UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C.  20549
 
 FORM
        10-K/A
 
 T
              Annual
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934 for the fiscal year ended September 30,
                  2007
 
 Commission
        File Number
        0-15245
 
 ELECTRONIC
        CLEARING HOUSE, INC.
 (Exact
        name of registrant as specified in its charter)
 
 
  Nevada
              
              93-0946274(State
                  or other jurisdiction ofincorporation
                  or
                  organization)
              
              (IRS
                  Employer
                  Identification No.)730
                  Paseo Camarillo, Camarillo, California
              
              93010(Address
                  of principal executive offices)
              
              (Zip
                  Code)
 
 
 Registrant's
        telephone number,
        including area code:(805)
        419-8700, fax number:(805)
        419-8682
 
 Securities
        registered pursuant to Section 12(b) of the Act:
 
 Title
                  of each
                  class
              
              Name
                  of each exchange
                  on which registeredNone
              
              None
 
 Securities
        registered pursuant to Section 12(g) of the Act:
 Common
        Stock, $0.01 par value
 (Title
        of
        class)
 
 Indicate
        by check mark if the registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act.  Yes£Noþ
  Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the Act.  Yes £No þ
  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:YesþNo£
  Indicate
        by check mark if
        disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
        (Sec.229.405 of this
        chapter) is not contained herein, and will not be contained, to the best
        of
        registrant’s knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to this
        Form 10-K.£
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer.  See definition of
        accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange
        Act.
        (Check one):
  Large
                  accelerated filer  £
              Accelerated
                  filer  þ
              Non-accelerated
                  filer  £
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).  Yes£No þ
 
 Based
        on
        a closing price of $11.61 as reported by the NASDAQ Stock Market on March
        31,
        2007, the aggregate market value of the voting and non-voting common equity
        held
        by non-affiliates was $73,491,799 .
 
 As
        of
        November 30, 2007, the Registrant had outstanding  7,025,329 shares of
        Common Stock.
 
 DOCUMENTS
        INCORPORATED BY REFERENCE – None
  
 
  EXPLANATORY
        NOTE
 
 
 This
        Amendment No. 1 to Annual Report on Form 10-K/A is being filed to amend and
        restate Part III of our Annual Report on Form 10-K for the year ended September
        30, 2007, filed with the Securities and Exchange Commission on December 14,
        2007.  Except as expressly noted herein, this Amendment does not
        reflect events occurring after the December 14, 2007 filing date of our original
        Annual Report, and we do not undertake to update any item of our original
        Annual
        Report, except in each case to reflect the changes discussed in this Amendment.
        Accordingly, this Amendment should be read in conjunction with the original
        Annual Report.
 
 As
        a
        result of these amendments, we are also filing as exhibits to this Amendment
        the
        certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
        2002.  Because no financial statements are contained within this
        Amendment, we are not including certifications pursuant to Section 906 of
        the
        Sarbanes-Oxley Act of 2002.
  2
 
 ELECTRONIC
        CLEARING HOUSE, INC.
 INDEX
        TO FORM 10-K
 
 
 PART
                  III
              
              
              
              4ITEM
                  10.
              
              Directors,
                  Executive Officers and Corporate Governance
              
              4ITEM
                  11.
              
              Executive
                  Compensation
              
              8ITEM
                  12.
              
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              
              20ITEM
                  13.
              
              Certain
                  Relationships and Related Transactions, and
                  Director Independence
              
              23ITEM
                  14.
              
              Principal
                  Accounting Fees and Services.
              
              24PART
                  IV
              
              
              
              25ITEM
                  15.
              
              Exhibits,
                  Financial Statement Schedules
              
              25
  3
 Index
  PART
        III
 
 ITEM10. Directors,
          Executive
          Officers and Corporate Governance
 
 The
        executive officers and directors of ECHO are:
 
 Name
              
              Position
              
              Date
                  first becameOfficer or
                  DirectorCharles
                  J. Harris
              
              Director,
                  Chief Executive Officer
              
              2005William
                  Wied
              
              Chief
                  Information Officer
              
              2006Alice
                  L. Cheung
              
              Chief
                  Financial Officer, Treasurer
              
              1996Karl
                  Asplund
              
              Senior
                  Vice President
              
              2006Sharat
                  Shankar
              
              Senior
                  Vice President
              
              2003Patricia
                  M. Williams
              
              Senior
                  Vice President
              
              1997Jack
                  Wilson
              
              Senior
                  Vice President
              
              1994Kris
                  Winckler
              
              Senior
                  Vice President
              
              1999Steve
                  Hoofring
              
              Senior
                  Vice President
              
              2003Rick
                  Slater
              
              Chief
                  Technology Officer, Vice President
              
              1998Shawn
                  Alikian
              
              General
                  Counsel
              
              2007Herbert
                  L. Lucas, Jr.
              
              Director
              
              1991Aristides
                  W. Georgantas
              
              Director
              
              1999Richard
                  D. Field
              
              Director
              
              2004Jerry
                  McElhatton
              
              Director
              
              2007Keith
                  B. Hall
              
              Director
              
              2007
 
 
 CHARLES
        J. HARRIS, age 45, joined ECHO in September 2005
        as
        President, Chief Operating Officer and a Director to serve on the Board of
        Directors of ECHO.  In July
        2007, he was appointed Chief Executive Officer when the then-current CEO
        retired. Prior to joining the Company, Mr. Harris served in executive,
        operational and sales leadership positions at prominent organizations including
        Paymentech and Electronic Data Systems.  His last position was as
        President of Merchant Link, a wholly-owned subsidiary of Paymentech, which
        supplies electronic payment technologies and outsourced services to the
        point-of-sale market.
 
 WILLIAM
        WIED, age 39, joined ECHO in January 2006
        as the
        Company’s Chief Information Officer. Prior to joining ECHO, Mr. Wied was
        the
        Director of Software Technology for TransCore LP/Roper Industries, Scottsdale,
        Arizona. Prior to that, he served as Vice President of Engineering for
        CarrierPoint, Inc., a division of the TransCore LP group of companies. Mr.
        Wied’s background includes responsibility in the areas of design, development
        and deployment of enterprise software solutions in a number of different
        industries including semiconductor, telecommunications, retail and
        transportation logistics. Mr. Wied resigned from the company on October 31,
        2007.
 
