Management's discussion and analysis reviews our consolidated financial condition as of March 31, 2009 and 2008, the consolidated results of operations for the years ended March 31, 2009 and 2008 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-K. Unless context requires otherwise, as used in this Management's Discussion and Analysis (i) the "current period" means the fiscal year ended March 31, 2009, (ii) the "prior period" means the fiscal year ended March 31, 2008, (iii) an increase or decrease compares the current period to the prior period, and (iv) all non-comparative amounts refer to the current period.

FORWARD-LOOKING STATEMENTS

The reader is urged to read the information contained in the "Forward-Looking Statements" section at the beginning of this report for a discussion of the use of forward-looking statements in this report as well as risks and uncertainties in attempting to predict our future performance based upon such statements.

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 these and other external factors.

OUR BUSINESS

We operate primarily through our subsidiary, ICC, as a broker-dealer and, doing business as ICA, as a registered investment advisor, with a national network of independent financial representatives.

Broker-Dealer Services

We, through our independent broker-dealer representatives, provides broker-dealer services in support of trading and investment by our representatives' customers in securities, including corporate equity and debt securities, U.S. Government securities, municipal securities, mutual funds, limited partnerships and other alternative investments, variable annuities and variable life insurance. We also provide such related services as market information, internet brokerage, portfolio tracking facilities and records management.

Investment Advisory Services

We, through our investment advisor representatives, provide investment advisory services, including asset allocation and portfolio rebalancing, for our representative's customers. In the past, investment advisory services were performed by both ICC and EPA. Over the last few years, we consolidated our investment advisory services into ICA, and EPA ceased operations and was dissolved during the fiscal quarter ended June 30, 2008.

Recruitment and Support of Representatives

A key component of our business strategy is to recruit well-established, productive representatives who generate revenues in high margin services and products. Additionally, we assist our representatives in developing and expanding their business by providing a variety of support services and a diversified range of investment products for their clients. We focus 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 trading systems, targeted financial assistance and a network of communication links with investment product companies. Regional and national conventions provide forums for interaction to improve product knowledge, sales and client satisfaction. In addition, 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 largest segment of our revenues is obtained through a check and application process where a check and a product application is delivered to us for processing that includes principal review and submission to the investment company or clearing firm. Investments in technology are facilitating our migration over time from a paper intensive to a virtually paperless process. This shortens the transaction cycle, reduces errors and creates greater efficiencies. We continue to invest in technologies that provide more efficient processes resulting in improved productivity.

Online Brokerage

Registered representatives can efficiently submit a wide range of security investments online through the use of our remote automated brokerage platform for trade execution.

Bond Brokerage

Our fixed-income brokerage desk uses a network of regional and primary dealers to execute trades across a broad array of fixed income asset classes. The desk also utilizes several dealer-only electronic services that allow the desk to offer inventory and to execute trades. Our fixed income traders work with our representatives to develop portfolios for clients. This area provides an investment alternative for investors who have become interested in retirement income, and it has potential for growth during an interest rate favorable environment.

Asset Allocation

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

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 (detailed in Footnote 2 to the Company's Consolidated Financial 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 consolidated financial statements. Due to their nature, estimates involve judgment based upon available information. Actual results or amounts could differ from estimates and the difference could have a material effect on the consolidated financial statements. Therefore, understanding these policies is important to understanding the reported results of operations and the financial position of the Company.

Off-Balance Sheet Risk

We execute securities transactions on behalf of our customers. If either the customer or 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.

Reserves

We record reserves related to legal proceedings in "accrued expenses" in the consolidated balance sheet. The determination of these reserve amounts requires significant judgment on the part of management. Many factors are considered 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 one of our employees or representatives; 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 or credit to earnings in that period. The assumptions of management in determining the estimates of reserves may be incorrect and the actual costs upon disposition of a legal proceeding could be greater or less than the reserved amount.

RISK MANAGEMENT

Risk is an inherent part of our business and activities. Risk management is critical to our financial strength and profitability and requires robust auditing, constant communications, sound judgment and knowledge of financial trends and the economy as a whole.

Senior management takes an active role in the risk management process. The principal risks involved in our business activities are market, operational, regulatory and legal.

Market Risk

Market risk is the risk attributable to common macroeconomic factors such as gross domestic product, employment, inflation, interest rates, budget deficits and consumer sentiment. Consumer and producer sentiment is critical to our business. The level of consumer confidence determines their willingness to spend, especially in the financial markets. It is the willingness to spend in the financial markets that is key to our business. A shift in spending in this area could negatively impact us. In addition, declines in market values negatively impact investment advisory revenues that are based upon the value of assets under management. We constantly monitor these economic trends in order to enhance and broaden our product line to mitigate potential negative impact of such trends.

