    -19.6%

Other income                                   136,496       153,453          n/a     n/a        3.6%         5.0%    -11.1%
                                          -------------  ------------
Total Gross Margin                         $ 3,799,504   $ 3,053,064          n/a     n/a      100.0%       100.0%     24.4%
                                          =============  ============
</TABLE>

COMMISSION EXPENSES

   Commission payouts to our independent representatives decreased from 79.9% to
79.3%  of  commissioned   revenues.   This  improvement   reflects  progress  in
management's  continuing  efforts  to  improve  commission  retention  rates  by
refining  our business  model to  emphasize  the  recruitment  and  retention of
sophisticated  representatives.   These  individuals  can  offer  a  variety  of
brokerage  and advisory  products and  services  that give us better  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 the revenue recognition policy.



                                       22
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


OPERATING EXPENSES

   Operating expenses,  which experienced a $1.04 million or 42.5% increase, are
discussed in detail below:

   COMPENSATION  AND  BENEFITS.  The largest  component of  operating  expenses,
compensation and benefits,  increased by $0.1 million or 7.1% during the current
period,  which is substantially  below the absolute and percentage  growth rates
achieved  in revenues  and gross  margins.  This change  includes an increase in
general  salaries of $0.17 million  offset by a decrease in officer's  salary of
$0.067  million as a result of the  resignation  of EPA's  president  during our
fiscal  quarter  ended June 30, 2005.  The overall  increase  also  reflects pay
increases  to  members  of our  management  team and staff and to the  hiring of
additional personnel.

   REGULATORY,  LEGAL  AND  PROFESSIONAL.  Regulatory,  legal  and  professional
expenses grew by $0.81 million or 249.8%. The largest component of this increase
was a $0.63 million or 1496% increase in non-in house legal fees,  $0.39 million
of which was incurred in connection with the Massachusetts Proceedings described
in detail in Part II, Item 1 "Legal Proceedings".  An additional $.13 million of
this increase arose from other actions that management believes,  with advice of
counsel,  are  atypical of the  exposures  likely to be presented by our ongoing
operations.  One of these atypical actions also contributed $0.15 million of the
$0.18 million increase in lawsuit settlement expenses.  It was deemed prudent to
increase our accruals  for legal  expenses  from $0.15 per quarter for the prior
period to $0.79 million per quarter for the current period.  Refer to Footnote 2
to the  Condensed  Consolidated  Financial  Statements.  In  addition,  since we
operate in an industry  embedded  with  regulation,  we will  continue to invest
significant resources to reduce the likelihood of future litigation by promoting
accuracy,  ensuring  sound  operational  techniques  and  providing  appropriate
compliance measures.

   We experienced a $0.01 million increase in non-in house accounting  expenses,
primarily  audit-related,  while regulatory and professional  expenses  remained
essentially flat at $0.12 million for the comparative periods.

   ADVERTISING.  Advertising  expenses  increased  overall by $0.022  million or
12.4%  due to a $0.01  million  decrease  in  advertisements,  a  $0.02  million
increase in meals and entertainment, and a $.015 million increase in travel. The
increases  are a result of  officers  of the  Company  continuing  to market our
services throughout the country.

   COMMUNICATIONS.  Communications expenses increased by $0.021 million or 15.5%
primarily due to increases in printing and website expenses approximating $0.015
million and $0.01 million, respectively.  These costs are incurred to target new
revenue  streams by  providing  access to  information  through the Internet and
other  publications.  Communication  efforts  and related  expenses,  which also
include investor/public relations, conferences, and telephone, have historically
been positively correlated with the overall growth of our business.

   OCCUPANCY.  Occupancy expenses increased by $0.016 million or 11.0% primarily
as a result of added costs for rent,  condominium fees and depreciation.  In the
current period we added a new investment center in Braintree,  Massachusetts and
acquired  additional fixed assets for technology  enhancement for the registered
representatives.  Utilities,  storage and repairs/maintenance  costs contributed
the remaining increase to occupancy expenses.