 4
 Index
  ALICE
        L.
        CHEUNG, age 50, has served as Treasurer and Chief Financial Officer since
        July
        1996.  Ms. Cheung became a Certified Public Accountant in May
        1982.  From February 1988 to January 1996, Ms. Cheung was the
        Treasurer and Chief Financial Officer of American Mobile Systems (AMS). AMS
        merged with Nextel Communications, Inc. in 1995.  Ms. Cheung is an
        active member of the American Institute of Certified Public Accountants and
        Financial Executive Institute.
  KARL
        ASPLUND, age 46, joined ECHO in May 2006 in
        the newly
        established position of Senior Vice President of Sales.  Before
        joining ECHO, Mr.
        Asplund was the Senior Vice President of Genpass Technologies in Irving,
        Texas.  Prior to that, he served as Group Manager of Business
        Development for First USA/Paymentech and was the Founder and President of
        Merchant Card Management Systems.
  SHARAT
        SHANKAR, age 37, joinedECHOin June 2003 as Vice President Risk
        Management and Business Intelligence and in December 2003, he was promoted
        to
        Senior Vice President.  In April 2005,Mr.Shankarwas appointed to hold the position of
        General Manager Check Services. In January 2006, he was given the additional
        responsibility of building and leading the strategic partnership group focused
        on growth through mutually beneficial alliances.  Prior to joiningECHO,
        Mr. Shankar worked at TeleCheck for
        approximately eight years where he held a variety of positions leading up
        to
        Vice President of Risk Management. Prior to TeleCheck,Mr.Shankarheld positions at MetLife as well as
        Hong Kong and Shanghai Bank,Madras,India.
   PATRICIA
        M. WILLIAMS, age 42, joined ECHO in September 1996,
        serving as Director of Program Management. Ms. Williams was appointed Vice
        President Corporate Program Management in October 1997 and Vice President
        Check
        Services in October 2001. In June of 2003, Ms. Williams was appointed to
        the
        position of Vice President Sales and Marketing and in December 2003, was
        promoted to Senior Vice President. In April 2005 Ms. Williams was appointed
        to
        hold the position of General Manager of Credit Card Services. Prior to
        joiningECHO, Ms.
        Williams was an Operations Manager for Bank of America Systems Engineering
        in
        San Francisco. Ms. Williams has also served as a Senior Program manager for
        the
        Los Angeles office of LANSystems, Inc., a nationwide systems integrator as
        well
        as a Senior Project Manager and Systems Engineer for Bank of America Systems
        Engineering in Los Angeles.
  JACK
        WILSON, age 63, has served as Vice President of Merchant Services since June
        1994 and was Director of Bankcard Relations for ECHO from October 1992
        until
        May 1994.  In December 2003, he was promoted to Senior Vice President
        Merchant Services and in April 2005, he was appointed to the position of
        Senior
        Vice President Credit Card Services. Mr. Wilson served as Vice President
        for
        Truckee River Bank from August 1989 until September 1992.  Previously,
        he was Senior Vice President/Cashier of Sunrise Bancorp and a Vice President
        of
        First Interstate Bank.
  KRIS
        WINCKLER, age 42, joined ECHO in April, 1999,
        as Vice
        President of ECHO’s
XPRESSCHEX
        subsidiary.  In December 2003, he was promoted to Senior Vice
        President Product and Strategic Planning and in April 2005, he was appointed
        to
        the position of Senior Vice President Check Services. Prior to joining ECHO, Mr. Winckler
        was a
        consultant at Andersen Consulting and the President of Magic Software, a
        company
        specializing in check verification, conversion, and ACH software.  Mr.
        Winckler has been active in the check and collection industry for over ten
        years
        and has been a member of the Electronic Check Council of NACHA since
        1998.
  RICK
        SLATER, age 46, joined ECHO in May 1995 as
        Vice
        President of Computer Based Controls, Inc. (“CBC”).  Mr. Slater was
        appointed President of CBC in December 1995, Vice President of ECHO in November 1998
        and
        Chief Technology Officer in October 1999, focusing on security, regulatory,
        process improvement, and strategic technical planning.  Prior to
        joining ECHO, Mr.
        Slater was President of Slater Research, which provided contract engineering
        services to various institutions.  During this time, Mr. Slater
        directly participated in the U.S. Coast Guard COMSTA upgrade project including
        site surveys, systems design and system upgrade integration in a number of
        sites
        within the U.S.  Prior to this position, Mr. Slater served as a group
        leader at Aiken Advanced Systems.
  STEVE
        HOOFRING, age 47, joined ECHO in October 2001
        as
        Implementation Manager for the Check Services group and was appointed Vice
        President Visa POS Check and Client Services in October 2003 and Senior Vice
        President Operations in August 2005. Mr. Hoofring was President of Running
        Dog
        Software, Inc., which developed ‘Enterprise’ software for small to medium size
        businesses.  Prior to this, Mr. Hoofring held several management
        positions with Emerson Power Transmission, a subsidiary of Emerson Electric,
        Inc.
  SHAWN
        ALIKIAN, age 37, joined ECHO as General Counsel
        in
        May 2007. Mr. Alikian was the founder and Executive Vice President of After
        Hours Pediatrics, Inc., an exclusive pediatric urgent care
        center.  Prior to this, Mr. Alikian was Division Counsel and Senior
        Vice President of Corporate Development at Homestore, Inc. In addition, Mr.
        Alikian was the General Counsel at Homes.com, Inc. and practiced as a corporate
        attorney at several large law firms.
  5
 Index
  HERBERT
        L. LUCAS, JR., age 81, has been a Director since 1991. He served as President
        from 1972 to 1981 of Carnation International in Los Angeles and as a member
        of
        the Board of Directors of the Carnation Company.  Since 1982, Mr.
        Lucas has managed his family investment business.  He has served on
        the Board of Directors of various financial and business institutions including
        Wellington Trust Company, Arctic Alaska Fisheries, Inc., Scolr Pharma, Inc.
        and
        Sunworld International Airways, Inc.  Mr. Lucas has served as a
        Trustee of The J. Paul Getty Trust, the Los Angeles County Museum of Art,
        The
        Morgan Library, National Association of Independent Schools and Winrock
        International. He was formerly a member of the Board of Trustees of Princeton
        University.
   ARISTIDES
        W. GEORGANTAS, age 63, has served as a Director since February
        1999.  Mr. Georgantas, prior to his retirement, was Executive Vice
        President and Chief Operating Officer at Chase Manhattan Bank’s Global Asset
        Management/Private Banking Division.  He serves as a director of
        Horizon Blue Cross Blue Shield of New Jersey, the Glenmede Corporation, the
        Glenmede Trust Company, Mathematica Policy Research, Inc., the Pew Charitable
        Trusts, and the Rita Allen Foundation.
   RICHARD
        D. FIELD, age 67, became a Director of ECHO in July 2004.
        Mr. Field
        has worked in the financial services industry for over 40 years as an executive
        of the Bank of New York, Chase, and Citigroup, and a director of Mastercard
        International and Chairman of its U.S. Board.  Since retiring from
        full time employment in 1997, he has continued his career in the specialty
        financial areas as a co-founder and director of LendingTree, Inc. as well
        as
        serving on the boards of Providian Financial Corporation and HPSC,
        Inc.
   KEITH
        B.
        HALL, age 54, became a director in October 2007.  Mr. Hall recently
        retired as the Senior Vice President and Chief Financial Officer of LendingTree,
        Inc., which went public under his tutelage in 2000.  LendingTree was
        subsequently purchased by InterActive Corp. (IACI).  Prior to
        LendingTree, Mr. Hall held chief financial officer positions with three public
        companies (Broadway & Seymour, Inc., Loctite Corporation, and Legent
        Corporation), all of which were subsequently acquired. He also was employed
        for
        over twelve years in various financial positions at United Technologies
        Corporation (UTX), including chief financial officer of Carrier Corporation’s
        North American Operations. Mr. Hall currently serves on the Board of
        privately-held NewRiver, Inc. and on the Board of Trustees at Coe
        College.
   JERRY
        McELHATTON, age 68, became a Director of ECHO in July 2007.
        Mr.
        McElhatton served as the President of Global Technology and Operations for
        MasterCard International from 1994 to 2005 and as President and Chief Executive
        Officer of Payment Systems Technology and Consulting from 1988 to
        1994.  Mr. McElhatton currently is President of Virtual
        Resources, Inc. which provides strategic direction, consulting, and managed
        services to numerous payment systems, technology clients and has a
        management contract and holds the position of CEO of a major call center
        company.  Additionally, he serves as a director on the board of Center
        for Security Technologies, Enterprise Bank and Trust, as well as serving
        on the
        Board of Advisors of the Washington University Business School and a Trustee
        for
        the University of Dallas.
   All
        directors are elected to three year terms by the stockholders and serve until
        their respective terms have expired. The Annual Meeting of Stockholders for
        the
        fiscal year ended September 30, 2006 was held on July 2, 2007, and the election
        of Class II directors was held at that time.  All officers serve at
        the pleasure of our Board of Directors.
   Code
        of Ethical Conduct
  Our
        Board
        of Directors has adopted a Code of Ethical Conduct (the "Code of Conduct").
        We
        require all employees, directors and officers, including our Chief Executive
        Officer and Chief Financial Officer, to adhere to the Code of Conduct in
        addressing legal and ethical issues encountered in conducting their
        work.  The Code of Conduct requires that these individuals avoid
        conflicts of interest, comply with all laws and other legal requirements,
        conduct business in an honest and ethical manner and otherwise act with
        integrity and in our best interest.  The Code of Conduct contains
        additional provisions that apply specifically to our Chief Financial Officer
        and
        other financial officers with respect to full and accurate
        reporting.  The Code of Conduct is available on our website at
        www.echo-inc.com.
 
 Audit
        Committee Financial Expert
   Our
        Board
        of Directors has determined that Messrs. Aristides W. Georgantas and Keith
        B.
        Hall are both “audit committee financial experts” as defined in Item 407(d)(5)
        of Regulation S-K.  Messrs. Georgantas and Hall are “independent” for
        purposes of Rule 4200(a)(15) of the NASDAQ Marketplace
        Rules.
  6
 Index
  Identification
        of Audit Committee
   Our
        Board
        of Directors has a separately standing Audit Committee.  The Audit
        Committee currently consists of Richard D. Field, Aristides W. Georgantas,
        Herbert L. Lucas, Jr., Jerry McElhatton, and Keith B. Hall.  Messrs.
        Field, Georgantas,  Lucas, McElhatton and Hall are “independent
        directors” within the meaning of Rule 10A-3 promulgated under the Securities
        Exchange Act of 1934, as amended, and the NASDAQ Marketplace Rules. The Audit
        Committee’s primary duties and responsibilities include appointment of the
        independent auditors, evaluation of the performance and independence of such
        auditors and review of the annual audited financial statements and the quarterly
        financial statements, as well as the adequacy of our internal
        controls.
   Section
        16(a) Beneficial Ownership Reporting Compliance
   Section
        16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
        and executive officers and the holders of 10% or more of our Common Stock
        to
        file with the Securities and Exchange Commission initial reports of ownership
        and reports of changes in ownership of our equity securities.  Based
        solely on our review of the copies of the forms received by us and written
        representations from certain reporting persons that they have complied with
        the
        relevant filing requirements, we believe that, during the year ended September
        30, 2007, all of our executive officers, directors and the holders of 10%
        or
        more of our Common Stock complied with all Section 16(a) filing requirements,
        however, Herbert L. Lucas, our director, filed one late Form 5 reporting
        twenty-two transactions which occurred during the year ended September 30,
        2004.
  7
 Index
  ITEM11.     Executive
        Compensation
 Compensation
        Discussion And Analysis
  Compensation
        Philosophy
  The
        philosophy used by the Compensation Committee in establishing compensation
        for
        our named executive officers, including the Chief Executive Officer, is to
        attract and retain key personnel through the payment of competitive-based
        salaries, annual bonuses and the granting of restricted stock-based grants
        or
        options. Where appropriate, relocation benefits are paid to attract key
        individuals. With this philosophy, the salaries of our named executive officers
        have been negotiated between our company and each executive officer, and
        were
        influenced by such factors as salaries paid to similar level executive officers
        in comparable-sized companies, the availability of persons with similar
        abilities and the geographic location of our offices. The companies that
        the
        Compensation Committee considers to be similar to us for purposes of making
        such
        determination are principally those companies against which we compete for
        executive personnel. The Compensation Committee believes that it has adequate
        knowledge of the compensation levels of such other companies as a result
        of
        information available to the public, recruitment efforts and compensation
        negotiations directed at candidates employed by such other companies, as
        well as
        data gathered from time to time from surveys, independent consultants and
        as a
        result of interactions between our personnel and the personnel of such other
        companies.
  In
        evaluating annual
        compensation levels and bonuses for our named executive officers, the
        Compensation Committee philosophy is to consider, among other factors, the
        individual, their commitment to being part of a team, and company-wide
        performance and results against applicable pre-established annual and long-term
        performance goals, taking into account shareholder return, economic and business
        conditions, remuneration given to each executive officer in the past and
        comparativeand competitive compensation
        and
        benefit performance levels. The Committee also considers our ability to increase
        salaries paid to our executive officers, taking into account our operating
        results and overall operations as a whole. Ultimately, the consideration
        of
        additional factors and the weight given to any particular factor is within
        the
        discretion of the Compensation Committee. As a result of such review, the
        Compensation Committee made its determinations for annual compensation, bonus
        and stock-based compensation for each of our executive officers as identified
        herein.
  Compensation
        Elements
  Annually,
        the Compensation Committee reviews its compensation structure and strategy.
        The
        Compensation Committee reviews the following executive positions annually:
        Chief
        Executive Officer, Chief Financial Officer, President/COO (as applicable),
        CIO,
        CTO, Senior Vice President (6), and Vice President (7). For fiscal year 2007,
        our compensation package for executive officers consisted of three elements
        which the Compensation Committee decided were appropriate after investigating
        and evaluating other similar sized companies and seeking input from a
        compensation specialist. The three material compensation elements were base
        salary, annual bonus and equity awards. The executive officers were also
        eligible to participate in all of the Company’s employee benefit
        plans.
  Base
        Salary
  The
        Compensation Committee believes base salaries for executive officers should
        be
        competitive but not excessive. Accordingly, base salaries are typically in
        the
        50th
        percentile range of those paid at similarly sized companies. The Compensation
        Committee takes several factors into consideration when setting the base
        pay for
        any given individual position, such as: experience in the industry, history
        of
        compensation prior to coming to the Company, a comparison of similar positions
        in similar revenue sized companies, a comparison of similar positions in
        companies that are in the payments industry and the individual’s specific
        knowledge of and long-term value to the Company. For sales specific positions,
        a
        base salary may be eliminated in lieu of a commission based compensation
        program
        that pays the salesperson according to their accumulated monthly processing
        volume derived from the business that they have sold on behalf of the
        Company.
 