Operational Risk

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

Regulatory and Legal Risk

Regulatory and legal risk includes non-compliance with applicable legal and regulatory requirements and the risk of a large number of customer claims that could result in adverse judgments against us. We are subject to extensive regulation in the various jurisdictions in which it operates, and we maintain a panoply of procedures to address issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds, credit granting, collection activities, money-laundering and record keeping. However, compliance procedures, no matter how stringent and comprehensive, can only limit, but not totally prevent, the institution of regulatory and legal proceedings, the outcomes and consequences of which typically cannot be reasonably foreseen or quantified.

In the normal course of business, we continue to be the subject of numerous civil actions and arbitrations arising out of customer complaints relating to our alleged activities as a broker-dealer or investment advisor, as an employer or as a result of other business activities. In line with general industry experience, the volume of such complaints has trended upward during the current financial downturn.

Effects of Inflation

Our assets primarily are liquid in nature and not significantly affected by inflation. Management believes that the replacement cost of property and equipment will not materially affect operating results. However, the rate of inflation can affect our expenses, including, without limitation, employee compensation and benefits, communications and occupancy, which may not be readily recoverable through charges for services provided.

KEY INDICATORS OF FINANCIAL PERFORMANCE

We periodically review and analyze 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 Adjusted EBITDA (as defined below), productivity and practice diversification of representatives, top line commission and advisory services revenues, gross margins, operating expenses, legal costs, taxes and earnings per share.

The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this report.

RESULTS OF OPERATIONS

                                                                                          Percent of Revenue
                                                                    Year Ended March 31,               Year Ended March 31,    Percent Change
                                                                  2009                  2008             2009        2008       2009 vs. 2008
Revenues:
   Commission                                             $         68,219,314  $        77,545,491        83.6%       85.2%       -12.0%
   Advisory fees                                                    11,090,508           10,504,031        13.6%       11.5%        5.6%
   Other fee income                                                    804,877            1,060,505         1.0%        1.2%       -24.1%
   Marketing revenue                                                   981,100            1,143,113         1.2%        1.3%       -14.2%
   Other income                                                        511,589              732,010         0.6%        0.8%       -30.1%
Total revenue                                                       81,607,388           90,985,150       100.0%      100.0%       -10.3%

Commission and advisory fees                                        65,609,588           73,388,303        80.4%       80.7%       -10.6%

Gross profit                                                        15,997,800           17,596,847        19.6%       19.3%       -9.1%

Operating expenses:
   Advertisement and marketing                                       1,279,756            1,538,071         1.6%        1.7%       -16.8%
   Communications                                                    1,060,641            1,039,911         1.3%        1.1%        2.0%
                Total selling expenses                               2,340,397            2,577,982         2.9%        2.8%       -9.2%

   Compensation and benefits                                         9,135,686           10,626,790        11.2%       11.6%       -14.0%
   Regulatory, legal and professional                                3,805,231            2,516,623         4.7%        2.8%       51.2%
   Occupancy                                                         1,032,914            1,162,672         1.3%        1.3%       -11.2%
   Other administrative expenses                                     1,815,393            1,286,605         2.2%        1.4%       41.1%
  Interest expense                                                      36,845               58,529         0.0%        0.1%       -37.0%
                 Total administrative expenses                      15,826,069           15,651,219        19.4%       17.2%        1.1%

Total operating expenses                                            18,166,466           18,229,201        22.3%       20.0%       -0.3%

Operating loss                                                     (2,168,666)            (632,354)        -2.7%       -0.7%       243.0%
Loss before taxes                                                  (2,168,666)            (632,354)        -2.7%       -0.7%       243.0%
Provision (benefit) for income taxes                                 (338,667)               29,104        -0.4%        0.0%      -1263.6%
Net loss                                                 $         (1,829,999)  $         (661,458)        -2.2%       -0.8%       176.7%

Adjusted EBITDA                                           $          (261,102)  $           862,647        -0.3%        0.9%      -130.3%
  Income tax benefit                                                   351,658              187,959        -0.4%       -0.2%       87.1%
  Interest expense                                                    (36,845)             (58,529)         0.0%        0.1%       -37.0%
  Income tax expense                                                  (12,991)            (217,063)         0.0%        0.2%       -94.0%
  Depreciation                                                       (386,625)            (380,824)         0.5%        0.4%        1.5%
  Non-cash compensation                                              (844,702)          (1,055,648)         1.0%        1.2%       -20.0%
  Non-recurring professional fees to evaluate strategic
   business opportunities                                            (639,392)                    -         0.8%        0.0%         -
Net loss                                                 $         (1,829,999)  $         (661,458)        -2.2%       -0.8%       176.7%

Adjusted EBITDA

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

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

PRODUCTIVITY AND PRACTICE DIVERSIFICATION OF REPRESENTATIVES

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

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

Productivity

  A key metric that we use to assess the average quality of our producing
(non-staff) representatives is per capita rep-generated revenue based on a
rolling 12-month period. Data for the 12-month periods ended March 31, 2009 and
2008 are presented below.