   OTHER ADMINISTRATIVE.  Other administrative  expenses,  which include various
insurance,  postage, office, and computer-related expenses,  increased by $0.062
million or 29.7%.  This  increase is mainly due to  additional  bank  charges of
$0.047  million   resulting  from  increased   usage  of  credit  cards  by  our
representatives  to pay fees relating to NASD  licensing  renewals.  The Company
also observed a $0.027 million increase in office expenses related  primarily to
the opening of new recruitment  offices.  Offsetting those  increases,  computer
maintenance services declined by $0.017 million reflecting a greater reliance on
in-house staff to service our computer systems.

OPERATING INCOME

   Operating  income decreased by $0.29 million or 47.2% due to a 42.5% increase
in operating  expenses that was offset by a rise of 24.4% in gross  margin.  Had
the company  not  incurred  the $0.39  million in out of the usual run of things
from legal fees in the  Massachusetts  Proceedings  mentioned above, the Company
would have reported an increase in operating income of $0.10 million.

                                       22
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

   We  will  continue  to  make  substantial  investments  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  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.  As part  of this  effort,  the  Company  continues  to  invest  in an
automated trading system that enables  sophisticated  representatives to enhance
client base and activity.


NET INCOME

   Net income  decreased by  approximately  $0.15 million or 43.3%,  or $.03 per
basic and diluted  share,  due to a decrease in  operating  income that was only
partially  offset by a related  decline in the provision  for income taxes.  The
decrease is a result of  incurring  more  operating  expenses,  primarily  legal
expenses,  proportionate to the increase in revenues and profit margins compared
to the three months ended December 31, 2004. In addition, we experienced a $0.09
million gain on the sale of an asset during the current  period.  See  condensed
footnote 5 to our Consolidated  Financial Statements.  There was no such gain in
the prior period.


                                       23
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================
<TABLE>
<CAPTION>
                                                                            Percent of Revenue
                                                 Nine Months Ended          Nine Months Ended         Percent
                                                    December 31,            December 31, 2005         Change
                                          ----------------------------    -------------------------------------
                                                                                                       2005
                                              2005            2004            2005         2004      vs. 2004
                                          ------------     -----------    ------------  ----------  -----------
Revenues:

<S>                                       <C>              <C>               <C>           <C>          <C>
     Commission                           $ 42,671,689     $35,853,473       88.2%         88.9%        19.0%
     Advisory                                3,769,457       2,711,173        7.8%          6.7%        39.0%
     Other fee income                          586,644         727,353        1.2%          1.8%       -19.3%
     Marketing revenue,net                                     706,869        1.8%          1.8%        23.4%
     Other income                              467,934         337,379        1.0%          0.8%        38.7%
                                          ------------    ------------
Total Revenue                               48,367,897      40,336,247      100.0%        100.0%        19.9%
                                          ============    ============
Commission and advisory expenses                            32,416,497       79.6%         80.4%        18.8%

          Gross Profit                       9,872,273       7,919,750       20.4%         19.6%        24.7%

Operating Expenses:

     Advertising                               626,575         583,438        1.3%          1.4%         7.4%
     Communications                            460,561         379,756        1.0%          0.9%        21.3%
                                          ------------    ------------
Total Selling Expenses                       1,087,136         963,194        2.2%          2.4%        12.9%

     Compensation and benefits                               4,065,595        9.6%         10.1%        14.5%
     Regulatory, legal and professional                      1,049,054        5.1%          2.6%       137.0%
     Occupancy                                 492,310         433,891        1.0%          1.1%        13.5%
     Other administrative expenses                             659,206        1.4%          1.6%         6.1%
                                          ------------    ------------
Total Administrative Expenses                8,334,658       6,207,746       17.2%         15.4%        34.3%

Total Operating Expenses                     9,421,794       7,170,940       19.5%         17.8%        31.4%
                                          ============    ============
          Operating Income                     450,479         748,810        0.9%          1.9%       -39.8%