 8
 Index
 Cash
        Bonus
  The
        Compensation Committee believes annual cash bonuses are the best way to motivate
        outstanding performance among the Company’s executives each year. An executive’s
        total bonus is offered as a percentage of his/her base salary, generally
        between
        20% and 60%, depending on the level of the executive in the Company. A percent
        of the annual bonus (40% to 80%) is awarded based upon achievement of a company
        performance metric and a percent of the executive’s bonus (20% to 60%) is
        awarded based upon the achievement of annual goals that have been mutually
        set
        for that executive by his/her supervisor. The Company performance metric
        has
        historically been related to Revenue and/or EBITDA. The total bonus percentage
        and the percentage of the bonus attributable to the Company’s performance is
        highest for the CEO and President positions (80%) and the percentage
        attributable to the individual’s performance is lowest (20%). The bonus
        percentage is progressively lowered for each level of management and the
        percentage of the total bonus attributable to the Company’s performance is also
        reduced with each level of management while the percentage attributable to
        the
        individual performance increases. Bonuses are paid in the second quarter
        of the
        new fiscal year for the prior fiscal year.
  Equity
        Compensation
  The
        Compensation Committee believes the best way to assure longevity and consistency
        in management is to have an effective equity compensation program under which
        management can receive equity awards. Prior to 2005, the Company typically
        made
        such awards in the form of stock option grants under the Amended and Restated
        2003 Incentive Stock Option Plan (the “Plan”). On December 31, 2004, the Company
        amended the Plan to provide for the issuance of restricted stock grants,
        and in
        2005, the Company made equity awards to its executive officers in the form
        of
        restricted stock grants. In 2006, the Company determined to make restricted
        stock grants under the Plan in the form of long term incentive grants, pursuant
        to which the Company allocated set equity awards for each position that would
        be
        deemed to be earned upon achieving a pre-defined EBITDA target over a three-year
        period ending with fiscal year 2008. New 3 year long term incentive grants
        are
        established each year and a new equity allocation is made for each executive
        position. In some instances, a cash award is substituted for an equity award
        but
        the amount of cash paid is tied to the same target as those who have equity
        awards. The allocations under the 2007 long term incentive grants ranged
        from a
        high of 45,000 set aside for the CEO to a low of 1,000 shares, set aside
        for
        certain Vice President positions.
  Compensation
        Committee Interlocks and Insider Participation
  The
        Compensation Committee is currently composed of Richard D. Field, Aristides
        W.
        Georgantas, Jerry McElhatton, Keith B. Hall and Herbert L. Lucas, Jr., who
        serves as the Chairman of the Committee. No interlocking relationship exists
        between our Board of Directors or Compensation Committee and the board of
        directors or compensation committee of any other company.
  Report
        of the Compensation Committee of the Board of Directors
  The
        Compensation Committee of the Board of Directors reviews and approves salaries,
        bonuses and other benefits payable to our executive officers and administers
        our
        Amended and Restated 2003 Incentive Stock Option Plan, and prior to its
        expiration, the Officers and Key Employees Incentive Stock Option Plan. In
        connection with its deliberations, the Compensation Committee seeks the views
        of
        the Chief Executive Officer and Chief Operating Officer with respect to
        appropriate compensation levels of the other officers who prepare
        recommendations to the Compensation Committee.
  The
        Compensation Committee is currently composed of Richard D. Field, Aristides
        W.
        Georgantas, Jerry McElhatton, Keith B. Hall and Herbert L. Lucas, Jr., who
        serves as the Chairman of the Committee. Messrs. Field, Georgantas, McElhatton,
        Hall and Lucas are “independent directors” within the meaning of the NASDAQ
        Marketplace Rules. In light of changes in the securities laws, rules and
        regulations, in December 2003, our Compensation Committee recommended, and
        the
        Board of Directors approved, a Compensation Committee Charter. The Compensation
        Committee Charter is available on our website at www.echo-inc.com.
  The
        Compensation Committee of the Board of Directors has reviewed and discussed
        the
        Compensation Discussion and Analysis required by Item 402(b) of Regulation
        S-K
        with management and based on such review and discussion has recommended to
        the
        Board of Directors that the Compensation Discussion and Analysis be included
        in
        this annual report on Form 10-K.
 
 The
                    Compensation
                    CommitteeHerbert
                    L. Lucas, Jr., ChairmanRichard
                    D. FieldAristides
                    W. GeorgantasJerry
                    McElhattonKeith
                    B. Hall
 9
 Index
  Summary
        Compensation Table
 The
        following table sets forth the total compensation for the fiscal year ended
        September 30, 2007 to our Chief Executive Officer, Chief Financial Officer,
        and
        to each of our three most highly compensated executive officers, other than
        the
        Chief Executive Officer and Chief Financial Officer (collectively, the “Named
        Executive Officers”).
 
 
 Name
                  and principal position
              Year
              
              Salary
              
              
              Bonus
              
              
              Stock
                  Awards[1]
              
              
              Option
                  Awards[1]
              
              
              All
                  Other Compensation
              
              
              TotalJoel
                  M. Barry,
                Chairman/CEO
              2007
              
              $
              265,900
              
              
              $
              11,800
              
              
              $
              -0-
              
              
              $
              83,900
              
              
              $
              1,031,200
              [2]
              
              $
              1,392,800Charles
                  J. Harris,
                CEO
              2007
              
              $
              281,800
              
              
              $
              102,100
              
              
              $
              278,800
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              662,700Alice
                  Cheung,
                CFO/Treasurer
              2007
              
              $
              167,000
              
              
              $
              66,800
              
              
              $
              30,300
              
              
              $
              71,500
              
              
              $
              5,700
              [3]
              
              $
              341,300William
                  Wied,
                CIO
              2007
              
              $
              192,000
              
              
              $
              8,700
              
              
              $
              33,000
              [6]
              
              $
              -0-
              
              
              $
              185,700
              [3][4]
                [5]
              
              $
              419,400Sharat
                  Shankar,
                Sr.
                  Vice President
              2007
              
              $
              156,700
              
              
              $
              75,600
              
              
              $
              26,800
              
              
              $
              84,600
              
              
              $
              6,800
              [3]
              
              $
              350,500Jack
                  Wilson,
                Sr.
                  Vice President
              2007
              
              $
              151,600
              
              
              $
              45,600
              
              
              $
              26,800
              
              
              $
              62,200
              
              
              $
              6,100
              [3]
              
              $
              292,300
 
 
 [1]
                The
                    expense for the stock awards and option awards above was computed
                    in
                    accordance with SFAS No. 123R.  See ECHO’s annual
                    report on
                    Form 10-K for the fiscal year ended September 30, 2007. The vesting
                    of
                    outstanding stock awards and option awards is subject to acceleration
                    upon
                    a change of control as discussed in the section entitled “Potential
                    Payments Upon Termination or Change in Control”
                    below.
 [2]
                Mr.
                    Barry received $1,031,200 as severance when he retired from the
                    Company on
                    July 2, 2007.
 [3]
                Represents
                    our match of contributions to our 401(k) plan.  We contribute
                    50% of the last 6% of each employee’s contribution to the 401(k)
                    plan.
 [4]
                In
                    2007, we provided Mr. Wied with relocation expenses in the amount
                    of
                    $82,200.
 [5]
                In
                    2007, we agreed to pay $110,000 as severance when Mr. Wied resigned
                    from
                    the Company on October 31, 2007, of which $99,000 was earned
                    at September
                    30, 2007.
 [6]
                Mr.
                    Wied forfeited his unvested shares of $26,500 when he resigned
                    from the
                    Company on October 31,
                    2007.
  10
 Index
  Grants
          of Plan-Based Awards
          Table
 
 The
        following table sets forth certain information regarding grants of plan-based
        awards to each of our Named Executive Officers for the fiscal year ended
        September 30, 2007.
 
 Estimated
                  Future Payouts
                Under
                  Non-Equity
                Incentive
                  Plan Awards
              
              
              Estimated
                  Future Payouts
                Under
                  Equity Incentive
                Plan
                  AwardsName
              Grant
                  Date
              
              Threshold
              
              
              Target
              
              
              Maximum
              
              
              Threshold
              
              
              Target
              
              
              Maximum
              
              
              All
                  Other
                Stock
                Awards:
                Numberof
                Shares
                  of
                Stocks
                  or
                Units
              
              
              Grant
                  Date
                FairValue
                of
                  Stock
                and
                  Option
                AwardsJoel
                  M. Barry
              5/26/06(12)
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              
              
              
              -0-
              (13)
              
              $
              -0-
              (13)Charles
                  J. Harris
              5/26/06(12)
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (3)(i)
              
              
              (3)(ii)
              
              
              (3)(iii)
              
              
              
              20,000
              (1)(3)
              
              $
              246,0006/22/07
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (4)(i)
              
              
              (4)(ii)
              
              
              (4)(iii)
              
              
              
              45,000
              (2)(4)
              
              $
              553,500Alice
                  Cheung
              5/26/06(12)
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (5)(i)
              
              
              (5)(ii)
              
              
              (5)(iii)
              
              
              
              5,000
              (1)(5)
              
              $
              61,5006/22/07
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (6)(i)
              
              
              (6)(ii)
              
              
              (6)(iii)
              
              
              
              8,000
              (2)(6)
              
              $
              98,400WilliamWied
              6/22/07
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (7)(i)
              
              
              (7)(ii)
              
              
              (7)(iii)
              
              
              
              -0-
              (2)(7)
              
              $
              -0-Sharat
                  Shankar
              5/26/06(12)
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (8)(i)
              
              
              (8)(ii)
              
              
              (8)(iii)
              
              
              
              5,000
              (1)(8)
              
              $
              61,5006/22/07
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (9)(i)
              
              
              (9)(ii)
              
              
              (9)(iii)
              
              
              
              6,000
              (2)(9)
              
              $
              73,800Jack
                  Wilson
              5/26/06(12)
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (10)(i)
              
              
              (10)(ii)
              
              
              (10)(iii)
              
              
              
              5,000
              (1)(10)
              
              $
              61,5006/22/07
              
              $
              -0-
              
              
              $
              -0-
              
              
              $
              -0-
              
              
              
              (11)(i)
              
              
              (11)(ii)
              
              
              (11)(iii)
              
              
              
              6,000
              (2)(11)
              
