|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------



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



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

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



|For the quarterly period ended September 30, 2009
|-------------------------------------------------



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



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

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

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



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

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



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

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



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

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

Number of shares outstanding of our only class of common stock as of November 10, 2009: 6,592,985

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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--------------------------------------------------------------------------------



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



|PART I--------------------------------------------------------------------------------FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSISITEM 4T. CONTROLS AND PROCEDURESPART II--------------------------------------------------------------------------------OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 6. EXHIBITSSIGNATURES
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

|                                                                   |                                                   |                    |                             |               
|------------------------------------------------------------------ | ------------------------------------------------- | ------------------ | --------------------------- | --------------
|PART I                                                             | FINANCIAL INFORMATION                            
|                                                                  
|ITEM 1.                                                            | FINANCIAL STATEMENTS                             
|                                                                   | INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES
|                                                                   | CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|                                                                  
|                                                                   |                                                   | September 30, 2009 |                             | March 31, 2009
|Assets                                                             |                                                   |                    |                             |               
|Current assets                                                     |                                                   |                    |                            
|Cash and cash equivalents                                          | $                 4,852,695                       |                    | $                 6,151,613
|Deposit with clearing organization, restricted                     | 175,000                                           |                    | 175,000                    
|Accounts receivable                                                | 6,020,319                                         |                    | 5,198,575                  
|Accounts receivable-Fidelity Bond                                  | -                                                 |                    | 956,223                    
|Note receivable - (current)                                        | 8,730                                             |                    | 8,674                      
|Loans receivable from registered representatives, net of allowance | 667,980                                           |                    | 737,571                    
|Prepaid income taxes                                               | 28,804                                            |                    | 295,608                    
|Marketable securities, at market value                             | 18,032                                            |                    | 85,436                     
|Prepaid expenses                                                   | 572,575                                           |                    | 858,679                    
|                                                                   |                                                   | 12,344,135         |                             | 14,467,379    
|                                                                  
|Property and equipment, net                                        | 790,247                                           |                    | 950,620                    
|                                                                  
|Long-term investments                                              |                                                   |                    |                            
|Loans receivable from registered representatives (long-term)       | 149,309                                           |                    | 129,358                    
|Note receivable                                                    | 747,617                                           |                    | 747,617                    
|Investments                                                        |                                                   | 160,723            |                             | 127,143       
|Non-qualified deferred compensation investment                     | 812,346                                           |                    | 533,665                    
|Cash surrender value life insurance policies                       | 482,008                                           |                    | 406,089                    
|                                                                   |                                                   | 2,352,003          |                             | 1,943,872     
|Other assets                                                       |                                                   |                    |                             |               
|Deferred tax asset, net                                            | 780,630                                           |                    | 1,097,952                  
|Other assets                                                       |                                                   | 74,335             |                             | 44,511        
|                                                                   |                                                   | 854,965            |                             | 1,142,463     
|                                                                  
|TOTAL ASSETS                                                       | $               16,341,350                        |                    | $               18,504,334 
|                                                                  
|Liabilities and stockholders' equity                               |                                                   |                    |                            
|Current liabilities                                                |                                                   |                    |                            
|Accounts payable                                                   | $                 1,147,310                       |                    | $                 2,029,286
|Accrued expenses                                                   | 884,243                                           |                    | 2,347,761                  
|Note payable                                                       |                                                   | 200,689            |                             | 1,044,805     
|Unearned revenues                                                  | 168,717                                           |                    | 94,259                     
|Commissions payable                                                | 3,105,882                                         |                    | 2,860,093                  
|Securities sold, not yet purchased, at market value                | 506                                               |                    | 7,056                      
|                                                                   |                                                   | 5,507,347          |                             | 8,383,260     
|Long-term liabilities                                              |                                                   |                    |                            
|Non-qualified deferred compensation                                | 828,035                                           |                    | 541,993                    
|                                                                   |                                                   | 828,035            |                             | 541,993       
|                                                                  
|                                                                   | Total liabilities                                 | 6,335,382          |                             | 8,925,253     
|                                                                  
|Commitments and contingencies(Note 3)                              |                                                   |                    |                            
|                                                                  
|Stockholders' equity:                                              |                                                   |                    |                            
|Common stock, $.01 par value, 10,000,000 shares authorized;        |                                                   |                    |                            
|6,598,169 issued and 6,594,284 outstanding at September 30, 2009;  |                                                   |                    |                            
|6,570,177 issued and 6,566,292 outstanding at March 31, 2009.      | 65,982                                            |                    | 65,702                     
|Additional paid-in capital                                         | 11,989,144                                        |                    | 11,852,467                 
|Accumulated deficit                                                | (2,027,390)                                       |                    | (2,285,622)                
|Less: Treasury stock, 3,885 shares at cost                         | (30,135)                                          |                    | (30,135)                   
|Accumulated other comprehensive income                             | 8,367                                             |                    | (23,331)                   
|                                                                   | Total stockholders' equity                        | 10,005,968         |                             | 9,579,081     
|                                                                  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         | $               16,341,350                        |                    | $               18,504,334 

See Notes to Condensed Consolidated Financial Statements.

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| | Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
| | ------------------------------------------------------------------------------------

|                                                                               |                                 |  |                                  
|------------------------------------------------------------------------------ | ------------------------------- |  | ---------------------------------
|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES                             
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                               
|THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)                    
|                                                                              
|                                                                               | 2009                            |  | 2008                             
|Revenue:                                                                       |                                 |  |                                  
|Commissions                                                                    | $             15,357,927        |  | $             19,464,072         
|Advisory fees                                                                  | 2,871,553                       |  | 3,032,044                        
|Other fee income                                                               | 106,661                         |  | 140,397                          
|Marketing revenue                                                              | 486,232                         |  | 295,239                          
|Interest, dividend and investment                                              | 113,426                         |  | 171,773                          
|Total revenue                                                                  | 18,935,799                      |  | 23,103,525                       
|                                                                              
|Commission and advisory fee expenses                                           | 15,136,218                      |  | 18,639,678                       
|Gross profit                                                                   | 3,799,581                       |  | 4,463,847                        
|                                                                              
|Operating expenses:                                                            |                                 |  |                                  
|Advertising                                                                    | 210,520                         |  | 327,682                          
|Communications                                                                 | 195,237                         |  | 397,631                          
|Selling expense                                                                | 405,757                         |  | 725,313                          
|                                                                              
|Compensation and benefits                                                      | 1,817,574                       |  | 2,478,485                        
|Regulatory, legal and professional                                             | 511,359                         |  | 756,282                          
|Occupancy                                                                      | 210,591                         |  | 269,064                          
|Other administrative                                                           | 419,368                         |  | 465,038                          
|Interest expense                                                               | 6,034                           |  | 9,741                            
|Administrative Expense                                                         | 2,964,926                       |  | 3,978,610                        
|                                                                              
|Total operating expense                                                        | 3,370,683                       |  | 4,703,923                        
|                                                                              
|Operating income (loss) before taxes                                           | 428,898                         |  | (240,076)                        
|Provision for income taxes                                                     | 222,202                         |  | 251,850                          
|Net income (loss)                                                              | $                  206,696      |  | $               (491,926)        
|                                                                              
|Earnings per common share:                                                     |                                 |  |                                  
|Basic earnings (loss) per common share                                         | $                        0.03   |  | $                     (0.08)     
|Diluted earnings per common share                                              | $                        0.03   |  | N/A                              
|                                                                              
|Dividends per common share:                                                    |                                 |  |                                  
|Basic earnings per common share                                                | $                             - |  | $                               -
|Diluted earnings per common share                                              | $                             - |  | $                               -
|                                                                              
|Share data:                                                                    |                                 |  |                                  
|Weighted average shares used in basic earnings per common share calculations   | 6,499,394                       |  | 6,374,066                        
|Incremental shares from assumed exercise of stock options and restrictedshares | 246,564                         |  | 539,074                          
|Weighted average shares used in diluted earnings per common sharecalculations  | 6,745,958                       |  | 6,913,140                        

See Notes to Condensed Consolidated Financial Statements.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

|                                                                               |                                 |  |                                
|------------------------------------------------------------------------------ | ------------------------------- |  | -------------------------------
|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES                             
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                               
|SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008                                  
|(UNAUDITED)                                                                   
|                                                                              
|                                                                               | 2009                            |  | 2008                           
|Revenue:                                                                       |                                 |  |                                
|Commissions                                                                    | $             31,070,736        |  | $             38,738,231       
|Advisory fees                                                                  | 5,303,741                       |  | 6,046,721                      
|Other fee income                                                               | 248,338                         |  | 278,044                        
|Marketing revenue                                                              | 704,762                         |  | 606,465                        
|Interest, dividend and investment                                              | 223,057                         |  | 332,232                        
|Total revenue                                                                  | 37,550,634                      |  | 46,001,693                     
|                                                                              
|Commission and advisory fee expenses                                           | 30,250,193                      |  | 37,224,852                     
|Gross profit                                                                   | 7,300,441                       |  | 8,776,841                      
|                                                                              
|Operating expenses:                                                            |                                 |  |                                
|Advertising                                                                    | 392,882                         |  | 764,905                        
|Communications                                                                 | 345,856                         |  | 635,049                        
|Selling expense                                                                | 738,738                         |  | 1,399,954                      
|                                                                              
|Compensation and benefits                                                      | 3,489,510                       |  | 4,999,938                      
|Regulatory, legal and professional                                             | 1,126,983                       |  | 1,839,981                      
|Occupancy                                                                      | 439,707                         |  | 571,199                        
|Other administrative                                                           | 769,853                         |  | 766,814                        
|Interest expense                                                               | 16,614                          |  | 21,598                         
|Administrative expense                                                         | 5,842,667                       |  | 8,199,530                      
|                                                                              
|Total operating expenses                                                       | 6,581,405                       |  | 9,599,484                      
|                                                                              
|Operating income (loss) before taxes                                           | 719,036                         |  | (822,643)                      
|Provision (benefit) for income taxes                                           | 460,804                         |  | (56,173)                       
|Net income (loss)                                                              | $                  258,232      |  | $              (766,470 )      
|                                                                              
|Earnings per common share:                                                     |                                 |  |                                
|Basic earnings (loss) per common share                                         | $                        0.04   |  | $                     (0.12)   
|Diluted earnings per common share                                              | $                        0.04   |  | N/A                            
|                                                                              
|Dividends per common share:                                                    |                                 |  |                                
|Basic earnings per common share                                                | $                             - |  | $                             -
|Diluted earnings per common share                                              | $                             - |  | $                             -
|                                                                              
|Share data:                                                                    |                                 |  |                                
|Weighted average shares used in basic earnings per common sharecalculations    | 6,490,974                       |  | 6,386,828                      
|Incremental shares from assumed exercise of stock options and restrictedshares | 242,054                         |  | 560,237                        
|Weighted average shares used in diluted earnings per common sharecalculations  | 6,733,028                       |  | 6,947,065                      
|                                                                               |                                 |  |                                
|                                                                               |                                 |  |                                
|See Notes to Condensed Consolidated Financial Statements.                     