Other Income and Expenses:

    Gain on sale of asset                      (91,313)

     Interest expense                           27,843          32,091        0.1%          0.1%       -13.2%
                                          ------------    ------------
Total Other Income and Expenses                (63,470)        (32,091)      -0.1%          0.1%      -297.8%
                                          ------------    ------------
Income before taxes                            513,950         716,719        1.1%          1.8%       -28.3%

Provision for income taxes                     248,076         306,977        0.5%          0.8%       -19.2%
                                          ------------    ------------
Net Income                                $    265,874    $    409,742        0.5%          1.0%       -35.1%
                                          ============    ============
</TABLE>


                                       24
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

NINE  MONTHS ENDED  DECEMBER 31, 2005 COMPARED WITH NINE MONTHS
ENDED DECEMBER 31, 2004:

Results  reported for the current  nine-month  period compared to the prior nine
month period are discussed below. Explanations for comparative variances in year
to date  results  may differ from the  explanations  for  comparative  quarterly
results discussed above. If no significant  differences in explaining  variances
in the year to date results are mentioned  below,  please refer to the quarterly
results analysis for an explanation of such variances.


REVENUES

   Revenues for nine months ended  December 31, 2005  increased by $8.03 million
or 19.9% compared to revenues for nine months ended December 31, 2004.  Revenues
from  commissions  increased  by $6.82  million or 19.0% and fees from  advisory
services increased by $1.06 million or 39.0% for the same comparative periods.

  Revenue  growth  continues  to be  supported  by  our  efforts  in  recruiting
sophisticated and experienced representatives. Revenues from new recruits during
the current  period was $2.18  million  compared  to $1.22  million in the prior
period.  $0.64  million  or 66% of this $.96  million  increase,  and 53% of all
current period revenues from recruits,  were derived from relatively high margin
brokerage services. Our progress in recruiting representatives who are qualified
and  likely to engage  in  trading  services  is  further  borne out by a 123%
increase for nine months ended 2005 compared to nine months ended 2004. Total
revenues from recruiting was up 79% for the comparative periods.


<TABLE>
<CAPTION>

Recruiting Statistics                        Nine Months Ended December 31,    Change     Percent Change
                                                    2005         2004      2005 vs. 2004  2005 vs. 2004

Product Type
<S>                                              <C>          <C>           <C>                <C>
Mutual Funds,Variable Annuities,
  Direct Participation Programs, Other           $  830,072   $  555,697    $274,375           49%
Trading Services                                  1,152,605      516,537    $636,068          123%
Advisory Services                                   198,230      144,741    $ 53,489           37%
                                                 -----------  -----------   --------      --------
Total                                            $2,180,907   $1,216,975    $963,932           79%
                                                 ===========  ===========   ========      ========
Representatives Recruited                               179          158
</TABLE>


   COMMISSIONS.  Compared to the prior  period,  trading  revenues  increased by
$2.31  million or 21.6%.  Commissions  from mutual  funds,  variable  annuities,
direct participation  programs, and other programs increased by $4.51 million or
17.9%.  Direct  Participation  program  revenues  increased by $1.05  million or
25.3%.


                               Commission Revenue

<TABLE>
<CAPTION>
                                               Nine Months Ended December 31,   Change in %
                                         2005           2004      2005 vs 2004  2005 vs 2004

Product Type
<S>                                <C>             <C>            <C>           <C>
Variable Annuities                 $ 14,946,320    $ 13,234,330   $ 1,711,990   12.94%
Trading                              12,968,013      10,662,154     2,305,859   21.63%
Mutual Funds                          8,461,624       6,751,752     1,709,872   25.32%
Direct Participation Programs         5,183,149       4,135,820     1,047,329   25.32%
Other                                 1,112,583       1,069,417        43,166    4.04%
                                   -------------   -------------  ------------
Total Commission Revenue             42,671,689      35,853,473   $ 6,818,216   19.02%
                                   =============   =============  ============
</TABLE>



