---

---

**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**


**(Mark
      One)**




ý
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




**For
                the quarterly period ended September 30, 2006**




**OR**




o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




**For
                the transition period from____________****to****____________******




**Commission
                File Number 1-9728**





**Epoch
      Holding Corporation**


(Exact
      name of registrant as specified in its charter)


**Delaware**
            
            **20-1938886**(State
                or other jurisdiction
            
            (I.R.S.
                Employerof
                incorporation or organization)
            
            Identification
                No.)**640
                Fifth Avenue, New York, NY 10019**
              (Address
                of principal executive offices)




**(212)
      303-7200**


(Registrant’s
      telephone number, including area code)




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




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 filero
            
            Accelerated
                filero
            
            Non-accelerated
                filerý




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No ý




At
      November 7, 2006, there were 19,671,932 shares of the Company's common stock,
      $.01 par value per share, issued and outstanding.












**EPOCH
      HOLDING CORPORATION AND SUBSIDIARIES**


**FORM
      10-Q**


**TABLE
      OF CONTENTS**




**Page
                No.****Part
                I.**
            **Financial
                Information**Item
                1.
            Financial
                Statements
            2CondensedConsolidated
                Balance Sheets -September
                30, 2006 (unaudited) and June 30, 2006
            2CondensedConsolidated
                Statements of Operations (Unaudited) -Three
                Months Ended September 30, 2006 and 2005
            3CondensedConsolidated
                Statement of Stockholders' Equity(Unaudited)
                -Three
                Months Ended September 30, 2006and
                for the year ended June 30,2006
            4CondensedConsolidated
                Statements of Cash Flows(Unaudited)
                - Three Months Ended September 30, 2006 and 2005
            5Notes
                to Condensed Consolidated Financial Statements(Unaudited)
            6-13Item
                2.
            Management's
                Discussion and Analysis of Financial Conditionand
                Results of Operations
            14-26Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            27Item
                4.
            Controls
                and Procedures
            27**Part
                II.**
            ******Other
                Information**Item
                1.
            Legal
                Proceedings
            28Item1a.
            Risk
                Factors
            28Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            28Item
                3.
            Defaults
                Upon Senior Securities
            28Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            28Item
                5.
            Other
                Information
            28Item
                6.
            Exhibits
            29Signatures
            30




1


**PART
        I: FINANCIAL INFORMATION**


**Item
        1. Financial Statements.**
  **EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES** **CONDENSED
          CONSOLIDATED BALANCE SHEETS** ***(Dollars
            in thousands, except share data)***
  **September
                    30,**
                  **2006**
              
              **June
                    30,**
                  **2006****(Unaudited)****ASSETS****Current
                  assets:**Cash
                  and cash equivalents
              
              $
              7,324
              
              $
              7,845Accounts
                  receivable
              
              
              3,427
              
              
              2,486Prepaid
                  and other current assets
              
              
              380
              
              
              316Total
                  current assets
              
              
              11,131
              
              
              10,647Property
                  and equipment (net of accumulateddepreciation
                  of $647 and $552, respectively)
              
              
              1,950
              
              
              2,015Security
                  deposits
              
              
              754
              
              
              749Investments
                  in technology-related businesses (**Notes
                  2,7(a)**)
              
              
              157
              
              
              157Total
                  assets
              
              $
              13,992
              
              $
              13,568**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  liabilities:**Accounts
                  payable and accrued liabilities
              
              $
              1,340
              
              $
              1,423Accrued
                  compensation and benefits
              
              
              2,060
              
              
              2,068Total
                  current liabilities
              
              
              3,400
              
              
              3,491Deferred
                  rent
              
              
              977
              
              
              1,011Sub-tenant
                  security deposit
              
              
              211
              
              
              211Total
                  liabilities
              
              
              4,588
              
              
              4,713**Commitments
                  and contingencies (Note 6 )****Stockholders'
                  equity: (Notes 2,7(a), (b))**Preferred
                  stock, $1 par value per share, 1,000,000shares
                  authorized; none issued
              
              
              -
              
              
              -Common
                  stock, $0.01 par value per share, 60,000,000shares
                  authorized; 19,671,932 and 19,153,996shares
                  issued and outstanding, respectively
              
              
              196
              
              
              191Additional
                  paid-in capital
              
              
              30,803
              
              
              28,500Accumulated
                  deficit
              
              
              (14,289
              )
              
              (13,251
              )Unearned
                  share-based compensation
              
              
              (7,306
              )
              
              (6,585
              )Total
                  stockholders' equity
              
              
              9,404
              
              
              8,855Total
                  liabilities and stockholders' equity
              
              $
              13,992
              
              $
              13,568


*The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*


2




**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS
        (UNAUDITED)**
 ***(Dollars
        in thousands, except per share data)***
  **Three
                  Months Ended**
                **September
                  30,****2006**
              
              **2005****Revenues:**Investment
                  advisory and management fees
              
              $
              4,318
              
              $
              1,780**Operating
                  expenses:**Employee
                  related costs (excluding share-based
                  compensation)
              
              
              2,836
              
              
              1,711Share-based
                  compensation
              
              
              1,587
              
              
              1,184General,
                  administrative and occupancy
              
              
              780
              
              
              563Professional
                  fees and services
              
              
              304
              
              
              218Depreciation
                  and amortization
              
              
              95
              
              
              80Total
                  operating expenses
              
              
              5,602
              
              
              3,756**Loss
                  from operations**
              
              
              (1,284
              )
              
              (1,976
              )**Other
                  income (expense):**Interest
                  and other income
              
              
              246
              
              
              213Realized
                  gain on investment
              
              
              -
              
              
              51Total
                  other income
              
              
              246
              
              
              264**Loss
                  before income taxes**
              
              
              (1,038
              )
              
              (1,712
              )Provision
                  for (benefit from) income taxes
              
              
              -
              
              
              -**Net
                  loss**
              
              $
              (1,038
              )
              $
              (1,712
              )**Basic
                  and diluted earnings (loss) per share**
              
              $
              (0.05
              )
              $
              (0.09
              )**Weighted
                  average shares outstanding:**Basic
              
              
              19,517
              
              
              18,349Diluted
              
              
              19,517
              
              
              18,349
  *The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*


3




**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES** **CONDENSED
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
          EQUITY** ***(
            in thousands)***
  **Common
                  Stock**
              
              **Additional****Paid-in**
              
              **Accumulated**
              
              **Unearned**
                  **Share-Based****Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Compensation**
              
              **Totals****Balances
                  at June 30, 2005**
              
              
              18,258
              
              $
              182
              
              $
              24,404
              
              $
              (7,529
              )
              $
              (7,480
              )
              $
              9,577Net
                  issuance of restricted common stock
              
              
              812
              
              
              8
              
              
              3,767
              
              
              -
              
              
              (3,285
              )
              
              490Amortization
                  of unearned share-basedcompensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              4,180
              
              
              4,180Issuance
                  of common stockupon
                  exercise of stock options
              
              
              84
              
              
              1
              
              
              329
              
              
              -
              
              
              -
              
              
              330Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (5,722
              )
              
              -
              
              
              (5,722
              )**Balances
                  at June 30, 2006**
              
              
              19,154
              
              
              191
              
              
              28,500
              
              
              (13,251
              )
              
              (6,585
              )
              
              8,855Net
                  issuance of restricted common stock
              
              
              518
              
              
              5
              
              
              2,303
              
              
              -
              
              
              (2,066
              )
              
              242Amortization
                  of unearned share-basedcompensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,345
              
              
              1,345Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,038
              )
              
              -
              
              
              (1,038
              )**Balances
                  at September 30, 2006****(Unaudited)**
              
              
              19,672
              
              $
              196
              
              $
              30,803
              
              $
              (14,289
              )
              $
              (7,306
              )
              $
              9,404
  *The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*


4




**EPOCH
            HOLDING CORPORATION AND SUBSIDIARIES**
 **CONDENSED
            CONSOLIDATED STATEMENTS OF CASH FLOWS
            (UNAUDITED)**
 ***(Dollars
            in thousands)***
 **Three
                  Months EndedSeptember 30,****2006**
              
              **2005****Cash
                  flows from operating activities:**Net
                  loss
              
              $
              (1,038
              )
              $
              (1,712
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating activities:Share-based
                  compensation
              
              
              1,587
              
              
              1,184Depreciation
                  and amortization
              
              
              95
              
              
              80Realized
                  gain on investment
              
              
              -
              
              
              (51
              )Increase
                  in operating assets:Accounts
                  receivable
              