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| | Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
| | ------------------------------------------------------------------------------------

|                                                                     |                |                       |                     |           |                     |                      |                       |                    
|-------------------------------------------------------------------- | -------------- | --------------------- | ------------------- | --------- | ------------------- | -------------------- | --------------------- | -------------------
|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES                   
|CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)            
|                                                                     | Common Stock   |                       |                     |           |                     | Accumulated          |                      
|                                                                     | $.01 Par Value | Additional            | Comprehensive       | Retained  |                     | Other                | Total                
|                                                                     | Number of      | Carrying              | Paid-In             | Income    | Earnings            | Treasury             | Comprehensive         | Stockholders'      
|                                                                     | Shares         | Amount                | Capital             | (loss)    | (Deficit)           | Stock                | Income (Loss)         | Equity             
|                                                                     |                |                       |                     |           |                     |                      |                       |                    
|Balance at April 1, 2008                                             | 6,535,871      | $              65,359 | $        10,886,381 |           | $         (455,623) | $           (30,135) | $             28,674  | $       10,494,656 
|Stock-based compensation:                                            |                |                       |                     |           |                     |                      |                       |                    
|Exercise of stock options                                            | 34,760         | 347                   | 121,399             |           |                     |                      |                       | 121,746            
|Amortization of deferred compensation                                |                |                       | 471,179             |           |                     |                      |                       | 471,179            
|Issuance of common stock under plans                                 | 2,000          | 20                    | 4,610               |           |                     |                      |                       | 4,630              
|Comprehensive income:                                                |                |                       |                     |           |                     |                      |                       |                    
|Net loss                                                             |                |                       |                     | (766,470) | (766,470)           |                      |                       |                    
|Other comprehensive income:                                          |                |                       |                     |           |                     |                      |                       |                    
|Unrealized gain on securities:                                       |                |                       |                     |           |                     |                      |                       |                    
|Unrealized holding gains arising during                              |                |                       |                     | (17,269)  |                     |                      |                       |                    
|the period, no tax effect                                            |                |                       |                     |           |                     |                      |                       |                    
|Other comprehensive loss                                             |                |                       |                     | (17,269)  |                     |                      | (17,269)              |                    
|Comprehensive loss                                                   |                |                       |                     | (783,739) |                     |                      |                       | (783,739)          
|                                                                     |                |                       |                     |           |                     |                      |                       |                    
|Balance at September 30, 2008                                        | 6,572,631      | $              65,726 | $        11,483,569 | -         | $       (1,222,093) | $           (30,135) | $             11,405  | $       10,308,472 
|Balance at April 01, 2009                                            | 6,570,177      | $              65,702 | $        11,852,467 |           | $       (2,285,622) | $           (30,135) | $           (23,331)  | $         9,579,081
|Stock-based compensation:                                            |                |                       |                     |           |                     |                      |                       |                    
|Amortization of deferred compensation                                |                |                       | 136,957             |           |                     |                      |                       | 136,957            
|Issuance of common stock under plans                                 | 28,701         | 287                   | (287)               |           |                     |                      |                       | -                  
|Cancelled restricted shares                                          | (709)          | (7)                   | 7                   |           |                     |                      |                       | -                  
|Comprehensive income:                                                |                |                       |                     |           |                     |                      |                       |                    
|Net income                                                           |                |                       |                     | 258,232   | 258,232             |                      |                       |                    
|Other comprehensive income:                                          |                |                       |                     |           |                     |                      |                       |                    
|Unrealized gain on securities:                                       |                |                       |                     |           |                     |                      |                       |                    
|Unrealized holding gains arising during                              |                |                       |                     | 31,698    |                     |                      |                       |                    
|the period, no tax effect                                            |                |                       |                     |           |                     |                      |                       |                    
|Other comprehensive income                                           |                |                       |                     | 31,698    |                     |                      | 31,698                |                    
|Comprehensive income                                                 |                |                       |                     | 289,930   |                     |                      |                       | 289,930            
|                                                                     |                |                       |                     |           |                     |                      |                       |                    
|Balance at September 30, 2009                                        | 6,598,169      | $              65,982 | $        11,989,144 | -         | $       (2,027,390) | $           (30,135) | $               8,367 | $       10,005,968 
|                                                                     |                |                       |                     |           |                     |                      |                       |                    
|                                                                     |                |                       |                     |           |                     |                      |                       |                    
|See Notes to Condensed Consolidated Financial Statements            



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| | Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
| | ------------------------------------------------------------------------------------

|                                                                                 |                             |  |                                
|-------------------------------------------------------------------------------- | --------------------------- |  | -------------------------------
|INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES                               
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                 
|SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)                        
|                                                                                
|                                                                                 | **2009**                    |  | 2008                           
|Cash flows from operating activities:                                            |                             |  |                                
|Net income (loss)                                                                | $                  258,232  |  | $             ( 766,470 )      
|Adjustments to reconcile net income (loss) to net cash                           |                             |  |                                
|(used in) provided by operating activities:                                      |                             |  |                                
|Depreciation and amortization                                                    | 175,300                     |  | 194,928                        
|Loss on disposal of equipment                                                    | 1,200                       |  | -                              
|Amortization of discount on U.S. Treasury note                                   | -                           |  | (1,955)                        
|Forgivable loan principal charged to commission expense                          | 71,727                      |  | 32,450                         
|Allowance for doubtful accounts on loans receivable (registered representatives) | (32,846)                    |  | 95,542                         
|Valuation allowance income taxes                                                 | 102,405                     |  | -                              
|Deferred taxes                                                                   | 214,917                     |  | (108,597)                      
|Stock-based compensation                                                         | 136,957                     |  | 475,809                        
|Unrealized loss in marketable securities                                         | 696                         |  | 75,574                         
|Non-qualified deferred compensation investment                                   | 7,361                       |  | (7,117)                        
|Market adjustment cash surrender value life insurance policy                     | (21,476)                    |  | 12,479                         
|                                                                                
|Change in operating assets and liabilities:                                      |                             |  |                                
|Accounts receivable                                                              | (821,744)                   |  | (331,562)                      
|Accounts receivable - Fidelity Bond                                              | 956,223                     |  | -                              
|Loans receivable from registered representatives                                 | 10,759                      |  | (153,107)                      
|Prepaid expenses and other assets                                                | 256,280                     |  | 67,955                         
|Prepaid income taxes                                                             | 266,804                     |  | 722,424                        
|Securities, net                                                                  | 60,158                      |  | (220,840)                      
|Accounts payable                                                                 | (881,976)                   |  | 488,934                        
|Accrued expenses                                                                 | (1,463,518)                 |  | 5,702                          
|Unearned revenues                                                                | 74,458                      |  | 82,599                         
|Commissions payable                                                              | 245,789                     |  | 288,516                        
|Net cash (used in) provided by operating activities                              | (382,294)                   |  | 953,264                        
|                                                                                
|Cash flows from investing activities:                                            |                             |  |                                
|Acquisition of property and equipment                                            | (16,127)                    |  | (103,233)                      
|(Payments) cash surrender value life insurance policies                          | (54,443)                    |  | (36,445)                       
|Note receivable                                                                  | (56)                        |  | (56)                           
|Proceeds from maturity of U.S. Treasury notes                                    | -                           |  | 750,000                        
|Purchase of investments                                                          | (1,882)                     |  | (1,821)                        
|Net cash (used in) provided by investing activities                              | (72,508)                    |  | 608,445                        
|                                                                                
|Cash flows from financing activities:                                            |                             |  |                                
|Payments on note payable                                                         | (844,116)                   |  | (819,438)                      
|Exercise of stock options                                                        | -                           |  | 121,746                        
|Net cash used in financing activities                                            | (844,116)                   |  | (697,692)                      
|                                                                                
|Net (decrease) increase  in cash and cash equivalents                            | (1,298,918)                 |  | 864,017                        
|                                                                                
|Cash and cash equivalents, beginning of period                                   | 6,151,613                   |  | 4,340,082                      
|Cash and cash equivalents, end of period                                         | $               4,852,695   |  | $               5,204,099      
|                                                                                
|Supplemental disclosures of cash flow information:                               |                             |  |                                
|Interest paid                                                                    | $                    16,614 |  | $                      9,034   
|Income taxes paid                                                                | $                    58,731 |  | $                             0
|                                                                                 |                             |  |                                
|                                                                                 |                             |  |                                
|See Notes to Condensed Consolidated Financial Statements.                       



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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



|SEPTEMBER 30, 2009(UNAUDITED)
|-----------------------------

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

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

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

INTERIM FINANCIAL REPORTING:

The accompanying interim unaudited condensed consolidated financial statements of Investors Capital Holdings, Ltd. and its subsidiaries (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Quarterly Report on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all of the adjustments necessary for a fair presentation of the results of the interim periods presented. Operating results for the three and six month period ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending March 31, 2010. The balance sheet at March 31, 2009 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the audited consolidated financial statements and footnotes thereto included in the Companys Annual Report on Form 10-K (the Form 10-K) for the fiscal year ended March 31, 2009 filed with the SEC.

USE OF ESTIMATES AND ASSUMPTIONS:

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

RECLASSIFICATIONS:

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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

Company revenue recognition policies are summarized below.

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

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

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

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

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

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

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

Accounts Receivable  Allowance for Doubtful Accounts

The Companys policy for determining whether a receivable is considered uncollectible is as follows:

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

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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

Income Taxes

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

We provide reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. Reserves related to uncertain tax positions are based on a determination of whether and how much of a tax benefit taken in our tax filings or positions is more likely than not to be realized, assuming that the matter in question will be raised by the tax authorities. Potential interest and penalties associated with such uncertain tax positions are recorded as a component of income tax expense. We believe appropriate provisions for outstanding issues have been made.

RECENTLY ISSUED ACCOUNTING STANDARDS:

In June 2009, the FASB issued FASB ASC 105, Generally Accepted Accounting Principles,which establishes the FASB Accounting Standards Codification as the sole source of authoritative generally accepted accounting principles. Pursuant to the provisions of FASB ASC 105, the Company has updated references to GAAP in its financial statements issued for the period ended September 30, 2009. The adoption of FASB ASC 105 did not impact the Companys financial position or results of operations.

In May, 2009, FASB issued ASCSubsequent Events.This Statement sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This Statement is effective for interim and annual periods ending after June 15, 2009. We evaluated any subsequent events through the date of this filing and concluded there were no material subsequent events requiring disclosure.

In June 2008, the FASB issued FASB ASC 260 which requires unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents to be treated as participating securities and, therefore, included in the earnings allocation in computing earnings per share under the two-class method. It is effective for fiscal years beginning after December 15, 2008 (April 1, 2009 for the Company), and interim periods within those fiscal years. The adoption of FASB ASC 260 did not impact the Companys financial position or results of operations.

NOTE 2 - SEGMENT INFORMATION

The Company evaluates segment performance based on several factors, including operating profit. The Company uses operating profit as a measure of the operating segment performance because it excludes the impact of corporate-driven decisions related to interest expense and income taxes. The Company's reportable segments include broker/dealer and related services offered through ICC and asset management (investment advisory) services offered through ICA and, previously, EPA. The Company's reportable segments are strategic business units that offer different services. They are managed separately because each business requires distinct marketing strategies and varied technological and operational support.

