10-Q

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

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

FORM 10-Q

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

For the quarterly period ended September 30, 2007

Commission File Number: 1-16349

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

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

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

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

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

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

Number of shares outstanding of our only class of common stock as of November 09, 2007:

6,285,715

Page 1

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

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Table of Contents

PART I

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FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 4. CONTROLS AND PROCEDURES

PART II

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

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

	PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS

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

(UNAUDITED)

	September 30,	March 31,
	2007	2007
Assets:
Current Assets
Cash and cash equivalents	$ 5,145,922	$ 5,498,259
Deposit with clearing organization, restricted	175,000	175,000
Accounts receivable	4,288,752	4,336,234
Note receivable (current)	8,618	8,561
Loans receivable from registered representatives (current)	656,999	470,492
Prepaid income taxes	288,037	35,078
Marketable securities, at market value	129,055	206,530
Investments (short term)	1,437,237	745,315
Prepaid expenses	376,555	482,882
Total Current Assets	12,506,175	11,958,351
Property and equipment, net	1,328,026	1,396,793
Long Term Investments
Loans receivable from registered representatives	148,405	191,305
Note receivable	747,617	747,617
Equity investments, at cost	190,000	190,000
Investments	246,005	1,169,606
Cash surrender value life insurance policies	312,943	275,201
	1,644,970	2,573,729
Other Assets
Other assets	64,545	72,199
Deferred tax asset, net	865,082	889,128
	929,627	961,327
Total Assets	$ 16,408,798	$ 16,890,200
Liabilities and Stockholders' Equity:
Current Liabilities
Accounts payable	$ 769,512	$ 773,636
Accrued expenses	957,339	1,871,694
Notes payable	13,342	838,358
Unearned revenues	115,350	100,363
Commissions payable	3,346,001	3,049,900
Securities sold, not yet purchased, at market value	782	711
	5,202,326	6,634,662
Total Liabilities	$ 5,202,326	$ 6,634,662
Stockholders' Equity:
Common stock, $.01 par value, 10,000,000 shares authorized;
6,287,766 issued and 6,283,881 outstanding at September 30,2007;
6,209,421 issued and 6,205,536 outstanding at March 31, 2007 .	62,878	62,094
Additional paid-in capital	9,936,116	9,721,749
Retained earnings	1,194,122	468,506
less: Treasury stock, 3,885 shares at cost	(30,135)	(30,135)
Accumulated other comprehensive income	43,491	33,324
Total Stockholders' Equity	11,206,472	10,255,538
Total Liabilities and Stockholders'
Equity	$ 16,408,798	$ 16,890,200
The accompanying notes are an integral part of these consolidated financial statements.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

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

THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

	Three Months Ended
	September 30,
	2007	2006
Revenues
Commission	$ 19,967,862	$ 15,289,438
Advisory fees	2,518,253	1,444,068
Other fee income	143,141	129,635
Marketing revenue	234,806	204,533
Other income	221,143	188,245
Total Revenue	23,085,205	17,255,919
Commission and advisory fees expenses	18,827,534	14,140,325
Gross Profit	4,257,671	3,115,594
Operating Expenses:
Advertising	428,201	231,797
Communications	336,024	134,633
Total Selling Expenses	764,225	366,430
Compensation and benefits	2,076,612	1,710,572
Regulatory, legal and professional	320,589	730,702
Occupancy	290,276	231,503
Other administrative expenses	323,071	156,296
Interest expense	8,572	7,570
Total Administrative Expenses	3,019,120	2,836,643
Total Operating Expenses	3,783,345	3,203,073
Operating Income (Loss)	474,326	(87,479)
Income (loss) before taxes	474,326	(87,479)
Provision for income taxes	215,277	82,356
Net Income (Loss)	$ 259,049	$ (169,835)
Earnings Per Common Share:
Basic earnings per common share	$0.04	($0.03)
Diluted earnings per common share	$0.04	($0.03)
Share Data:
Weighted average shares used in basic earnings per
common share calculations	6,064,200	6,116,869
Incremental shares from assumed exercise of stock options	394,110	162,814
Weighted average shares used in diluted earnings per
common share calculations	6,458,310	6,279,683
See Notes to Condensed Consolidated Financial Statements.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

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

SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

	Six Months Ended
	September 30,
	2007	2006
Revenues
Commission	$ 39,675,975	$ 32,748,340
Advisory fees	4,706,537	3,012,497
Other fee income	272,960	196,032
Marketing revenue	729,365	528,947
Other income	449,164	372,275
Total Revenue	45,834,001	36,858,091
Commission and advisory fees expenses	37,152,948	29,955,545
Gross Profit	8,681,053	6,902,546
Operating Expenses:
Advertising	695,694	501,424
Communications	515,027	200,401
Total Selling Expenses	1,210,721	701,825
Compensation and benefits	4,057,203	4,426,597
Regulatory, legal and professional	926,893	1,933,042
Occupancy	595,387	465,509
Other administrative expenses	574,683	488,899
Interest expense	34,216	15,602
Total Administrative Expenses	6,188,382	7,329,649
Total Operating Expenses	7,399,103	8,031,474
Operating Income (Loss)	1,281,950	(1,128,928)
Income (loss) before taxes	1,281,950	(1,128,928)
Provision (Benefit) for income taxes	556,334	(361,471)
Net Income (Loss)	$ 725,616	$ (767,457)
Earnings Per Common Share:
Basic earnings per common share	$0.12	($0.13)
Diluted earnings per common share	$0.11	($0.13)
Share Data:
Weighted average shares used in basic earnings per
common share calculations	6,059,619	5,874,301
Incremental shares from assumed exercise of stock options	400,675	153,177
Weighted average shares used in diluted earnings per
common share calculations	6,460,294	6,027,478
See Notes to Condensed Consolidated Financial Statements.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

	Common	Amount	Additional	Comprehensive	Retained	Treasury	Accumulated
	Stock		Paid-In	Income	Earnings	Stock	Other
	Shares		Capital		(Deficit)		Comprehensive	Total
							Income (Loss)
Balance at April 01, 2006	5,794,246	$ 57,942	$ 8,740,780	-	$ 1,797,789	$ (30,135)	$ 19,707	$ 10,586,083
Stock based compensation	345,439	3,455	756,376					759,831
Comprehensive income:
Net (loss)				(767,457)	(767,457)
Other Comprehensive Income:
Unrealized gain on securities:
Unrealized holding gains arising
during period no tax effect				2,761
No reclassification adjustment required				-
Other Comprehensive Income				2,761			2,761
Comprehensive Income				(764,696)				(764,696)
Dividend payment to shareholders					(245,218)			(245,218)
Balance at September 30,2006	6,139,685	$ 61,397	$ 9,497,156	-	$ 785,114	$ (30,135)	$ 22,468	$ 10,336,000
Balance at April 01, 2007	6,209,421	$ 62,094	$ 9,721,749	-	$ 468,506	$ (30,135)	$ 33,324	$ 10,255,538
Stock based compensation	78,345	784	214,367					215,151
Comprehensive income:
Net income				725,616	725,616
Other Comprehensive Income:
Unrealized gain on securities:
Unrealized holding gains arising
during period no tax effect				10,167
No reclassification adjustment required				-
Other Comprehensive Income				10,167			10,167
Comprehensive Income				735,783				735,783
Balance at September 30,2007	6,287,766	$ 62,878	$ 9,936,116	-	$ 1,194,122	$ (30,135)	$ 43,491	$ 11,206,472
See Notes to Condensed Consolidated Financial Statements.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (UNAUDITED)

	Six Months Ended September 30,
	2007	2006
Cash flows from operating activities:
Net income (loss)	$ 725,616	$ (767,457)
Adjustments to reconcile net income (loss) to net cash
Provided by (used in) operating activities:
Depreciation and amortization	187,167	135,050
Amortization U.S. Treasury Bills	(2,866)	(6,016)
Change in deferred taxes	24,046	(355,620)
Share-Based Compensation	170,064	662,144
Market adjustment Cash surrender value life insurance policy	(1,299)	1,737
Stock-option compensation	-	75,033
Change in marketable securities	77,546	(65,621)
Gain on investment	(5,288)	(199)
Change in operating assets and liabilities:
Accounts receivable	47,482	681,621
Prepaid expenses and other assets	113,981	17,943
Prepaid income taxes and payable	(252,959)	(366,071)
Loans receivable from registered representatives	(143,607)	(62,999)
Accounts payable	(4,124)	(147,503)
Accrued expenses	(914,355)	271,903
Commissions payable	296,101	(269,775)
Unearned revenues	14,987	(1,228)
Net cash provided by (used in) operating activities	332,492	(197,058)
Cash flows from investing activities:
Purchases of property and equipment	(118,400)	(398,595)
(Payments) Cash Surrender Value life insurance policy	(36,443)	(53,111)
Investments in U.S.Treasury Notes, Bills	250,000	(1,977,751)
Changes in Note Receivable	(57)	(57)
Net cash provided by (used in) investing activities	95,100	(2,429,514)

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 (CONTINUED)

(UNAUDITED)

	Six Months Ended September 30,
	2007	2006
Cash flows from financing activities:
Payment of Note Payable	$ (825,016)	$ (82,509)
Payment of dividends	-	(245,218)
Exercise of stock options	45,087	22,654
Net cash used in financing activities	(779,929)	(305,073)
Net Decrease in cash and cash equivalents	(352,337)	(2,931,645)
Cash and cash equivalents, at the beginning of the period	5,498,259	7,718,682
Cash and cash equivalents, at the end of the period	$ 5,145,922	$ 4,787,037
Supplemental disclosures of cash flow information:
Interest paid	$ 34,216	$ 15,602
Income taxes paid	$ 780,025	$ 360,700

See Notes to Condensed Consolidated Financial Statements.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

     INVESTORS CAPITAL HOLDINGS, LTD. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTER ENDED SEPTEMBER 30, 2007

(UNAUDITED)

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

ORGANIZATION:

     Incorporated in July 1995, Investors Capital Holdings, Ltd. ("ICH") is a financial services holding company that operates in two segments of the financial services industry through its subsidiaries, Investors Capital Corporation (“ICC”) (doing business as Investors Capital Advisors, “ICA”, as a registered investment advisor), Eastern Point Advisors, Inc. (“EPA”), ICC Insurance Agency, Inc. and Investors Capital Holdings Securities Corporation (“ICH Securities”). These two segments comprise (1) broker-dealer services in support of Brokerage in securities, including provision of market information, internet on-line Brokerage, portfolio tracking and records management, and (2) investment advisory services including asset management. These products and services are offered throughout the United States primarily through our network of independent registered representatives. ICH Securities was formed in March 2005 to hold cash, cash equivalents, interest income and dividend income for ICH.