              
              (941
              )
              
              (394
              )Prepaid
                  and other current assets
              
              
              (49
              )
              
              (54
              )(Decrease)
                  increase in operating liabilities:Accounts
                  payable and accrued liabilities
              
              
              (83
              )
              
              69Accrued
                  compensation and benefits
              
              
              (8
              )
              
              -Deferred
                  rent
              
              
              (34
              )
              
              131Net
                  cash used in operating activities
              
              
              (471
              )
              
              (747
              )**Cash
                  flows from investing activities:**Capital
                  expenditures
              
              
              (30
              )
              
              (124
              )Security
                  deposits
              
              
              (5
              )
              
              1Proceeds
                  from investment
              
              
              -
              
              
              51Net
                  cash used in investing activities
              
              
              (35
              )
              
              (72
              )**Cash
                  flows from financing activities:**Preferred
                  stock issuance costs
              
              
              (15
              )
              
              -Net
                  cash used in financing activities
              
              
              (15
              )
              
              -Net
                  decrease in cash and cashequivalents
              
              
              (521
              )
              
              (819
              )Cash
                  and cash equivalents at beginning of period
              
              
              7,845
              
              
              8,550Cash
                  and cash equivalents at end of period
              
              $
              7,324
              
              $
              7,731
  *The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*


5




**EPOCH
      HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS**


***(Unaudited)***




**Note
      1 - Organization**





***Business***





Epoch
      Holding Corporation ("Epoch" or the "Company"), a Delaware corporation, is
      a
      holding company whose line of business is investment advisory and investment
      management services. The operations of the Company are conducted through its
      wholly-owned subsidiary, Epoch Investment Partners, Inc. ("EIP"), which was
      acquired in a business combination that was completed on June 2, 2004 as more
      fully described below. EIP is a registered investment adviser under the
      Investment Advisers Act of 1940, as amended (the "Investment Advisers Act").
      EIP
      provides investment advisory and investment management services to retirement
      plans, mutual funds, endowments, foundations and high net worth individuals.
      Headquartered in New York City, with an office in Sherman Oaks, CA, the
      Company’s current product offerings include U.S. All Cap Value, U.S. Value, U.S.
      Small Cap Value, Global Small Cap Value, Global Absolute Return, International
      Small Cap, Balanced Portfolios, and Global Equity Shareholder
      Yield.





***Company
      Structure***





Operations
      commenced under the existing structure on June 2, 2004 when a subsidiary of
      J
      Net Enterprises, Inc. ("J Net", whose name was subsequently changed to Epoch
      Holding Corporation in November 2004), merged with EIP in a business combination
      which resulted in the former EIP stockholders acquiring 51% of the issued and
      outstanding equity securities of J Net immediately following the merger. As
      a
      result of the majority of ownership interest in the Company being held by the
      former EIP stockholders, the business combination was accounted for as a reverse
      merger. Under generally accepted accounting principles in the United States
      of
      America, the legally acquired company (in this case, EIP) became the surviving
      entity for financial reporting purposes. EIP was formed on April 14, 2004 and
      did not have a predecessor business.





***Business
      segments***





The
      Company's line of business is the investment advisory and investment management
      business. There are no other operating or reportable segments.




**Note
      2 - Significant Accounting Policies**





***Basis
      of presentation***





The
      unaudited condensed consolidated financial statements of the Company included
      herein have been prepared in accordance with accounting principles generally
      accepted in the United States of America (“GAAP”), and in accordance with the
      instructions to Form 10-Q pursuant to the rules and regulations of the
      Securities and Exchange Commission (“SEC”). In the opinion of management, all
      adjustments, consisting of normal recurring adjustments, necessary for a fair
      presentation of the financial condition and interim results of operations have
      been made. The results for the interim periods are not necessarily indicative
      of
      the results to be obtained for a full fiscal year.




6


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS (Continued)**
 ***(Unaudited)***


The
      Company’s unaudited condensed consolidated financial statements and the related
      notes should be read together with the consolidated financial statements and
      the
      related notes included in the Company’s Annual Report on Form 10-K for the
      fiscal year ended June 30, 2006.





***Principles
      of consolidation***





The
      accompanying condensed consolidated financial statements include the accounts
      of
      the Company and its subsidiaries. All material intercompany accounts and
      transactions have been eliminated in consolidation. Certain reclassifications
      have been made to prior period financial statements to conform with the current
      period presentation.





***Use
      of estimates***





The
      preparation of financial statements in conformity with GAAP requires
      management to make certain estimates and assumptions. These estimates and
      assumptions impact the reported amounts of assets and liabilities and disclosure
      of contingent assets and liabilities as of the dates of these condensed
      consolidated financial statements and the reported amounts of revenue and
      expenses during the reporting periods. Actual results could differ from those
      estimates.





***Fair
      value of financial instruments***





The
      carrying value of the Company's cash and cash equivalents, accounts receivable,
      accounts payable and accrued liabilities approximates fair value due to
      their short-term nature.





***Cash
      equivalents***





Cash
      equivalents are liquid investments primarily comprising debt and money market
      instruments with maturities of three months or less when acquired. Cash
      equivalents are stated at cost, which approximates fair value due to their
      short
      maturity.





***Financial
      instruments with concentration of credit risk***





The
      financial instruments that potentially subject the Company to concentrations
      of
      credit risk consist principally of cash and cash equivalents. Epoch invests
      its
      cash and cash equivalents with financial institutions in amounts which, at
      times, may be in excess of the FDIC insurance limits. Cash is also invested
      in
      high-grade, short-term liquid investments, limiting exposure to concentrations
      of credit risk.





***Property
      and equipment***





The
      cost
      of leasehold improvements are capitalized and such costs are amortized on a
      straight-line basis over the shorter of their estimated useful lives or lease
      term, as applicable. All other capital assets are recorded at cost and such
      costs are depreciated on a straight-line basis over their estimated useful
      lives. Generally, the useful lives are approximately 3 to 7 years for equipment
      and 10 years for leasehold improvements and exclude option periods, if any.
      Repairs and maintenance are charged to expense as incurred. Property sold or
      retired is eliminated from the accounts in the period of disposition.





7


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS (Continued)**
 ***(Unaudited)***


***Investments
      in technology-related businesses***





The
      Company holds minority investments in a few privately held, active
      technology-related companies. Ownership in these companies range from less
      than
      1% to 19.9%. As of September 30, 2006, the Company also held investments in
      several inactive technology-related companies. The Company uses the cost method
      to account for the above investments. Only one such investment, Tellme Networks,
      Inc., had any value ascribed to it at September 30, 2006. Subsequent to
      September 30, 2006, one of the privately held, active technology-related
      companies, eStara, Inc., was acquired by a publicly traded technology company.
      See Note 7 (a), "Subsequent Events - eStara Transaction," for further
      discussion.




It
      is the
      policy of the Company to evaluate its investments in technology-related
      businesses for possible impairment on an annual basis, or earlier if an
      indicator of impairment arises. Management uses a number of different criteria
      when evaluating an asset for possible impairment. Indicators such as significant
      decreases in the investee’s book value, cash flows which cannot be resolved or
      improved within a reasonable amount of time, sustained operating losses, adverse
      changes in the business climate, legal matters, losses of significant customers,
      and new technologies which could accelerate obsolescence of business products
      are used by management when making its evaluations.





The
      Company recorded gains of $51 thousand from one of the inactive
      technology-related companies during the quarter ended September 30, 2005. There
      are no plans to make additional investments in technology-related businesses.
      Furthermore, the Company intends to divest its existing investments in
      technology-related companies in the foreseeable future. The Company may realize
      proceeds from divestitures of investments whose carrying value had previously
      been written down to zero. The amount of proceeds from such divestitures is
      not
      readily determinable, except for the eStara, Inc. transaction, and may be
      material to the Company’s financial position, results of operations, and cash
      flows.





***Revenue
      recognition***





Investment
      advisory and management fees are generally recognized as services are provided
      pursuant to specific terms contained in advisory or sub-advisory contracts
      between EIP and its clients. Such contracts generally call for revenue to be
      determined as a percentage of Assets Under Management (“AUM”). Generally, fees
      are billed on a quarterly basis, in arrears, based on the account’s net asset
      value at the end of a quarter. Advance payments, if received, are deferred
      and
      recognized during the periods for which services are provided.





The
      Company performs services for mutual funds under advisory and sub-advisory
      contracts. Fees for these contracts are calculated based upon the daily net
      asset values of the respective fund. Generally, advisory payments from the
      mutual funds are received monthly, while sub-advisory payments are received
      quarterly.