ICC earns commissions as a broker for its customers in the purchase and sale of securities on major exchanges and other public markets. Asset management services generate recurring revenue from fees received on the management of customer accounts.

Our business is presented in segments reflecting the way we make operating decisions and assess performance. 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.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

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.

Effective October 1, 2008, management modified the expense sharing agreement between ICH and ICC to allocate overhead expenses, previously allocated entirely to ICH, separately to the parent and subsidiary. Costs associated with shared personnel are allocated between the two entities based upon time studies and a determination of which entities are the beneficiaries of the services rendered by the personnel. Within ICC, expenses are further allocated between the brokerage and asset management segments as follows: overhead expenses pro rata to revenue, direct full-time and timeshared employee costs based on the segments being served, and other personnel-related expenses pro rata to head count.

Effective July 1, 2009, ICC agreed to reimburse ICH in the form of a management fee for ICH-incurred overhead expenses that are necessary for ICC to effectively conduct its operations. This overhead primarily is in the nature of salaries and professional and legal fees incurred to obtain such services as audit engagements, legal advice, and industry expertise.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

|                                                       |                            |  |                           
|------------------------------------------------------ | -------------------------- |  | --------------------------
|Segment reporting is as follows for the quarter ended: |                            |  |                           
|                                                       | September 30,             
|                                                       | **2009**                   |  | 2008                      
|Non-interest revenues:                                 |                            |  |                           
|ICC brokerage services                                 | $           15,925,453     |  | $           19,843,698    
|ICA asset management services                          | 2,923,825                  |  | 3,088,055                 
|ICH (loss) gain on investment                          | (6,872)                    |  | 4,152                     
|Total                                                  | $           18,842,406     |  | $           22,935,905    
|                                                      
|Interest and dividend income, net:                     |                            |  |                           
|ICC                                                    | $                  91,163  |  | $                165,006  
|ICH                                                    | 2,217                      |  | 2,601                     
|ICH Securities                                         | 13                         |  | 13                        
|Total                                                  | $                   93,393 |  | $                167,620  
|                                                      
|Depreciation and amortization expenses:                |                            |  |                           
|ICC brokerage services                                 | $                   85,991 |  | $                  94,375 
|ICA asset management services                          | 1,167                      |  | 1,167                     
|Total                                                  | $                   87,158 |  | $                  95,542 
|                                                      
|Operating income (loss):                               |                            |  |                           
|ICC brokerage services                                 | $                 342,199  |  | $                 419,659 
|ICA asset management services                          | 213,813                    |  | 357,855                   
|ICH                                                    | (127,127)                  |  | (1,017,603)               
|ICH Securities                                         | 13                         |  | 13                        
|Total                                                  | $                 428,898  |  | $               (240,076) 
|                                                      
|Period end total assets:                               |                            |  |                           
|ICC brokerage services                                 | $            13,130,466    |  | $             13,007,815  
|ICA asset management services                          | 1,391,710                  |  | 1,169,245                 
|ICH                                                    | 2,894,490                  |  | 3,391,899                 
|ICH Securities                                         | 10,213                     |  | 10,162                    
|Corporate items and eliminations                       | (1,085,529)                |  | (427,742)                 
|Total                                                  | $            16,341,350    |  | $             17,151,379  
|                                                      
|Corporate items and eliminations:                      |                            |  |                           
|Inter-company eliminations                             | $              (681,551)   |  | $                (427,742)
|Income taxes                                           | (403,978)                  |  | -                         
|Total                                                  | $           (1,085,529)    |  | $                (427,742)

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

|                                                          |                         |  |                        
|--------------------------------------------------------- | ----------------------- |  | -----------------------
|Segment reporting is as follows for the six months ended: |                         |  |                        
|                                                         
|                                                          | September 30,          
|                                                          | 2009                    |  | 2008                   
|Non-interest revenues:                                    |                         |  |                        
|ICC brokerage services                                    | $          31,925,896   |  | $          39,514,753  
|ICA asset management services                             | 5,428,586               |  | 6,154,708              
|ICH (loss) gain on investment                             | (9,361)                 |  | 7,117                  
|Total                                                     | $          37,345,121   |  | $          45,676,578  
|                                                         
|Interest and dividend income, net:                        |                         |  |                        
|ICC                                                       | $               200,655 |  | $               318,808
|ICH                                                       | 4,832                   |  | 6,282                  
|ICH Securities                                            | 26                      |  | 25                     
|Total                                                     | $               205,513 |  | $               325,115
|                                                         
|Depreciation and amortization expenses:                   |                         |  |                        
|ICC brokerage services                                    | $               172,967 |  | $               192,594
|ICA asset management services                             | 2,333                   |  | 2,334                  
|Total                                                     | $               175,300 |  | $               194,928
|                                                         
|Operating income (loss):                                  |                         |  |                        
|ICC brokerage services                                    | $               966,394 |  | $               315,733
|ICA asset management services                             | 464,508                 |  | 648,119                
|ICH                                                       | (711,892)               |  | (1,786,520)            
|ICH Securities                                            | 26                      |  | 25                     
|Total                                                     | $               719,036 |  | $            (822,643) 
|                                                         
|Period end total assets:                                  |                         |  |                        
|ICC brokerage services                                    | $          13,130,466   |  | $          13,007,815  
|ICA asset management services                             | 1,391,710               |  | 1,169,245              
|ICH                                                       | 2,894,490               |  | 3,391,899              
|ICH Securities                                            | 10,213                  |  | 10,162                 
|Corporate items and eliminations                          | (1,085,529)             |  | (427,742)              
|Total                                                     | $          16,341,350   |  | $          17,151,379  

NOTE 3 - LITIGATION AND REGULATORY MATTERS

In the ordinary course of business, the Company routinely is a defendant in or party to pending and threatened legal actions and proceedings, including actions and arbitrations brought on behalf of various investors. Certain of these actions and proceedings are based on alleged violations of consumer protection, securities and other laws and may involve claims for substantial monetary damages asserted against the Company and its subsidiaries. Also, the Company and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries, investigations and formal administrative proceedings that may result in fines or other negative impact on the Company. ICC, a duly registered broker/dealer and investment advisor, is subject to regulation by the SEC, FINRA, NYSE Amex (formerly the American Stock Exchange) and state securities regulators.

The Company maintains E&O insurance to protect itself from potential damages and/or legal costs associated with certain litigation and arbitration proceedings and, as a result, in the majority of cases the Companys exposure is limited to $100,000 in any one case, subject to policy limitations and exclusions. The maximum exposure in any one case with coverage was $75,000 per the Companys E&O policy through December 30, 2008. The Company also maintains a fidelity bond to protect itself from potential damages and/or legal costs related to fraudulent activities pursuant to which the Companys exposure is usually limited to a $200,000 deductible per case, subject to policy limitations and exclusions.

The Company had accrued expenses of $440,116 and $2,267,522 as of September 30, 2009 and March 31, 2009, respectively related to legal fees and estimated probable settlement costs.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

NOTE 4 - STOCK BASED COMPENSATION

The Company measures and recognizes compensation expense for all share-based awards made to employees and directors to be based on estimated fair values. Under the modified prospective transition method selected by the Company, all equity-based awards granted to employees and existing awards modified are accounted for at fair value with compensation expense recorded as a component of net (loss) income. The Company periodically issues common stock to employees, directors, officers, representatives and other key individuals in accordance with the provisions of the shareholder approved equity compensation plans.

Restricted Stock

Restricted shares of stock granted under theCompanys 2005 Equity Incentive Plan (the 2005 Plan) as of September 30, 2009 have been either fully vested at date of grant or subject to vesting over times periods varying from one to five years after the date of grant, unvested shares being subject to forfeiture in the event of termination of the grantees relationship with the Company, other than for death or disability. The compensation cost associated with restricted stock grants is recognized over the vesting period of the shares and is calculated as the market value of the shares on the date of grant. Restricted shares have been recorded as deferred compensation, which is a component of paid-in capital within stockholders equity on the Companys Consolidated Balance Sheets.

The following activity occurred during the three months ended September 30, 2009:

|                                                                                |          |                               |                  |                      
|------------------------------------------------------------------------------- | -------- | ----------------------------- | ---------------- | ---------------------
|                                                                                |          | Weighted Ave                  | Weighted Average |                      
|                                                                                | Shares   | Stock Price                   | Vested Life      | Fair Value           
|Non-vested at July 1, 2009                                                      | 81,996   | $                        4.08 | 1.48 years       | $             334,544
|Granted                                                                         | 28,701   | $                        2.65 |                  | 76,058               
|Vested                                                                          | (15,576) | $                        4.18 |                  | (65,108)             
|Canceled                                                                        | (376)    | $                        5.02 |                  | (1,888)              
|Non-vested at September 30, 2009                                                | 94,745   | $                        3.63 | 2.01 years       | $             343,924
|                                                                                |          |                              
|The following activity occurred during the six months ended September 30, 2009: |          |                              
|                                                                                |          |                              
|                                                                                |          | Weighted Ave                  | Weighted Average |                      
|                                                                                | Shares   | Stock Price                   | Vested Life      | Fair Value           
|Non-vested at April 1, 2009                                                     | 96,913   | $                        4.11 | 1.66 yrs         | $             398,312
|Granted                                                                         | 28,701   | $                        2.65 |                  | 76,058               
|Vested                                                                          | (30,160) | $                        4.22 |                  | (127,275)            
|Canceled                                                                        | (709)    | $                        4.97 |                  | (3,524)              
|Non-vested at September 30, 2009                                                | 94,745   | $                        3.63 | 2.01 years       | $             343,924

The Companys net income for the three months ended September 30, 2009 includes $33,635 of compensation costs related to the Companys grants of restricted stock to executives and employees, and $34,539 for grants to independent representatives, under the Plan. The Companys net loss for the three months ended September 30, 2008 includes $208,122 of compensation costs related to the Companys grants of restricted stock to executives and employees, and $25,245 for grants to independent representatives, under the Plan.