BASIS OF PRESENTATION:

     The accompanying unaudited condensed consolidated financial statements of Investors Capital Holdings, Ltd. and its subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q. In the opinion of management, these financial statements contain all of the adjustments necessary for a fair presentation of the results of these interim periods. Certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, although the Company believes the disclosures in these financial statements are adequate to make the information presented not misleading. Operating results for the three-month period ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending March 31, 2008. The balance sheet at March 31, 2007 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's annual audited financial statements included in the Company's report on Form 10-K for the fiscal year ended March 31, 2007 filed with the Securities and Exchange Commission (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 the prior periods have been reclassified to remain consistent with the current fiscal year financial statement presentation.

SIGNIFICANT ACCOUNTING POLICIES:

Revenue Recognition

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

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

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

     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 the Financial Industry Regulatory Authority (“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 firm.

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

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

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

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

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

Accounts Receivable – Allowance for Doubtful Accounts

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

     Loans to representatives. We perform periodic credit evaluations and provide allowance based on our assessment of specifically identified unsecured receivables and other factors, including the representative's payment history. Once it is determined that it is both probable that a loan has been impaired and the amount of loss can reasonably be estimated, the portion of the loan balance estimated to be uncollectible is so classified and written off. See “Note 6. Loans to Representatives”.

     Advisory fees from mutual funds. Effective October 18, 2005, the Company no longer provides advisory services to mutual funds. Prior thereto, as disclosed in the respective mutual funds' prospectuses, the Company attempted to recoup waived advisory service fees within a three-year period. If management believed that the likelihood of collecting such a receivable within the three-year period was doubtful, the Company provided for an allowance. Determinations whether to write off such fees were made annually. By agreement, the Company is entitled to payment of all uncollected waived advisory fees by the successor fund adviser.

     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-Q

Quarter Ended 09/30/07

Income Taxes

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

     The Company adopted FIN 48 during the fiscal quarter ended June 30, 2006. After analysis conducted by management and consultants as to the financial impact FIN 48 will have on the Company’s financials, the Company has concluded that FIN 48 will not have a material impact on its financials.

RECENTLY ISSUED ACCOUNTING STANDARDS:

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

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

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” ("SFAS No. 159"), which provides companies with an option to report selected financial assets and liabilities at fair value. The objective of SFAS No. 159 is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS No. 159 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect of the company’s choice to use fair value on its earnings. SFAS No. 159 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. SFAS No. 159 does not eliminate disclosure requirements of other accounting standards, including fair value measurement disclosures in SFAS No. 157. This Statement is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of Statement No. 157. Adoption of SFAS No. 159 is not expected to have a material impact on the Company’s results of operations or financial position.

NOTE 2. SEGMENT INFORMATION

     The Company makes disclosures about products and services, geographic areas, and major customers in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Company evaluates performance based on profit and loss from operations after income taxes.

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

     The Company's reportable segments include broker/dealer and related services offered through ICC and asset management (investment advisory) services offered through ICA and EPA. 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 annual revenue from fees received on the management of customer accounts.

     EPA provided asset management and portfolio design services to two mutual funds until October 18, 2005, and provided money management services to a variety of investors through March 2006. ICA’s primary mission is to offer clients investment advisory and asset management procedures grounded on sound investment principles of asset allocation,

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

performance monitoring and portfolio rebalancing. To improve efficiency, EPA transitioned the bulk of its advisory services business to ICA over the 2 ½ year period ended March 31, 2006. Subsequent EPA operations have been limited to providing third-party advisory services and easing the conversion of representatives to ICA’s investment advisory programs.

     Under the guidelines of FAS No. 131 “Disclosures about Segments of an Enterprise and Related Information”, commencing with the quarter ended December 31, 2005, management reports its segments on a management approach whereby our business is presented in segments reflecting the way we make operating decisions and assess performance. Accordingly, ICA is now reported as part of the asset management services segment. Segments are currently reported based upon the services provided, whereas they were previously segmented according to legal entity.

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

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

	September 30,
	2007	2006
Inter-company eliminations	$ (842,381)	$ (1,136,748)
Deferred income taxes	(3,200)	(24,013)
Income Taxes	(512,697)	(353)
Total Corporate items and eliminations	$ (1,358,278)	$ (1,161,114)

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Segment reporting is as follows:
	Quarter Ended September 30,
	2007	2006
Non-interest revenues:
ICC brokerage services	$ 20,268,719	$ 15,604,117
EPA, ICA asset management services	2,598,044	1,463,557
Total	$ 22,866,763	$ 17,067,674
Revenues from transactions with other operating segments:
ICC brokerage services	$ 401,339	$ 335,128
EPA, ICA asset management services	50,727	34,686
Total	$ 452,066	$ 369,814
Interest and dividend income,net:
ICC brokerage services	$ 180,159	$ 141,382
EPA, ICA asset management services	15,091	14,522
ICH	1,407	229
ICH Securities	21,785	32,112
Total	$ 218,442	$ 188,245
Depreciation and amortization expenses:
ICC brokerage services	$ 93,406	$ 74,017
EPA, ICA asset management services	690	690
Total	$ 94,096	$ 74,707
Income tax provision:
ICC brokerage services	$ 6,142	$ 130,458
EPA, ICA asset management services	199,071	(56,120)
ICH	10,064	8,018
Total	$ 215,277	$ 82,356
Income (loss) :
ICC brokerage services	$ 5,974	$ (330,169)
EPA, ICA asset management services	239,507	154,690
ICH	(8217)	(26,468)
ICH Securities	21,785	32,112
Total	$ 259,049	$ (169,835)
Period end total assets:
ICC brokerage services	$ 11,976,116	$ 9,278,448
EPA, ICA asset management services	1,389,455	1,401,080
ICH	2,405,523	1,934,821
ICH Securities	1,995,982	3,144,628
Corporate items and eliminations	(1,358,278)	(1,161,114)
Total	$ 16,408,798	$ 14,597,863

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

	Six Months Ended September 30,
	2007	2006
Non-interest revenues:
ICC brokerage services	$ 40,536,393	$ 33,438,474
EPA, ICA asset management services	4,851,145	3,055,779
Total	$ 45,387,538	$ 36,494,253
Revenues from transactions with other operating segments:
ICC brokerage services	$ 707,892	$ 1,371,441
EPA, ICA asset management services	84,788	137,934
Total	$ 792,680	$ 1,509,375
Interest and dividend income,net:
ICC brokerage services	$ 372,603	$ 271,985
EPA, ICA asset management services	28,686	32,524
ICH	1,841	455
ICH Securities	43,333	58,874
Total	$ 446,463	$ 363,838
Depreciation and amortization expenses:
ICC brokerage services	$ 185,786	$ 133,669
EPA, ICA asset management services	1,381	1,381
Total	$ 187,167	$ 135,050
Income tax provision (benefit):
ICC brokerage services	$ 223,905	$ (676,782)
EPA, ICA asset management services	338,397	295,994
ICH	(5,968)	19,317
Total	$ 556,334	$ (361,471)
Income (loss) :
ICC brokerage services	$ 303,875	$ (1,098,155)
EPA, ICA asset management services	430,104	309,839
ICH	(51,696)	(37,995)
ICH Securities	43,333	58,854
Total	$ 725,616	$ (767,457)
Period end total assets:
ICC brokerage services	$ 11,976,116	$ 9,278,448
EPA, ICA asset management services	1,389,455	1,401,080
ICH	2,405,523	1,934,821
ICH Securities	1,995,982	3,144,628
Corporate items and eliminations	(1,358,278)	(1,161,114)
Total	$ 16,408,798	$ 14,597,863

NOTE 3. LITIGATION

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

Massachusetts Proceedings

     By administrative complaint dated November 16, 2005, the Securities Division of the Secretary of the Commonwealth of Massachusetts brought an adjudicatory proceeding against the Company alleging violation of supervisory obligations under state securities laws in connection with certain past sales of equity-indexed annuities by a few independent representatives. In settling these proceedings on December 19, 2006, the Company agreed, among other things:

• to pay a $0.5 million administrative fine,
• to offer to reimburse losses and costs incurred by Massachusetts persons aged 75 or older in connection with the surrender, no later than December 31, 2007, of any equity-indexed annuities purchased through ICC or its representatives during 2004 or 2005, and to offer an additional payment to ensure that no amount invested in a surrendered EIA yielded less than 3%; and
• to pay an additional administrative fine equal to the extent, if any, that ICC’s surrender-related payments total less than $0.5 million.

Page 14

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

     The Company does not anticipate, although there can be no assurances, that the total of said payments will exceed $1 million, of which $0.77 million had been expended as of September 30, 2007.

Other Proceedings

     At September 30, 2007, the Company was a co-defendant in various legal proceedings other than the Massachusetts Proceedings. Management believes, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on the firm's financial condition. The Company has Errors and Omissions ("E&O") insurance to protect itself from potential damages and/or legal costs associated with the majority of aforementioned lawsuits and, as a result, in the majority of cases the Company’s exposure is limited to between $75,000 and $100,000 per case, subject to policy limitations and exclusions. In accordance with FASB Statement No. 5, "Accounting for Contingencies", the Company had accrued expenses of approximately $0.68 million for the quarter ended September 30, 2007 related to legal fees and estimated probable settlement costs rela ting to the Company's defense in various lawsuits.

NOTE 4. STOCK BASED COMPENSATION

     On April 1, 2006, the Company adopted SFAS No. 123(R), “Share-Based Payment”, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair value over the requisite service period. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements for prior periods because the Company adopted the fair value recognition provisions of SFAS No. 123 effective September 28, 2002 using the modified prospective application t ransition method within the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure.”

Stock Options

     Prior to the adoption of SFAS 123(R), the Company had granted options and had reported as a footnote disclosure the pro forma effect if we had reported an expense under the guidelines of SFAS No. 123. There was no stock option expense for the quarters ended September 30, 2007 and 2006. The pro forma expense calculated using the Black-Scholes option pricing model did not exceed the cumulative expense previously disclosed in the Company’s report on Form 10-K for the fiscal year ended March 31, 2005.