              $
              73,800
 
 (1)
                Each
                    long-term incentive grant applies to the cumulative performance
                    of the
                    Company over the three fiscal years ending September 30,
                    2008.  Each long-term incentive grant permits the identified
                    Named Executive Officer to receive the number of shares of restricted
                    stock set forth in the table, in addition to cash compensation
                    under
                    certain circumstances, based on the Company’s actual performance, as
                    compared to a cumulative total EBITDA (Earnings before Interest,
                    Taxes,
                    Depreciation and Amortization) target set forth by the Board
                    of Directors
                    (the “Performance Target”), for the three fiscal years ending September
                    30, 2008.
  (2)
                  Each
                      long-term incentive grant applies to the cumulative performance
                      of the
                      Company over the three fiscal years ending September 30,
                      2009.  Each long-term incentive grant permits the identified
                      Named Executive Officer to receive the number of shares of
                      restricted
                      stock set forth in the table, in addition to cash compensation
                      under
                      certain circumstances, based on the Company’s actual performance, as
                      compared to a cumulative total EBITDA (Earnings before Interest,
                      Taxes,
                      Depreciation and Amortization) target set forth by the Board
                      of Directors
                      (the “Performance Target”), for the three fiscal years ending September
                      30, 2009.
   (3)
              In
                  the event that, as of September 30, 2008, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Mr. Harris would be entitled to receive 10,000 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Mr. Harris would be entitled to receive 20,000 shares of
                  restricted stock, and (iii) equal to or greater than 121% of the
                  Performance Target, the Maximum amount would be an amount in cash
                  equal to
                  a pro rata portion of a $500,000 bonus pool (based on the proportion
                  of
                  Mr. Harris’ then current salary as compared to other officers in the bonus
                  pool), and Mr. Harris would be entitled to receive 20,000 shares
                  of
                  restricted stock.  The right to receive the Target amount
                  accelerates in the event of a change of control of the Company
                  (as defined
                  in the Amended and Restated 2003 Incentive Stock Option
                  Plan).
  11
 Index
  (4)
              In
                  the event that, as of September 30, 2009, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Mr. Harris would be entitled to receive 22,500 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Mr. Harris would be entitled to receive 45,000 shares of
                  restricted stock, and (iii) equal to or greater than 121% of the
                  Performance Target, the Maximum amount would be an amount in cash
                  equal to
                  a pro rata portion of a $500,000 bonus pool (based on the proportion
                  of
                  Mr. Harris’ then current salary as compared to other officers in the bonus
                  pool), and Mr. Harris would be entitled to receive 45,000 shares
                  of
                  restricted stock.  The right to receive the Target amount
                  accelerates in the event of a change of control of the Company
                  (as defined
                  in the Amended and Restated 2003 Incentive Stock Option
                  Plan).
   (5)
              In
                  the event that, as of September 30, 2008, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Ms. Cheung would be entitled to receive 2,500 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Ms. Cheung would be entitled to receive 5,000 shares of
                  restricted
                  stock, and (iii) equal to or greater than 121% of the Performance
                  Target,
                  the Maximum amount would be an amount in cash equal to a pro rata
                  portion
                  of a $500,000 bonus pool (based on the proportion of Ms. Cheung’s then
                  current salary as compared to other officers in the bonus pool),
                  and Ms.
                  Cheung would be entitled to receive 5,000 shares of restricted
                  stock.  The right to receive the Target amount accelerates in
                  the event of a change of control of the Company (as defined in
                  the Amended
                  and Restated 2003 Incentive Stock Option
                  Plan).
   (6)
              In
                  the event that, as of September 30, 2009, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Ms. Cheung would be entitled to receive 4,000 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Ms. Cheung would be entitled to receive 8,000 shares of
                  restricted
                  stock, and (iii) equal to or greater than 121% of the Performance
                  Target,
                  the Maximum amount would be an amount in cash equal to a pro rata
                  portion
                  of a $500,000 bonus pool (based on the proportion of Ms. Cheung’s then
                  current salary as compared to other officers in the bonus pool),
                  and Ms.
                  Cheung would be entitled to receive 8,000 shares of restricted
                  stock.  The right to receive the Target amount accelerates in
                  the event of a change of control of the Company (as defined in
                  the Amended
                  and Restated 2003 Incentive Stock Option
                  Plan).
   (7)
              In
                  the event that, as of September 30, 2009, the Company would have
                  achieved
                  (i) between 70-75% of the Performance Target, the Threshold amount
                  would
                  be $0, and Mr. Wied would have been entitled to receive 3,000 shares
                  of
                  restricted stock, (ii) between 90-110% of the Performance Target,
                  the
                  Target amount would be $0, and Mr. Wied would have been entitled
                  to
                  receive 6,000 shares of restricted stock, and (iii) equal to or
                  greater
                  than 121% of the Performance Target, the Maximum amount would have
                  been an
                  amount in cash equal to a pro rata portion of a $500,000 bonus
                  pool (based
                  on the proportion of Mr. Wied’s then current salary as compared to other
                  officers in the bonus pool), and Mr. Wied would have been entitled
                  to
                  receive 6,000 shares of restricted stock.  The right to receive
                  the Target amount would have accelerated in the event of a change
                  of
                  control of the Company (as defined in the Amended and Restated
                  2003
                  Incentive Stock Option Plan).  Mr. Wied resigned from the
                  Company on October 31, 2007 and thus forfeited all shares of restricted
                  stock he may have received pursuant to this
                  grant.
   (8)
              In
                  the event that, as of September 30, 2008, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Mr. Shankar would be entitled to receive 2,500 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Mr. Shankar would be entitled to receive 5,000 shares of
                  restricted stock, and (iii) equal to or greater than 121% of the
                  Performance Target, the Maximum amount would be an amount in cash
                  equal to
                  a pro rata portion of a $500,000 bonus pool (based on the proportion
                  of
                  Mr. Shankar’s then current salary as compared to other officers in the
                  bonus pool), and Mr. Shankar would be entitled to receive 5,000
                  shares of
                  restricted stock.  The right to receive the Target amount
                  accelerates in the event of a change of control of the Company
                  (as defined
                  in the Amended and Restated 2003 Incentive Stock Option
                  Plan).
   (9)
              In
                  the event that, as of September 30, 2009, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Mr. Shankar would be entitled to receive 3,000 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Mr. Shankar would be entitled to receive 6,000 shares of
                  restricted stock, and (iii) equal to or greater than 121% of the
                  Performance Target, the Maximum amount would be an amount in cash
                  equal to
                  a pro rata portion of a $500,000 bonus pool (based on the proportion
                  of
                  Mr. Shankar’s then current salary as compared to other officers in the
                  bonus pool), and Mr. Shankar would be entitled to receive 6,000
                  shares of
                  restricted stock.  The right to receive the Target amount
                  accelerates in the event of a change of control of the Company
                  (as defined
                  in the Amended and Restated 2003 Incentive Stock Option
                  Plan).
   (10)
              In
                  the event that, as of September 30, 2008, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Mr. Wilson would be entitled to receive 2,500 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Mr. Wilson would be entitled to receive 5,000 shares of
                  restricted
                  stock, and (iii) equal to or greater than 121% of the Performance
                  Target,
                  the Maximum amount would be an amount in cash equal to a pro rata
                  portion
                  of a $500,000 bonus pool (based on the proportion of Mr. Wilson’s then
                  current salary as compared to other officers in the bonus pool),
                  and Mr.
                  Wilson would be entitled to receive 5,000 shares of restricted
                  stock.  The right to receive the Target amount accelerates in
                  the event of a change of control of the Company (as defined in
                  the Amended
                  and Restated 2003 Incentive Stock Option
                  Plan).
  12
 Index
  (11)
              In
                  the event that, as of September 30, 2009, the Company achieves
                  (i) between
                  70-75% of the Performance Target, the Threshold amount would be
                  $0, and
                  Mr. Wilson would be entitled to receive 3,000 shares of restricted
                  stock,
                  (ii) between 90-110% of the Performance Target, the Target amount
                  would be
                  $0, and Mr. Wilson would be entitled to receive 6,000 shares of
                  restricted
                  stock, and (iii) equal to or greater than 121% of the Performance
                  Target,
                  the Maximum amount would be an amount in cash equal to a pro rata
                  portion
                  of a $500,000 bonus pool (based on the proportion of Mr. Wilson’s then
                  current salary as compared to other officers in the bonus pool),
                  and Mr.
                  Wilson would be entitled to receive 6,000 shares of restricted
                  stock.  The right to receive the Target amount accelerates in
                  the event of a change of control of the Company (as defined in
                  the Amended
                  and Restated 2003 Incentive Stock Option
                  Plan).
 
 (12)
              On
                  June 22, 2007, we amended the long-term incentive grants awarded
                  during
                  the fiscal year ended September 30, 2006 including those awarded
                  to our
                  named executive officers, namely Charles Harris, Chief Executive
                  Officer,
                  President and Chief Operating Officer, Alice Cheung, Chief Financial
                  Officer and Treasurer, Sharat Shankar, Senior Vice President, and
                  Jack
                  Wilson, Senior Vice President.  The long-term incentive grants
                  were awarded under the Plan.  The grants were amended solely to
                  change the EBITDA performance target for fiscal years ending September
                  30,
                  2007 and September 30, 2008.  The amendment was treated as a
                  modification of an award under SFAS No. 123(R), and the shares
                  were
                  repriced from $13.16 to $12.30 per share. All other terms and conditions
                  of the long-term incentive grants remain
                  unchanged.
 
 (13)
              Mr.
                  Barry retired from the Company on July 2, 2007 and thus forfeited
                  his
                  unvested shares.
  13
 Index
  Outstanding
        Equity-Based Awards at Fiscal Year-End
 
 The
        following table sets forth certain information regarding outstanding equity
        awards for each Named Executive Officer outstanding as of September 30,
        2007.
 