                                       25
<PAGE>

INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

ADVISORY  FEES.  Increases in fees from advisory  services  mainly came from our
rep-directed  asset-managed  program  where a $.73  million  or 47.4%  growth in
advisory  fees was  achieved.  Revenues  from our  fund-managed  and  separately
managed  allocation  models  increased by $.22 million or 32.6%.  Revenues  from
asset managed programs provided from third-party  investment  advisors increased
by $.09  million or 15.0%.  Fees from  advisory  services  in our  mutual  funds
remained  relatively  flat due to the  termination of the  management  agreement
associated with the two mutual funds in October 2005.

  OTHER FEE INCOME. Other fee income for the current period when compared to the
prior  period  decreased  by $0.14  million  or 19.3%.  This  resulted  from the
additional  collection  of revenue to cover the  increase in  insurance  premium
costs during nine months  ended  December  31,  2004.  There were no  additional
collections during the nine months ended December 31, 2005.

GROSS MARGINS

  Our gross margin increased by $1.95 million or 24.7%, of which trading made up
$1.25 million of the increase and fees from advisory  services  comprised  $0.39
million.  It is important to note that in the prior period we had  experienced a
trading error that reduced our margin in trading by $0.21 million.

<TABLE>
<CAPTION>
                                                                                                      % of Total         Gross
                                                          Gross Margin      Gross Margin Retention   Gross Margin        Margin
                                                        Nine Months Ended       Nine Months Ended   Nine Months Ended    Percent
                                                            December 31,          December 31,        December 31,       Change
                                                     --------------------------  --------------    ------------------   -----------
                                                       2005             2004      2005     2004     2005      2004        vs. 2004
                                                     ------------   -----------  ------   ------   ------   ---------   ----------
    Revenue Source

<S>                                                  <C>            <C>            <C>      <C>       <C>       <C>          <C>
    Commission - Mutual Funds and Variable Annuities $ 3,497,355    $ 3,193,451    11.9%    12.7%     35.4%     40.3%        9.5%

    Commission - Trading                               2,883,151      1,637,757    22.2%    15.4%     29.2%     20.7%        76.0%

    Commission - Insurance Products                      224,761        266,427    94.8%    99.1%      2.3%      3.4%       -15.6%

    Commission - Underwriting                              4,407          5,632    10.0%    13.2%      0.0%      0.1%       -21.8%

    Advisory Services                                  1,557,622      1,171,458    39.7%    44.7%     15.8%     14.8%        33.0%

    Licensing                                            414,479        596,515   100.0%   100.0%      4.2%      7.5%       -30.5%

    Marketing                                            872,173        706,869     n/a      n/a       8.8%      8.9%        23.4%

    Other income                                         418,325        341,641     n/a      n/a       4.2%      4.3%        22.4%
                                                     ------------   -----------
    Total Gross Margin                               $ 9,872,273    $ 7,919,750     n/a      n/a     100.0%    100.0%        24.7%
                                                     ============   ===========
</TABLE>


COMMISSION EXPENSES

 The commission payout decreased  marginally from 82.5% to 81.9% of commissioned
revenues.

OPERATING EXPENSES

   Operating expenses increased by $2.25 million or 31.4% for the current period
when compared to the prior period.

   Compensation  and  benefits  increased by $0.6 million or 14.5 %. The company
has invested resources toward acquiring  additional  personnel in its marketing,
trading/operations,  and advisory services departments to increase overall sales
and improve services,  with an emphasis on revenue growth within the trading and
advisory services sectors.