     The following is a summary of the status of the Company's employee and director fixed stock options as of September 30, 2007 and 2006:

	Employee Fixed Options
	2007		2006
		Weighted-Average		Weighted-Average
	Shares	Exercise Price	Shares	Exercise Price
Outstanding at beginning of year	153,332	$1.02	$ 153,332	$1.02
Granted	-		-
Forfeited	-		-
Exercised	-		-
Reclassified(non-employee)	-		-
Outstanding at quarter end	153,332	$1.02	153,332	$1.02
Options exercisable at quarter-end	153,166		$ 152,500
Weighted-average fair value of
options granted during the year	$ -		$ -

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

     The following assumptions were applied to employee options for the quarters ended September 30, 2007 and September 30, 2006.

	2007	2006
Dividend	0.00%	0.19%
Volatility	23%	48%
Risk-free interest rate	3.81%	4.84%
Expected Life in years	0.25	1.25

     The following table summarizes information about employee and directors' fixed stock options outstanding as of September 30, 2007:

Options Outstanding			Options Exercisable
		Weighted-Average
Range Of	Number	Remaining		Number	Weighted-Average
Exercise Prices	Outstanding		Exercise Price	Exercisable	Exercise Price
$1.00	150,000	No Stated Maturity	$1.00	150,000	$1.00
$1.91	3,332	0.25	$1.91	3,166	$1.91
	153,332	0.25	$1.02	153,166	$1.02

Restricted Stock

     Under the 2005 Equity Incentive Plan (the “Plan”) the Company is authorized to grant shares of ICH common stock to employees, directors, officers, representatives and other key individuals. Grants under the Plan may be made in connection with initial employment or under various retention plans and, to date, have subjected unvested options and shares to forfeiture in the event of termination other than for death, disability or retirement. The compensation cost associated with these stock grants is recognized over the vesting period of the shares and is calculated as the market value of the shares on the date of grant. The following activity occurred during the three and six months period ended September 30, 2007:

	THREE MONTHS ENDED SEPTEMBER 30, 2007
	Shares	Weighted Ave Stock Price	Weighted Average Vested Life	Fair Value $
Non-vested at
July 1, 2007	194,594	$4.04	3.49 yrs.	$786,160
Granted	27,200	$4.90		$133,280
Vested	25,673	$4.43		$113,731
Canceled	(1,133)	$4.90		$(5,552)
Non-vested at
September 30, 2007	194,988	$4.11	3.03 yrs.		$801,401
	SIX MONTHS ENDED SEPTEMBER 30, 2007
	Shares	Weighted Ave Stock Price	Weighted Average Vested Life		Fair Value $
Non-vested at
April 1, 2007	181,729	$3.95                                                        3.8 yrs.			$717,830
Granted	57,200	$4.80			$274,560
Vested	40,120	$4.30			$172,516
Canceled	(3,821)	$4.81			$(18,379)
Non-vested at		3.03 yrs.
September 30, 2007	194,988	$4.04			$787,752

     The Company’s net income for the three months ended September 30, 2007 includes $78,696 of compensation costs related to the Company’s grants of restricted stock to employees, and $31,422 for grants to independent representatives, under the Plan.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

     The Company’s net loss for the three months ended September 30, 2006 includes $30,797 of compensation costs related to the Company’s grants of restricted stock to employees, and $7,322 for grants to independent representatives, under the Plan.

     For the six months ended September 30, 2007 the compensation costs related to this plan includes $109,493 to employees and $60,571 for grants to independent representatives, under the Plan.

     For the six months ended September 30, 2006 the compensation costs related to this plan includes $587,992 to employees and $74,122 for grants to directors, consultants and independent representatives.

     As of September 30, 2007, there was $801,401 of total unrecognized compensation cost related to grants under the Plan. These costs are expected to be recognized over a weighted average period of approximately 3.03 years. The total fair value of shares vested under this plan during the three months ended September 30, 2007 was $113,731.

     As of September 30, 2006, there was $644,921 of total unrecognized compensation cost related to grants under the Company’s Equity Incentive Plan. These costs are expected to be recognized over a weighted average period of approximately 4.40 years. The total fair value of shares vested under this plan during the three months ended September 30, 2006 was $662,515.

NOTE 5 - NOTE RECEIVABLE

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

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

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

NOTE 6 – 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. There were no loans charged to commission expense for the quarters ended September 30, 2007 and 2006.

     Other loans to registered representatives are not subject to a forgiveness contingency. These loans, as well as loans that have not met the forgiveness contingency, are repaid to the Company by deducting a portion of the representatives’ commission payouts throughout the commission cycle until the loans are paid off.

     Interest charged on these loans to representatives range from 3% to 8% per annum.

     The Company writes off any loans that are deemed uncollectible after performing periodic credit evaluations. There were no loans written off to commission expense for the quarters ended September 30, 2007 and 2006.

     For further detail, please refer to “Note 1 - Accounts Receivable- Allowance for Doubtful Accounts”.

Page 17

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

	September 30,	March 31,
	2007	2007
Forgiveable Loans	$ 439,817	$ 331,023
Other Loans	365,587	330,774
Total Loans	$ 805,404	$ 661,797

NOTE 7 - INVESTMENTS

     Securities that are 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 has not exercised significant influence over these equity investments; accordingly, these investments were recorded as of September 30, 2007 and March 31, 2007 at the Company’s cost of $190,000 pursuant to Accounting Principles Board No. 18 "The Equity Method of Accounting for Investments in Common Stock" (“APB No. 18”).

     As of September 30, 2007, the Company had investments in U.S. Treasury Notes being held to maturity in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” These investments are presented at an amortized value as follows:

		SEPTEMBER 30, 2007
Purchase Date	Purchase Price	Interest Rate /Maturity Date /Coupon Date	Face Value	Amortized Cost	Interest Date
7/12/2006	$ 242,745	US TREAS NOTES 3.000% 11/15/07 B/E DTD 11/15/02 N/C	$ 250,000	$ 249,389	May 15, Nov 15
7/12/2006	248,525	US TREAS NOTES 4.875% 04/30/08 B/E DTD 04/30/06 N/C	250,000	249,516	Apr 30, Oct 31
7/12/2006	249,727	US TREAS NOTES 5.125% 06/30/08 B/E DTD 06/30/06 N/C	250,000	249,952	Jun 30, Dec 30
9/28/2006	250,732	US TREAS NOTES 4.875% 08/31/08 B/E DTD 08/31/06 N/C	250,000	250,341	Feb 28, Aug 28
11/3/2006	242,461	US TREAS NOTES 3.125% 10/15/08 B/E DTD 10/15/03 N/C	250,000	246,005	Apr 15, Oct 15
	$ 1,234,189	Balance at September 30, 2007	$ 1,250,000	$ 1,245,203

	MARCH 31, 2007
Purchase Date	Purchase Price	Interest Rate /Maturity Date /Coupon Date	Face Value	Amortized Cost	Interest Date
7/12/2006	$ 242,745	US TREAS NOTES 3.000% 11/15/07 B/E DTD 11/15/02 N/C	$ 250,000	$ 246,594	May 15, Nov 15
7/12/2006	246,650	US TREAS NOTES 3.625% 04/30/07 B/E DTD 04/30/05 N/C	250,000	249,695	Apr 30, Oct 31
7/12/2006	246,035	US TREAS NOTES 3.625% 06/30/07 B/E DTD 06/30/05 N/C	250,000	249,025	Jun 30, Dec 30
7/12/2006	248,525	US TREAS NOTES 4.875% 04/30/08 B/E DTD 04/30/06 N/C	250,000	249,088	Apr 30, Oct 31
7/12/2006	249,727	US TREAS NOTES 5.125% 06/30/08 B/E DTD 06/30/06 N/C	250,000	249,865	Jun 30, Dec 30
9/28/2006	250,732	US TREAS NOTES 4.875% 08/31/08 B/E DTD 08/31/06 N/C	250,000	250,520	Feb 28, Aug 28
11/3/2006	242,461	US TREAS NOTES 3.125% 10/15/08 B/E DTD 10/15/03 N/C	250,000	244,055	Apr 15, Oct 15
	$ 1,726,875	Balance at March 31, 2007	$1,750,000	$ 1,738,842

     On September 08, 2006, The Eastern Point Advisors Capital Appreciation Fund merged with The Eastern Point Advisors Rising Dividend Fund to become The Rising Dividend Growth Fund. As of September 30, 2007 the Company held a 0.24% ownership interest in The Rising Dividend Growth Fund, which had a fair market value of $188,039. At March 31, 2007 this investment had a fair market value of $176,079 which represented a 0.30% ownership interest.

     The Company has invested in a $250,000 face amount Certificate of Deposit with a stated date of maturity as of November 16, 2007 with a coupon rate of 5.25% . The Company is holding this investment to maturity. The Company had not invested in this Certificate of Deposit until after March 31, 2007.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

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, 2007 and March 31, 2007, the consolidated results of operations for the 3 and 6 months ended September 30, 2007 and 2006 and, where appropriate, factors that may affect future financial performance. The discussion should be read in conjunction with the consolidated financial statements and related notes, included elsewhere in this Form 10-Q. Unless context requires otherwise, as used in this Management’s Discussion and Analysis (i) the “current period” means the 3 or 6 months ended September 30, 2007, (ii) the “prior period” means the 3 or 6 months ended September 30, 2006, (iii) an increase and 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.

OUR BUSINESS

     The Company operates primarily through its subsidiary ICC in the broker-dealer segment and, doing business as ICA, the investment advisory segment of the financial services industry.

Broker-Dealer Services

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

Investment Advisory Services

     The Company provides investment advisory services, including asset allocation and portfolio rebalancing, for its representatives’ customers. In the past, investment advisory services were performed by both ICC and EPA. To avoid the duplication of effort involved in supporting two advisory services entities, the Company has consolidated substantially all of its investment advisor services in ICC doing business as ICA. Since March 31, 2006, EPA operations have been limited to providing third-party advisory services and easing the conversion of representatives to ICA’s investment advisory programs.