 
 OPTION
                  AWARDS
              
              
              STOCK
                  AWARDSName
              
              Number
                  of Securities Underlying Unexercised Options
                Exercisable
              
              
              Number
                  of Securities Underlying Unexercised Options
                Unexercisable
              
              
              Option
                  Exercise Price
              
              
              Option
                  Expiration Date
              
              
              Number
                  of Shares or Units of Stock That Have Not Vested
              
              
              Market
                  Value of Shares or Units of Stock That Have Not Vested
              
              
              Equity
                  Incentive Plan Awards: Number of Unearned Shares, Units or Other
                  Rights
                  That Have Not Vested
              
              
              Equity
                  Incentive Plan Awards: Market or Payout Value of Unearned Shares,
                  Units or
                  Other Rights That Have Not VestedJoel
                  M. Barry
              
              
              40,000
              [2]
              
              
              -0-
              [2]
              
              $
              2.31
              
              
              6/26/08
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-60,000
              [2]
              
              
              -0-
              [2]
              
              $
              6.85
              
              
              6/26/08
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-30,000
              [2]
              
              
              -0-
              [2]
              
              $
              7.60
              
              
              6/26/08
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-Charles
                  J. Harris
              
              
              -0-
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              
              30,000
              [4]
              
              $
              324,000
              [1]
              
              
              65,000
              
              
              $
              702,000
              [1]-0-
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              
              12,000
              [4]
              
              $
              129,600
              [1]
              
              
              -0-
              
              
              $
              -0--0-
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              
              15,000
              [4]
              
              $
              162,000
              [1]
              
              
              -0-
              
              
              $
              -0-Alice
                  Cheung
              
              
              2,000
              
              
              
              -0-
              
              
              $
              4.00
              
              
              11/4/08
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              13,000
              
              
              $
              140,400
              [1]1,500
              
              
              
              -0-
              
              
              $
              7.00
              
              
              12/23/09
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-3,000
              
              
              
              -0-
              
              
              $
              2.84
              
              
              12/20/10
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-1,000
              
              
              
              -0-
              
              
              $
              3.36
              
              
              12/20/10
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-5,000
              
              
              
              -0-
              
              
              $
              2.15
              
              
              12/27/11
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-6,000
              
              
              
              -0-
              
              
              $
              1.30
              
              
              12/9/12
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-6,000
              
              
              
              3,000
              [3]
              
              $
              2.10
              
              
              12/9/12
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-21,000
              
              
              
              14,000
              [3]
              
              $
              6.85
              
              
              12/15/13
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-12,000
              
              
              
              18,000
              [3]
              
              $
              7.60
              
              
              11/15/14
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-William
                  Wied
              
              
              -0-
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              
              -0-
              [5]
              
              $
              -0-
              [5]
              
              
              -0-
              [5]
              
              $
              -0-
              [5]Sharat
                  Shankar
              
              
              30,000
              
              
              
              10,000
              [6]
              
              $
              3.96
              
              
              5/27/13
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              11,000
              
              
              $
              118,800
              [1]21,000
              
              
              
              14,000
              [6]
              
              $
              6.85
              
              
              12/15/13
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-8,400
              
              
              
              12,600
              [6]
              
              $
              7.60
              
              
              11/15/14
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-Jack
                  Wilson
              
              
              2,000
              
              
              
              -0-
              
              
              $
              4.00
              
              
              11/4/08
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              11,000
              
              
              $
              118,800
              [1]3,000
              
              
              
              -0-
              
              
              $
              7.00
              
              
              12/23/09
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-4,500
              
              
              
              -0-
              
              
              $
              2.84
              
              
              12/20/10
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-1,500
              
              
              
              -0-
              
              
              $
              3.36
              
              
              12/20/10
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-5,000
              
              
              
              -0-
              
              
              $
              2.15
              
              
              12/27/11
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-6,000
              
              
              
              -0-
              
              
              $
              1.30
              
              
              12/9/12
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-6,000
              
              
              
              3,000
              [7]
              
              $
              2.10
              
              
              12/9/12
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-21,000
              
              
              
              14,000
              [7]
              
              $
              6.85
              
              
              12/15/13
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-8,400
              
              
              
              12,600
              [7]
              
              $
              7.60
              
              
              11/15/14
              
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-
 
 14
 Index
  [1]
                Based
                    on the closing sale price of the Common Stock on September 30,
                    2007 of
                    $10.80 per share.
 [2]
                  Mr.
                      Barry’s option vesting dates accelerated upon his retirement on July
                      2,
                      2007 and will expire on June 26,
                      2008.
 [3]
                Ms.
                    Cheung’s 3,000 options will vest on 12/9/07.  Her 14,000 options
                    will vest as follows: 7,000 on 12/15/07 and 7,000 on
                    12/15/08.  Her 18,000 options will vest as follows: 6,000 on
                    11/15/07; 6,000 on 11/15/08; and 6,000 on 11/15/09. The vesting
                    of Ms.
                    Cheung’s outstanding stock awards and option awards is subject to
                    acceleration upon a change of control as discussed in the section
                    entitled
                    “Potential Payments Upon Termination or Change in Control”
                    below.
 [4]
                Mr.
                    Harris’ 30,000 restricted shares vest as follows: 10,000 on 9/19/08;
                    10,000 on 9/19/09; and 10,000 on 9/19/10. His 12,000 restricted
                    shares
                    vest as follows: 3,000 on 9/1/08; 3,000 on 9/1/09; 3,000 on 9/1/10;
                    and
                    3,000 on 9/1/11. His 15,000 restricted shares vest as
                    follows:  3,000 on 9/1/08, 3,000 on 9/1/09; 3,000 on 9/1/10;
                    3,000 on 9/1/11; and 3,000 on 9/1/12. The vesting of Mr. Harris’
                    outstanding stock awards and option awards is subject to acceleration
                    upon
                    a change of control as discussed in the section entitled “Potential
                    Payments Upon Termination or Change in Control”
                    below.
 [5]
                Mr.
                    Wied resigned from the Company on October 31, 2007 and thus forfeited
                    his
                    8,000 unvested shares and 6,000 unvested equity incentive plan
                    awards.
 [6]
                Mr.
                    Shankar’s 10,000 options will vest on 5/27/08.  His 14,000
                    options vest as follows: 7,000 on 12/15/07 and 7,000 on
                    12/15/08.  His 12,600 options vest as follows: 4,200 on
                    11/15/07; 4,200 on 11/15/08; and 4,200 on 11/15/09. The vesting
                    of Mr.
                    Shankar’s outstanding stock awards and option awards is subject to
                    acceleration upon a change of control as discussed in the section
                    entitled
                    “Potential Payments Upon Termination or Change in Control”
                    below.
 [7]
                Mr.
                    Wilson’s 3,000 options will
                    vest on 12/9/07. His 14,000 options vest as follows: 7,000 on
                    12/15/07 and
                    7,000 on 12/15/08. His 12,600 options vest as follows: 4,200
                    on 11/15/07;
                    4,200 on 11/15/08; and 4,200 on 11/15/09.The vesting of Mr.
                    Wilson’s outstanding stock awards and option awards is subject to
                    acceleration upon a change of control as discussed in the section
                    entitled
                    “Potential Payments Upon Termination or Change in Control”
                    below.
  15
 Index
  Option
        Exercises and Stock Vested in Fiscal Year 2007.
 
 The
        following table sets forth information concerning the exercise of stock options
        and vesting of stock awards during the fiscal year ended September 30, 2007
        by
        each of our Named Executive Officers.
 
 OPTION
                  AWARDS
              
              
              STOCK
                  AWARDSName
              
              Number
                  ofShares
                Acquiredon
                  Exercise
              
              
              ValueRealized
                onExercise
              
              
              Number
                  ofShares
                AcquiredonVesting
              
              
              ValueRealized
                onVestingJoel
                  M. Barry
              
              
              117,500
              
              
              $
              892,600
              
              
              
              -0-
              
              
              $
              -0-Charles
                  J. Harris
              
              
              -0-
              
              
              $
              -0-
              
              
              
              13,000
              
              
              $
              131,990Alice
                  Cheung
              
              
              5,000
              
              
              $
              49,465
              
              
              
              -0-
              
              
              $
              -0-William
                  Wied
              
              
              -0-
              
              
              $
              -0-
              
              
              
              2,000
              
              
              $
              36,920Sharat
                  Shankar
              
              
              -0-
              
              
              $
              -0-
              
              
              
              -0-
              
              
              $
              -0-Jack
                  Wilson
              
              
              3,500
              
              
              $
              25,795
              
              
              
              -0-
              
              
              $
              -0-
   Stock
        Option Plans
   On
        May
        13, 1992, our Board of Directors authorized adoption of an Officers and Key
        Employees Incentive Stock Option Plan (the “1992 Plan”), ratified by the
        shareholders at the Annual Meeting held July 10, 1992. The 1992 Plan provided
        for the issuance of up to 81,250 shares of Common Stock underlying stock
        options, each to purchase one share of the Common Stock for $3.40 per share,
        subject to adjustment in the event of stock splits, combinations of shares,
        stock dividends or the like.
  On
        November 18, 1996, our Board of Directors authorized an increase in the 1992
        Plan to 843,750 shares to be subject to stock options, which action was ratified
        by the shareholders at the Annual Meeting held in February 1997.
  On
        February 4, 1999, our Board of Directors authorized an increase in the 1992
        Plan
        to 1,343,750 shares to be subject to stock options, which action was ratified
        by
        the shareholders at the Annual Meeting held in February 1999.
  On
        May
        13, 2002, the Plan expired. The 2003 Incentive Stock Option Plan, which provided
        for the issuance of up to 900,000 shares of Common Stock underlying stock
        options, was approved by our Board of Directors and by our shareholders at
        the
        Annual Meeting of shareholders held on February 3, 2003.
  On
        April
        19, 2004, our Compensation Committee approved certain non-material changes
        to
        our 2003 Incentive Stock Option Plan.
   16
 Index
 On
        December 21, 2004, our Compensation Committee authorized an amendment and
        restatement of the 2003 Incentive Stock Option Plan to, among other matters,
        (i)
        increase the number of shares to be issued under the 2003 Incentive Stock
        Option
        Plan from 900,000 shares to 1,150,000 shares, and (ii) permit the grant of
        restricted stock under the plan.
  On
        May
        26, 2006, our Compensation Committee approved long term incentive grants
        under
        our existing incentive stock option plan.
  On
        June
        22, 2007, our Compensation Committee approved additional long term incentive
        grants under our existing incentive stock option plan.
  On
        June
        22, 2007, under SFAS No. 123(R), we amended the long-term incentive grants
        awarded during the fiscal year ended September 30, 2006 solely to change
        the
        EBITDA performance target for fiscal years ending September 30, 2007 and
        September 30, 2008.  All other terms and conditions of the long-term
        incentive grants remain unchanged
  On
        November 13, 2007, the Board of Directors approved a cash-based Stock
        Appreciation Rights Plan.  The plan has 150,000 stock appreciation
        units reserved for issuance to all non-Executive employees of the
        Company.  No units have been issued to date, and there are currently
        no planned grants.  Additionally, there is no timeframe for when the
        units will be granted.  In addition, there has been no determination
        as to how these units will be allocated among employees.
  Potential
        Payments Upon Termination or Change in Control
  Separation Agreements
  On
        December 11, 2007, the Company entered into amended and restated separation
        agreements with each of its principal executive officers (CEO and CFO) and
        each
        of its senior vice presidents whereby, in the event of a change in control
        of
        the Company (as defined in each agreement) each such executive officer would
        be
        entitled, to the extent they remain employed by the Company at the time of
        such
        change in control, to the following: (i) an acceleration of vesting with
        respect
        to all stock option and restricted stock grants then outstanding and not
        yet
        vested, (ii) a portion of such executive’s anticipated cash or sales
        commission-based bonus, as applicable, for the fiscal year in which the change
        in control occurred, and (iii) in the event that the executive is terminated
        without cause (as defined in each agreement), or ceases to provide services
        to
        the Company (or its successor) as a result of an involuntary termination
        (as
        defined in each agreement) within the two year period following the change
        in
        control, then the executive would be entitled to a one-time lump sum cash
        payment equal to a percentage of the executive’s total compensation for the
        fiscal year prior to the year in which the change in control occurred, plus
        continued medical benefits for a period of time following such
        termination.  The amount of the lump sum payout ranges from 1 1⁄2 to 2
        years of total compensation for the prior year, and the duration of continued
        medical benefits ranges between 1 1⁄2 and 2 years depending on the position held
        by the principal executive or senior vice president.  The amounts
        payable to the executive may be reduced to the extent the "parachute payments"
        under Section 280G(b)(2) of the Internal Revenue Code of 1986 exceed 2.99
        times
        the executive’s “base amount”, if such reduction would result in higher
        after-tax income to the executive. These agreements amend and restate
        separation agreements previously entered into with each of these
        executives.
 