The
      Company also has certain contracts which contain "incentive clauses" that allow
      the Company to collect additional fees in the event that investment returns
      meet
      or exceed targeted amounts specified in the contracts. Revenues for these
      incentives are recognized only when such performance targets are met or exceeded
      at the end of the contract’s year, typically at the end of each calendar year.
      Due to the inability to forecast financial markets, no revenues are recognized
      until the contract year ends, even when investment returns are exceeding the
      contractual targets within the contract year.





8


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS (Continued)**
 ***(Unaudited)***
  ***Share-based
        compensation***





Effective
      July 1, 2005, the Company adopted Statement of Financial Accounting Standards
      No. 123 (Revised 2004), *Share-Based
      Payment* (“SFAS
      123R”), which requires employee and qualifying director share-based payments to
      be accounted for using the fair value method. The fair value of the Company’s
      restricted stock awards is based on the closing price of the Company’s common
      stock at the grant date. Share-based compensation costs related to equity
      instruments are charged against income ratably over the fixed vesting period
      for
      the related equity instruments, with the initial charge generally recorded
      in
      the first full month following the grant. The Company’s accounting treatment of
      restricted stock awards under SFAS 123R is consistent with that of the Company’s
      previous policies under Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
      for Stock Issued to Employees* and the
      pro forma disclosures required in accordance with SFAS 123, *Accounting
      for Stock-Based Compensation* .
      The
      adoption of this standard did not have a material effect on the Company’s
      financial statements.




Under
      the
      modified prospective method transition of SFAS 123R, compensation costs related
      to any non-vested portion of stock option awards outstanding at the adoption
      date are based on the grant date fair value of those awards. Since all stock
      options previously granted under the Company’s plan that expired on September
      30, 2002 were fully vested prior to June 30, 2004, there are no deferred
      compensation costs resulting from stock options to be accounted for on a
      prospective basis. There were no further stock options issued for all periods
      presented.





***Income
      taxes***





The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standard No. 109, *Accounting
      for Income Taxes* ("SFAS
      109"). SFAS 109 requires that deferred tax assets and liabilities arising from
      temporary differences between book and tax basis be recognized using the enacted
      statutory tax rates and laws that will be in effect when such differences are
      expected to reverse. In the case of deferred tax assets, SFAS 109 requires
      a
      reduction in deferred tax assets if it is more likely than not that some portion
      of the deferred tax assets will not be realized.





***Earnings
      (loss) per common share***





Basic
      earnings (loss) per share (“EPS”) is calculated by dividing net earnings (loss)
      applicable to common shareholders by the weighted average number of common
      shares outstanding during the period. Diluted EPS includes the determinants
      of
      basic EPS and, in addition, reflects the dilutive effect, if any, of the common
      stock deliverable pursuant to stock options.





***Recently
      issued accounting standards***





On
      June 7, 2005, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 154, *Accounting
      Changes and Error Corrections* ("SFAS
      No. 154"), replacing APB Opinion No. 20, *Accounting
      Changes* ,
      and
      SFAS No. 3, *Reporting
      Accounting Changes in Interim Financial Statements.* SFAS
      No. 154 alters the requirements for the accounting for and reporting of a
      change in accounting principle. Previously, most voluntary changes in accounting
      principles required recognition via a cumulative effect adjustment within net
      income of the period of the change. SFAS No. 154 requires retrospective
      application to prior periods' financial statements, unless it is impracticable
      to determine either the period-specific effects or the cumulative effect of
      the
      change. SFAS No. 154 is effective for accounting changes made in fiscal
      years beginning after December 15, 2005; however, SFAS No. 154 does
      not change the transition provisions of any existing accounting pronouncements.
      The adoption of SFAS No. 154 did not have a material effect on the
      Company’s condensed consolidated financial position, results of operations, or
      cash flows, as it did not make any voluntary accounting changes.





9


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS (Continued)**
 ***(Unaudited)***
  In
        June 2006, the FASB issued FASB Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes* — *an
        interpretation of FASB Statement No. 109* ,
        (“FIN
        48”). FIN 48 clarifies the accounting for income taxes by prescribing the
        minimum recognition threshold that a tax position must meet to be recognized
        in
        the financial statements. FIN 48 also provides guidance on measurement,
        derecognition, classification, interest and penalties, accounting in interim
        periods, disclosure and transition. FIN 48 must be implemented for fiscal
        years
        beginning after December 15, 2006. Early application is permitted. The Company
        is evaluating the effect, if any, the adoption of FIN 48 will have on its
        consolidated financial statements .





In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (“SFAS
      157”). SFAS 157 defines fair value, establishes a framework for measuring fair
      value and enhances disclosures about fair value measurements required under
      other accounting pronouncements, but does not change existing guidance as to
      whether or not an instrument is carried at fair value. SFAS
      157
      is effective for fiscal years beginning after November 15, 2007, with earlier
      application permitted. The Company is evaluating the provisions of SFAS 157
      and
      the potential effect, if any, on its consolidated financial
      statements.





**Note
      3 - Accounts Receivable**





The
      Company's accounts receivable balances do not include an allowance for doubtful
      accounts and there have been no bad debt expenses recognized during the quarters
      ended September 30, 2006 and 2005, respectively. These receivables are advisory
      and sub-advisory service fees, and management believes they are fully
      collectible.





***Significant
      customers and contracts***





For
      the
      three months ended September 30, 2006, two customers accounted for 41% of
      consolidated revenues. CI Investments Inc. (“CI”), a Canadian-owned investment
      management company, accounted for approximately 19%, while Genworth
      Financial Asset Management, Inc. (“Genworth”), an investment
      adviser, through its investments in the Epoch International Small Cap Fund
      (“EPIEX”) and the Epoch Global Equity Shareholder Yield Fund (“EPSYX”), as well
      as separate account mandates, accounted for approximately 22%. The Company's
      services and relationships with these clients are important to the Company's
      ongoing growth strategy, and retention of these customers is significant to
      the
      ongoing results of operations and liquidity of the Company.




During
      the three months ended September 30, 2005, two customers accounted for 42%
      of
      consolidated revenues. CI accounted for approximately 25%, while Genworth,
      through its investments in EPIEX, as well as separate account mandates,
      accounted for approximately 17%.





**Note
      4 - Earnings (Loss) Per Share**





Basic
      earnings (loss) per share is computed by dividing net earnings (loss) by the
      weighted average number of common shares outstanding during the period. Diluted
      earnings per share is computed by dividing net earnings by the weighted average
      number of common and common equivalent shares outstanding during the period.
      The
      calculation of diluted earnings (loss) per share excluded 1,130,000 and
      1,267,500 issued and outstanding stock options at September 30, 2006 and 2005,
      respectively, as their effect was antidilutive.





10


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS (Continued)**
 ***(Unaudited)***




**Note
      5 -Income Taxes**





The
      Company completed a reverse merger business combination with EIP on June 2,
      2004. As a result, the ability to utilize certain net operating loss
      carryfowards ("NOLs") became limited as a result of a greater than 50% change
      in
      ownership. These limitations are covered by Section 382 of the Internal Revenue
      Code ("IRC"). Section 382 limits the annual utilization of NOLs accumulated
      prior to the ownership change to a percentage of the acquired entity's fair
      value at the time of the change in ownership. As a result, the Company's ability
      to utilize accumulated NOLs to their full extent prior to their expiration
      cannot be reasonably assured. Until profitability can be achieved, and
      utilization of NOLs can be more definitive, the Company has provided a full
      valuation allowance on its accumulated NOLs and other net tax
      assets.





**Note
      6 - Commitments and Contingencies**





***Employment
      agreements***





There
      are
      no employment contracts with any officers of the Company. There are written
      agreements with certain employees, which provide for sales commissions or
      bonuses, subject to the attainment of certain performance criteria or
      continuation of employment. Such commitments under the various agreements
      totaled approximately $1.3 million at September 30, 2006 and are accrued over
      the applicable service period. Of this amount, approximately $0.1 million
      represents restricted stock awards to be issued during the fiscal year ending
      June 30, 2007.





The
      Company is obligated to enter into an employment agreement with its Chief
      Executive Officer prior to June 2, 2007, the third anniversary of the business
      combination with EIP. Terms of the contract are to be customary for Chief
      Executive Officers of peer group companies and must be reviewed and approved
      by
      the Company's Compensation Committee.