Recruitment and Support of Representatives

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

     Support provided to assist representatives in pursuing consistent and profitable sales growth takes many forms, including: hi-tech brokerage systems, targeted financial assistance and a network of communication links with investment product

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

companies. Regional and national conventions provide forums for interaction to improve product knowledge, sales and client satisfaction. In addition, a dedicated business development unit focuses on providing representatives with programs and tools to grow their businesses both through new client acquisition and advancement of existing client relationships. These programs enhance our ability to attract and retain productive representatives.

OUR PROCESS

Check and Application

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

Online Trading

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

Bond Trading

     The Company's 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. This area has seen growth as interest rates have risen and more investors have become interested in retirement income.

Asset Allocation

     Asset allocation services are made available through ICA, the Company's registered investment advisory service provider. Our services include the design, selection and rebalancing of investment portfolio on behalf of our representatives’ clients in addition to providing the 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 the fund company.

OFF-BALANCE SHEET RISK

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

CRITICAL ACCOUNTING POLICIES

In General

     Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The Company believes that of its significant accounting policies (see Footnote 1 to the Company’s condensed consolidated financials statements contained herein), those dealing with valuation of securities and other assets, revenue recognition and allowance for doubtful accounts receivable 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. Due to 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 fina ncial statements. Therefore, understanding these policies is important to understanding the reported results of operations and the financial position of the Company.

Reserves

     The Company records reserves related to legal proceedings in “accrued expenses” in the condensed consolidated balance sheet. The determination of these reserve amounts requires significant judgment on the part of management. Management considers many factors including, but not limited to: the amount of the claim; the amount of the loss in the client’s account; the basis and validity of the claim; the possibility of wrongdoing on the part of an employee or representative of the

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Company; previous results in similar cases; and legal precedents. Each legal proceeding is reviewed with counsel in each accounting period and the reserve is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the 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 disposition of a legal proceeding may be greater or less than the reserved amount.

KEY INDICATORS OF FINANCIAL PERFORMANCE

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

COMPARISON OF THE FISCAL QUARTERS ENDED SEPTEMBER 30, 2007 AND 2006

RESULTS OF OPERATIONS
			Percent of Revenue
			Quarter Ended		Percent
	Quarter Ended September 30,		September 30,		Change
					2007
	2007	2006	2007	2006	vs. 2006
Revenues:
Commission	$ 19,967,862	$ 15,289,438	86.5%	88.6%	30.6%
Advisory fees	2,518,253	1,444,068	10.9%	8.4%	74.4%
Other fee income	143,141	129,635	0.6%	0.7%	10.4%
Marketing revenue	234,806	204,533	1.0%	1.2%	14.8%
Other income	221,143	188,245	1.0%	1.1%	17.5%
Total Revenue	23,085,205	17,255,919	100.0%	100.0%	33.8%
Commission and advisory fee expenses	18,827,534	14,140,325	81.6%	81.9%	33.1%
Gross Profit	4,257,671	3,115,594	18.4%	18.1%	36.7%
Operating Expenses:
Advertising	428,201	231,797	1.9%	1.3%	84.7%
Communications	336,024	134,633	1.5%	0.8%	149.6%
Total Selling Expenses	764,225	366,430	3.3%	2.1%	108.6%
Compensation and benefits	2,076,612	1,710,572	9.0%	9.9%	21.4%
Regulatory, legal and professional	320,589	730,702	1.4%	4.2%	-56.1%
Occupancy	290,276	231,503	1.3%	1.3%	25.4%
Other administrative expenses	323,071	156,296	1.4%	0.9%	106.7%
Interest expense	8,572	7,570	0.0%	0.0%	13.2%
Total Administrative Expenses	3,019,120	2,836,643	13.1%	16.4%	6.4%
Total Operating Expenses	3,783,345	3,203,073	16.4%	18.6%	18.1%
Operating Income (Loss)	474,326	(87,479)	2.1%	-0.5%	-642.2%
Income before taxes	474,326	(87,479)	2.1%	-0.5%	-642.2%
Provision (benefit) for income taxes	215,277	(82,356)	0.9%	-0.5%	-361.4%
Net Income (Loss)	$ 259,049	$ (169,835)	1.1%	-1.0%	-252.5%

     Management believes that upgrading the overall quality of our independent representatives is key to achieving robust growth in revenues and net income. Our experience has been that increasing the technical qualifications and business practices of our representatives not only generates more revenue, but assists in limiting the cost of overhead functions and representative errors and misconduct. We strive to continually improve the overall quality of our force of representatives by:

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

• recruiting high quality new representatives,
• terminating low quality representatives, and
• assisting representatives to improve their skills and practices.

     A key metric that we use to assess the average quality of our representatives is average revenue generated per representative.

     Average production per representative increased by 45.2%, reflecting management’s continuing emphasis on recruiting and retaining established, successful representatives who value the high level of service and support provided by ICC/ICA.

AVERAGE PRODUCTION PER REPRESENTATIVE

		Quarter Ended
	September 30, 2007	September 30, 2006	Percentage Change
Commission	$ 19,967,862	$ 15,289,438	30.6%
Advisory	2,518,253	1,444,068	74.4%
Other fee income	143,141	129,635	10.4%
	$ 22,629,256	$ 16,863,141	34.2%
Number of representatives	696	753	-7.6%
Average Production Per Rep	$ 32,513	$ 22,395	45.2%

REVENUES

     Revenues rose $5.82 million, or 33.8 %, to $23.08 million, led by a $4.68 million or 30.6% increase in commissions and a $1.07 million or 74.4% increase in advisory services revenue. Robust growth in revenue from high margin lines, such as brokerage and advisory services, continues to be complimented by expanding revenues from other commission sources such as mutual funds, variable annuities and direct participation programs. Management looks to a diversified revenue stream to provide a degree of protection from market risk.

Commissions

     Commissions from variable annuities, which continued to comprise the largest component of both commission revenue and commission revenue growth, increased 31.6% over the year ago period. Brokerage, which maintained its position as the second largest component of commission revenue, experienced an even higher percentage revenue increase of 39.3%. Commission revenues from mutual funds and direct participation programs also grew strongly.

Commission Revenue
Quarters Ended September 30,

				Percent of total	Percentage increase
Product Type1 :	2007	2006	2007 vs 2006	Increase	2007 vs 2006
Variable Annuities	$ 7,870,474	$ 5,982,628	$ 1,887,846	40.4%	31.6%
Brokerage	6,385,468	4,582,422	1,803,046	38.5%	39.3%
Mutual Funds	3,059,665	2,358,286	701,379	15.0%	29.7%
Direct Participation Programs	2,581,668	2,217,661	364,007	7.8%	16.4%
Other	70,587	148,441	(77,855)	-1.7%	-52.4%
Total Commission Revenue	$ 19,967,862	$ 15,289,438	$ 4,678,422	100.0%	30.6%
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".

     We continue to emphasize recruitment and retention of representatives who generate transactional (brokerage) business, particularly through utilization of our clearing firm’s electronic brokerage platform which enables us to more efficiently conduct brokerage business despite increasing volume. As discussed below, the recent trend of higher revenue growth from

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

fee-based advisory services, compared to commission-based services, reflects parallel efforts by management to grow revenues in the high margin investment advisory services area.

Advisory Fees

     Advisory services typically provide significantly higher margins than non-brokerage broker-dealer products such as variable annuities and mutual funds. See "- Gross Margins", below. Accordingly, we have been encouraging our representatives to transition more of their non-brokerage business to advisory services. We do not dictate the nature or extent of advisory services our representatives provide for their clients. However, we continue to make concerted efforts to attract our representatives to our expanded line of proprietary advisory services programs through education, seminars, tradeshows and direct telemarketing.

     Fees from our advisor-directed managed asset program, A-MAP, where investment advisory services are provided directly by our independent representatives, continue to be the leading source of advisory services revenue. Revenues from this program, which have been contributing an increasing proportion of advisory services revenue, grew by $0.65 million or 61.0% to $1.72 million compared to $1.07 million for the prior period. Supported by our Net Exchange Pro and Pershing direct on-line mainframe brokerage platforms, A-MAP is popular with our representatives because of the opportunities it provides to potentially deliver superior asset management services and overall investment performance at a lower cost. Resulting transactional cost savings have been passed on to our representatives’ clients in the form of lower fees for improved service.

Other Fee Income

     Other fee income, which includes licensing and financial planning fees, increased modestly primarily due to increases in financial planning fees.

Marketing Revenue

     Marketing revenues rose somewhat reflecting an increase in marketing support revenue resulting from product sales.

Other Income

     Other income increased by 17.5% or $0.03 million reflecting an increase in interest earned on brokerage account balances due to higher average daily account balances.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

GROSS MARGINS
	Amount			% of Sales (Retention Rate)		% of Total Gross Margin
	Quarter Ended September 30,			Quarter EndedSeptember 30,		Quarter Ended September 30,		Percent Change
								2007
	2007		2006	2007	2006	2007	2006	vs. 2006
Commissions:
Check and Application	$ 1,756,535	$ 1,372,615		13.0%	13.0%	41.3%	44.1%	28.0%
Brokerage	1,470,639		882,103	23.0%	19.3%	34.5%	28.3%	66.7%
Fixed Insurance	44,837		61,079	100.0%	100.0%	1.1%	2.0%	-26.6%
Underwriting	2,575		8,736	10.0%	10.0%	0.1%	0.2%	-70.5%
Total	3,274,586		2,324,533			77.0%	74.6%	40.9%
Advisory Services:
A-MAP	356,663		237,512	20.8%	22.3%	8.4%	7.6%	50.2%
Other	210,856		98,625	n/a1	n/a1	5.0%	3.1%	113.8%
Total	567,519		336,137	21.8%	23.0%	13.4%	10.7%	68.8%
Licensing	64,960		98,796	n/a1	n/a1	1.5%	3.2%	-34.2%
Marketing	234,806		204,533	n/a1	n/a1	5.4%	6.6%	14.8%
Other Income	115,800		151,595	n/a1	n/a1	2.7%	4.9%	-23.6%
Total Gross Margin	4,257,671		3,115,594	19.4%	18.1%	100.0%	100.0%	36.7%

1. Due to account composition, profit margin retention for these products is not deemed a useful indicator of performance. 