 With
        respect to Mr. Harris, our Chief Executive Officer, in the event of his
        termination without cause or involuntary termination within the two year
        period
        following the change in control, he would be entitled to a one-time lump
        sum
        payment equal to two times his total compensation for the fiscal year prior
        to
        the year in which the change in control occurred, plus continued medical
        benefits for a period of two years following such termination.
  With
        respect to Ms. Cheung, our Chief Financial Officer, in the event of her
        termination without cause or involuntary termination within the two year
        period
        following the change in control, she would be entitled to a one-time lump
        sum
        payment equal to one and one-half times her total compensation for the fiscal
        year prior to the year in which the change in control occurred, plus continued
        medical benefits for a period of one and one-half years following such
        termination.
  With
        respect to our senior vice presidents, in the event of their termination
        without
        cause or involuntary termination within the two year period following the
        change
        in control, they would each be entitled to a one-time lump sum payment equal
        to
        one and one-half times the respective executive’s total compensation for the
        fiscal year prior to the year in which the change in control occurred, plus
        continued medical benefits for a period of one and one-half years following
        such
        termination.
  The
        provision regarding the acceleration of vesting for previously issued stock
        option grants is consistent with the standard terms and conditions of our
        Amended and Restated 2003 Incentive Stock Option Plan which already provides
        for
        such accelerated vesting.
 
 17
 Index
 For
        purposes of the separation agreements, (a) “change in control” means the
        consummation of (i) a merger, consolidation, plan of share exchange, or other
        reorganization involving the Company, if more than 50% of the combined voting
        power (which voting power shall be calculated by assuming the conversion
        of all
        equity securities convertible (immediately or at some future time) into shares
        entitled to vote, but not assuming the exercise of any warrant or right to
        subscribe to or purchase those shares) of the continuing or surviving entity’s
        securities outstanding immediately after such merger, consolidation, plan
        of
        share exchange or other reorganization is owned, directly or indirectly,
        by
        persons who were not stockholders of the Company immediately prior to such
        merger, consolidation, plan of share exchange or other reorganization; provided, however,
        that in
        making the determination of ownership by the stockholders of the Company,
        immediately after the reorganization, equity securities which persons own
        immediately before the reorganization as stockholders of another party to
        the
        transaction shall be disregarded; (ii) the sale, lease, exchange, transfer
        or
        other disposition (in one transaction or a series of related transactions)
        of
        all or substantially all of the Company’s assets; or (iii) any Person (as
        defined below) shall have become the beneficial owner (within the meaning
        of
        Rule 13d-3 under the Exchange Act) directly or indirectly, of securities
        of the
        Company ordinarily having the right to vote for the election of directors
        representing 50% or more of the combined voting power of the then outstanding
        securities of the Company ordinarily having the right to vote for the election
        of directors;  and provided, further, that an event shall constitute a
        change in control only if such event is a change in the ownership or effective
        control, or in the ownership of a substantial portion of the assets, within
        the
        meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code; (b)
        Termination for “cause” means termination by reason of: (i) any act or omission
        knowingly undertaken or omitted by executive with the intent of causing damage
        to the Company or its affiliates, its properties, assets or business, or
        its
        stockholders, officers, directors or employees; (ii) any act of executive
        involving a material personal profit to executive, including, without
        limitation, any fraud, misappropriation or embezzlement, involving properties,
        assets or funds of the Company or any of its subsidiaries; (iii) executive's
        consistent failure to perform his normal duties or any obligation under any
        provision of the agreement, in either case, as directed by the Board; (iv)
        conviction of, or pleading nolo contendere to, (A) any crime or offense
        involving monies or other property of the Company; (B) any felony offense;
        or
        (C) any crime of moral turpitude; or (v) the chronic or habitual use or
        consumption of drugs or alcoholic beverages; and (c) “involuntary termination”
means the executive’s cessation of the provision of services to the Company
        following (i) a material reduction in the executive’s function, authority,
        duties, or responsibilities, without the executive’s express written consent;
        (ii) a material reduction in salary; or (iii) the Company’s breach of the
        separation agreement.
 
 Barry
          Separation Agreement
  In
          connection with the retirement of our Chairman and Chief Executive Officer,
          Joel
          M. ("Jody") Barry on July 2, 2007 (the "Effective Date"), the Company entered
          into a separation agreement (the "Agreement") with him on August 10, 2007.
          Under
          the Agreement, Mr. Barry is entitled to cash severance payments totaling
          $742,800 to be paid as follows: (a) an initial lump sum payment of $300,000
          that
          was paid within three days of August 10, 2007 and (b) two payments of $221,400
          each to be paid on January 2, 2008 and 2009, which payments may be accelerated
          and become payable within three business days upon Mr. Barry’s written request.
          All stock options issued to Mr. Barry under the Company’s 1992 Officers and Key
          Employees Incentive Stock Option Plan expired in accordance with their
          terms as
          of the Effective Date. All unvested stock options issued to Mr. Barry under
          the
          Company’s Amended and Restated 2003 Incentive Stock Option Plan vested
          immediately as of the Effective Date and will expire on the 360th day
          thereafter. The Company paid an amount of approximately $21,930 in respect
          to
          the payoff amount for Mr. Barry’s company vehicle, which he was entitled to
          retain. The Company will also make equivalent medical benefits available
          to Mr.
          Barry for a two year period. Mr. Barry has agreed to certain noncompetition
          and
          nonsolicitation provisions for a 12 month period. In exchange for his severance
          benefits, Mr. Barry has relinquished his right to make claims against the
          Company. As part of the agreement, Mr. Barry also forfeited his unvested
          restricted stock with compensation previously recorded of $146,000.
 Bonus,
        Profit Sharing and Other Remuneration Plans and Pension and Retirement
        Plans
 
 In
        addition to salary, the Compensation Committee, from time to time, grants
        stock
        options and restricted stock grants to executive officers and key personnel
        pursuant to the Amended and Restated 2003 Incentive Stock Option Plan. The
        Compensation Committee thus views equity-based compensation as an important
        component of its long-term, performance-based compensation philosophy. Since
        the
        value of stock options and grants of restricted stock bears a direct
        relationship to our stock price, the Compensation Committee believes that
        stock
        options and grants of restricted stock motivate executive officers and key
        personnel to manage us in a manner which will also benefit shareholders.
        As
        such, stock options and grants of restricted stock are granted at the current
        market price. One of the principal factors considered in granting stock options
        and grants of restricted stock to executive officers or key personnel is
        their
        ability to influence our long-term growth and profitability.
 
 The
        Compensation Committee has also established a bonus program to reward
        extraordinary performance that exceeds pre-set goals established for executive
        officers and key personnel. We believe that such a bonus program provides
        the
        incentive to exceed such goals, thereby building shareholder value.
  We
        have a
        contributory 401(k) Retirement Pension Plan, which covers all employees who
        are
        qualified under the plan provisions. In fiscal 2006, we also adopted a
        non-qualified deferred compensation plan that provides additional retirement
        investment alternatives for eligible employees and directors and is
        complementary to our contributory 401(k) Retirement Pension Plan.
  Compensation
        of Directors
  The
        general policy of the Board is that compensation for independent directors
        should be cash or equity-based compensation, depending upon the desire of
        the
        specific director. We do not pay management directors for Board service in
        addition to their regular employee compensation. The Compensation Committee,
        which consists solely of independent directors, has the primary responsibility
        for reviewing and considering any revisions to director compensation. The
        Board
        reviews the committee’s recommendations and determines the amount of director
        compensation. The committee can engage the services of outside advisers,
        experts, and others to assist the committee in determining director
        compensation. During 2007, as consistent with past practice, the committee
        did
        not use an outside adviser to aid in setting director compensation.
 
 18
 Index
 The
        Board
        followed the recommendation of the Compensation Committee and maintained
        director compensation at similar levels in 2007 as was paid in 2006. In fiscal
        2007, Messrs. Georgantas and Lucas each earned $55,000.  Mr. Field
        earned $61,250, Mr. Lockhart earned $25,000, Mr. Terzian earned $37,500 and
        Mr.
        McElhatton earned $12,500.  Mr. Lockhart received 1,077 shares of
        restricted common stock which was deposited into a Non-Qualified Deferred
        Compensation Plan for the account of Mr. Lockhart. Mr. Field received 4,000
        shares of restricted stock.  Messrs. Lucas, Georantas, and McElhatton
        each received 3,000 shares of restricted stock.  Additionally, Mr.
        McElhatton received 1,500 shares of restricted stock upon his election to
        the
        Company’s Board of Directors.  Directors are compensated for all
        reasonable expenses and are not compensated for attending special
        meetings.
  Director
        Compensation Table
  The
        following table summarizes the total compensation paid by the Company to
        non-employee directors for the fiscal year ended September 30,
        2007.
 