***Legal
      matters***





From
      time
      to time, the Company or its subsidiaries may become parties to claims, legal
      actions and complaints arising in the ordinary course of business. Management
      is
      not aware of any claims which would have a material adverse effect on its
      condensed consolidated financial statements.





**Note
      7 - Subsequent Events**





***(a)
      eStara Transaction:***





During
      the fiscal year ended June 30, 2000, J Net, the predecessor company to Epoch,
      made a $4.0 million investment in eStara, Inc. ("eStara"), a technology-related
      company that provides conversion and tracking solutions to enhance on-line
      sales. This investment comprised 373,376 shares of Series C-1 and 553,893 shares
      of Series C-2, respectively, 8% cumulative convertible redeemable preferred
      stock. As there was no readily available market for the securities and the
      investment represented less than a 20% interest in eStara, the securities were
      valued at the Company’s initial cost. During the fiscal years ended June 30,
      2001 and 2002, the carrying value of this investment was deemed to be impaired
      by J Net’s management and written down. During the fiscal year ended June 30,
      2003, J Net’s management concluded its ability to recover its investment was
      remote and wrote off the remaining carrying value. Accordingly, this investment
      had no carrying value at September 30, 2006. Additionally, no dividends had
      been
      paid through September 30, 2006.




11


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS (Continued)**
 ***(Unaudited)***






On
      October 2, 2006, eStara was acquired by Art Technology Group, Inc.
      (NASDAQ ticker symbol “ARTG”). Under the terms of the agreement, ARTG acquired
      all of the outstanding common stock, preferred stock, and vested and unvested
      stock options of eStara for approximately 15.3 million shares of ARTG common
      stock, $2.0 million in cash, and up to an additional $6.0 million in potential
      earn-out payments.





The
      merger transaction will have a material impact on the Company's financial
      position, shareholders' equity, and results of operations during the quarter
      ending December 31, 2006.





As
      a
      result of the above-mentioned merger, the Company, as holder of the preferred
      stock of eStara, will receive an amount per share equal to the original issue
      price, plus the amount of any unpaid cumulative dividends. Also, the Company
      is
      entitled to its approximately 5% proportionate share of remaining merger
      consideration. Accordingly, the Company will receive approximately 2,458,000
      common shares of ARTG as well as $321 thousand in cash. Additional lesser
      amounts, up to $150 thousand, may also be realized, pursuant to the earn-out
      provisions of the merger. The shares to be received from ARTG are subject to
      a
      lock-up agreement pursuant to which the shares will be released from the lock-up
      in equal monthly installments over a period of 12 months, beginning three
      months after the October 2, 2006 closing.




If
      the
      transaction had closed on the last business day of the quarter ended September
      30, 2006, the Company would have had increases in both total assets and
      stockholders’ equity of approximately $6.6 million. Based on the quarter end
      closing price of $2.56 per share for ARTG, this increase in total assets
      comprises approximately $6.3 million in ARTG stock and $0.3 million in cash.
      Approximately $4.0 million will be recognized as other comprehensive income,
      a
      component of stockholders’ equity. Approximately $2.4 million and $0.2 million
      will be recognized as dividend income and realized gains, respectively, through
      the Statement of Operations. The Company will treat the investment in ARTG
      stock
      as available-for-sale securities.





***(b)
      Preferred Stock Issuance:***




On
      November 6, 2006, Epoch Holding Corporation ("Epoch" or the "Company") entered
      into a Securities Purchase Agreement (the "Purchase Agreement") with General
      American Investors Company, Inc. ("GAM" or the "Purchaser"), whereby GAM
      invested $10 million in Epoch and Epoch issued GAM 10,000 shares of Series
      A
      Convertible Preferred Stock (the "Series A Preferred Stock").




The
      Company intends to use the proceeds for general business purposes and to support
      the Company's future growth. No placement or other broker fees were paid in
      connection with this transaction.




The
      Series A Convertible Preferred Stock has an annual cumulative cash dividend
      of
      4.60%, payable semi-annually on June 30 and December 31, the first payment
      being
      December 31, 2006. These securities are convertible, in whole or in part at
      any
      time, into shares of the Company's common stock at a fixed conversion price
      of
      $6.00 per share, or 1,666,667 common shares in total.




12


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS (Continued)**
 ***(Unaudited)***




The
      conversion price of $6.00 per common share contains a beneficial conversion
      feature of $0.42 per share to the November 6, 2006 closing price of $6.42.
      This
      beneficial conversion feature, which is the difference between the above closing
      price and the conversion price, will be fully charged to retained
      earnings (accumulated deficit) at the date of closing. A corresponding amount
      will be credited to additional paid-in capital.




Upon
      the
      five year anniversary of the closing of the transaction, there is an automatic
      conversion into shares of the Company's common stock at the fixed conversion
      price. The Series A Convertible Preferred Stock also contains an automatic
      conversion provision upon a change in control (as defined in the Certificate
      of
      Designation), as well as customary conversion price adjustments for stock
      combinations, stock splits, stock dividends and other similar
      events.




Prior
      to
      the conversion, the number of shares of common stock issuable upon the
      conversion of the Series A Preferred Stock will have no effect on the Company's
      basic earnings per share calculation, but shall be included in its diluted
      earnings per share calculation. Upon conversion, the issuable shares of common
      stock shall be included in the calculation of both the basic and diluted
      earnings per share.




The
      holders of the Series A Preferred Stock generally have voting rights equivalent
      to the holders of the Company's common stock, and will be entitled to vote
      on an
      as-converted basis (1,666,667 shares) with the holders of the common stock
      together as a single class. The Series A Preferred Stock also provides for
      customary preference upon a Liquidation, as defined in the Certificate of
      Designation.




The
      Series A Preferred Stock was offered and sold to the Purchaser in a private
      placement transaction in reliance upon exemptions from registration pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
      and the rules and regulations of the Securities and Exchange Commission (the
      "SEC") promulgated thereunder, including Regulation D. The Purchaser is an
      accredited investor as defined in Rule 501 of Regulation D under the Securities
      Act.




The
      Series A Convertible Preferred Stock is not registered under the Securities
      Act.
      The common stock into which the Series A Preferred Stock will be convertible
      may
      not be offered or sold in the U.S. absent registration or an applicable
      exemption from registration requirements.




In
      connection with the Purchase Agreement, the Company and GAM also entered into
      a
      Registration Rights Agreement, dated November 7, 2006, in which, among other
      things, the Company agreed to prepare, and, within sixty (60) calendar days
      after the closing date, file with the SEC a registration statement covering
      the
      resale by GAM of the shares of common stock underlying the Series A Convertible
      Preferred Stock.






13




**Item
      2.****Management's
      Discussion and Analysis of Financial Condition and Results of****Operations**





Set
      forth
      on the following pages is management’s discussion and analysis of our financial
      condition and results of operations for the three months ended September 30,
      2006 and September 30, 2005. Such information should be read in conjunction
      with
      our unaudited condensed consolidated financial statements together with the
      notes to the unaudited condensed consolidated financial statements as well
      as
      our Annual Report on Form 10-K for the Fiscal year ended June 30, 2006. When
      we
      use the terms the “Company”, “management”, “we”, “us”, and “our”, we mean Epoch
      Holding Corporation, a Delaware corporation, and its consolidated
      subsidiaries.