                                                  Year Ended                                     % Increase/
                                         March 31, 2009     March 31, 2008     Incease/decrease   decrease
Rep-generated revenue:
 Commission                          $      68,219,314  $      77,545,491   $      (9,326,177)     -12.0%
 Advisory                                   11,090,508         10,504,031              586,477      5.6%
 Other fee income                              804,877          1,060,505            (255,628)     -24.1%
                                    $       80,114,699  $      89,110,027   $      (8,995,328)     -10.1%
Number of representatives                          651                689                 (38)     -5.5%
Average revenue per representative   $         123,064  $         129,332    $         (6,268)     -4.8%

We believe that the 4.8% decline in per capita rep-generated revenue compares favorably with percentage drops in revenue widely experienced in comparable segments of the financial industry during the twelve months ended March 31, 2009.

Practice Diversification

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

REVENUES

Revenues decreased by $9.38 million, or 10.3%, to $81.61 million, led by a $9.33 million or 12.0% decline in commissions offset by a $0.59 million or 5.6% increase in advisory services revenue. The decline in commissionable revenues was mostly attributed to a drop off in investments in our check and application business. Decreased investments in this category reflected the current economic environment.

Revenues from advisory services increased primarily as a result of the relocation of assets from brokerage commission accounts to investment advisor accounts due to the repeal of the regulatory rule commonly referred to as the "Merrill Lynch rule". Otherwise revenues from advisory services would have remained relatively flat for the comparative twelve month periods.

The "Merrill Lynch" rule (SEC Rule 202), which allowed fees based on assets in a client's brokerage account (i.e., fee based commissions), was repealed and, effective October 1, 2007, assets were required to be relocated to either investment advisor accounts or commission-based brokerage accounts. The new rule prohibits brokerage representatives from charging a fee for investment advice on brokerage accounts unless they are registered as investment advisor representatives under the 1940 Investment Advisor Act.

Commissions

  Commission revenue fell by 12.0%, led by a 10.3% drop in variable annuities,
brokerage and direct mutual funds sales. These decreases reflected a significant
decline in financial asset values and resulting flight from these product
categories to investments regarded to be more secure, including money market
funds and treasury bonds.

                                            Fiscal Year Ended                   Increase/         Percentage     Percentage
                                                March 31,                        decrease          of Total   Increase/decrease
                                           2009             2008               2009 vs. 2008       decrease     2009 vs. 2008
Commission Revenue:
 Variable Annuities             $        28,433,022  $        31,695,917   $        (3,262,895)     35.0%          -10.3%
 Brokerage(1)                            22,936,314           25,668,157            (2,731,843)     29.3%          -10.6%
 Direct Participation Programs            9,601,454           10,401,831              (800,377)      8.6%           -7.7%
 Direct Mutual Funds Sales                7,004,834            9,478,724            (2,473,890)     26.5%          -26.1%
 Other                                      243,690              300,861               (57,171)      0.6%          -19.0%

Total Commission Revenue        $        68,219,314  $        77,545,491   $        (9,326,177)     100.0%         -12.0%

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

Advisory

Responding to industry trends and increasing client demand, we have endeavored to assist our representatives in transitioning more of their business to advisory services. We do not dictate the general 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.

Our advisor-directed managed assets program, A-MAP, where investment advisory services are provided directly by our independent representatives, continues to be the leading source of advisory services revenue. Revenues from this program decreased by $0.65 million or 9.3% due to a decrease in assets under management which, in turn, reflected a drop in new investment dollars driven principally by market-wide declines in asset values.

Supported by our Net Exchange Pro and Pershing direct on-line mainframe brokerage platforms, A-MAP is still popular with our representatives because of the opportunities it provides to 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.

The 5.6% increase in total advisory revenue principally reflected the relocation of assets from fee-based brokerage accounts into advisory fee accounts due to the repeal of the above-described "Merrill Lynch rule". In addition, there was a $0.25 million increase in revenues from new investment in our ICA-directed F Map program.

. . .