The Companys net income for the six months ended September 30, 2009 includes $68,818 of compensation costs related to executives and employees, and $68,139 for grants to independent representatives, under the Plan. The Companys net loss for the six months ended September 30, 2008 includes $419,951 of compensation costs related to executives and employees, and $55,858 for grants to independent representatives, under the Plan.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

Stock Options

The following table summarizes information regarding the Company's employee and director fixed stock options as of September 30, 2009 and, 2008:

|                                   |         |                  |      |         |                 
|---------------------------------- | ------- | ---------------- | ---- | ------- | ----------------
|Employee, Director and Officers    | 2009    |                  | 2008
|Fixed Options                      |         | Weighted-Average |      |         | Weighted-Average
|                                   | Shares  | Exercise Price   |      | Shares  | Exercise Price  
|                                  
|Outstanding at beginning of year   | 150,000 | $1.00            |      | 150,000 | $1.00           
|Granted                            | -       |                  |      | -       |                 
|Forfeited                          | -       |                  |      | -       |                 
|Exercised                          | -       |                  |      | -       |                 
|Reclassified(non-employee)         | -       |                  |      | -       |                 
|                                  
|Outstanding at quarter end         | 150,000 | $1.00            |      | 150,000 | $1.00           
|                                  
|Options exercisable at quarter-end | 150,000 |                  |      | 150,000 |                 

The following table summarizes further information about employee and Directors' fixed stock options outstanding as of September 30, 2009:

|                    |             |                     |                    |                |             |                 
|------------------- | ----------- | ------------------- | ------------------ | -------------- | ----------- | ----------------
|Options Outstanding |             | Options Exercisable
|                   
|                    |             |                     | Weighted-Average   |                |             |                 
|Range Of            | Number      |                     | Remaining          |                | Number      | Weighted-Average
|Exercise Prices     | Outstanding |                     | Contractual Life   | Exercise Price | Exercisable | Exercise Price  
|                   
|                   
|$1.00               | 150,000     |                     | No Stated Maturity | $1.00          | 150,000     | $1.00           

NOTE 5 - NOTE RECEIVABLE

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

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

The note provides for a principle amount of $747,617, quarterly payments of interest accruing thereon at a 5.5% annual rate, and full payment on or before October 31, 2010. Prepayments are permitted without penalty. Interest accrued for the periods ended September 30, 2009 and March 31, 2009 was $8,730 and $8,674, respectively.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

NOTE 6  LOANS TO REGISTERED REPRESENTATIVES

ICC has granted loans to certain registered representatives with the stipulation that the loans will be forgiven if the representatives remain licensed with the Company for an agreed upon period of time, generally one to five years, and/or meet specified performance goals. Upon forgiveness, the loans are charged to commission expense for financial reporting purposes.

Some loans to registered representatives are not subject to a forgiveness contingency. These loans, as well as loans that have failed the forgiveness contingency, typically are repayable to the Company by deducting a portion of the representatives commission payouts throughout the commission cycle until the loans are paid off. Interest charged onthese loans to representatives ranges from 3.1% to 11.25% annually.

|                                                    |                     |  |                   
|--------------------------------------------------- | ------------------- |  | ------------------
|Loans to registered representatives are as follows: |                     |  |                   
|                                                   
|                                                    | September 30,       |  | March 31,         
|                                                    | 2009                |  | 2009              
|                                                   
|Non-forgiveable                                     | $           366,306 |  | $          567,576
|Forgiveable                                         | 515,416             |  | 396,632           
|Less: allowance                                     | (64,433)            |  | (97,279)          
|Total loans                                         | $           817,289 |  | $          866,929

NOTE 7 - INVESTMENTS

Securities not readily marketable include investment securities (a) for which there is no market on a securities exchange or no independent publicly quoted market, (b) that cannot be publicly offered or sold unless registration has been effected under the Securities Act of 1933, or (c) that cannot be offered or sold because of other arrangements, restrictions, or conditions applicable to the securities or to the Company. The Company became aware of factors that indicated a decrease in the value of their private equity investments which was considered to be other than temporary. The Company reduced the value of the investments to $0 as of March 31, 2009.

NOTE 8  FAIR VALUE MEASUREMENTS

On April 1, 2008, the Company adopted the provisions of FASB ASC 820 for certain financial assets and financial liabilities that are measured at fair value on a recurring basis and provides a consistent definition of fair value, with a focus on exit price from the perspective of a market participant.

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

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

The fair value hierarchy of the Companys inputs used in the determination of fair value for assets and liabilities during the current period consists of three levels. Level 1 inputs are comprised of unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs incorporate the Companys own best estimate of what market participants would use in pricing the asset or liability at the measurement date where consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. If inputs used to measure an asset or liability fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the asset or liability. The Companys assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

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| | Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
| | ------------------------------------------------------------------------------------

The following table presents financial assets and liabilities measured at fair value on a recurring basis and their related valuation inputs as of September 30, 2009:

|                                                                   |                                                 |  |                                                  |  |                                               |   |                                                   |                                                   
|------------------------------------------------------------------ | ----------------------------------------------- |  | ------------------------------------------------ |  | --------------------------------------------- | - | ------------------------------------------------- | --------------------------------------------------
|Assets and Liabilities Measured at Fair Value on a Recurring Basis |                                                 |  |                                                  |  |                                               |   |                                                  
|                                                                  
|September 30, 2009                                                 |                                                 |  | Fair Value Measurements at Reporting Date Using 
|                                                                   |                                                 |  | Quotes Prices in                                 |  | Significant                                   |   |                                                  
|                                                                   |                                                 |  | Active Markets for                               |  | Other                                         |   | Significant                                      
|                                                                   | Total Fair Value of                             |  | Identical Assets                                 |  | Observable                                    |   | Unobservable                                     
|                                                                   | Asset or Liability                              |  | (Level 1)                                        |  | Input (Level 2)                               |   | Inputs (Level 3)                                 
|Non-qualified deferred compensation investment                     | $                                   812,346     |  | $                                     812,346    |  | $                                             | - |                                                   | $                                                -
|Cash surrender value of life insurance policies                    | 482,008                                         |  | 482,008                                          |  |                                               | - |                                                   | -                                                 
|Investments                                                        | 160,723                                         |  | 160,723                                          |  |                                               | - |                                                   | -                                                 
|Marketable securities, at market value                             | 18,032                                          |  | 18,032                                           |  |                                               | - |                                                   | -                                                 
|Loans receivable from registered representatives, net              | 817,289                                         |  | -                                                |  |                                               | - |                                                   | 817,289                                           
|Note receivable                                                    | 747,617                                         |  | -                                                |  |                                               | - |                                                   | 747,617                                           
|Accounts receivable - employees/other                              | 13,977                                          |  | -                                                |  |                                               | - |                                                   | 13,977                                            
|Total Assets                                                       | $                                3,051,992      |  | $                                  1,473,109     |  | $                                          -  |   | $                                 1,578,883      
|                                                                  
|Securities sold, not yet purchased, at market value                | $                                           506 |  | $                                            506 |  | $                                           - |   | $                                               -
|Non-qualified deferred compensation plan                           | 828,035                                         |  | 828,035                                          |  |                                               | - |                                                   | -                                                 
|Total Liabilities                                                  | $                                   828,541     |  | $                                    828,541     |  | $                                           - |   | $                                               -

The following table is a roll forward of those investment assets classified as Level 3 as of September 30, 2009:

|                                          |            
|----------------------------------------- | -----------
|Balance as of April 1, 2009               | $ 1,614,546
|Receipts                                  | (193,509)  
|Distributions                             | 125,000    
|Change in allowance for doubtful accounts | 32,846     
|Balance as of September 30, 2009          | $ 1,578,883

|                                                    |                                           |  |                                                 |  |                                                 |  |                                             
|--------------------------------------------------- | ----------------------------------------- |  | ----------------------------------------------- |  | ----------------------------------------------- |  | --------------------------------------------
|March 31, 2009                                      |                                           |  | Fair Value Measurements at Reporting Date Using
|                                                   
|                                                    |                                           |  | Quotes Prices in                                |  |                                                 |  |                                             
|                                                    |                                           |  | Active Markets for                              |  | Significant Other                               |  | Significant                                 
|                                                    | Total Fair Value of                       |  | Identical Assets                                |  | Observable Input                                |  | Unobservable                                
|                                                    | Asset or Liability                        |  | (Level 1)                                       |  | (Level 2)                                       |  | Inputs (Level 3)                            
|Non-qualified deferred compensation investment      | $                                 533,665 |  | $                                 533,665       |  | $                                             - |  | $                                          -
|Cash surrender value of life insurance policies     | 406,089                                   |  | 406,089                                         |  | -                                               |  | -                                           
|Investments                                         | 127,143                                   |  | 127,143                                         |  | -                                               |  | -                                           
|Marketable securities, at market value              | 85,436                                    |  | 85,436                                          |  | -                                               |  | -                                           
|Total assets                                        | $                              1,152,333  |  | $                              1,152,333        |  | $                                       -       |  | $-                                          
|                                                   
|Securities sold, not yet purchased, at market value | 7,056                                     |  | 7,056                                           |  | $                                             - |  | $                                          -
|Non-qualified deferred compensation plan            | 541,993                                   |  | 541,993                                         |  | -                                               |  | -                                           
|Total liabilities                                   | $                                549,049  |  | $                                 549,049       |  | $                                             - |  | $                                          -

NOTE 9  NON-QUALIFIED PLAN

Non-Qualified Deferred Compensation Plan.Effective December 2008, the Company established the Investors Capital Holdings, Ltd. Deferred Compensation Plan (the NQ Plan) as well as a Rabbi Trust Agreement for this Plan. ICH is the NQ Plans sponsor. The unfunded NQ Plan enables eligible ICC registered representatives to elect to defer a portion of fees earned by them, as well as any gains or losses on the underlying investments, as defined by the NQ Plan. The total amount of compensation deferred by the participating representatives was $89,796 and $159,359 for the three and six months ended September 30, 2009 and $139,481 and $285,494 for the three and six months ended September 30, 2008.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis reviews our consolidated financial condition as of September 30, 2009 and March 31, 2009, the consolidated results of operations for the three and six months ended September 30, 2009 and 2008 and, where appropriate, factors that may affect future financial performance. The discussion should be read in conjunction with the condensed consolidated financial statements and related notes, included elsewhere in this Form 10-Q. Unless context requires otherwise, as used in this Managements Discussion and Analysis (i) the current period means the three or six months ended September 30, 2009, (ii) the prior period means the three or six months ended September 30, 2008, (iii) an increase or decrease compares the current period to the prior period, and (iv) all non-comparative amounts refer to the current period.

FORWARD-LOOKING STATEMENTS

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

OVERVIEW

We are a financial services holding company that, through our subsidiaries, provides brokerage, investment advisory, insurance and related services. We operate in a highly regulated and competitive industry that is influenced by numerous external factors such as economic conditions, marketplace liquidity and volatility, monetary policy, global and national political events, regulatory developments, competition, and investor preferences. Our revenues and net earnings may be either enhanced or diminished from period to period by such external factors. We remain focused on continuing to reduce redundant operating costs, upgrade operating efficiency, recruit quality representatives and grow our revenue base.

Broker-Dealer Services

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

Investment Advisory Services

We provide investment advisory services, including asset allocation and portfolio rebalancing, for our representatives customers. In the past, investment advisory services were performed by both ICC and EPA. We have consolidated our investment advisory services into ICA, and EPA ceased operations and was dissolved during the fiscal quarter ended June 30, 2008.

Recruitment and Support of Representatives

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

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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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OUR PROCESS

Check and Application

The largest segment of our revenues is obtained through a check and application process where a check and a product application is delivered to us for processing that includes principal review and submission to the variable annuity, mutual fund, direct participation or other investment product company. Investments in technology are facilitating our migration over time from a paper intensive to a virtually paperless process. This shortens the transaction cycle, reduces errors and creates greater efficiencies. We continue to invest in technologies that provide more efficient processes resulting improved productivity.

Online Brokerage

Registered representatives have direct market access to submit security transactions for their clients through the use of online brokerage platform for trade execution serviced by our clearing firm, Pershing. Using Pershings Net Exchange Pro 360 Platform our registered representatives execute client transactions.