**Forward-Looking
      Statements**





*Certain
      information included in this Quarterly Report on Form 10-Q and other materials
      filed or to be filed by the Company with the Securities and Exchange Commission
      ("SEC") contain statements that may be considered forward-looking. In some
      cases, you can identify these statements by forward-looking words such as "may,"
      "might," "will," "should," "expect," "plan," "anticipate," "believe,"
      "estimate," "predict," "potential" or "continue," and the negative of these
      terms and other comparable terminology. These forward-looking statements, which
      are subject to known and unknown risks, uncertainties and assumptions about
      the
      Company, may include projections of the Company's future financial performance
      based on the Company's growth strategies and anticipated trends in the Company's
      business. These statements are only predictions based on the Company's current
      expectations and projections about future events. There are important factors
      that could cause the Company's actual results, level of activity, performance
      or
      achievements to differ materially from the results, level of activity,
      performance or achievements expressed or implied by the forward-looking
      statements. See "Factors Which May Affect Future Results".*





*These
      risks and uncertainties are not exhaustive. Other sections of this Quarterly
      Report on Form 10-Q may include additional factors which could adversely impact
      the Company's business and financial performance. Moreover, the Company operates
      in a very competitive and rapidly changing environment. New risks and
      uncertainties emerge from time to time, and it is not possible for the Company's
      management to predict all risks and uncertainties, nor can the Company assess
      the impact of all factors on the Company's business or the extent to which
      any
      factor, or combination of factors, may cause actual results to differ materially
      from those contained in any forward-looking statements.*





*Although
      the Company believes the expectations reflected in the forward-looking
      statements are reasonable, the Company cannot guarantee future results, level
      of
      activity, performance or achievements. Moreover, neither the Company nor any
      other person assumes responsibility for the accuracy or completeness of any
      of
      these forward-looking statements. You should not rely upon forward-looking
      statements as predictions of future events. The Company is under no duty to
      update any of these forward-looking statements after the date of this Quarterly
      Report on Form 10-Q, nor to conform the Company's prior statements to actual
      results or revised expectations, and the Company does not intend to do
      so.*





14




*Forward-looking
      statements include, but are not limited to, statements about:*





**·**
            *the
                Company's business strategies and investment
                policies,***·**
            *the
                Company's possible or assumed future results of operations and operating
                cash flows,***·**
            *the
                Company's financing plans and the availability of short-term
                borrowing,***·**
            *the
                Company's competitive position,***·**
            *potential
                growth opportunities available to the Company,***·**
            *the
                recruitment and retention of the Company's managing directors and
                employees,***·**
            *the
                Company's expected levels of compensation,***·**
            *the
                Company's potential operating performance, achievements, productivity
                improvements, efficiency and cost reduction
                efforts,***·**
            *the
                likelihood of success and impact of litigation,***·**
            *the
                Company's expected tax rates,***·**
            *the
                Company's expectations with respect to the economy, securities markets,
                the market for mergers and acquisitions activity, the market for
                asset
                management activity and other industry trends,***·**
            *the
                benefits to the Company resulting from the effects of separation
                and
                recapitalization transactions and additional financing
                transactions,***·**
            *the
                effects of competition on the Company, and***·**
            *the
                impact of future legislation and regulation on the
                Company.*





**Available
      Information**





The
      Company maintains a website which contains current information on operations
      and
      other corporate governance matters. The website address is www.eipny.com.
      Through the Investor Relations section of our website, and “Link to SEC Website”
therein, we make available our Annual Report on Form 10-K, quarterly reports
      on
      Form 10-Q, current reports on Form 8-K, and any amendments to those reports
      filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
      Act as soon as reasonably practicable after we electronically file such material
      with, or furnish it to, the SEC.





**Overview**





Epoch
      Holding Corporation ("Epoch" or the "Company") is a holding company whose line
      of business is investment advisory and investment management services. The
      operations of the Company are conducted through its wholly-owned subsidiary,
      Epoch Investment Partners, Inc. ("EIP"). EIP is a registered investment advisor
      under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
      Act").





**Critical
      Accounting Policies**





Our
      significant accounting policies are described in Note 2 of the Notes to the
      Consolidated Financial Statements included in our Annual Report on Form 10-K
      for
      the fiscal year ended June 30, 2006. A discussion of critical accounting
      policies is included in Management’s Discussion and Analysis of Financial
      Condition and Results of Operations in our Annual Report on Form 10-K for the
      fiscal year ended June 30, 2006. There were no significant changes in our
      critical accounting policies during the three months ended September 30,
      2006.




15





**Company
      Structure**





Operations
      commenced under the existing structure on June 2, 2004 when a subsidiary of
      J
      Net Enterprises, Inc. ("J Net", whose name was subsequently changed to Epoch
      Holding Corporation in November 2004), merged with EIP in a business combination
      which resulted in the former EIP stockholders acquiring 51% of the issued and
      outstanding equity securities of J Net immediately following the merger. As
      a
      result of the majority of ownership interest in the Company being held by the
      former EIP stockholders, the business combination was accounted for as a reverse
      merger. Under generally accepted accounting principles in the United States
      of
      America, the legally acquired company (in this case, EIP) became the surviving
      entity for financial reporting purposes. EIP was formed on April 14, 2004 and
      did not have a predecessor business.




**Results
      of operations - three months ended September 30, 2006 and
      2005**





***Financial
      Highlights***





The
      Company continued to achieve positive operating leverage for the quarter ended
      September 30, 2006, which is defined as the total revenue growth rate that
      exceeds the rate of growth of expenses. Total operating revenue increased by
      approximately 140% from $1.8 million to $4.3 million, while total operating
      expenses increased by 49%. Operating margins, while still negative, continue
      to
      improve and approach break-even levels. The main driver of this positive trend
      was the significant increase in Assets Under Management (“AUM”). The Company
      finished the quarter ended September 30, 2006 with AUM of $3.85 billion, more
      than doubling AUM of $1.77 billion at the end of the same quarter a year ago.





For
      the
      quarter ended September 30, 2006, the Company recorded a net loss of $1.0
      million, an improvement of $0.7 million, or 41%, from a net loss of $1.7 million
      for the same period a year ago. Basic and diluted loss per share was $.05 per
      share for the quarter ended September 30, 2006, an improvement of 44% from
      a
      loss of $.09 per share for the same period a year ago.





***Business
      Environment***





As
      an
      investment advisory and management firm, our results of operations can
      be directly impacted by global market, political, and economic trends. A
      favorable business environment can be depicted by several factors, including
      strong business profitability, robust investor confidence, low unemployment,
      and
      financial market transparency. These factors can directly affect capital
      appreciation, which in turn, impacts our investment management and advisory
      business.





The
      global market environment towards the end of the quarter ended September 30,
      2006 became increasingly favorable, and ended the quarter stronger than it
      had
      begun. Optimism about the U.S. economy began to increase as energy prices began
      to fall and the Federal Reserve did not continue to increase interest rates.
      These factors led to a stock market rally that lasted through the quarter.
      For
      the quarter ended September 30, 2006, the S&P 500 increased by 5.2%, while
      the Dow Industrials and NASDAQ increased by 4.7% and 4.0%, respectively. This
      environment was favorable to our business as market appreciation contributed
      to
      approximately 25% of the increase in Assets Under Management (“AUM”) for the
      quarter ended September 30, 2006.





16





***Assets
      Under Management and Flows (in millions)***


**Three
                    Months Ended****September
                      30,****2006**
              ****
              **2005**Beginning
                  of period assets
              
              $
              3,253
              
              $
              1,401Net
                  Inflows/(Outflows)
              
              
              433
              
              
              284Market
                  Appreciation
              
              
              161
              
              
              85End
                  of period assets
              
              $
              3,847
              
              $
              1,770





AUM
      increased to $3.85 billion at September 30, 2006, from $1.77 billion at
      September 30, 2005. This increase was primarily attributable to the ongoing
      expansion of the Company’s client base.





The
      following chart shows the Company’s investment products as a percentage of AUM
      as of September 30, 2006:










17




The
      table
      and charts that follow set forth the amount of AUM by distribution
      channel:




**Assets
        Under Management (AUM) By Distribution Channel**
 ***(Dollars
        in Millions)***
  **As
                  of September 30,**
              
              **Amount**
              
              **Percent****Distribution
                  Channel:**
              
              **2006**
              
              **2005**
              
              **Increased**
              
              **Increased**Sub-advisory
              
              $
              1,868
              
              $
              1,215
              
              $
              653
              
              
              53.7
              %Institutional
              
              
              1,681
              
              
              273
              
              
              1,408
              
              
              515.8
              %High
                  net worth
              
              
              298
              
              
              282
              
              
              16
              
              
              5.7
              %Total
                  AUM
              
              $
              3,847
              
              $
              1,770
              
              $
              2,077
              
              
              117.3
              %




As
      a result of the increase in AUM from the prior year
      period, the percentage of assets under management from CI Mutual Funds, Inc.
      of
      Canada ("CI"), a significant sub-advisory customer, declined to approximately
      39% at September 30, 2006 from approximately 50% at September 30,
      2005.














18




***Revenues***





Total
      revenues from investment advisory and management services for the three months
      ended September 30, 2006 were $4.3 million, more than doubling fees earned
      from
      the same period a year ago. This increase was attributable to the increase
      in
      assets under management, led primarily by an increase in institutional and
      sub-advisory mandates. We expect this positive revenue trend to continue during
      the next quarter as AUM levels are significantly higher than comparative periods
      from the prior year.