                                       26
<PAGE>

<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

   Regulatory,  legal and  professional  expenses grew by $1.44 million or 137%.
The largest  component of this increase was an $0.88 million or 367% increase in
non-in house legal fees,  $0.39 million of which was incurred in connection with
the  Massachusetts  Proceedings  described  in detail in Part II,  Item 1 "Legal
Proceedings". An additional $.38 million of this increase arose from three other
actions that management  believes,  with advice of counsel,  are atypical of the
exposures  likely  to be  presented  by our  ongoing  operations.  Two of  these
atypical  actions also  contributed  $0.51  million of the $0.54 million or 154%
increase in lawsuit settlement expenses.

   We experienced a $0.04 million increase in non-in house accounting  expenses,
primarily  audit-related,  while regulatory and professional  expenses  remained
essentially flat at $0.33 million.

   Occupancy   expenses   increased   by  $0.06   million  or  13.5%  and  other
administrative expenses went up by $0.04 million or 6.1%.

OPERATING INCOME

   Operating income decreased by $0.30 million or 40% compared to the nine-month
period ended  December 31,  2004.Operating  income  decreased for the nine month
comparative period resulting primarily from a 31.4% increase or $2.25 million in
operating  expenses  offset by a 24.7% or $1.95 million  increase from our gross
profit.  If we exclude the .77 million in legal  expenses we incurred from cases
that were uncharacteristic, we would have realized a .47 million dollar increase
to operating income.


NET INCOME

   Net income  decreased by $0.14 million  compared to the prior period due to a
$0.06  million  decrease in provision  for income taxes and a $0.09  million net
gain from the sale of an asset.  See  Condensed  Footnote 5 to the  Consolidated
Financial Statements.


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 have  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 several representatives and
their clients are on summer vacation),  and relatively high profitability during
the fourth fiscal quarter (when several  representatives and their clients start
a new business and investment year).

   In addition to the annual profitability  cycle,  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 such as the NASD or
the SEC. A key to this  approach is ensuring  that  adequate  controls  over our
operations and those of our  representatives  are implemented  and  periodically
updated.  As part of this effort,  substantial  resources have been committed to
enhancing the  capabilities of our compliance team members,  whose tasks include
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
sales representatives and staff.

   As of December 31, 2005,  cash and cash  equivalents  totaled $9.0 million as
compared to $8.6  million as of March 31, 2005.  Working  capital as of December
31, 2005 was $8.0 million as compared to $9.1 million as of March 31, 2005.  The
ratio of current assets to current  liabilities was 2.42 to 1 as of December 31,
2005 as compared to 3.31 to 1 as of March 31, 2005.


                                       27
<PAGE>

INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================

   Operations  provided $1.9 million for the nine months ended December 31, 2005
as compared to providing  $1.3  million cash for nine months ended  December 31,
2004.  Factors  contributing to this increase of $0.6 million in cash flows from
operations  were as  follows:  the sale of our  mutual  funds  contributed  $0.5
million and an increase in collections from our  representatives  for regulatory
and licensing purposes of $0.1 million.

   Cash outflows from investing activities for the current period comprised $1.4
million in which .3 million was for  purchasing  equipment as well as technology
and leasehold  improvements.  $0.4 million was used to grant loans to registered
representatives to help grow their businesses. In addition, we had a $.15
million cash outflow from an investment in a private equity.

   Finally,  a  $0.1  million  cash  dividend  was  paid  on  May  16,  2005  to
shareholders of record as of May 2, 2005.

   Cash  disbursements   contributing  significantly  to  current  quarter  cash
outflows  included $0.176 million for legal related matters,  $0.129 million for
compensation  and  benefits,  $0.14  million for upcoming  marketing  events and
programs,  and $0.045  million for computer  equipment and software.  Management
anticipates  that the current  period net cash outflows are not  indicative of a
future cash outflow trend but, rather,  reflected payment on an atypical lawsuit
that was not  covered by our  insurance  policy.  However,  those  disbursements
during the current quarter did have a significant 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
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.  As of December 31, 2005, ICC had net capital of $0.5 million (i.e., an
excess of $0.04  million) and a 13.93 to 1 net capital  ratio as compared to net
capital of  approximately  $1.7 million (i.e.,  an excess of $1.4 million) and a
2.43 to 1 net capital ratio as of March 31, 2005.