Bond Brokerage

Our fixed-income brokerage desk uses a network of regional and primary dealers to execute trades across a broad array of fixed income asset classes. The desk also utilizes several dealer-only electronic services that allow the desk to offer inventory and to execute trades. Our fixed income traders work with our representatives to develop portfolios for clients.

Asset Allocation

Asset allocation services are made available through ICA. Our services include the design, selection and rebalancing investment portfolios on behalf of our representatives' clients. We also provide tools, services and guidance that enable our representatives to provide these investment services directly to their clients. These services, for the most part, are conducted through our online brokerage platform. Other allocation services are performed directly by fund companies.

CRITICAL ACCOUNTING POLICIES

In General

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

Off Balance Sheet Risk

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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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Reserves

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

KEY INDICATORS OF FINANCIAL PERFORMANCE FOR MANAGEMENT

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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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|                                                                    |                             |                             |                             |                       |        |         |             
|------------------------------------------------------------------- | --------------------------- | --------------------------- | --------------------------- | --------------------- | ------ | ------- | ------------
|COMPARISON OF THE FISCAL QUARTERS ENDED SEPTEMBER 30, 2009 AND 2008
|                                                                   
|RESULTS OF OPERATIONS                                               |                             |                             |                             |                       |        |         |             
|                                                                   
|                                                                    |                             |                             |                             | Percentage of Revenue |        | Percent
|                                                                    | Quarter Ended September 30, |                             | Quarter Ended September 30, |                       | Change
|                                                                    | 2009                        | 2008                        |                             | 2009                  | 2008   |         | 2009 vs 2008
|                                                                   
|Revenue:                                                            |                             |                             |                             |                       |        |         |             
|Commissions                                                         | $             15,357,927    | $             19,464,072    |                             | 81.0%                 | 84.3%  |         | -21.1%      
|Advisory fees                                                       | 2,871,553                   | 3,032,044                   |                             | 15.2%                 | 13.1%  |         | -5.3%       
|Other fee income                                                    | 106,661                     | 140,397                     |                             | 0.6%                  | 0.6%   |         | -24.0%      
|Marketing revenue                                                   | 486,232                     | 295,239                     |                             | 2.6%                  | 1.3%   |         | 64.7%       
|Interest, dividend and investment                                   | 113,426                     | 171,773                     |                             | 0.6%                  | 0.7%   |         | -34.0%      
|Total revenue                                                       | 18,935,799                  | 23,103,525                  |                             | 100.0%                | 100.0% |         | -18.0%      
|                                                                   
|Commission and advisory fee expenses                                | 15,136,218                  | 18,639,678                  |                             | 79.9%                 | 80.7%  |         | -18.8%      
|Gross profit                                                        | 3,799,581                   | 4,463,847                   |                             | 20.1%                 | 19.3%  |         | -14.9%      
|                                                                   
|Operating expenses:                                                 |                             |                             |                             |                       |        |         |             
|                                                                   
|Advertising                                                         | 210,520                     | 327,682                     |                             | 1.1%                  | 1.4%   |         | -35.8%      
|Communications                                                      | 195,237                     | 397,631                     |                             | 1.0%                  | 1.7%   |         | -50.9%      
|Total selling expenses                                              | 405,757                     | 725,313                     |                             | 2.1%                  | 3.1%   |         | -44.1%      
|                                                                   
|Compensation and benefits                                           | 1,817,574                   | 2,478,485                   |                             | 9.6%                  | 10.7%  |         | -26.7%      
|Regulatory, legal and professional                                  | 511,359                     | 756,282                     |                             | 2.7%                  | 3.3%   |         | -32.4%      
|Occupancy                                                           | 210,591                     | 269,064                     |                             | 1.1%                  | 1.2%   |         | -21.7%      
|Other administrative                                                | 419,368                     | 465,038                     |                             | 2.2%                  | 2.0%   |         | -9.8%       
|Interest                                                            | 6,034                       | 9,741                       |                             | 0.0%                  | 0.0%   |         | -38.1%      
|Total administrative expenses                                       | 2,964,926                   | 3,978,610                   |                             | 15.6%                 | 17.2%  |         | -25.5%      
|                                                                   
|Total operating expenses                                            | 3,370,683                   | 4,703,923                   |                             | 17.7%                 | 20.3%  |         | -28.3%      
|                                                                   
|Operating income (loss)                                             | 428,898                     | (240,076)                   |                             | 2.4%                  | -1.0%  |         | -278.7%     
|                                                                   
|Provision for income taxes                                          | 222,202                     | 251,850                     |                             | 1.2%                  | 1.1%   |         | -11.8%      
|                                                                   
|Net income (loss)                                                   | 206,696                     | (491,926)                   |                             | 1.2%                  | -2.1%  |         | -142.0%     
|                                                                   
|Adjusted Earnings before income taxes,                              |                             |                             |                             |                       |        |         |             
|depreciation and amortization                                       | $                  590,964  | $                    98,455 |                             | 3.1%                  | 0.4%   |         | 500.1%      
|                                                                   
|Adjustments to GAAP Net income (loss):                              |                             |                             |                             |                       |        |         |             
|Income tax benefit                                                  | 80,337                      | 33,187                      |                             | 0.4%                  | 0.1%   |         | 142.1%      
|Interest exense                                                     | (6,034)                     | (9,741)                     |                             | 0.0%                  | 0.0%   |         | -38.1%      
|Income tax provision                                                | (302,539)                   | (285,037)                   |                             | -1.6%                 | -1.2%  |         | 6.1%        
|Depreciation                                                        | (87,858)                    | (95,423)                    |                             | -0.5%                 | -0.4%  |         | -7.9%       
|Non-cash compensation                                               | (68,174)                    | (233,367)                   |                             | -0.4%                 | -1.0%  |         | -70.8%      
|                                                                   
|Net income (loss)                                                   | $                  206,696  | $                (491,926)  |                             | 1.1%                  | -2.1%  |         | -142.0%     

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|Investors Capital Holdings, Ltd. Report on Form 10-Quarter Ended September 30, 2009
|-----------------------------------------------------------------------------------

Adjusted EBITDA

Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted by eliminating other non-cash expense, gains or losses on sales of assets, and various non-recurring items, (adjusted EBITDA) is a key metric we use in evaluating our financial performance. Adjusted EBITDA eliminates items that we believe are not part of our core operations, are non-recurring items of revenue or expense, or do not involve a cash outlay, such as stock-related compensation. We consider adjusted EBITDA important in monitoring and evaluating our financial performance on consistent basis across various periods. We also use adjusted EBITDA as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions.

Adjusted EBITDA is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. Adjusted EBITDA should be considered in addition to, rather than as substitute for, important GAAP financial measures including pre-tax income, net income and cash flows from operating activities. Items excluded from adjusted EBITDA are significant and necessary components to the operations of our business; therefore, adjusted EBITDA should only be used as a supplemental measure of our operating performance.

Productivity

A key metric that we use to assess the average quality of our producing (non-staff) representatives is per capita rep generated revenue based on a rolling 12-month period. Data for the 12-month periods ended September 30, 2009 and 2008 are presented below:

|                                   |                         |  |                         |  |                      |  |            
|---------------------------------- | ----------------------- |  | ----------------------- |  | -------------------- |  | -----------
|                                   |                         |  |                         |  | Incease/             |  | % Increase/
|                                   | 2009                    |  | 2008                    |  | decrease             |  | decrease   
|Rep-generated revenue:             |                         |  |                         |  |                      |  |            
|Commission                         | $       60,551,819      |  | $       76,607,746      |  | $    (16,055,927)    |  | -21.0%     
|Advisory                           | 10,347,528              |  | 11,844,216              |  | (1,496,688)          |  | -12.6%     
|Other fee income                   | 775,171                 |  | 1,065,589               |  | (290,418)            |  | -27.3%     
|                                   | $       71,674,518      |  | $       89,517,551      |  | $    (17,843,033)    |  | -19.9%     
|Number of representatives          | $                   637 |  | $                   687 |  | (50)                 |  | -7.3%      
|Average revenue per representative | $            112,519    |  | $            130,302    |  | $           (17,783) |  | -13.6%     

We believe that the 13.6% decline in per capita representative-generated revenue compares well with percentage changes in revenue experienced in the financial industry during the twelve months ended September 30, 2009.

REVENUES

Revenues decreased by $4.2 million, or 18.0%, primarily due to a reduction of $4.1 million in commissionable revenues reflecting the overall economic crisis; however, the Company is seeing a stabilization of revenues since our fiscal year end.

Revenues continue to reflect the effect of the unprecedented events of last year on the financial services sector. Management seeks a diversified revenue stream to provide a degree of protection from market risk and continues to emphasize retention and recruitment of representatives who seek to leverage the full range of our services and technology platforms.

Commissions

Commission revenue fell by 21.1%, led by a $4.1 million drop in commissions from direct business. Revenues from the sale of mutual funds, direct participation programs (DPPs), and variable annuities all contributed to this decline. The drop in commissions from the sale of DPPs was due largely to a decline in Real Estate Investment Trusts (REITS) sales reflecting disruption in real estate markets, and a drop in sales of oil and gas programs as prices for these commodities fell.

Brokerage commissions rose by 10.5% due to increased trading of both bonds and equities in over-the-counter markets. Speculation that interest rates would continue to fall attracted investors into the bond markets. Also, in the prior period there was a major sell off in the equity markets. In recent quarters stock market performance, measured by major indices, has begun to show signs of recovery and investors are gradually beginning to reinvest in equities with the mindset that there exist good buying opportunities.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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|                                                                                        |                                             |  |                                              |  |                                             |  |              |  |                
|--------------------------------------------------------------------------------------- | ------------------------------------------- |  | -------------------------------------------- |  | ------------------------------------------- |  | ------------ |  | ---------------
|The following table details commission revenue by product type included in commissions: |                                             |  |                                              | 
|                                                                                       
|                                                                                        |                                             |  |                                              |  |                                             |  |              |  | Percentage     
|                                                                                        |                                             |  |                                              |  |                                             |  | Percent of   |  | change 2009 vs.
|Product Type                                                                            | 2009                                        |  | 2008                                         |  | 2009 vs. 2008                               |  | total change |  | 2008           
|Variable Annuities                                                                      | $                                 6,322,520 |  | $                                  7,868,207 |  | $                               (1,545,687) |  | -37.5%       |  | -19.6%         
|Brokerage (1)                                                                           | 6,464,322                                   |  | 5,851,198                                    |  | 613,124                                     |  | 14.9%        |  | 10.5%          
|Mutual Funds                                                                            | 1,313,372                                   |  | 2,178,289                                    |  | (864,917)                                   |  | -21.1%       |  | -39.7%         
|Direct Participation Programs                                                           | 1,241,819                                   |  | 3,486,093                                    |  | (2,244,274)                                 |  | -54.7%       |  | -64.4%         
|Other                                                                                   | 15,894                                      |  | 80,285                                       |  | (64,391)                                    |  | -1.6%        |  | -80.2%         
|Total Commissions Revenue                                                               | $                               15,357,927  |  | $                                19,464,072  |  | $                               (4,106,145) |  | -100.0%      |  | -21.1%         

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

Advisory

Fees from advisory services dropped by 5.3% to $2.9 million. The decrease was attributable largely to market-related declines in asset values and decreasing new investment contributions.