For
      the
      three months ended September 30, 2006, CI accounted for approximately 19% of
      revenues, while Genworth Financial Asset Management, Inc. (“Genworth”),
      an investment adviser, through its investments in the Epoch
      International Small Cap Fund (“EPIEX”) and the Epoch Global Equity Shareholder
      Yield Fund (“EPSYX”), as well as separate account mandates, accounted for
      approximately 22% of revenues.





For
      the
      three months ended September 30, 2005, CI accounted for approximately 25% of
      revenues, while Genworth, through its investments in EPIEX, as well as separate
      account mandates, accounted for approximately 17%.





***Employee
      related costs (excluding share-based compensation)***





Expenses
      in this category include salaries, benefits, incentive compensation, signing
      bonuses and commission expenses. For the three months ended September 30, 2006,
      these expenses were $2.8 million, an increase of $1.1 million or 65% from $1.7
      million for the three months ended September 30, 2005. Increased employee
      headcount to support the growth and expansion of the business was the primary
      reason for this increase. We expect the level of overall employee related costs
      to increase in future periods due to changes in staffing levels to support
      the
      growth and expansion of our business.





***Share-based
      compensation***





Share-based
      compensation for the three months ended September 30, 2006 was $1.6 million,
      up
      $0.4 million or approximately 34% from $1.2 million for the three months ended
      September 30, 2005. Share-based compensation includes 5.5 million shares of
      restricted stock that were issued to employee owners associated with the
      acquisition of EIP, as well as restricted stock issued to employees during
      fiscal years 2005 and 2006, and the three months ended September 30, 2006.
      The
      increase from the same quarter a year ago is primarily attributable to the
      increase in employees.





Share-based
      compensation expense is recognized ratably over the three-year vesting period
      of
      those awards, in accordance with their underlying vesting provisions. In the
      three months ended September 30, 2006 and 2005, 460,658 and 471,792 shares
      of
      restricted stock, respectively, were issued to employees. A total of 57,582
      and
      58,974 shares of the awards, or approximately 12.5% of the shares issued in
      the
      three months ended September 30, 2006 and 2005, respectively, were immediately
      vested. The remaining 87.5% of the shares vest ratably over the subsequent
      three
      years. Approximately 8,950 shares were forfeited by terminated employees in
      the
      three months ended September 30, 2006. There were no forfeitures in the three
      months ended September 30, 2005. ****





During
      the three months ended September 30, 2006 and September 30, 2005 **,** 66,228
      and zero shares, respectively, were granted to directors of the Company. The
      prior year’s
      director awards were granted in the quarter preceding September 30, 2005. The
      recently issued directors' shares vest over one year. The prior years’ issued
      directors’ shares are subject to a three-year vesting period and vest one-third
      each year, or immediately in the event of death or disability. Prospective
      director stock awards will vest over one year. Share-based compensation expense
      is recognized ratably over the respective vesting period, in accordance with
      their underlying vesting provisions.




19




***General,
      administrative and occupancy expenses***





These
      expenses consist primarily of office rentals, travel and entertainment,
      advertising and marketing, information technology expenses, utilities,
      insurance, and other office related expenses. For the three months ended
      September 30, 2006 such fees were $0.8 million, an increase of $0.2 million,
      or
      39% from the comparable period a year ago. Increased insurance costs as a result
      of increased insurance coverage as well as higher advertising costs as a result
      of an increase in marketing efforts were the primary reasons for this increase.
      We expect occupancy expenses to be higher in fiscal year 2007 as we anticipate
      obtaining additional office space during the fiscal year.





***Professional
      fees and services***





These
      expenses consist primarily of outside legal fees for Securities and Exchange
      Commission compliance and general corporate legal affairs, independent
      accountants' fees, and other professional services. For the three months ended
      September 30, 2006 such fees were $0.3 million, an increase of $0.1 million,
      or
      39% from the comparable period a year ago. An increase in legal fees as well
      as
      public relations fees were the primary reasons for this increase.





***Depreciation
      and amortization***





Depreciation
      and amortization increased to $95 thousand in the three months ended September
      30, 2006, an increase of $15 thousand from $80 thousand in the three months
      ended September 30, 2005.





***Other
      income***





Other
      income includes interest earnings from cash and cash equivalents, rental income
      from subleased office space in New York, and realized gains on investments.
      For
      the three months ended September 30, 2006, other income decreased to $246
      thousand, a decrease of $18 thousand from $264 thousand for the three months
      ended September 30, 2005. The Company anticipates an increase in other income
      during the next quarter as a result of interest income earned on the $10 million
      of private placement proceeds received on November 7, 2006. See “Subsequent
      Events - Preferred Stock Issuance” discussion which follows.





20




**Liquidity
      and Capital Resources**





A
      summary
      of cash flow data for the quarters ended September 30, 2006 and 2005,
      respectively, is as follows *(in
      thousands):*


**September
                    30,****2006**
                
                **2005**Cash
                    flows used in:Operating
                    activities
                
                $
                (471
                )
                $
                (747
                )Investing
                    activities
                
                
                (35
                )
                
                (72
                )Financing
                    activities
                
                
                (15
                )
                
                -Net
                    decrease in cash and cash equivalents
                
                
                (521
                )
                
                (819
                )Cash
                    and cash equivalents at beginning of period
                
                
                7,845
                
                
                8,550Cash
                    and cash equivalents at end of the period
                
                $
                7,324
                
                $
                7,731
  Sources
        of funds for the Company's operations are derived from investment advisory
        and
        investment management fees, interest on the Company's cash and cash equivalents
        and sublease income. As of September 30, 2006, the Company had $7.3 million
        of
        cash and cash equivalents and $3.4 million of accounts receivable to fund
        its
        business growth strategy. Accounts payable and accrued liabilities, which
        consist of professional fees, trade payables and other liabilities were $1.3
        million. Accrued compensation and benefits, which consist primarily of accrued
        employee bonuses and sales commissions, were $2.1 million. There was no debt
        and
        management does not foresee any reason to incur debt unless a significant
        business opportunity warrants such action.





The
      Company’s business does not require it to maintain significant capital balances.
      The Company’s current financial condition is highly liquid, with cash and cash
      equivalents comprising approximately 52% of its total assets at September 30,
      2006.





The
      Company expects to continue to increase staff to support the growth and
      expansion of its business and the related distribution efforts for its products.
      Despite the occurrence of operating losses in the quarter ended September 30,
      2006, management believes the existing cash and cash equivalents are adequate
      to
      provide the necessary resources to meets its operating needs for the foreseeable
      future as well as to implement its growth objectives.





The
      Company’s liquidity position further strengthened subsequent to September 30,
      2006, as a result of the November 7, 2006 private placement - see “Subsequent
      Events- Preferred Stock Issuance” discussion which follows. The Company believes
      that the proceeds from the private placement, when combined with its current
      cash position, will enable the Company to accelerate its growth
      objectives.


21




**Preferred
      Dividends**





As
      a
      result of the November 7, 2006 private placement - see “Subsequent Events -
      Preferred Stock Issuance” discussion which follows - the Company will pay
      semi-annual dividends on newly issued Series A Convertible Preferred Stock
      on
      December 31 and June 30 of each year. The Company expects to pay approximately
      $70 thousand in preferred dividends at the end of the next fiscal quarter,
      which
      represents dividends for the period from November 7, 2006 to December 31,
      2006.





**Working
      Capital**





The
      Company’s working capital and current ratio (current assets divided by current
      liabilities) for the quarter ended September 30, 2006 and recent fiscal year
      ended June 30, 2006 is set forth in the table below (*dollars* *in
      thousands* ):





September
                      30,
                    2006
              
              June
                    30,
                  2006
              
              Increase
                    (decrease)
              
              Percent
                    Change*(dollars
                  in thousands)*Current
                  Assets
              
              $
              11,131
              
              $
              10,647
              
              $
              484
              
              
              4.5
              %Current
                  Liabilities
              
              
              3,400
              
              
              3,491
              
              
              (91
              )
              
              (2.6
              %)Working
                  Capital
              
              $
              7,731
              
              $
              7,156
              
              $
              575
              
              
              8.0
              %Current
                  Ratio
              
              
              3.27
              
              
              3.05
              
              
              0.22
              
              
              7.2
              %





**Contractual
      Obligations**





The
      Company's primary headquarters and operations are located in New York, New
      York.
      Business is conducted at a location with approximately 10,000 square feet under
      a long-term lease that expires in September 2015.