     Gross margin rose by $1.14 million or 36.7% to $4.26 million for the current period. This increase was due primarily to a $0.38 million or 28.0% increase in gross margin derived from our check and application programs and a $0.59 million or 66.7% increase from Brokerage. We also experienced a $0.23 million increase from our advisory service programs that in recent periods have been undergoing steady growth, primarily from our representative-directed A-MAP program.

Check and Application

     Check and application distribution programs generated $1.76 million in gross margins compared to $1.37 million during the prior period. This increase in large part reflected a $2.59 million rise in commissions from sales of variable annuity and mutual funds that contributed approximately $0.34 million to our profit margin. However, gross margin from check and application programs, as a percentage of total gross margin, decreased from 44.1% to 41.3% principally due to an even greater increase in gross margins generated by more profitable brokerage and advisory services.

Brokerage Services

     Brokerage services profit margin increased by $0.59 million or 66.7% principally due to a $0.43 million increase in gross margins from brokerage activities that required a commission payout, including $0.10 million in discounts on clearing fees. These latter fees, as well as a $0.16 million increase in the margin from non-commissionable fees on account balances, contributed to a 3.8% decrease in payouts to representatives as a percentage of total brokerage revenue. However, payouts, as a percentage of commissionable brokerage, remained relatively flat.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

     Our overall margin retention on commissionable services increased from 19.3% in the prior period to 23.0% in the current period as brokerage services represented the leading component of revenue contributing to our growth in gross margin.

Advisory Services

     Gross margin from our A-MAP rep-directed managed assets program grew by $0.12 million or 50.2% . The improvement resulted directly from growth in assets under management in the program that, in management’s opinion, is due primarily to lower fees, improved services and increased awareness of this program.

     The Company also experienced a $0.11 million or 113.8% rise in profit margin from non-AMAP programs, including third-party and, perhaps more importantly, ICA-directed investment advisory programs. The Company is continuing its efforts to bring on additional proprietary investment advisory products that emphasize improved service at lower fee levels and are designed to attract representatives with substantial amounts of client assets under management.

Commission and Advisory Fees Expenses / Retention

     Payouts to our independent representatives, when combined with other advisory and brokerage services costs, decreased to 79.8% of representative-generated revenue, compared to 83.9% for the prior period. The corresponding increase in our overall retention rate from 16.1% to 20.2% reflects a transitioning of our direct business (check and application) to our high margin brokerage and advisory services.

     Management is continuing their efforts to improve margin contribution by recruiting and retaining sophisticated representatives who are duly licensed to offer a variety of brokerage and advisory products and services that generate higher commission retention rates than those obtained from check and application products. Margins from brokerage were boosted by ticket charges and fees pertaining to increases in account balances that flow entirely to the profit margin. Fees received on asset account balances under our investment advisory programs also flow directly to the firm.

OPERATING EXPENSES

      Operating expenses, which experienced a $0.58 million or 18.1% increase, are discussed in detail below.

Compensation and Benefits

     The largest component of operating expenses is compensation and benefits, which increased by $0.37 million or 21.4% . This stems mostly from a $0.24 million increase in general salaries incurred primarily in hiring additional IT, recruitment and accounting personnel. In addition there was a $0.07 million increase in stock compensation for restricted stock awards issued to representatives and employees. Other forms of compensation and benefits, including dental, health, and life insurance, increased by $0.06 million.

Regulatory, Legal and Professional

     Regulatory, legal and professional expenses decreased by $0.41 million or 56.1% . The largest component of this decrease was a $0.65 million decrease in legal fees and settlement costs of which $0.28 million was associated with the settlement of the Massachusetts Proceedings. In addition, the Company received $0.24 million in insurance proceeds reimbursing previously-recorded costs pertaining to a prior period settlement.

     Management believes, although there can be no assurances, that the Massachusetts Proceedings will prove to be atypical, in terms of financial impact, of legal proceedings that will be generated in the future in connection with our on-going operations.

     Legal fees and settlement costs, other than those associated with the Massachusetts Proceedings, decreased by $0.08 million. Management believes this result is directly attributable to the Company’s risk-based management approach that seeks to minimize risk by improving the quality of its associated registered representatives while committing resources to educate and train our sales force, efficiently and accurately process their business, and appropriately supervise their business activities.

     The Company's legal accrual decreased by $0.10 million to $0.56 million as of September 30, 2007, compared to $0.66 million as of September 30, 2006, primarily as a result of the settlement of the Massachusetts Proceedings. As we operate in an increasingly litigious industry embedded with regulation, we will continue to invest significant resources to reduce the likelihood of future litigation exposure by promoting accuracy, ensuring sound operational techniques and applying appropriate compliance measures.

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Advertising

     Advertising, including related marketing expenses, increased by $0.20 million or 84.7% . Management has been aggressively placing advertisements in financial services trade publications to communicate to potential representative recruits.

Communications

     Communications expenses increased by $0.20 million or 149.6% primarily due to an increase in conferences and meetings costs from the hosting of our Pinnacle Conference, which focused on furthering the business development of our top producing representatives. Communication efforts and related expenses, which also include investor/public relations, conference and telephone, have historically been positively correlated with the overall growth of our business. Our website and newsletter, "The Capitalist", have become effective media to communicate to qualified representative recruitment prospects.

Occupancy

     Occupancy expenses increased by $0.06 million or 25.4% primarily as a result of opening Investment Centers in Braintree, MA, Manhattan, NY, and Bedford, NH, and a new Business Center in Miami, FL. The Company also experienced an increase in depreciation due to acquiring additional fixed assets in the form of new computers for additional staff, leasehold improvements and additional furniture and fixtures for the home office in Lynnfield, MA to accommodate the increased number of employees.

Other Administrative

     Other administrative expenses, which include various insurance, postage, office and computer-related expenses, increased by $0.17 million or 106.7% primarily reflecting a FINRA fine resulting from email-related deficiencies. Increased expenses were incurred for employee training and seminars geared to educating our staff on the importance of achieving excellence in providing quality customer service. Finally, the Company paid additional taxes stemming from a use tax audit. Management continues to mount a concerted effort to curtail unnecessary office expenses.

NET INCOME

     Net income totaled $0.26 million, or $.04 per basic and diluted share, compared to a $0.17 million, or $.03 per basic and diluted share, loss for the prior period. The improvement in after-tax results was due to a favorable $0.56 million swing in operating income (loss) partially offset by a countervailing $0.30 million swing in provision (benefit) for income tax. The turnaround in operating income (loss) reflects both substantial increases in revenues and substantial reductions in operating expenses, particularly, regulatory/legal expenses.

COMPARISON OF THE SIX MONTH PERIODS ENDED SEPTEMBER 30, 2007 AND 2006

     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-Q

Quarter Ended 09/30/07

RESULTS OF OPERATIONS
			Percent of Revenue
			Six Months Ended		Percent
	Six Months Ended September 30,		September 30,		Change
					2007
	2007	2006	2007	2006	vs. 2006
Revenues:
Commission	$ 39,675,975	$ 32,748,340	86.5%	88.9%	21.2%
Advisory fees	4,706,537	3,012,497	10.3%	8.2%	56.2%
Other fee income	272,960	196,032	0.6%	0.5%	39.2%
Marketing revenue	729,365	528,947	1.6%	1.4%	37.9%
Other income	449,164	372,275	1.0%	1.0%	20.7%
Total Revenue	45,834,001	36,858,091	100.0%	100.0%	24.4%
Commission and advisory expenses	37,152,948	29,955,545	81.1%	81.3%	24.0%
Gross Profit	8,681,053	6,902,546	18.9%	18.7%	25.8%
Operating Expenses:
Advertising	695,694	501,424	1.5%	1.4%	38.7%
Communications	515,027	200,401	1.1%	0.5%	157.0%
Total Selling Expenses	1,210,721	701,825	2.6%	1.9%	72.5%
Compensation and benefits	4,057,203	4,426,597	8.9%	12.0%	-8.3%
Regulatory, legal and professional	926,893	1,933,042	2.0%	5.2%	-52.1%
Occupancy	595,387	465,509	1.3%	1.3%	27.9%
Other administrative expenses	574,683	488,899	1.3%	1.3%	17.5%
Interest expense	34,216	15,602	0.1%	0.0%	119.3%
Total Administrative Expenses	6,188,382	7,329,649	13.5%	19.9%	-15.6%
Total Operating Expenses	7,399,103	8,031,474	16.1%	21.8%	-7.9%
Operating Income (Loss)	1,281,950	(1,128,928)	2.8%	-3.1%	-213.6%
Income before taxes	1,281,950	(1,128,928)	2.8%	-3.1%	-213.6%
Provision (benefit) for income taxes	556,334	(361,471)	1.2%	-1.0%	-253.9%
Net Income (Loss)	$ 725,616	$ (767,457)	1.6%	-2.1%	-194.5%

AVERAGE PRODUCTION PER REPRESENTATIVE
		Six Months Ended
	September 30, 2007	September 30, 2006	Percentage Change
Commission	$ 39,675,975	$ 32,748,340	21.2%
Advisory	4,706,537	3,012,497	56.2%
Other fee income	272,960	196,032	39.2%
	$ 44,655,472	$ 35,956,869	24.2%
Actual number of representatives	696	753	-7.6%
Average Revenue Per Rep	$ 64,160	$ 47,751	34.4%

REVENUES

     Revenues increased by $9.0 million or 24.4% for the six-month comparative period as top line revenue grew 21.2 % in commissions and 56.2% in advisory fees over the same time frame a year ago.

Page 27

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

 Commissions

	Commission Revenue
	Six Months Ended September 30, 2007 and 2006
				Percent of total	Percentage change
Product Type1 :	2007	2006	2007 vs 2006	Increase	2007 vs 2006
Variable Annuities	$ 15,720,150	$ 13,146,136	$ 2,574,014	37.1%	19.6%
Brokerage	12,204,871	9,828,921	2,375,950	34.3%	24.2%
Mutual Funds	5,895,229	4,851,186	1,044,043	15.1%	21.5%
Direct Participation Programs	5,716,058	4,609,637	1,106,421	16.0%	24.0%
Other	139,667	312,460	(172,794)	-2.5%	-55.3%
Total Commission Revenue	$ 39,675,975	$ 32,748,340	$ 6,927,633	100.0%	21.2%
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".

     Brokerage revenue experienced the largest percentage growth while commissions from variable annuity sales continued to be the leading revenue component. This current growth trend in Brokerage is indicative of our refined business model of attracting highly sophisticated representatives who can potentially flow through a well diversified book of business.