Our advisor-directed managed assets program, A-MAP, where investment advisory services are provided directly by our independent representatives, continues to contribute the majority of advisory services revenue. Revenue from this program decreased by $0.67 million, or 18.81%, due to a decrease in assets under management which, in turn, reflected market-wide declines in asset values, asset managed performance and decreasing new investment.

Assisted by Pershings Net Exchange Pro on-line platform, A-MAP remains popular with our representatives because of the opportunities it provides them to deliver superior asset management services and overall investment performance at a lower cost. Resulting transactional cost savings has been shared with our representatives' clients in the form of lower fees.

Other Fee Income

A decrease in other fee income, primarily comprised of administrative, licensing and financial planning fees, was due in part to transition assistance provided to newly recruited representatives.

Marketing Revenue

Marketing revenues increased by $0.2 million, or 64.7%, due primarily to an increase in marketing support revenue for our East Coast National convention in addition to strategic reductions in the cost of hosting such events.

Other Income

Other income, primarily interest, declined 34.0% to $0.1 million, as compared to $0.2 million during the prior period. The decrease in interest income is directly attributable to a reduction by the Federal Reserve in effective yields on cash accounts.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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GROSS MARGINS

The following table reports gross margin by each of our operating segments for the quarters ended September 30, 2009 and 2008, respectively:

|                                                                                                                                                   |             |  |             |  |                |        |              |        |                |  |         
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- |  | ----------- |  | -------------- | ------ | ------------ | ------ | -------------- |  | --------
|                                                                                                                                                   |             |  |             |  | % of Sales     |        | % of Total   |        | Percent Change
|                                                                                                                                                   |             |  |             |  | Retention Rate |        | Gross Margin |        | 2009          
|                                                                                                                                                   | 2009        |  | 2008        |  | 2009           | 2008   |              | 2009   | 2008           |  | vs. 2008
|Commissions:                                                                                                                                       |             |  |             |  |                |        |              |        |                |  |         
|Brokerage                                                                                                                                          | $ 1,510,707 |  | $ 1,553,115 |  | 23.4%          | 26.5%  |              | 39.8%  | 34.8%          |  | -2.7%   
|Check and Application                                                                                                                              | 1,154,102   |  | 1,759,236   |  | 13.0%          | 13.0%  |              | 30.4%  | 39.4%          |  | -34.4%  
|Fixed Insurance                                                                                                                                    | 15,894      |  | 26,935      |  | 100.0%         | 100.0% |              | 0.4%   | 0.6%           |  | -41.0%  
|Underwriting                                                                                                                                       | -           |  | 12,006      |  | 0.0%           | 22.5%  |              | 0.0%   | 0.3%           |  | -100.0% 
|Total                                                                                                                                              | 2,680,703   |  | 3,351,292   |  |                |        |              | 70.6%  | 75.1%          |  | -20.0%  
|Advisory Services:                                                                                                                                 |             |  |             |  |                |        |              |        |                |  |         
|A-MAP                                                                                                                                              | 330,701     |  | 402,675     |  | 21.1%          | 23.2%  |              | 8.7%   | 9.0%           |  | -17.9%  
|F-MAP                                                                                                                                              | 119,937     |  | 115,552     |  | 40.2%          | 40.7%  |              | 3.2%   | 2.6%           |  | 3.8%    
|Other                                                                                                                                              | 128,153     |  | 146,954     |  | n/a1           | n/a1   |              | 3.4%   | 3.3%           |  | -12.8%  
|Total                                                                                                                                              | 578,791     |  | 665,181     |  | 19.8%          | 21.5%  |              | 15.3%  | 14.9%          |  | -13.0%  
|Licensing                                                                                                                                          | 29,870      |  | 61,302      |  | n/a1           | n/a1   |              | 0.8%   | 1.5%           |  | -51.3%  
|Marketing                                                                                                                                          | 486,231     |  | 295,239     |  | n/a1           | n/a1   |              | 12.7%  | 6.5%           |  | 64.7%   
|Other Income                                                                                                                                       | 23,986      |  | 90,833      |  | n/a1           | n/a1   |              | 0.6%   | 2.0%           |  | -73.6%  
|Total Gross Margin                                                                                                                                 | $ 3,799,581 |  | $ 4,463,847 |  | 20.1%          | 19.3%  |              | 100.0% | 100.0%         |  | -14.9%  
|                                                                                                                                                   |             | 
|1. Due to account composition of the notated products, profit margin retention is not deemed a useful indicator of performance and is not tracked. |             | 

Gross margin decreased by $0.66 million, or 14.9%, to $3.80 million for the current period primarily due to a $0.60 million, or 34.4%, decrease in gross margin from our direct check and application programs..

Commissions

As a result of a significant decline in alternative investments, and a drop in investments in mutual funds and variable annuities, gross margins from our direct check and application programs declined. The continued decline in these investments can be attributed in part to the economic recession that has impacted the discretionary income of most consumers. Gross margin from brokerage remained relatively flat, assisted by an increase in over-the-counter bond investments as expectations of lower interest rates made bonds an attractive investment.

Advisory Services

The decrease in profit margin from our advisory services segment is attributed to a decline in fees generated from our A-MAP Program, as lower asset values impacted overall fee-based income and profit margin.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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Marketing

The Company experienced a 64.7% increase in profit margin from marketing efforts due to both new and repeat sponsors participating and supporting our National Convention. Also in the current period, we strategically lowered costs to host that event.

Commission and Advisory Fees Expenses

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

Commission and advisory fee expenses during the current period were $15.1 million as compared to $18.6 million for the prior period. As a percentage of revenue generated by representatives, defined as commissions, advisory fees and other fees, commission and advisory expenses increased slightly from 82.3% in the prior period to 82.5% in the current period. These expenses include commissions to representatives, clearing and execution costs and other direct costs that are necessary to produce revenue. Management continuously monitors these costs as they have a substantial effect on our profit margin.

OPERATING EXPENSES

Operating expenses, which decreased by 28.3% to $3.4 million, are discussed in detail below.

Compensation and Benefits

The largest component of our operating expenses, compensation and benefits, decreased by $0.7 million or 26.7%. Due to a reduction in base salary to our executives, management team and staff, and suspension of the employer match to our 401(k) Plan, each effective in the fourth quarter of the prior fiscal year, we have reduced overall compensation. Reduced stock compensation to executives, reduction of investment center staff in the prior period, and also the resignation of one of our officers, has further reduced compensation. We also experienced 26% cost savings per employee related to health care benefits resulting from changing health care providers.

Regulatory, Legal and Professional

Regulatory, legal and professional expenses declined by $0.2 million, or 32.4%, reflecting significant reductions in both litigation legal fees and legal and professional costs incurred in connection with strategic corporate matters.

We will continue to incur legal fees and settlement costs as we operate in a regulated industry that is increasingly litigious. In addition, from time to time regulatory agencies and self-regulatory organizations institute investigations into industry practices, which can also result in the imposition of sanctions. We invest significant resources to contain future litigation and regulatory exposure by promoting accuracy, ensuring sound operational procedures and applying appropriate compliance measures.

Advertising

Advertising, marketing and branding efforts, and meals and entertainment decreased by $0.1 million, or 35.8%. Reflecting prevailing economic conditions, we have reduced our advertising costs and resulting exposure in print publications. Also, a modified travel policy, implemented in the winter 2008, resulted in a reduction in travel costs.

Communications

Communications expenses decreased 50.9%, or $0.2 million, in the current period versus the prior period as a result of many factors including a reduction in telephone expenses and website connectivity costs from the closing of our investment centers, and use of electronic rather than print for direct marketing efforts. Also, we sponsored a reward trip, the Pinnacle Conference in Ireland during August 2008, whereas we combined that event with sponsored events in the current year.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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Occupancy

Occupancy expenses, which include depreciation, decreased 21.7% or by $0.06 million due largely to consolidation of home office space in June 2009, plus the closing of our investment centers in the prior period.

Other Administrative

Other administrative expenses, which include various insurance, postage, office and other office-related expenses, decreased by $0.05 million or 9.8%. There were fewer special committee Board meetings and resulting fees paid to our independent board members.

OPERATING AND NET INCOME

We reported operating income of $0.43 million compared to a $0.24 million operating loss for the prior period. Our net income totaled $0.21 million, or $0.03 per basic and diluted net income per share, compared to net loss of $0.49 million, or $0.08 basic and diluted net loss per share, for the prior period. The Company has achieved profitability for two consecutive quarters, the first time since fiscal 2007, primarily due to our efforts at cutting costs. Substantially all of the Companys segments realized significant bottom line improvement from the preceding quarter, albeit not all at the gross revenue levels of prior years, as the equity markets and overall economy have begun to show signs of recovery. Management attributes the stabilized results of operations primarily to reduced operating costs, upgraded operating efficiency, recruitment of quality representatives and growth of our advisory segments asset values.

COMPARISON OF THE SIX MONTH PERIODS ENDED SEPTEMBER 30, 2009 AND 2008

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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