The
      Company is also the primary party to another lease in New York, New York which
      expires in December 2010. This property is subleased to an unrelated third
      party. While the Company remains responsible for obligations under the lease,
      the sublease income, net of profit sharing with the landlord, more than offsets
      the Company's obligations under this lease. The subtenant has performed its
      obligations under the sublease agreement and the Company is not aware of any
      credit issues with the subtenant. As of September 30, 2006, the remaining future
      minimum payments under this lease total approximately $2.0 million. Future
      minimum receipts from the subtenant, net of profit sharing with the landlord,
      total $2.3 million as of September 30, 2006.





The
      Company also has an office lease in Sherman Oaks, California with an annual
      option to renew. The obligations under this lease are minimal.





There
      are
      no employment contracts with any officers or employees of the Company. The
      Company is obligated to enter into an employment agreement with its Chief
      Executive Officer prior to June 2, 2007, the third anniversary of the business
      combination with EIP. Terms of the contract are to be customary for Chief
      Executive Officers of peer group companies and must be reviewed and approved
      by
      the Company's Compensation Committee.





22




**Summary
      of Contractual Obligations**





The
      following table summarizes all contractual obligations, including the
      aforementioned office leases ( *in
      thousands* ):


**Remaining**
                  **Payments
                    in**
              
              **Payments
                    Due In****Fiscal
                    Years Ended June 30,****2007**
              
              **2008
                    -****2009**
              
              **2010
                    -****2011**
              
              **2012
                    and****thereafter**
              
              **Total**Primary
                  New York operations
              
              $
              499
              
              $
              1,333
              
              $
              1,369
              
              $
              3,047
              
              $
              6,248Subleased
                  location
              
              
              360
              
              
              961
              
              
              641
              
              
              -
              
              
              1,962Other
                  office locations
              
              
              24
              
              
              -
              
              
              -
              
              
              -
              
              
              24Other
                  operating leases
              
              
              24
              
              
              30
              
              
              11
              
              
              -
              
              
              65Total
                  obligations
              
              
              907
              
              
              2,324
              
              
              2,021
              
              
              3,047
              
              
              8,299Sublease
                  income
              
              
              (418
              )
              
              (1,148
              )
              
              (765
              )
              
              -
              
              
              (2,331
              )Net
                  obligations
              
              $
              489
              
              $
              1,176
              
              $
              1,256
              
              $
              3,047
              
              $
              5,968


**Off-Balance
      Sheet Arrangements**





As
      of
      September 30, 2006 the Company had no off-balance sheet arrangements.





**New
      Accounting Pronouncements**





On
      June 7, 2005, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 154, *Accounting
      Changes and Error Corrections* ("SFAS
      No. 154"), replacing APB Opinion No. 20, *Accounting
      Changes* ,
      and
      SFAS No. 3, *Reporting
      Accounting Changes in Interim Financial Statements.* SFAS
      No. 154 alters the requirements for the accounting for and reporting of a
      change in accounting principle. Previously, most voluntary changes in accounting
      principles required recognition via a cumulative effect adjustment within net
      income of the period of the change. SFAS No. 154 requires retrospective
      application to prior periods' financial statements, unless it is impracticable
      to determine either the period-specific effects or the cumulative effect of
      the
      change. SFAS No. 154 is effective for accounting changes made in fiscal
      years beginning after December 15, 2005; however, SFAS No. 154 does
      not change the transition provisions of any existing accounting pronouncements.
      The adoption of SFAS No. 154 did not have a material effect on the
      Company’s consolidated financial position, results of operations, or cash flows,
      as it did not make any voluntary accounting changes.




23




In
      June 2006, the FASB issued FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes* — *an
      interpretation of FASB Statement No. 109* ,
      (“FIN
      48”). FIN 48 clarifies the accounting for income taxes by prescribing the
      minimum recognition threshold that a tax position must meet to be recognized
      in
      the financial statements. FIN 48 also provides guidance on measurement,
      derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure and transition. FIN 48 must be implemented for fiscal years
      beginning after December 15, 2006. Early application is permitted. The Company
      is evaluating the effect, if any, the adoption of FIN 48 will have on its
      consolidated financial statements .





In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (“SFAS
      157”). SFAS 157 defines fair value, establishes a framework for measuring fair
      value and enhances disclosures about fair value measurements required under
      other accounting pronouncements, but does not change existing guidance as to
      whether or not an instrument is carried at fair value. SFAS
      157
      is effective for fiscal years beginning after November 15, 2007, with
      earlier application permitted. The Company is evaluating the provisions of
      SFAS
      157 and the potential effect, if any, on its consolidated financial
      statements.





**Subsequent
      Events**





***eStara
      Transaction:***





During
      the fiscal year ended June 30, 2000, J Net, the predecessor company to Epoch,
      made a $4.0 million investment in eStara, Inc. ("eStara"), a technology-related
      company that provides conversion and tracking solutions to enhance on-line
      sales. This investment comprised 373,376 shares of Series C-1 and 553,893 shares
      of Series C-2, respectively, 8% cumulative convertible redeemable preferred
      stock. As there was no readily available market for the securities and the
      investment represented less than a 20% interest in eStara, the securities were
      valued at the Company’s initial cost. During the fiscal years ended June 30,
      2001 and 2002, the carrying value of this investment was deemed to be impaired
      by J Net’s management and written down. During the fiscal year ended June 30,
      2003, J Net’s management concluded its ability to recover its investment was
      remote and wrote off the remaining carrying value. Accordingly, this investment
      had no carrying value at September 30, 2006. Additionally, no dividends had
      been
      paid through September 30, 2006.





On
      October 2, 2006, eStara was acquired by Art Technology Group, Inc.
      (NASDAQ ticker symbol “ARTG”). Under the terms of the agreement, ARTG acquired
      all of the outstanding common stock, preferred stock, and vested and unvested
      stock options of eStara for approximately 15.3 million shares of ARTG common
      stock, $2.0 million in cash, and up to an additional $6.0 million in potential
      earn-out payments.





The
      merger transaction will have a material impact on the Company's financial
      position, shareholders' equity, and results of operations during the quarter
      ending December 31, 2006.





As
      a
      result of the above-mentioned merger, the Company, as holder of the preferred
      stock of eStara, will receive an amount per share equal to the original issue
      price, plus the amount of any unpaid cumulative dividends. Also, the Company
      is
      entitled to its approximately 5% proportionate share of remaining merger
      consideration. Accordingly, the Company will receive approximately 2,458,000
      common shares of ARTG as well as $321 thousand in cash. Additional lesser
      amounts, up to $150 thousand, may also be realized, pursuant to the earn-out
      provisions of the merger. The shares to be received from ARTG are subject to
      a
      lock-up agreement pursuant to which the shares will be released from the lock-up
      in equal monthly installments over a period of 12 months, beginning three
      months after the October 2, 2006 closing.




24




If
      the
      transaction had closed on the last business day of the quarter ended September
      30, 2006, the Company would have had increases in both total assets and
      stockholders’ equity of approximately $6.6 million. Based on the quarter end
      closing price of $2.56 per share for ARTG, this increase in total assets
      comprises approximately $6.3 million in ARTG stock and $0.3 million in cash.
      Approximately $4.0 million will be recognized as other comprehensive income,
      a
      component of stockholders’ equity. Approximately $2.4 million and $0.2 million
      will be recognized as dividend income and realized gains, respectively, through
      the Statement of Operations. The Company will treat the investment in ARTG
      stock
      as available-for-sale securities.





***Preferred
      Stock Issuance:***




On
      November 6, 2006, Epoch Holding Corporation ("Epoch" or the "Company") entered
      into a Securities Purchase Agreement (the "Purchase Agreement") with General
      American Investors Company, Inc. ("GAM" or the "Purchaser"), whereby GAM
      invested $10 million in Epoch and Epoch issued GAM 10,000 shares of Series
      A
      Convertible Preferred Stock (the "Series A Preferred Stock").




The
      Company intends to use the proceeds for general business purposes and to support
      the Company's future growth. No placement or other broker fees were paid in
      connection with this transaction.




The
      Series A Convertible Preferred Stock has an annual cumulative cash dividend
      of
      4.60%, payable semi-annually on June 30 and December 31, the first payment
      being
      December 31, 2006. These securities are convertible, in whole or in part at
      any
      time, into shares of the Company's common stock at a fixed conversion price
      of
      $6.00 per share, or 1,666,667 common shares in total.





The
      conversion price of $6.00 per common share contains a beneficial conversion
      feature of $0.42 per share to the November 6, 2006 closing price of $6.42.
      This
      beneficial conversion feature, which is the difference between the above closing
      price and the conversion price, will be fully charged to retained
      earnings (accumulated deficit) at the date of closing. A corresponding amount
      will be credited to additional paid-in capital.