 DIRECTOR
                    COMPENSATIONName
                
                FeesEarned
                
                
                StockAwards[1]
                
                
                OptionAwards
                
                
                Non-EquityIncentivePlanCompensation
                
                
                Change
                    inPensionValue
                    andNonqualifiedDeferredCompensationEarnings
                
                
                AllOtherCompensation
                
                
                TotalRichard
                    D. Field
                
                $
                61,250
                
                
                $
                14,000
                [6]
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                75,250Aristides
                    W. Georgantas
                
                $
                55,000
                
                
                $
                10,500
                [7]
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                65,500H.
                    Eugene Lockhart[2]
                
                $
                25,000
                
                
                $
                12,500
                [3]
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                37,500Herbert
                    L. Lucas
                
                $
                55,000
                
                
                $
                10,500
                [8]
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                65,500Carl
                    R. Terzian[2]
                
                $
                37,500
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                37,500Jerry
                    McElhatton[4]
                
                $
                12,500
                
                
                $
                12,250
                [9]
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                24,750Keith
                    Hall[5]
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-Total
                
                $
                246,250
                
                
                $
                59,750
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                -0-
                
                
                $
                306,000
 ___________________
 [1]
                Amounts
                    included in the Stock Awards column above reflect the stock expense
                    recognized for financial statement reporting purposes for the
                    fiscal year
                    ended September 30, 2007 in accordance with SFAS No.
                    123(R).
 [2]
                Messrs.
                    Lockhart and Terzian both resigned from the Company’s Board of Directors,
                    effective July 2, 2007.
  19
 Index
  [3]
                During
                    fiscal 2007, Mr. Lockhart received 1,077 shares of stock, equivalent
                    to a
                    grant date fair value of $12,500, which were deposited in a non-qualified
                    deferred compensation account pursuant to a Non-Qualified Deferred
                    Compensation Plan approved by the Board of Directors of the Company.
 [4]
                Mr.
                    McElhatton was elected to the Company’s Board of Directors on July 2,
                    2007.
 [5]
                Mr.
                    Hall was appointed to the Board of Directors of the Company on
                    October 11,
                    2007.
 [6]
                The
                    grant date total fair value of Mr. Field’s equity award computed in
                    accordance with SFAS No. 123(R) was
                    $56,000.
 [7]
                The
                    grant date total fair value of Mr. Georgantas’ equity award computed in
                    accordance with SFAS No. 123(R) was
                    $42,000.
 [8]
                The
                    grant date total fair value of Mr. Lucas’ equity award computed in
                    accordance with SFAS No. 123(R) was
                    $42,000.
 [9]
                The
                    grant date total fair value of Mr. McElhatton’s equity awards computed in
                    accordance with SFAS No. 123(R) was
                    $63,000.
  Directors
        receive cash fees in four installments, or the equivalent value in restricted
        stock measured on the date of payment. Annual retainers are prorated so that
        adjustments can be made during the year. Unpaid portions of cash retainers
        are
        forfeited upon termination, retirement, disability, or death.
 
 
 ITEM12. Security
          Ownership of
          Certain Beneficial Owners and Management and Related Stockholder
          Matters
 PRINCIPAL
        OWNERS OF COMMON STOCK
 
 As
        of
        December 31, 2007, there were 7,040,379 shares of our Common Stock outstanding.
        Based on our review of Schedules 13D and 13G filed with the Securities and
        Exchange Commission on the date noted, the following persons have beneficial
        ownership or control over 5% or more of our outstanding Common
        Stock.
 
 Name
                  and Address
              
              Number
                  of Shares
                Beneficially
                  Owned
              
              Percentage
                  of
                Common
                  Stock at 12/31/07Melvin
                  Laufer
              
              650,033
              
              9.23%136
                  Beach 140th
                  StreetFar
                  Rockaway, NY  11694Schedule
                  13D/A filed November 5, 2007Discovery
                  Equity Partners, LP;
              
              974,110
              
              13.84%Discovery
                  Group I LLC; DanielJ.
                  Donoghue; Michael J. Murphy71
                  South Wacker DriveChicago,
                  IL 60606Form
                  13F filed September 30, 2007Joel
                  M. Barry
              
              378,119[2]
                  [3]
              
              5.27%730
                  Paseo CamarilloCamarillo,
                  CA 93010Paul
                  Glazer
              
              489,767
              
              6.96%Glazer
                  Capital, LLC237
                  Park Avenue, Suite 900New
                  York, NY 10017Schedule
                  13G filed February 2, 2007
 
 The
        following table sets forth the number of shares of Common Stock owned
        beneficially by (i) our directors, (ii) our Named Executive Officers (as
        defined
        below), and (iii) all of our executive officers and directors as a group,
        as of
        December 31, 2007.  Such figures are based upon information furnished
        by the persons named.
  20
 Index
  Name
                  and Address
              
              Number
                  of Shares
                Beneficially
                  Owned
              
              Percentage
                  of
                Common
                  Stock[1]Joel
                  M. Barry
              
              378,119[2]
                  [3]
              
              5.27%Chairman/Chief
                  Executive Officer730
                  Paseo CamarilloCamarillo,
                  CA 93010Charles
                  Harris
              
              80,000
              
              1.14%Chief
                  Executive Officer730
                  Paseo CamarilloCamarillo,
                  CA 93010Alice
                  L. Cheung
              
              101,500[2]
              
              1.43%Chief
                  Financial Officer/Treasurer730
                  Paseo CamarilloCamarillo,
                  CA 93010William
                  Wied
              
              2,000[4]
              
              0.03%Chief
                  Operating Officer730
                  Paseo CamarilloCamarillo,
                  CA 93010Sharat
                  Shankar
              
              73,100[2]
              
              1.03%Senior
                  Vice President730
                  Paseo CamarilloCamarillo,
                  CA 93010Jack
                  Wilson
              
              81,675[2][6]
              
              1.15%Vice
                  President730
                  Paseo CamarilloCamarillo,
                  CA 93010Richard
                  Field
              
              307,696[5]
              
              4.37%Director49
                  Locust AvenueNew
                  Canaan, CT 06840Aristides
                  W. Georgantas
              
              19,521
              
              0.28%Director180
                  Springdale RoadPrinceton,
                  NJ 08540Herbert
                  L. Lucas, Jr.
              
              42,908
              
              0.61%Director12011
                  San Vicente Blvd.Los
                  Angeles, CA 90049Jerry
                  McElhatton
              
              4,500
              
              0.06%Director43
                  Braewood PlaceDallas,
                  TX 75248Keith
                  Hall
              
              4,500
              
              0.06%17204
                  Connor Quay CourtCornelius,
                  NC  28031All
                  officers and directors as a group ( 17 persons)
              
              1,331,797[7]
              
              17.64%
 ___________________________
  21
 Index
  [1]
                Under
                    Rule 13d-3, certain shares may be deemed to be beneficially owned
                    by more
                    than one person (if, for example, persons share the power to
                    vote or the
                    power to dispose of the shares). In addition, shares are deemed
                    to be
                    beneficially owned by a person if the person has the right to
                    acquire the
                    shares (for example, upon exercise of an option) within 60 days
                    of the
                    date as of which the information is provided. In computing the
                    percentage
                    ownership of any person, the amount of shares outstanding is
                    deemed to
                    include the amount of shares beneficially owned by such person
                    (and only
                    such person) by reason of these acquisition rights. As a result,
                    the
                    percentage of outstanding shares of any person as shown in this
                    table does
                    not necessarily reflect the person’s actual ownership or voting power with
                    respect to the number of shares of Common Stock actually outstanding
                    at
                    December 31, 2007.
 [2]
                Includes
                    stock options according to the terms of the 1992 Officers and
                    Key
                    Employees Incentive Stock Option Plan and the Amended and Restated
                    2003
                    Incentive Stock Option Plan, which for the following number of
                    shares and
                    for the following individuals could be acquired within 60 days
                    through the
                    exercise of stock options: Joel M. Barry, 130,000 shares; Alice
                    Cheung,
                    70,000 shares; Sharat Shankar, 70,600 shares; and Jack Wilson,
                    67,100
                    shares.
 [3]
                Mr.
                    Barry retired as an executive officer and director of the Company
                    effective July 2, 2007.
 [4]
                Mr.
                    Wied resigned as an executive officer of the Company effective
                    October 31,
                    2007.
 [5]
                Includes
                    103,400 shares which are in an IRA account in Mr. Field’s name.
 [6]
                Includes
                    530 shares indirectly owned by Mr. Wilson through his
                    wife.
 [7]
                Includes
                    shares and stock options according to the terms of the 1992 Officers
                    and
                    Key Employees Incentive Stock Option Plan and the Amended and
                    Restated
                    2003 Incentive Stock Option Plan, which, in addition to those
                    amounts
                    disclosed in footnote 2, for the following number of shares and
                    for the
                    following individuals could be acquired within 60 days through
                    the
                    exercise of stock options: Patricia Williams, 50,600 shares;
                    Steven
                    Hoofring, 48,500 shares; Kris Winckler, 51,100 shares; and Rick
                    Slater,
                    23,200 shares.
   Equity
        Compensation Plan Information
   The
        following table sets forth information concerning our equity compensation
        plans
        as of September 30, 2007.
   Plan
                  Category
              
              (a)
                  Number ofsecurities
                  to be
                issued
                  uponexercise
                  of
                outstanding
                  options
              
              
              (b)
                  Weighted-averageexercise
                  price ofoutstanding
                  options
              
              
              (c)
                  Number of securitiesremaining
                  available forfuture
                  issuance underequity
                  compensation(excluding
                  securitiesreflected
                  in column (a))Equity
                  compensation plans approved by security holders[1]
              
              
              767,925
              
              
              $
              5.94
              
              
              
              74,324Equity
                  compensation plans not approved by security holders
              
              
              -0-
              
              
              
              -0--
              
              
              
              -0-Total
              
              
              767,925
              
              
              $
              5.94
              
              
              
              74,324
   [1]
              Plan
                  represents the Officers and
                  Key Employees Incentive Stock Option Plan, which expired in May
                  2002, and
                  our Amended and Restated 2003 Incentive Stock Option
                  Plan.
  