|                                       |                                          |               |                                         |                    |  |         |  |         
|-------------------------------------- | ---------------------------------------- | ------------- | --------------------------------------- | ------------------ |  | ------- |  | --------
|RESULTS OF OPERATIONS                  |                                          |               |                                         |                    |  |         |  |         
|                                       |                                          |               |                                         | Percent of Revenue |  |        
|                                       |                                          |               |                                         | Six Months Ended   |  | Percent
|                                       | Six Months Ended September 30,           | September 30, |                                         | Change            
|                                       |                                          |               |                                         |                    |  |         |  | 2009    
|                                       | 2009                                     |               | 2008                                    | 2009               |  | 2008    |  | vs. 2008
|                                      
|Revenues:                              |                                          |               |                                         |                    |  |         |  |         
|Commission                             | $                           31,070,736   |               | $                           38,738,231  | 82.7%              |  | 84.2%   |  | -19.8%  
|Advisory fees                          | 5,303,741                                |               | 6,046,721                               | 14.1%              |  | 13.1%   |  | -12.3%  
|Other fee income                       | 248,338                                  |               | 278,044                                 | 0.7%               |  | 0.6%    |  | -10.7%  
|Marketing revenue                      | 704,762                                  |               | 606,465                                 | 1.9%               |  | 1.4%    |  | 16.2%   
|Other income                           | 223,057                                  |               | 332,232                                 | 0.6%               |  | 0.7%    |  | -32.9%  
|Total revenue                          | 37,550,634                               |               | 46,001,693                              | 100.0%             |  | 100.0%  |  | -18.4%  
|                                      
|Commission and advisory expenses       | 30,250,193                               |               | 37,224,852                              | 80.6%              |  | 80.9%   |  | -18.7%  
|Gross profit                           | 7,300,441                                |               | 8,776,841                               | 19.4%              |  | 19.1%   |  | -16.8%  
|                                      
|Operating expenses:                    |                                          |               |                                         |                    |  |         |  |         
|Advertising                            | 392,882                                  |               | 764,905                                 | 1.0%               |  | 1.7%    |  | -48.6%  
|Communications                         | 345,856                                  |               | 635,049                                 | 0.9%               |  | 1.4%    |  | -45.5%  
|Total selling expenses                 | 738,738                                  |               | 1,399,954                               | 1.9%               |  | 3.1%    |  | -47.2%  
|                                      
|Compensation and benefits              | 3,489,510                                |               | 4,999,938                               | 9.3%               |  | 10.9%   |  | -30.2%  
|Regulatory, legal and professional     | 1,126,983                                |               | 1,839,981                               | 3.0%               |  | 4.0%    |  | -38.8%  
|Occupancy                              | 439,707                                  |               | 571,199                                 | 1.2%               |  | 1.2%    |  | -23.0%  
|Other administrative expenses          | 769,853                                  |               | 766,814                                 | 2.1%               |  | 1.7%    |  | 0.4%    
|Interest expense                       | 16,614                                   |               | 21,598                                  | 0.0%               |  | 0.0%    |  | -23.1%  
|Total administrative expenses          | 5,842,667                                |               | 8,199,530                               | 15.6%              |  | 17.8%   |  | -28.7%  
|                                      
|Total operating expenses               | 6,581,405                                |               | 9,599,484                               | 17.5%              |  | 20.9%   |  | -31.4%  
|                                      
|Operating income (loss)                | 719,036                                  |               | (822,643)                               | 1.9%               |  | -1.8%   |  | -187.4% 
|                                      
|Provision (benefit) for income taxes   | 460,804                                  |               | (56,173)                                | 1.2%               |  | -0.1%   |  | -920.3% 
|                                      
|Net income (loss)                      | $                                258,232 |               | $                             (766,470) | 0.7%               |  | -1.7%   |  | -133.7% 
|                                      
|Adjusted Earnings before income taxes, |                                          |               |                                         |                    |  |         |  |         
|depreciation and amortization          | $                             1,047,907  |               | $                             (130,308) | 2.8%               |  | -0.4%   |  | -904.2% 
|                                      
|Adjustments to GAAP Net income (loss): |                                          |               |                                         |                    |  |         |  |         
|Income tax benefit                     | 252,446                                  |               | 440,209                                 | 0.7%               |  | 0.9%    |  | -42.7%  
|Interest exense                        | (16,614)                                 |               | (21,598)                                | 0.0%               |  | -0.1%   |  | -23.1%  
|Income tax provision                   | (713,250)                                |               | (384,036)                               | -1.9%              |  | -0.9%   |  | 0.0%    
|Depreciation                           | (175,300)                                |               | (194,928)                               | -0.5%              |  | -0.5%   |  | -10.1%  
|Non-cash compensation                  | (136,957)                                |               | (475,809)                               | -0.4%              |  | -1.1%   |  | -71.2%  
|                                      
|Net income (loss)                      | $                                258,232 |               | $                             (766,470) | 0.7%               |  | -1.8%   |  | -133.7% 

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

REVENUES

Revenues decreased by $8.5 million, or 18.4%, from the six-month comparative period. The significant decline primarily came from commissionable based revenues which declined by $7.7 million or 19.8%.

|                              |                                              |  |                      |  |                      |  |              |  |            
|----------------------------- | -------------------------------------------- |  | -------------------- |  | -------------------- |  | ------------ |  | -----------
|Commissions                   |                                              |  |                      |  |                      |  |              |  |            
|                             
|                              | Commission Revenue                           |  |                      |  |                     
|                              | Six Months Ended September 30, 2009 and 2008 |  |                      |  |                     
|                              |                                              |  |                      |  |                      |  |              |  | Percentage 
|                              |                                              |  |                      |  |                      |  | Percent of   |  | change 2009
|Product Type1:                | 2009                                         |  | 2008                 |  | 2009 vs. 2008        |  | total change |  | vs 2008    
|Variable Annuities            | $        13,215,796                          |  | $        15,554,834  |  | $       (2,339,038)  |  | -30.6%       |  | -15.0%     
|Brokerage                     | 12,663,374                                   |  | 12,249,984           |  | 413,390              |  | 5.4%         |  | 3.4%       
|Mutual Funds                  | 2,252,583                                    |  | 4,385,695            |  | (2,133,112)          |  | -27.8%       |  | -48.6%     
|Direct Participation Programs | 2,897,663                                    |  | 6,403,260            |  | (3,505,597)          |  | -45.7%       |  | -54.7%     
|Other                         | 41,320                                       |  | 144,458              |  | (103,138)            |  | -1.3%        |  | -71.4%     
|Total Commission Revenue      | $        31,070,736                          |  | $         38,738,231 |  | $        (7,667,495) |  | -100.0%      |  | -19.8%     

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

The decline in commissionable revenue was mainly the result of the decline in our direct business as commissions from variable annuities, mutual funds, and DPPs fell significantly. Alternatively, brokerage revenues grew by 5.4% as commissions generated from over the- counter bond trading contributed mostly to this improvement compared to the prior period. Bonds became an investment alternative with the speculation that interest rates would continue to fall.

Advisory Fees

Advisory fees declined by $0.7 million, or 12.3 %, resulting mostly from a decline in asset values reflecting the downward trend in the stock market, asset managed performance, and a decline in new investment dollar contributions within the advisory service accounts.

Other Fee Income

Other fee income remained relatively flat for the comparative periods.

Marketing Revenue

Marketing revenues increased slightly by $0.1 million as the result of an overall growth in marketing support for hosting our conventions in addition to strategic reductions in event-related costs.

Other Income

Other income decreased by 32.9%, or $0.1 million, over the year ago period reflecting a decrease from interest income on balances from our trading accounts for the same reason mentioned in our quarterly analysis.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

|                                                                                                                           |                               |  |                               |  |                             |  |                         |  |        |  |        |  |         
|-------------------------------------------------------------------------------------------------------------------------- | ----------------------------- |  | ----------------------------- |  | --------------------------- |  | ----------------------- |  | ------ |  | ------ |  | --------
|GROSS MARGINS                                                                                                              |                               |  |                               |  |                             |  |                         |  |        |  |        |  |         
|                                                                                                                           |                               |  |                               |  | % of Sales (Retention Rate) |  | % of Total Gross Margin |  |       
|                                                                                                                           | Six Months Ended              |  | Six Months Ended              |  | Six Months Ended            |  |                        
|                                                                                                                           | September 30,                 |  | September 30,                 |  | September 30,               |  | % Change               
|                                                                                                                           |                               |  |                               |  |                             |  |                         |  |        |  |        |  | 2009    
|                                                                                                                           | 2009                          |  | 2008                          |  | 2009                        |  | 2008                    |  | 2009   |  | 2008   |  | vs. 2008
|Commissions:                                                                                                               |                               |  |                               |  |                             |  |                         |  |        |  |        |  |         
|Check & Application                                                                                                        | $                   2,387,585 |  | $                   3,424,692 |  | 13.0%                       |  | 13.0%                   |  | 32.7%  |  | 38.9%  |  | -30.3%  
|Brokerage                                                                                                                  | 2,914,304                     |  | 3,065,356                     |  | 23.0%                       |  | 25.0%                   |  | 39.9%  |  | 34.9%  |  | -4.9%   
|Fixed Insurance                                                                                                            | 41,320                        |  | 55,457                        |  | 100.0%                      |  | 100.0%                  |  | 0.6%   |  | 0.6%   |  | -25.5%  
|Underwriting                                                                                                               | -                             |  | 19,042                        |  | 0.0%                        |  | 21.4%                   |  | 0.0%   |  | 0.2%   |  | -100.0% 
|Total                                                                                                                      | 5,343,209                     |  | 6,564,547                     |  |                             |  |                         |  | 73.2%  |  | 74.6%  |  | -18.6%  
|Advisory Services:                                                                                                         |                               |  |                               |  |                             |  |                         |  |        |  |        |  |         
|A-MAP                                                                                                                      | 650,729                       |  | 817,454                       |  | 22.5%                       |  | 23.0%                   |  | 8.9%   |  | 9.3%   |  | -20.4%  
|F-MAP                                                                                                                      | 223,352                       |  | 230,811                       |  | 40.7%                       |  | 40.6%                   |  | 3.1%   |  | 2.6%   |  |         
|Other                                                                                                                      | 203,290                       |  | 259,290                       |  | n/a1                        |  | n/a1                    |  | 2.8%   |  | 3.0%   |  | -21.6%  
|Total                                                                                                                      | 1,077,371                     |  | 1,307,555                     |  | 19.9%                       |  | 21.2%                   |  | 14.8%  |  | 14.9%  |  | -17.6%  
|Licensing                                                                                                                  | 74,141                        |  | 127,392                       |  | n/a1                        |  | n/a1                    |  | 1.0%   |  | 1.5%   |  | -41.8%  
|Marketing                                                                                                                  | 704,761                       |  | 606,465                       |  | n/a1                        |  | n/a1                    |  | 9.6%   |  | 7.1%   |  | 16.2%   
|Other income                                                                                                               | 100,959                       |  | 170,882                       |  | n/a1                        |  | n/a1                    |  | 1.4%   |  | 1.9%   |  | -40.9%  
|Total Gross Margin                                                                                                         | $                   7,300,441 |  | $                   8,776,841 |  | 19.4%                       |  | 19.1%                   |  | 100.0% |  | 100.0% |  | -16.8%  
|                                                                                                                          
|1. Due to account composition, profit margin retention for these products is not deemed a useful indicator of performance. |                               |  |                               | 
|                                                                                                                           |                               |  |                               |  |                             |  |                         |  |        |  |        |  |         

**Commissions**

Gross profit from our check and application business declined in the current period versus the prior period as consumers were reluctant to invest in alternative investments, mutual funds, and variable annuities reflecting continued poor performance in these investments. However, gross margin from brokerage remained relativly flat for similar reasons discussed in our quarlerly analysis.

Advisory Services

Profit margins from advisory services declined mostly from a decline in advisory fees in our A-Map Program. Lower asset values and a decline in investments in these asset managed accounts lead to lower fees and profit margin.

Commission and Advisory Fees Expenses

Commission and advisory fees expenses during the current six-month period were $30.25 million versus $37.22 million in the prior period. As a percentage of revenue generated by representatives (i.e., commissions, advisory fees and other fees) commission and advisory expenses were relatively the same for the comparative periods. These expenses include commissions to representatives, clearing costs and other direct costs that are necessary to produce revenue. Management continuously monitors these costs as they have a substantial effect on our profit margin.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

OPERATING EXPENSES

Operating expenses decreased by 31.4% to $3.0 million, are discussed in detail below.

Compensation and Benefits

Compensation and benefits decreased by 30.2%, or $1.5 million, due principally to a 10% reduction on executive, management team and staff salaries and a suspension of the employer 401(k) match, each effective January 2009. Coupled with those reductions, restricted stock awards to executives became vested in the prior period versus in the current period there were no restricted stock awards issued to executives. Lastly, we achieved cost savings in health care benefits as a result of changing insurance providers.

Regulatory, Legal and Professional

Regulatory, legal and professional expenses declined by $0.7 million, or 38.8%, due principally to a decrease in legal fees incurred for strategic corporate matters, along with legal fees for our defense in a now- settled litigation.