Upon
      the
      five year anniversary of the closing of the transaction, there is an automatic
      conversion into shares of the Company's common stock at the fixed conversion
      price. The Series A Convertible Preferred Stock also contains an automatic
      conversion provision upon a change in control (as defined in the Certificate
      of
      Designation), as well as customary conversion price adjustments for stock
      combinations, stock splits, stock dividends and other similar
      events.




Prior
      to
      the conversion, the number of shares of common stock issuable upon the
      conversion of the Series A Preferred Stock will have no effect on the Company's
      basic earnings per share calculation, but shall be included in its diluted
      earnings per share calculation. Upon conversion, the issuable shares of common
      stock shall be included in the calculation of both the basic and diluted
      earnings per share.




The
      holders of the Series A Preferred Stock generally have voting rights equivalent
      to the holders of the Company's common stock, and will be entitled to vote
      on an
      as-converted basis (1,666,667 shares) with the holders of the common stock
      together as a single class. The Series A Preferred Stock also provides for
      customary preference upon a Liquidation, as defined in the Certificate of
      Designation.




25




The
      Series A Preferred Stock was offered and sold to the Purchaser in a private
      placement transaction in reliance upon exemptions from registration pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
      and the rules and regulations of the Securities and Exchange Commission (the
      "SEC") promulgated thereunder, including Regulation D. The Purchaser is an
      accredited investor as defined in Rule 501 of Regulation D under the Securities
      Act.




The
      Series A Convertible Preferred Stock is not registered under the Securities
      Act.
      The common stock into which the Series A Preferred Stock will be convertible
      may
      not be offered or sold in the U.S. absent registration or an applicable
      exemption from registration requirements.




In
      connection with the Purchase Agreement, the Company and GAM also entered into
      a
      Registration Rights Agreement, dated November 7, 2006, in which, among other
      things, the Company agreed to prepare, and, within sixty (60) calendar days
      after the closing date, file with the SEC a registration statement covering
      the
      resale by GAM of the shares of common stock underlying the Series A Convertible
      Preferred Stock.





**Factors
      Which May Affect Future Results**





There
      are
      numerous risks which may affect the results of operations of the Company.
      Factors which could affect the Company's success include, but are not limited
      to, the Company's limited operating history in the investment advisory and
      investment management business, the ability to attract and retain clients,
      performance of the financial markets and invested assets managed by the Company,
      retention of key employees, misappropriation of assets and information by
      employees, system failures, significant changes in regulations, the costs of
      compliance associated with existing regulations and the penalties associated
      with non-compliance, and the risks associated with loss of key members of the
      management team.





In
      addition, the Company's ability to expand or alter its product offerings,
      whether through acquisitions or internal development is critical to its
      long-term success and has inherent risks. This success is dependent on the
      ability to identify and fund those products or acquisitions on terms which
      are
      favorable to the Company. There can be no assurance that any of these operating
      factors or acquisitions can be achieved or, if undertaken, will be
      successful.





These
      and
      other risks related to our Company are discussed in greater detail under Part
      I,
      Item 1A. "Risk Factors" in the Company’s Annual Report on Form 10-K for the
      fiscal year ended June 30, 2006.





26




**Item
                3.****Quantitative and Qualitative Disclosures About Market
                Risk.**




***Investment
      advisory and management fees***




The
      Company’s exposure to market risk is directly related to its role as an
      investment adviser for the separate accounts and mutual funds the Company
      manages. The revenues earned under these agreements are typically based on
      the
      market value of AUM. AUM can be affected by changes in interest rates,
      fluctuations in financial markets, and fluctuations in foreign currency.
      Accordingly, a decline in the prices of securities may cause the Company’s
      revenue to decline by:





-
            causing
                the value of AUM to decrease, which would result in lower investment
                advisory and management fees.





-
            causing
                the Company’s clients to withdraw funds in favor of investments that they
                perceive as offering greater reward or lower risk, which would also
                result
                in lower investment advisory and management
                fees.




***Cash
      and cash equivalents***





Cash
      and
      cash equivalents, including instruments which earn interest over short periods
      of time (7-35 days), are exposed to market risk due to changes in interest
      rates, which impacts interest income. The Company maintains its cash in
      institutions which have superior credit ratings and it consistently monitors
      the
      quality of the institutions where its cash is deposited.





Presently,
      the Company neither participates in hedging activities nor does it have any
      derivative financial instruments.





The
      Company has had no significant changes in its exposure to market risks from
      that
      previously reported in the Company’s Annual Report on Form 10-K for the fiscal
      year ended June 30, 2006.





**Item
      4. Controls and Procedures.**





***Evaluation
      of Disclosure Controls and Procedures*** .





Our
      management, with the participation of the Company's principal executive officer
      and principal financial officer, has evaluated the effectiveness of our
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
      as
      of the end of the period covered by this Quarterly Report on Form 10-Q. Based
      on
      such evaluation, the Company's principal executive officer and principal
      financial officer have concluded that as of such date, the Company's disclosure
      controls and procedures were designed to ensure that information required to
      be
      disclosed by us in reports that we file or submit under the Exchange Act is
      recorded, processed, summarized and reported within the time periods specified
      in applicable SEC rules and forms and were effective.





***Changes
      in Internal Control Over Financial Reporting*** .





There
      was
      no change in our internal control over financial reporting (as defined in Rules
      13a-5(f) and 15d-15(f) under the Exchange Act) that occurred during the period
      covered by this Quarterly Report on Form 10-Q that has materially affected,
      or
      is reasonably likely to materially affect, our internal control over financial
      reporting.




27




**PART
      II. OTHER INFORMATION**





**Item
      1.****Legal
      Proceedings****.**





From
      time
      to time, the Company or its subsidiaries may become parties to claims, legal
      actions and complaints arising in the ordinary course of business. Management
      is
      not aware of any claims which would have a material adverse effect on its
      condensed consolidated financial statements.





**Item
      1a. Risk Factors****.**





Other
      than the risk factor noted below, there were no material changes from the risk
      factors set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on
      Form 10-K for the fiscal year ended June 30, 2006.





*Common
      shareholders may suffer dilution from the exercise of existing conversion rights
      pursuant to the issuance of the Series A Convertible Preferred
      Stock.*





The
      ownership interests of existing common stockholders may become diluted if
      additional shares are issued upon conversion pursuant to conversion rights
      of
      the holder of the Company’s Series A Convertible Preferred Stock. The number of
      shares of the Company’s common stock that can be issued upon conversion of the
      Series A Convertible Preferred Stock is 1,666,667 common shares.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.**





Please
      see the Company’s Current Report on Form 8-K dated November 6, 2006 relating to
      the sale and issuance of the Company’s Series A Convertible Preferred Stock, the
      contents of which are incorporated by reference herein. Also see note 7(b)
      to
      the condensed consolidated financial statements as well as the discussion in
      the
      MD&A section of this Quarterly Report on Form 10-Q.





**Item
      3. Defaults Upon Senior Securities.**





N/A





**Item
      4. Submission of Matters to a Vote of Security
      Holders.**





None.





**Item
      5. Other Information.**





The
      Company’s Annual Meeting of Stockholders will be held on Thursday, November 30,
      2006 at The Cornell Club of New York City.





28




**Item
      6.****Exhibits.**





(a)
      Exhibits:





Exhibit
              No.
            
            Description4.2
            
            Certificate
              of
              Designation, Preferences and Rights of Series A Convertible Preferred
              Stock of Epoch Holding Corporation, filed with the Secretary of State
              of
              the State of Delaware November 6, 2006. (A)4.3
            
            Registration
              Rights Agreement, dated November 7, 2006, by and between Epoch Holding
              Corporation and General American Investors Company, Inc. (A)10.49
            
            Securities
                Purchase Agreement, dated November 6, 2006, by and between Epoch
                Holding
                Corporation and General American Investors Company, Inc.
                (A)31.1
            
            Principal
                Executive Officer Certification31.2
            
            Principal
              Financial Officer Certification32.1
            
            Certification
              of Chief Executive Officer and Chief Financial Officer pursuant to
              18
              U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.(A) - Incorporated
              by
              reference to Registrant’s Form 8-K dated November 6,
              2006.




29




Signature





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




EPOCH
                HOLDING CORPORATION
                (Registrant)By:
            /s/ Adam
              BorakAdam
                Borak
                Chief
                  Financial OfficerDate:
              November 14, 2006




30