Advisory Fees

     Advisory fees grew by 56.2% during the current period versus the prior period, primarily in the A-MAP program. A-MAP grew 55.0% or by $1.13 million as we continue to strive to service and improve a quality product at reduced fees.

Other Fee Income

     Other fee income increased by 39.2% or $0.08 million compared to the year ago period. The growth in other fee income reflects mostly an increase in planning fees as more of our qualified representatives are providing consulting services to better assist clients in managing their portfolios.

Marketing Revenue

     Marketing revenues grew by 37.9 % or $0.20 million over the prior period. This growth is primarily due to the increase in marketing support revenue resulting from product sales.

Other Income

     Other Income grew by 20.7% or $0.08 million over the year ago period reflecting increased interest income on account balances from our trading accounts.

Page 28

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

GROSS MARGINS
	Amount		% of Sales (Retention Rate)		% of Total Gross Margin
	Six Months		Six Months Ended		Six Months Ended
	Ended September 30,		September 30,		September 30,		% Change
							2007
	2007	2006	2007	2006	2007	2006	vs. 2006
Commissions:
Check & Application	$ 3,553,086	$ 2,889,507	13.0%	12.6%	40.9%	41.8%	23.0%
Brokerage	2,833,363	2,064,156	23.2%	22.5%	32.6%	29.9%	37.3%
Fixed Insurance	85,480	129,753	100.0%	99.5%	1.0%	1.9%	-34.1%
Underwriting	5,419	18,238	10.0%	10.0%	0.1%	0.3%	-70.3%
Total	6,477,348	5,101,654			74.6%	73.9%	27.0%
Advisory Services:	-	-
A-MAP	694,215	458,625	21.8%	22.3%	8.0%	6.6%	51.4%
Other	338,682	360,732	n/a1	n/a1	3.9%	5.2%	-6.1%
Total	1,032,897	819,357	21.3%	23.0%	11.9%	11.8%	26.1%
Licensing	129,068	136,624	n/a1	n/a1	1.5%	2.0%	-5.5%
Marketing	729,364	528,947	n/a1	n/a1	8.4%	7.7%	37.9%
Other income	312,376	315,964	n/a1	n/a1	3.6%	4.6%	-1.1%
Total Gross Margin	8,681,053	6,902,546	19.4%	18.7%	100.0%	100.0%	25.8%
1. Due to account composition, profit margin retention for these products is not deemed a useful indicator of performance.

 Check and Application  

    Gross profit from our direct business (check and application) continues to comprise the largest contribution to the margin; however, as a percentage of total gross margin, it decreased from 41.8% to 40.9% .

Brokerage Services

     Brokerage services profit margin grew by 37.3% or $0.77 million as non-commissionable money market revenue increased by $0.24 million. In addition we experienced a $0.53 million increase in margin from commissionable brokerage activities including a $0.10 million in clearing discounts.

     The growth in margin from brokerage is due in part to a revised fee structure with our clearing firm. Other commissions in the form of 12b-1 trails, ticket charges and sales commissions, and interest earned on money market balances, have made a considerable contribution to our profit margin as brokerage volume increases.

Advisory Services

     Advisory services profit margin grew by 26.1% or $0.21 million reflecting a 51.4% or $0.24 million rise in gross margin generated by our A-MAP rep-directed managed assets program.

Commission and Advisory Fees Expenses

     Commission and advisory fees expenses during the current six-month period were $37.2 million versus $30.0 million in the prior period. As a percentage of revenue generated by representatives (i.e., commissions, advisory fees and other fees) commission and advisory expenses decreased slightly from 83.3% to 83.2% . 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.

Page 29

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

OPERATING EXPENSES

Operating expenses decreased by 7.9% primarily due to a decrease in regulatory, legal and professional services.

Compensation and Benefits

     Compensation and benefits decreased by 8.3% due primarily to non-repetition of prior period restricted stock awards to key management and staff.

Regulatory, Legal and Professional

     The decrease in this expense category stems principally from a decrease in legal fees compared to those incurred in our defense in the Massachusetts Proceedings during the prior period. In addition the Company received insurance proceeds reimbursing certain prior period arbitration settlement costs.

Advertising

     The Company’s advertising expenses increased by 38.74 % over the prior period as management has been committing more resources towards placing advertisements in financial service periodicals to enhance recruitment of independent representatives.

Communications

     Communication expenses rose by 157% principally due to commitment of resources to two conferences for representatives held in the current period to stimulate revenue growth in advisory services and from our top producers.

Occupancy

     Occupancy expenses increased by 27.9 % in the current period versus the year ago six-month period reflecting the opening of new investment centers.

Other Administrative

     Other administrative expenses increased in the current period by 17.5 % versus the prior period primarily due to a FINRA fine regarding our email domain.

NET INCOME

     The Company experienced a profit turnaround for the six-month period in comparison to the prior period. We continued to grow top line revenues in the high margin areas while reducing operating expenses, primarily in legal expenses. Management believes that the $1.49 million profit increase in the current period compared to the prior period demonstrates the viability of our current business model, which stresses recruitment of high-producing representatives and reduction of regulatory risk that has negatively impacted the firm in the past.

LIQUIDITY AND CAPITAL RESOURCES

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

     Cash inflows typically have come primarily from the Company’s core broker-dealer and investment advisory services. Our business operations historically have proven profitable on a yearly basis. An exception was the fiscal year ended March 31, 2007, during which $2.20 million of costs were incurred in connection with the Massachusetts Proceedings. With the settlement of these proceedings in December 2006, management believes, although there can be no assurances, that the profits and positive cash flows achieved in the last two fiscal quarters mark the return of long-term, sustainable profitability and positive cash flow.

     Our historic profitability typically has followed an annual cycle of relatively average profitability during the first and third fiscal quarters, relatively low profitability (or even a loss) during the second fiscal quarter (when many representatives and their clients are on summer vacation), and relatively high profitability during the fourth fiscal quarter (when many representatives and their clients start a new business and investment year).

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

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

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

     As of September 30, 2007, cash and cash equivalents totaled $5.15 million compared to $5.50 million as of March 31, 2007. Working capital as of September 30, 2007 was $7.30 million compared to $5.32 million as of March 31, 2007. The ratio of current assets to current liabilities was 2.40 to 1 as of September 30, 2007 compared to 1.80 to 1 as of March 31, 2007.

     Operations provided cash flow of $0.33 million for the six months ended September 30, 2007 compared to $0.20 million in cash used for the six months ended September 30, 2006. Cash flow from operations, in comparing the current period to the prior period, generated an increase to cash flow of $0.53 million as a result of several factors. We experienced a $1.49 million increase in cash flow from net income as the Company reported a $0.73 million profit in the current period versus a $0.77 million loss in the prior period. Offsetting this increase was a $1.19 million decrease in cash flow from the payment of accrued expenses, primarily related to preferred marketing events and litigation in the current period versus an increase in accrued expenses in the prior period pertaining to the Massachusetts Proceedings.

     Cash inflows from investing activities for the current period totaled $0.10 million, as a treasury note matured on July 1, 2007 in the amount of $0.25 million offset by purchases in property and equipment of $0.12 million. Finally we experienced a $0.83 million decrease in cash flow during the current period pertaining to a short-term obligation for insurance premiums.

     By comparison, for the six months ended September 30, 2006, cash used in operations was $0.20 million. Cash outflows for the prior period included $0.40 million for purchasing equipment, software and leasehold improvements. In addition, the Company had invested $1.98 million in U.S Treasury bills and notes. Finally, from financing activities we paid a $0.25 million cash dividend on June 29, 2006 to shareholders of record as of June 15, 2006.

     Cash disbursements contributing to period ended September 30, 2006 cash flow included $0.58 million for legal-related matters, of which $0.41 million was for legal fees pertaining to the Massachusetts Proceedings.

     Cash disbursements contributing significantly to cash outflows during our most recent quarter included $0.21 million for legal-related matters, of which $0.08 million was for payments made to the “eligible purchasers” as part of the settlement of the Massachusetts Proceedings. In addition, the Company paid out $0.32 million toward short-term financing of insurance premiums along with $0.55 million for two of our preferred conferences, the “Diamond Achiever” and the “West Coast National Convention,” as well as our Pinnacle Conference. Finally we paid out $0.22 million to FINRA. Cash disbursements had reduced an allowable asset, cash, or our net capital during the quarter ended September 30, 2007.

     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, 2007 ICC had net capital of $2.0 million (i.e., an excess of $1.59 million) and a 3.07 to 1 net capital ratio as compared to net capital of $1.05 million (i.e., an excess of $0.52 million) and a 7.59 to 1 net capital ratio as of March 31, 2007.

     The Company’s legal accrual decreased to $0.56 million from $0.66 million as a result of payments of accrued expenses incurred in the prior period pertaining to the Massachusetts Proceedings and various arbitrations filed against the Company. The Company will continue to assess its legal accrual as it pertains to the settlement of the Massachusetts Proceedings and its impact on ICC’s net capital ratio and excess net capital. The Company will record additional accruals as needed in the future if, when and to the extent that it becomes likely that total Massachusetts Proceedings settlement costs will exceed $1,000,000. The Company believes that it currently has ample cash to cover additional accruals and disbursements resulting from these and other arbitrations and proceedings.

Page 31

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

CONTRACTUAL OBLIGATIONS
Contractual Obligations			Payments Due by period
Period		April 1, 2007-March 31, 2008		April 1, 2008-March 31, 2011	April 1, 2011-March 31, 2013	April 1, 2013 and thereafter
	Total	less than 1 year		1-3 years	4-5 years	After 5 years
Fiscal Years Ended March 31,		2008		2009-2011	2012-2013	2014 and thereafter
Short- term loans and notes payable:
short- term borrowings	$ 13,342	$  13,342		-	-	-
Operating leases:	1,830,526	296,330		1,210,084	324,112	-
Total Contractual Obligations	$ 1,843,868	$ 309,672		$ 1,210,084	$ 324,112	$ -

NOTES PAYABLE

       At September 30, 2007 notes payable consisted of debt to finance insurance premiums. These notes are referenced in the table below:

September 30,	Lender	Premium	Principal	Interest Rate
2007	First insurance Funding, Corp.	Directors and Officers, Liability, Fidelity Bond	$ 13,342	7.19%

COMMITMENTS AND CONTINGENCIES

     The Company is obligated under various lease agreements covering offices and equipment. These agreements are considered to be operating leases in accordance with the requirements under FASB 13 "Accounting for Leases". The terms of the leases expire between fiscal year 2008 and 2012. Options to renew for additional terms are included under the lease agreements. The total minimum rental due in future periods under these existing agreements is as follows as of March 31, 2007:

Year ending March 31, 2008	$ 296,330
Year ending March 31, 2009	489,973
Year ending March 31, 2010	379,544
Year ending March 31, 2011	340,567
Year ending March 31, 2012	324,112
Total minimum lease payments	$ 1,830,526

       Certain leases contain provisions for escalation of minimum lease payments contingent upon increases in real estate taxes.