Advertising

The decrease in advertising expenses was due primarily to lower print costs, restricting advertising to fewer publications, fewer trips and an overall reduction in travel and entertainment expenses.

Communications

Communication expenses declined by $0.3 million due primarily to reasons explained in our quarterly analysis.

Occupancy

Occupancy expenses decreased by 23.0 % in the current period versus the prior period reflecting the closing of various investment centers in addition to downsizing home office space upon expiration of a lease.

Other Administrative

Expenses relevant to other administrative activities remained relatively constant for the six month comparative periods.

OPERATING AND NET INCOME

Historically, the Companys overall results have been correlated to activity levels in the U.S. equity markets. The Company is currently operating in a challenging environment: a recession and financial services industry issues such as credit quality and illiquidity continue to negatively impact activity levels. Nonetheless, substantially all the Companys revenue categories realized improvement in the quarter ended September 30, 2009 compared to the quarter ended June 30, 2009, as the equity markets and overall economy began to show signs of recovery.

The Companys reported operating income and net profit in the current period versus the reported operating and net loss in the prior period can mostly be attributed to implementing cost cutting measures while maintaining service quality. We will continue to seek synergies within and among all departments to improve operational efficiency.

Management is focused on aggressively recruiting quality representatives from other independent firms and wire houses to achieve significant revenue growth and sustainable profitability.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

We strive for efficient use of capital. Our primary source of liquidity remains our cash flows from operations. Market fluctuations, general uncertainty and continued negative sentiment in financial markets have had a adverse impact on this cash flow.

We take a proactive approach to minimizing the occurrence and impact of events that may lead to unpredictable cash outflows, including major legal proceedings, trade errors, and fines and other sanctions imposed by regulatory agencies such as FINRA, the SEC and state securities regulators. The Company allocates considerable resources to stay current with the many rules and regulations applicable to our business and to provide up-to-date education and training to our staff and independent representatives. A key to this approach is ensuring that industry-standard controls over our operations and those of our representatives are maintained.

Approximately 66.5% and 61%of our total assets at both September 30, 2009 and March 31, 2009 consisted of cash and cash equivalents, receivables from clearing brokers and other broker-dealers, all of which fluctuate, depending upon the levels of customer business and trading. As of September 30, 2009, cash and cash equivalents totaled $4.9 million compared to $6.2 million as of March 31, 2009. Although our total assets fell by 11.6%, our working capital increased 12.5% to $6.84 million as of September 30, 2009 compared to $6.08 million as of March 31, 2009. The ratio of current assets to current liabilities was 2.24 to 1 as of September 30, 2009 compared to 1.73 to 1 as of March 31, 2009.

We experienced a $1.46million decrease in cash flows, largely due to payments made on accruedexpenses incurred for litigation as of March 31, 2009.

Cash outflows from investing activities for the current period totaled $0.07 million, primarily for payments on officers life insurance, whereas in the prior period there wereinflows of $0.61 million due to the maturity of three treasury notes totaling $0.75 million.

Finally, cash flows used in financing activities in the current period paralleled the prior period as we disbursed $0.84 million in loan payments to finance E&O insurance premiums for the six month period ended September 30, 2009 versus $ $0.82 million for the same six month period last year.

REGULATORY NET CAPITAL

Cash disbursements can have a material impact on our brokerage firms regulatory net capital. The SEC Uniform Net Capital Rule (Rule 15c3-1) requires that ICC, our broker-dealer subsidiary, maintain net capital of $100,000 and a ratio of aggregate indebtedness to net capital (a net capital ratio) not to exceed 15 to 1. Under the rule, indebtedness generally includes all money owed by ICC, and net capital includes ICC cash and assets that are easily converted into cash. SEC rules also prohibit "equity capital" (which, under the net capital rule, includes subordinated loans) from being withdrawn, cash dividends from being paid and other specified actions of similar effect from being taken, if, among other specified contingencies, ICCs net capital ratio would exceed 10 to 1 or if ICC would have less than 120% of its minimum required net capital.

As of September 30, 2009, ICC had net capital of $3.97 million (an excess of $3.60 million) and a 1.40 to 1 net capital ratio as compared to net capital of $1.94 million (an excess of $1.41 million) and a 4.10 to 1 net capital ratio as of March 31, 2009. We are continually focused on timely implementation of measures designed to ensure the maintenance of adequate capital.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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COMMITMENTS AND CONTINGENCIES

We are obligated under various lease agreements covering offices and equipment. These agreements are considered to be operating leases. The terms of the leases expire between fiscal year 2010 and 2015. On August 25, 2009 the Board ratified a lease extension. Options to renew for additional terms are included under the lease agreements. Certain leases contain provisions for escalation of minimum lease payments contingent upon increases in real estate taxes.

The total minimum rental due in future periods under these existing agreements is as follows as of September 30, 2009:

|                    |            
|------------------- | -----------
|2010                | $ 200,866  
|2011                | 370,758    
|2012                | 357,841    
|2013                | 260,413    
|2014                | 270,477    
|2015 and thereafter | 306,214    
|                    | $ 1,766,569

Total lease expense approximated $0.09 and $0.15 million for each of the three months ended September 30, 2009 and 2008, respectively. Total lease expense approximated $0.22 and $0.32 million for each of the six months ended September 30, 2009 and 2008, respectively.

The Company offers loans and transition assistance to its representatives mainly for recruiting or retention purposes. These commitments are contingent upon certain events occurring, including but not limited to the representatives joining the Company and meeting certain production requirements. As of September 30, 2009, the Company estimates that it had made commitments of $0.20 million in loans and transition assistance, which have not yet been funded.

ITEM 4T. CONTROLS AND PROCEDURES

Report of Management on Internal Control Over Financial Reporting

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

As of September 30, 2009, we carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are effective in enabling us to record, process, summarize and report information required to be included in our periodic SEC filings within the required time period, and to ensure that information required to be disclosed in such reports that we file or submit under the Securities Exchange Act of 1934 is accumulated an communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions required regarding required disclosure.

There have been no changes in our internal controls over financial reporting that occurred during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

ITEMS 2  5.

None.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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|                 |                                                                          |                |               
|---------------- | ------------------------------------------------------------------------ | -------------- | --------------
|ITEM 6. EXHIBITS |                                                                          |               
|                 |                                                                          |               
|Exhibit          |                                                                          |                |               
|Number           | Description                                                              |                | Location      
|3.1              | Certificate of Incorporation                                             |                | (2)(Exh. 3.1) 
|3.2              | By-Laws                                                                  |                | (2)(Exh. 3.2) 
|4.1              | Form of Stock Certificate                                                |                | (3)(Exh. 4.1) 
|10.1             | Employment Agreement with Theodore E. Charles (4)                        | (3)(Exh. 10.1)
|10.2             | Employment Agreement with Timothy B. Murphy (4)                          | (3)(Exh. 10.2)
|10.3             | The 1994 Stock Option Plan (4)                                           |                | (5)(Exh. 10.3)
|10.4             | The 1996 Stock Incentive Plan (4)                                        |                | (3)(Exh. 10.3)
|10.6             | The 2001 Equity Incentive Plan (4)                                       |                | (6)(Exh. 4.4) 
|10.7             | The 2005 Equity Incentive Plan (4)                                       |                | (7)(Exh. 4.5) 
|10.8             | Form of June 2006 Stock Grant Agreement (4)                              | (8)(Exh. 10.8)
|10.9             | Form of February 2008 Stock Grant Agreement (4)                          | (8)(Exh. 10.9)
|31.1             | Certification of Timothy B. Murphy pursuant to Rule 13a-14(a)            | (1)           
|31.2             | Certification of Kathleen L. Donnelly pursuant to Rule 13a-14(a)         | (1)           
|32.1             | Certification of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350    | (1)           
|32.2             | Certification of Kathleen L. Donnelly pursuant to 18 U.S.C. Section 1350 | (1)           

|(1)                                                                                                                                                                                                                                                                                                                     | Filed herewith.                                                                                                                                         
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)                                                                                                                                                                                                                                                                                                                     | Incorporated by reference to the indicated exhibit to the Registrants Quarterly Report on Form 10-Q filed November 14, 2007                            
|(3)                                                                                                                                                                                                                                                                                                                     | Incorporated by reference to the indicated exhibit to the Registrant's Registration Statement on Form SB-2 (File No. 333-05327) filed November 14, 2000.
|(4)                                                                                                                                                                                                                                                                                                                     | A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of this report.                     
|(5)                                                                                                                                                                                                                                                                                                                     | Incorporated by reference to the indicated exhibit to the Registrants Annual Report on Form 10-K filed June 30, 2005                                   
|(6)                                                                                                                                                                                                                                                                                                                     | Incorporated by reference to the indicated exhibit to the Registrants Registration Statement on Form S-8 (File No. 333-117807) filed July 30, 2004.    
|(7)                                                                                                                                                                                                                                                                                                                     | Incorporated by reference to the indicated exhibit to the Registrants Registration Statement on Form S-8 (File No. 333-134885) filed June 9, 2006.     
|(8)                                                                                                                                                                                                                                                                                                                     | Incorporated by reference to the indicated exhibit to the Registrants Annual Report on Form 10-K filed June 30, 2008.                                  
|                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                         
|Any exhibit not included with this Form 10-Q when furnished to any shareholder of record will be furnished to such shareholder upon written request and payment of up to $.25 per page plus postage. Such requests should be directed to Investors Capital Holdings, Ltd., 230 Broadway East, Lynnfield, MA 01940-2320.

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------



|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/ Kathleen L. DonnellyChief Accounting Officer(Duly authorized officer)
| | ------------------------------------------------------------------------------------------------------------



|Date: November 13, 2009
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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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|Exhibit 31.1CERTIFICATION
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|I, Timothy B. Murphy, certify that:
|-----------------------------------

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

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



|Date: November 13, 2009
By: /s/ Timothy B. MurphyTimothy B. Murphy, President,Treasurer, Chief Executive Officer and Director(Principal executive officer)
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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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|Exhibit 31.2CERTIFICATION
|-------------------------



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

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

a)
     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating the smaller reporting company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;b)
     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.c)
     Evaluated the effectiveness of the smaller reporting company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)
     Disclosed in this report any change in the smaller reporting company's internal control over financial reporting that occurred during the smaller reporting company's most recent fiscal quarter (the smaller reporting company's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the smaller reporting company's internal control over financial reporting; and


|5. | The smaller reporting company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the smaller reporting company's auditors and the audit committee of thesmallerreporting company's board of directors (or persons performing the equivalent functions):
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the smaller reporting company's ability to record, process, summarize and report financial information; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the smaller reporting company's internal control over financial reporting.                                                                                               
| |   



Date: November 13, 2009

By: /s/ Kathleen L. DonnellyKathleen L. DonnellyCheif Financial Officer(Principal executive officer)



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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
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|Exhibit 32.1CERTIFICATION
|-------------------------

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

Date: November 13, 2009

By: /s/ Timothy B. Murphy



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

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|Investors Capital Holdings, Ltd. Report on Form 10-QQuarter Ended September 30, 2009
|------------------------------------------------------------------------------------



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

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

Date: November 13, 2009

By: /s/ Kathleen L. Donnelly



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