   The company's legal accrual increased to $0.79 million from $0.40 million
as a result of the Massachusetts proceedings against the Company. During the
current period the increase in our legal accrual had impacted our net capital
ratio and excess net capital for ICC. 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 condensed footnote 3 to our Condensed Consolidated
Financial Statements .

    The  Company  currently  has ample  cash to cover  additional  accruals  and
disbursements  resulting  from these  proceedings.  Despite these atypical legal
proceedings  that increased our legal accrual,  the Company  remains  focused on
committing their resources necessary for continued growth.

    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 have averaged $0.08 million per quarter during the
duration of this current 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 $0.09  million for the quarter ended
December 31,2005 versus quarter ended December 31,2004. See condensed footnote 5
to our Condensed Consolidated Financial Statements.

   By  comparison,  for the nine months ended  December  31, 2004,  cash inflows
primarily  came from the  collection of $0.4 million of accounts  receivable and
$1.6 million in  collections  for  regulatory  and  licensing  activities.  Cash
outflows included $0.5 million for payment of taxes, $0.6 million for payment of
commissions,  $0.3 million in accrued  expenses,  $0.2 million for equipment and
technology and $0.15 million to the NASD to pay in full a note.


                                       28
<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


   ICC made a business  decision  in fiscal year ending 2003 to conclude an NASD
investigation into supervisory procedures relating to the period of January 2000
through July of 2002. While we considered  disputing the allegations in a formal
proceeding, we estimated the cost of doing so to be prohibitive. Furthermore, we
sought  to  avoid  disruption  of our  operations.  Accordingly,  while  neither
admitting nor denying the  allegations,  we consented to a number of findings in
order to resolve the matter in its initial  stages.  Repayment of the  resulting
settlement  note to NASD did not have a material effect on cash flow at any time
during the  current  period as the note was fully paid on August 19,  2004.  The
Company has  implemented  and maintains an adequate  system of  supervisory  and
regulatory  procedures  and does not foresee any  material  deficiencies  in the
future in this regard.

<TABLE>
<CAPTION>
Contractual Obligations                     Payments Due by period
-----------------------------------------------------------------------------------------------------------------

                                Total          Less than 1 year     1-3 years    4-5 years      After 5 years
Fiscal Years                                         2006           2007-2009    2010-2011   2012 and thereafter
-----------------------------------------------------------------------------------------------------------------
<S>                            <C>                 <C>               <C>             <C>              <C>
Operating leases:              763,023             105,391           657,632         0                0

                              -----------------------------------------------------------------------------------
Total Contractual Obligations $763,023             $105,391         $657,632         0                0
                              -----------------------------------------------------------------------------------
</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 2006 and 2009. Options to renew for additional
terms are  included  under the lease  agreements.  During the current  period we
entered  into a lease  agreement  for our new  investment  center in  Braintree,
Massachusetts.  The total  minimum  rental  due in future  periods  under  these
existing agreements is as follows as of December 31, 2005:

          Year ending March 31, 2006                      $ 105,391
          Year ending March 31, 2007                        345,254
          Year ending March 31, 2008                        263,581
          Year ending March 31, 2009                         48,797
                                                         ----------
          Total minimum lease payments                     $763,023
                                                         ==========


   Certain  leases  contain  provisions  for  minimum  lease  payments  that are
contingent upon increases in real estate taxes. Total lease expenses amounted to
$0.1  million for the quarter  ended  December 31, 2005 and $0.1 million for the
quarter ended December 31, 2004.  Related party leases amounted to $0.06 million
for the Arlsburg Trust and Investors Realty,  LLC for the quarter ended December
31,  2005.  Lease  expenses  were $0.3 million for the  nine-month  period ended
December 31, 2005 versus $0.3 million for the  nine-month  period ended December
31,  2004.  Related  party leases  amounted to $0.18  million for the nine month
period ended December 31, 2005.