     Total lease expense amounted to $178,024, and $152,928 for quarters ended September 30, 2007 and 2006, and for the six months ended September 30, 2007 and 2006 total lease expense was $354,141 and $300,201, respectively.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk is present in our business due to, among other things, price changes in equities, changes in interest rates, and credit ratings in debt instruments. This risk relates both to financial instruments we hold as investments and those we hold for Brokerage purposes.

     As of September 30, 2007, we held U.S. Treasury bonds with an amortized value totaling $1,245,203. Although we intend to hold these bonds to maturity, if we determined to liquidate our position in these bonds prior to maturity the proceeds from their sale would depend on fluctuations in their market value that reflect, among other things, fluctuations in prevailing interest rates.

     We own an equity position in the Rising Dividend Fund with a market value of $188,039 as of September 30, 2007. The value of this position fluctuates daily.

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     Market risk is present in our normal business activity as a result of our involvement as principal in the execution of brokerage activity and delivery of fixed and variable investment products. Securities inventories are exposed to risk of loss in the event of unfavorable price movements. Securities positions are marked to market on a daily basis. Market making activities are client driven, with the objective of meeting client needs while earning a positive spread. As of September 30, 2007, we held in inventory for brokerage purposes securities valued at $129,837. We conduct our business as a brokerage and advisory firm clearing through another broker dealer on a fully disclosed basis to minimize our market risk. In our view, exposure to market risk, trading volatility and illiquidity of securities held from time to time in the firm’s inventory accounts could potentially have a material adverse effect on our financial position.

ITEM 4. CONTROLS AND PROCEDURES

     Based on an evaluation by our management in which they or persons performing similar functions participated, our principal executive and financial officers have concluded that controls and procedures in place as of the end of the period covered by this report were effective (i) for the purpose of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and (ii) for the purpose of ensuring that material information required to be in a report is made known to management and others, as appropriate, to allow timely decisions regarding required disclosures.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEMS 1A – 3.

       None.

ITEMS 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       The Company held its annual meeting of stockholders on August 23, 2007. Three proposals were acted upon.

Election of directors to one-year terms. All nominees were elected as follows:

Director Nominees	For	Against	Withheld	Abstain	Broker Non-votes
Theodore E. Charles	4,684,522	-	42,369	-	-
Timothy B. Murphy	4,683,674	-	43,217	-	-
Arthur Stickney	4,684,469	-	42,422	-	-
William Atherton	4,684,522	-	42,369	-	-
Robert Martin	4,684,469	-	42,422	-	-

Ratification of UHY, LLP as the Company’s auditors for the fiscal year ending March 31, 2008. Ratified as follows:

For	Against	Withheld	Abstain	Broker Non-votes
4,735,164	1,077	-	1,700	-

Approval of plan of domestication of the Company as a Delaware corporation. Approved as follows:
For	Against	Withheld	Abstain	Broker Non-votes
4,697,110	21,166	-	1,200	-

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ITEM 5. OTHER INFORMATION

   None.

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ITEM 6. EXHIBITS
Exhibit
Number	Description	Location
3.1	Certificate of Incorporation	(1)
3.2	By-Laws	(1)
4.1	Form of Stock Certificate	(2)(Exh. 4.1)
10.1	Employment Agreement with Theodore E. Charles	(2)(Exh. 10.1)
10.2	Employment Agreement with Timothy B. Murphy	(2)(Exh. 10.2)
10.3	The 1994 Stock Option Plan	(3)(Exh. 10.3)
10.4	The 2005 Equity Incentive Plan	(4)(Exh. 4.5)
31.1	Certification of Theodore E. Charles pursuant to Rule 13a-14(a)	(1)
31.2	Certification of Timothy B. Murphy pursuant to Rule 13a-14(a)	(1)
32.1	Certification of Theodore E. Charles pursuant to 18 U.S.C. Section 1350	(1)
32.2	Certification of Timothy B. Murphy pursuant to 18 U.S.C. Section 1350	(1)

(1)	Filed herewith.
(2)	Incorporated by reference to the indicated exhibit to the Registrant’s Registration Statement on Form SB-2 (File No. 333-05327) filed August 14, 2000.
(3)	Incorporated by reference to the indicated exhibit to the Registrant’s Annual Report on Form 10-K for the year ended March 31, 2005.
(4)	Incorporated by reference to the indicated exhibit to the Registrant’s Registration Statement on Form S-8 (File No. 333-43664) filed June 9, 2006

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

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SIGNATURES

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

INVESTORS CAPITAL HOLDINGS, LTD.

 By: /s/ Timothy B. Murphy

 Chief Financial Officer

Date: November 14, 2007

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Exhibit 3.1

CERTIFICATE OF INCORPORATION

OF

INVESTORS CAPITAL HOLDINGS, LTD.

FIRST. The name of the corporation is Investors Capital Holdings, Ltd.

SECOND. The address of the Corporation's registered office in the State of Delaware is One Commerce Center, 1201 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is Agents and Corporations, Inc.

THIRD. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH. The total number of shares of capital stock which the Corporation shall have authority to issue is Ten Million (10,000,000) shares of Common Stock, par value one cent ($.01) per share.

FIFTH. The Corporation shall have perpetual existence.

SIXTH. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to make, alter or repeal the By-Laws of the Corporation as and to the extent provided by the By-Laws.

SEVENTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed by the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said c ourt directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders of the Corporation, as the case may be, and also on the Corporation.

EIGHTH. Election of directors need not be by written ballot unless the By-Laws of the Corporation shall so provide. Meetings of the stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.

NINTH. The Corporation may enter into contracts or transact business (i) with one or more of its directors, officers or stockholders (“Insiders”), (ii) with any corporation, organization or other concern in which any one or more Insiders are directors, officers, stockholders or otherwise interested) and (iii) in which any one or more Insiders is in any way interested; and, in the absence of fraud, no such contract or transaction shall be invalidated or in any way affected by the fact that such Insiders have or may have interests which are or might be adverse to the interest of the Corporation even though the vote or action of Insiders having such adverse interests may have been necessary to obligate the Corporation upon such contract or transaction. At any meeting of the Board of Directors of the Corporation (or of any duly authorized committee thereof) at which any such contract or transaction shall be authorized or ra tified, any such director or directors may vote or act thereat with like force and effect as if he had no such interest, provided in such case the nature of such interest shall be disclosed or shall have been known to the directors or a majority of thereof. A general notice that an Insider is interested in any corporation, organization or other concern of any kind above referred to shall be sufficient disclosure as to the nature of such interest of such Insider with respect to all contracts and transactions with such corporation, organization or other concern. No person shall be disqualified from holding office as a director or officer by

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reason of any such adverse interests unless the Board of Directors shall determine that such adverse interest is detrimental to the interests of the Corporation.

TENTH. A director of the Corporation shall have no personal liability to the Corporation or to its stockholders for monetary damages for breach of fiduciary duty as a director except to the extent that Section 102(b)(7) (or any successor or additional provision) of the General Corporation Law of the State of Delaware, as amended from time to time, expressly provides that the liability of a director may not be eliminated or limited.

ELEVENTH. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation, in the manner now or hereafter prescribed by statutes, and all rights conferred on stockholders herein are granted subject to this reservation.

TWELVETH. The name and mailing address of the incorporator is Steven C. Preskenis, c/o Investors Capital Corporation, 230 Broadway East, Lynnfield, Massachusetts 01940-2320.

     I, the undersigned, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my free act and deed and that the facts herein stated are true, and accordingly have hereunto set my hand this 29th day of August, 2007.

___________________________________
Steven C. Preskenis, Sole Incorporator

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Exhibit 3.2

BY-LAWS

of

Investors Capital Holdings, Ltd.
(a Delaware corporation)

ARTICLE 1
OFFICES

     Section 1.01. Offices. The Corporation may have offices at such places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE 2

MEETINGS OF STOCKHOLDERS

     Section 2.01. Place of Meeting. Meetings of the stockholders shall be held at such place, within the State of Delaware or elsewhere, as may be fixed from time to time by the Board of Directors. If no place is so fixed for a meeting, it shall be held at the Corporation's then principal executive office.

     Section 2.02. Annual Meeting. The annual meeting of stockholders shall be held, unless the Board of Directors shall fix some other hour or date therefore, at 10:00 o'clock A.M. on the third Wednesday of August in each year commencing with the year 2008, if not a legal holiday under the laws of Massachusetts, and, if a legal holiday, then on the next succeeding secular day not a legal holiday under the laws of Massachusetts, at which the stockholders shall elect by plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting.

     Section 2.03. Notice of Annual Meetings. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 days or more than 60 days before the date of the meeting.

     Section 2.04. List of Stockholders. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be so speci fied in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

     Section 2.05. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the President and shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of stockholders owning one-third in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

     Section 2.06. Notice of Special Meetings. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than 10 days nor more than 60 days before the date of the meeting.

     Section 2.07. Quorum; Voting. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date

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is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. When a quorum is present at any meeting, except for elections of directors, which shall be decided by plurality vote, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of statute or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no shares shall be voted pursuant to a proxy more than the earlier of (i) three years after the date of the proxy unless the proxy provides for a longer period, or (ii) such time limit as is mandated by applicable law or any exchange upon which the Corporation’s stock is listed.