 Changes
        in control
   On
        December 19, 2007, the Company entered into an Agreement and Plan of Merger
        (the
“Merger
        Agreement”) to be acquired by Intuit Inc. (“Intuit”)
        in a merger transaction pursuant to which ECHO will merge with and into Elan
        Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary
        of
        Intuit (“Merger
        Sub”) and will become a wholly-owned subsidiary of Intuit (the “Merger”).
        Pursuant to the terms of the Merger Agreement and subject to the conditions
        thereof, Intuit will acquire all of the outstanding shares of ECHO common
        stock
        for a cash amount of $17.00 per share, including shares issuable upon exercise
        of options, for a total aggregate purchase price of approximately $130.8
        million
        on a fully-diluted basis.
  22
 Index
  In
        connection with the execution of the Merger Agreement, in order to induce
        Intuit
        and Merger Sub to enter into the Merger Agreement, each of our executive
        officers and directors entered into a Voting Agreement with Intuit (each,
        a
“Voting
        Agreement” and together, the “Voting
        Agreements”). Pursuant to the Voting Agreements, our executive officers
        and directors have agreed to vote all securities of ECHO (including all shares
        of Common Stock and all options, warrants and other rights to acquire shares
        of
        Common Stock) owned by them (the “Shares”):
 
 •
                in
                    favor of approval of the
                    Merger;
  •
                against
                    approval of any proposal
                    made in opposition to, or in competition with, consummation of
                    the Merger
                    and the transactions contemplated by the Merger Agreement, and
                    against any
                    action or agreement that would result in a breach of any representation,
                    warranty, covenant, agreement or other obligation of the Company
                    in the
                    Merger Agreement; and
  •
                against
                    any Acquisition Proposal
                    (as defined in the Merger Agreement) or (other than those actions
                    that
                    relate to the Merger and the transactions contemplated by the
                    Merger
                    Agreement) any other: (A) merger, consolidation, business
                    combination, sale of assets, reorganization or recapitalization
                    of the
                    Company or any subsidiary of the Company with any party, (B) sale,
                    lease or transfer of any significant part of the assets of the
                    Company or
                    any subsidiary of the Company, (C) reorganization, recapitalization,
                    dissolution, liquidation or winding up of the Company or any
                    subsidiary of
                    the Company, (D) material change in the capitalization of the Company
                    or any subsidiary of the Company, or the corporate structure
                    of the
                    Company or any subsidiary of the Company, or (E) action that is
                    intended, or could reasonably be expected to, impede, interfere
                    with,
                    delay, postpone, discourage or adversely affect the Merger or
                    any of the
                    other transactions contemplated by the Merger
                    Agreement.
   Pursuant
        to the Voting Agreements, our executive officers and directors also granted
        to
        the directors of Intuit an irrevocable proxy and irrevocably appointed them
        as
        their attorney and proxy to vote the Shares on any of the foregoing matters
        at
        every ECHO annual, special, adjourned or postponed stockholder meeting and
        in
        every written consent in lieu of such meeting.
  The
        Voting Agreements terminate upon the earliest to occur of (i) such date and
        time as the Merger Agreement shall have been validly terminated pursuant
        to its
        terms, or (ii) such date and time as the Merger shall become effective in
        accordance with the terms and conditions set forth in the Merger
        Agreement.
 
 ITEM13. Certain
          Relationships
          and Related Transactions, and Director Independence
  In
        connection with the retirement of our Chairman and Chief Executive Officer,
        Joel
        M. (“Jody”) Barry on July 2, 2007 (the “Effective Date”), the Company entered
        into a separation agreement (the “Agreement”) with him on August 10,
        2007.  The agreement resulted in a charge of approximately $1.0
        million to the Company. Under the Agreement, Mr. Barry is entitled to cash
        severance payments totaling $742,800 to be paid as follows: (a) an initial
        lump
        sum payment of $300,000 that was paid within three days of August 10, 2007
        and
        (b) two payments of $221,400 each to be paid on January 2, 2008 and 2009,
        which
        payments may be accelerated and become payable within three business days
        upon
        Mr. Barry’s written request.  All stock options issued to Mr. Barry
        under the Company’s 1992 Officers and Key Employees Incentive Stock Option Plan
        will expire in accordance with their terms as of the Effective
        Date.  All unvested stock options issued to Mr. Barry under the
        Company’s Amended and Restated 2003 Incentive Stock Option Plan vested
        immediately as of the Effective Date and will expire on the 360th
        day
        thereafter.  The Company paid an amount of approximately $21,930 in
        respect to the payoff amount for Mr. Barry’s company vehicle, which he will be
        entitled to retain.  The Company will also make equivalent medical
        benefits available to Mr. Barry for a two year period.  Mr. Barry has
        agreed to certain noncompetition and nonsolicitation provisions for a 12
        month
        period.  In exchange for his severance benefits, Mr. Barry has
        relinquished his right to make claims against the Company.  As part of
        the agreement, Mr. Barry also forfeited his unvested restricted stock with
        compensation previously recorded of $146,000. Amounts still due Mr. Barry
        under
        the Agreement totaled approximately $450,000 at September 30, 2007 and are
        included in accrued compensation expenses.
  Review
        and Approval of Related Person Transactions
  We
        have
        adopted a Code of Ethical Conduct that applies to all employees and directors
        of
        the Company. This Code of Ethical Conduct requires that all of our employees
        and
        directors avoid engaging in activities that give rise to conflicts of interest,
        including engaging in any transactions with the Company, without first obtaining
        a waiver. Executive officers and directors are required to obtain such a
        waiver
        from our Board of Directors or an appropriate committee of our Board. There
        were
        no instances during the 2007 fiscal year in which an executive officer or
        director engaged in a related party transaction with the Company without
        first
        obtaining a waiver under as required under our Code of Ethical
        Conduct.
  23
 Index
  Director
        Independence
  During
        the 2007 fiscal year our Board has been comprised of "independent" directors
        within the meaning of the applicable rules for companies traded on NASDAQ.
        During 2007, the Board determined that each of Richard D. Field, Aristides
        W.
        Georgantas, H. Eugene Lockhart, Herbert L. Lucas, Carl R. Terzian, Jerry
        McElhatton, and Keith B. Hall were independent.
  ITEM14. Principal
        Accounting
        Fees and Services
  Audit
        Fees
  BDO
        Seidman, LLP, our independent registered public accounting firm (“BDO”) billed
        us an aggregate of approximately $693,000 in fees for professional services
        rendered for the audit of our annual financial statements and audit of the
        effectiveness of our internal controls over financial reporting for the fiscal
        year ended September 30, 2007, and the reviews of the financial statements
        included in our Form 10-Q for the quarters included therein.
  BDO
        billed us an aggregate of approximately $847,000 in fees for professional
        services rendered for the audit of our annual financial statements and audit
        of
        the effectiveness of our internal controls over financial reporting for the
        fiscal year ended September 30, 2006, and the reviews of the financial
        statements included in our Form 10-Q for the second and third quarters of
        fiscal
        2006.
  We
        previously disclosed in our 2006 Form 10-K that a total of $725,000 had been
        billed by BDO for audit services rendered in connection with the audit of
        our
        annual financials statements and audit of the effectiveness of the internal
        controls over financial reporting for the fiscal year ended September 30,
        2006.  Subsequent to fiscal year end, as is customary, we were billed
        an additional $122,000 which relates to our audit of the effectiveness of
        the
        internal controls over financial reporting.
  Audit-Related
        Fees
  BDO
        billed us an aggregate of approximately $7,000 and $36,000 in fees related
        to
        the fiscal years ended September 30, 2007 and 2006, respectively, for assurance
        and related services including accounting consultations in connection with
        merger and other transactions and consultations concerning financial accounting
        and reporting standards.
  We
        previously disclosed  in our 2006 Form 10-K that audit related fees of
        approximately $25,000 had been billed by BDO for the fiscal year ended September
        30, 2006; subsequently, we were billed an additional $11,000 relating to
        the
        above.
  Tax
        Fees
  We
        did
        not incur any tax fees from BDO for the fiscal years ended September 30,
        2007 or
        2006.
  All
        Other Fees
  We
        did
        not incur any other fees from BDO for the fiscal years ended September 30,
        2007
        or 2006.
  Our
        Audit
        Committee is directly responsible for interviewing and retaining our independent
        accountant, considering the accounting firm’s independence and effectiveness,
        and pre-approving the engagement fees and other compensation to be paid to,
        and
        the services to be conducted by, the independent accountant.  The
        Audit Committee does not delegate these responsibilities. During each of
        the
        fiscal years ended September 30, 2007 and 2006, respectively, our Audit
        Committee pre-approved 100% of the services described above.
   24
 Index
  PART
        IV
    ITEM15.  Exhibits,
          Financial
          Statement Schedules
  (a)
        The
        following documents are filed as part of this report:
 
 Exhibits:
  Exhibit
                  Number
              
              Description
                  of
                  Document31.1
              
              Certificate
                  of Charles J. Harris, Chief Executive Officer of Electronic Clearing
                  House, Inc. pursuant to Rule 13a-14(a) under the Securities and
                  Exchange
                  Act of 1934, as amended.31.2
              
              Certificate
                  of Alice L. Cheung, Chief Financial Officer of Electronic Clearing
                  House,
                  Inc. pursuant to Rule 13a-14(a) under the Securities and Exchange
                  Act of
                  1934, as amended.
  25
 Index
  SIGNATURES
 
 Pursuant
        to the requirements of Section 13 or 15(d) 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.
 
 ELECTRONIC
                CLEARING HOUSE, INC.By:
              /s/  Charles
                  J.
                  HarrisCharles
                  J. Harris, Chief Executive Officer
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, this Report has
        been
        signed by the following persons in the capacities and on the dates
        indicated.
 
 Signature
              
              Title
              
              
              Date/s/  Charles
                  J.
                  Harris
              
              Director,  Chief
                  Executive Officer
              )
              
              January
                  25, 2008Charles J. Harris
              
              
              ))*
              
              Director
              )
              
              January
                  25, 2008Aristides
                  W. Georgantas
              
              
              ))*
              
              Director
              )
              
              January
                  25, 2008Herbert
                  L. Lucas, Jr.
              
              
              ))*
              
              Director
              )
              
              January
                  25, 2008Richard
                  D. Field
              
              
              ))*
              
              Director
              )
              
              January
                  25, 2008Jerry
                  McElhatton
              
              
              ))*
              
              Director
              )
              
              January
                  25, 2008Keith
                  B. Hall
              
              
              ))/s/  Alice
                  L.
                  Cheung
              
              Chief
                  Financial Officer and Treasurer
              )
              
              January
                  25, 2008Alice L. Cheung
              
              
              ))/s/
                  Jeffrey Jacobs
              
              Director
                  of Accounting
              )
              
              January
                  25, 2008Jeffrey
                  Jacobs
              
              
              )
     *By:
              /s/
                  Alice L.
                  CheungAlice
                  L. CheungAs
                  Attorney-In-Fact
  26
 Index
  INDEX
        TO
        EXHIBITS
 
 Exhibit
                  Number
              
              Description
                  of
                  Document31.1
              
              Certificate
                  of Charles J. Harris, Chief Executive Officer of Electronic Clearing
                  House, Inc. pursuant to Rule 13a-14(a) under the Securities and
                  Exchange
                  Act of 1934, as amended.31.2
              
              Certificate
                  of Alice L. Cheung, Chief Financial Officer of Electronic Clearing
                  House,
                  Inc. pursuant to Rule 13a-14(a) under the Securities and Exchange
                  Act of
                  1934, as
                  amended.