RISK MANAGEMENT

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


                                       29
<PAGE>

INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


MARKET RISK


   Market risk is the risk attributable to common macroeconomic  factors such as
gross domestic product, employment,  inflation,  interest rates, budget deficits
and sentiment.  Consumer and producer sentiment is critical to our business. The
level of consumer  confidence  determines  an investor's  willingness  to spend,
especially  in the financial  markets.  It is this  willingness  to spend in the
financial markets that is key to our business.  A shift in spending in this area
could negatively  impact the Company.  However,  senior management is constantly
monitoring  these economic trends in order to enhance 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  and  implemented  specific  policies and  procedures
designed to identify and manage  operational risk. These policies and procedures
are  reviewed  and  updated on a  continuing  basis to ensure  that this risk is
minimized.

REGULATORY AND LEGAL RISK

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


                                       30
<PAGE>

<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================




                            PART II OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


MASSACHUSETTS PROCEEDINGS

By  administrative  complaint  dated November 16, 2005, the Securities  Division
(the  "Division") of the Secretary of the  Commonwealth  of  Massachusetts  (the
"State")  brought  an  adjudicatory   proceeding   against   Investors   Capital
Corporation  ("ICC")  alleging  violation of its supervisory  obligations  under
State  securities laws in connection  with a handful of sales of  equity-indexed
annuities  by  a  few  of  ICC's  independent  registered  representatives.  The
complaint,   which   claims  that  ICC  failed  to  properly   supervise   these
representatives,  thereby allowing allegedly unsuitable sales of these insurance
products,  seeks an order instructing ICC to cease such violations and to pay an
unspecified administrative fine.

ICC did not recommend, encourage, assist, receive any remuneration from, or have
any   contemporaneous   knowledge   of   these   allegedly   unsuitable   sales.
Equity-indexed  annuities  are  regulated by the State's  Insurance  Department,
which has approved the sale of upwards of 200 versions of this type of insurance
product by a number of insurance companies.

Based upon explicit statutory  provisions and established  judicial and industry
precedent,  it is our principled  position that these insurance products are not
and never have been  considered  securities  under  State and  federal  laws and
regulation  or  National   Association  of  Securities   Dealers  (NASD)  rules.
Accordingly,  the  mere  fact  that  ICC is  the  registered  broker-dealer  for
SECURITIES  business  conducted by its  registered  independent  representatives
neither  obligates  ICC to  supervise  the sale of these  insurance  products by
independent  representatives  nor  empowers  the Division to require or regulate
such supervision by ICC. Nonetheless, as a matter of good corporate citizenship,
ICC since the summer of 2005 has been in the  forefront of a gathering  industry
trend  towards  voluntarily  implementing  procedures  to supervise the sales of
equity-indexed  annuities by independent  representatives,  and ICC welcomes the
opportunity to implement these changes in partnership with the Division.

An action  commenced by ICC on December 14, 2005 in the State's  Suffolk  County
Superior Court to enjoin the  administrative  proceeding brought by the Division
has been  effectively  stayed  while ICC  pursues  its  remedies  in the  latter
proceeding.  No  substantive  hearings  have  been  scheduled  to date in either
proceeding, the outcomes and impact of which cannot be determined at the present
time.



ITEMS 2 - 5.  Not applicable.



                                       31
<PAGE>

<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================


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     Purchase Agreement Between Eastern Point Advisors, Inc.
         and Dividend Growth Advisors, LLC
         dated October 24, 2005 .................................(4)(Exh. 10.4)

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
     Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
     2005.

   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.



                                       32
<PAGE>

<PAGE>
INVESTORS CAPITAL HOLDINGS LTD-10Q                       QUARTER ENDED 12/13/05
================================================================================




                                   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
                                                -------------------------
                                                    TIMOTHY B. MURPHY
                                                 Chief Financial Officer


                                                 Date: February 14, 2006


                                       33