     Section 2.08. Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the State, its principal place of business, or an officer or agent of the corporation having cust ody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days after the earliest dated consent delivered in the manner required by this Section to the corporation, written consents signed by a sufficient number of stockholders to take action are delivered in the manner required by this Section to the Corporation. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE 3
DIRECTORS

     Section 3.01. Number and Term of Office; Chairman. The number of directors of the Corporation shall be such number as shall be designated from time to time by resolution of the Board of Directors and initially shall be five. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 3.02 hereof, and, at its first meeting following election of the board, each board of directors shall elect a Chairman who shall preside over all meetings of the board. Each director elected shall hold office for a term of one year and shall serve until his successor is elected and qualified or until his earlier death, resignation or removal. Dir ectors need not be stockholders.

     Section 3.02. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10 percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

     Section 3.03. Resignations. Any director may resign at any time by giving written notice to the Board of Directors, the President, the Secretary or any Assistant Secretary. Such resignation shall take effect at the time of receipt thereof or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

     Section 3.04. Direction of Management. The business of the Corporation shall be managed under the direction of its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders.

     Section 3.05. Place of Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.

     Section 3.06. Annual Meeting. Immediately after each annual election of directors, the Board of Directors shall meet for the purpose of organization, election of officers, and the transaction of other business, at the place where such election of directors was held or, if notice of such meeting is given, at the place specified in such notice. Notice

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of such meeting need not be given. In the absence of a quorum at said meeting, the same may be held at any other time and place which shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by the directors, if any, not attending and participating in the meeting.

     Section 3.07. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board.

     Section 3.08. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman or President on 2 days' notice to each director; either personally (including telephone), or in the manner specified in Section 4.01; special meetings shall be called by the President or the Secretary in like manner and on like notice on the written request of two directors (or of one director, if there be no others).

     Section 3.09. Quorum; Voting. At all meetings of the Board, a majority of the directors shall constitute a quorum for the transaction of business; and at all meetings of any committee of the Board, a majority of the members of such committee shall constitute a quorum for the transaction of business. The act of a majority of the directors present at any meeting of the Board of Directors or any committee thereof at which there is a quorum present shall be the act of the Board of Directors or such committee, as the case may be, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors or committee thereof, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

     Section 3.10. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

     Section 3.11. Participation in Meetings. One or more directors may participate in any meeting of the Board or committee thereof by means of conference telephone or other communications equipment by which all persons participating can hear each other.

     Section 3.12. Committees of Directors. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution, shall have and may exercise all of the powers and authority of the Board of Directors and may authorize the seal of the Corporation to be affixed to all papers which may require it, but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution providing for the issuance of shares of stock adopted by the Board of Directors, fix any preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-Laws of the Corporation; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when requested.

     Section 3.13. Compensation of Directors. Each director shall be entitled to receive such compensation, if any, as may from time to time be fixed by the Board of Directors. Members of special or standing committees may be allowed like compensation for attending committee meetings. Directors may also be reimbursed by the Corporation for all reasonable expenses incurred in traveling to and from the place of each meeting of the Board or of any such committee or otherwise incurred in the performance of their duties as directors. No payment referred to herein shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefore.

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ARTICLE
NOTICES

     Section 4.01. Notices. Whenever, under the provisions of law or of the Certificate of Incorporation or of these By-Laws, notice is required to be given to any director or stockholder, such requirement shall not be construed to necessitate personal notice. Such notice may in every instance be effectively given by depositing a writing in a post office or letter box, in a postpaid, sealed wrapper, or by dispatching a prepaid telegram, cable, telecopy, telex or email or by delivering a writing in a sealed wrapper prepaid to a courier service guaranteeing delivery within 2 business days, in each case addressed to such director or stockholder, at his address as it appears on the recor ds of the Corporation in the case of a stockholder and at his business address (unless he shall have filed a written request with the Secretary that notices be directed to a different address) in the case of a director. Such notice shall be deemed to be given at the time it is so dispatched.

     Section 4.02. Waiver of Notice. Whenever, under the provisions of law or of the Certificate of Incorporation or of these By-Laws, notice is required to be given, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent thereto. Neither the business nor the purpose of any meeting need be specified in such a waiver.

ARTICLE 5
OFFICERS

     Section 5.01. Number. The officers of the Corporation shall be a President, a Secretary and a Treasurer, and may also include one or more Executive Vice Presidents and/or Vice Presidents, one or more Assistant Secretaries and Assistant Treasurers, and such other officers as may be enumerated and elected by the Board of Directors from time to time. Any number of offices may be held simultaneously by the same person.

     Section 5.02. Election and Term of Office; Removal. The officers of the Corporation shall be elected by the Board of Directors. Officers shall hold office at the pleasure of the Board. Any officer may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors.

     Section 5.03. President. The President shall be the chief executive officer and general manager of the Corporation and shall have overall responsibility for the management of the business and operations of the Corporation. He shall see that all orders and resolutions of the Board are carried into effect. In general, he shall perform all duties incident to the office of President, and such other duties as from time to time may be assigned by the Board.

     Section 5.04. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the President. He shall have custody of the corporate seal of the Corporation (if any) and he, or an Assistant Secretary, shall have authority to affix the same to any instrument, and when so affixed it may be attested by his signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.

     Section 5.05. Assistant Secretaries. The Assistant Secretary or Secretaries shall, in the absence or disability of the Secretary, perform the duties and exercise the authority of the Secretary and shall perform such other duties and have such other authority as the Board of Directors or the President may from time to time prescribe.

     Section 5.06. Treasurer. The Treasurer shall be the chief financial officer of the Corporation and shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors or the President, taking proper vouchers for such disbursements, and shall render to the Board of Directors when the Board so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation.

     Section 5.07. Assistant Treasurers. The Assistant Treasurer or Treasurers shall, in the absence or disability of the Treasurer, perform the duties and exercise the authority of the Treasurer and shall perform such other duties and have such other authority as the Board of Directors or the President may from time to time prescribe.

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ARTICLE 6
INDEMNIFICATION OF DIRECTORS AND OFFICERS 

   Section 6.01. Indemnification. Any person who was or is a party or is threatened to be made a party toany threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving while a director or officer of the Corporation at the request of the Corporation as a director, officer, employee, agent, fiduciary or other representative of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall be indemnified by the Corporation against expenses (including attorneys' fees), judgments, fines, excise taxes and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding to the full extent permissible under Delaware law.

     Section 6.02. Advances. Any person claiming indemnification within the scope of Section 6.01 shall be entitled to advances from the Corporation for payment of the expenses of defending actions against such person in the manner and to the full extent permissible under Delaware law.

     Section 6.03. Procedure. On the request of any person requesting indemnification under Section 6.01, the Board of Directors or a committee thereof shall determine whether such indemnification is permissible or such determination shall be made by independent legal counsel if the Board or committee so directs or if the Board or committee is not empowered by statute to make such determination.

     Section 6.04. Other Rights. The indemnification and advancement of expenses provided by this Article 6 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any insurance or other agreement, vote of shareholders or disinterested directors or otherwise, both as to actions in their official capacity and as to actions in another capacity while holding an office, and shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such person.

     Section 6.05. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, agent, fiduciary or other representative of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of these By-laws.

     Section 6.06. Modification. The duties of the Corporation to indemnify and to advance expenses to a director or officer provided in this Article 6 shall be in the nature of a contract between the Corporation and each such director or officer, and no amendment or repeal of any provision of this Article 6 shall alter, to the detriment of such director or officer, the right of such person to the advancement of expenses or indemnification related to a claim based on an act or failure to act which took place prior to such amendment, repeal or termination.

ARTICLE 7
CERTIFICATES OF STOCK

     Section 7.01. Stock Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate in the form prescribed by the Board of Directors signed on behalf of the Corporation by the President or an Executive Vice President or Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares owned by him in the Corporation. Any or all signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transf er agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent, or registrar at the date of issue.

     Section 7.02. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it m ay direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

     Section 7.03. Transfers of Stock. Upon surrender to the Corporation or the transfer agent of the

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Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

     Section 7.04. Fixing Record Date. The Board of Directors of the Corporation may fix a record date for the purpose of determining the stockholders entitled to notice of, or to vote at, any meeting of stockholders or any adjournment thereof, or to consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. Such record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and such record date shall not be (i) in the case of such a meeting of stockholders, more than 60 nor less than 10 days before the date of the meeting of stockholders, or (ii) in the case of consents in writing without a meeting, more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors, or (iii) in other cases, more than 60 days prior to the payment or allotment or change, conversion or exchange or other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting.

     Section 7.05. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of stock to receive dividends and to vote as such owner, and shall be entitled to hold liable for calls and assessments a person registered on its books as the owner of stock, and shall not be bound to recognize any equitable or other claim to, or interest in, such stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE 8
AMENDMENTS

     Section 8.01. Amendments. These By-Laws may be altered, amended or repealed, and new By-Laws may be adopted, by the stockholders or by the Board of Directors at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such special meeting.

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EX-31

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Exhibit 31.1

CERTIFICATION

I, Theodore E. Charles, 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 registrant as of, and for, the periods presented in said report;
4.	The registrant's other certifying officer(s) 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) for the registrant 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 to the registrant, 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)	Not applicable.
	c)	Evaluated the effectiveness of the registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting.

Date: November 14, 2007

By: /s/ Theodore E. Charles

Theodore E. Charles, Chairman,
Chief Executive Officer and Director
(principal executive officer)

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EX-31

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Exhibit 31.2

CERTIFICATION

I, Timothy B. Murphy, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Investors Capital Holdings, Ltd.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in said report;
4.	The registrant's other certifying officer(s) 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) for the registrant 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 to the registrant, 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)	Not applicable.
	c)	Evaluated the effectiveness of the registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting.

Date: November 14, 2007

By: /s/ Timothy B. Murphy

Timothy B. Murphy, President,
Treasurer, Chief Financial Officer and Director
(principal financial officer)

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EX-32

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Exhibit 32.1

CERTIFICATION

I, Theodore E. Charles, 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 14, 2007

By: /s/ Theodore E. Charles

Theodore E. Charles, Chairman,
Chief Executive Officer and Director
(principal executive officer)

Page 1

EX-32

Investors Capital Holdings, Ltd. report on form 10-Q

Quarter Ended 09/30/07

Exhibit 32.2

CERTIFICATION

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 14, 2007

By: /s/ Timothy B. Murphy

Timothy B. Murphy, President,
Treasurer, Chief Financial Officer and Director
(principal financial officer)

Page 1