**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


**FORM
      10-Q**





**(Mark
      One)**


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




**For
                the quarterly period ended December 31, 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 þ 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
                filerþ




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




At
      February 7, 2007, there were 19,857,445 shares of the Company's common stock,
      $.01 par value per share, outstanding.













**EPOCH
      HOLDING CORPORATION AND SUBSIDIARIES**


**FORM
      10-Q**


**TABLE
      OF CONTENTS**




**Page
                No.****Part
                I.**
            **Financial
                Information**Item
                1.
            Financial
                Statements
            3CondensedConsolidated
                Balance Sheets - December 31, 2006 (Unaudited) and June 30,
                2006
            3CondensedConsolidated
                Statements of Operations (Unaudited) - Three and Six Months Ended
                December
                31, 2006 and 2005
            4CondensedConsolidated
                Statement of Changes in Stockholders' Equity (Unaudited)
                -Six
                Months Ended December 31, 2006and
                for the year ended June 30, 2006
            5CondensedConsolidated
                Statements of Cash Flows (Unaudited) - Six Months Ended December
                31, 2006
                and 2005
            6Notes
                to Condensed Consolidated Financial Statements(Unaudited)
            7-18Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            19-38Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            38-39Item
                4.
            Controls
                and Procedures
            39**Part
                II.**
            ******Other
                Information**Item
                1.
            Legal
                Proceedings
            40Item1a.
            Risk
                Factors
            40Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            40Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            40Item
                6.
            Exhibits
            41Signatures
            41







2


**PART
        I: FINANCIAL INFORMATION**


**Item
                  1. Financial Statements.**
  **EPOCH
                  HOLDING CORPORATION AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED BALANCE SHEETS*****(Dollars
                  in thousands, except share
                  data)***
  **December
                  31,**
              
              **June
                  30,****2006**
              
              **2006****(Unaudited)****ASSETS****Current
                  assets:**Cash
                  and cash equivalents
              
              $
              1,511
              
              $
              2,445Short-term
                  investments - (**Note
                  2**)
              
              
              17,100
              
              
              5,400Accounts
                  receivable
              
              
              5,230
              
              
              2,486Marketable
                  securities -**(Note
                  8)**
              
              
              5,776
              
              
              -Prepaid
                  and other current assets
              
              
              349
              
              
              316Total
                  current assets
              
              
              29,966
              
              
              10,647Property
                  and equipment (net of accumulateddepreciation
                  of $742 and $552, respectively)
              
              
              1,890
              
              
              2,015Security
                  deposits
              
              
              760
              
              
              749Investments
                  in technology-related businesses
              
              
              157
              
              
              157Total
                  assets
              
              $
              32,773
              
              $
              13,568**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  liabilities:**Accounts
                  payable and accrued liabilities
              
              $
              541
              
              $
              1,423Accrued
                  compensation and benefits
              
              
              3,576
              
              
              2,068Total
                  current liabilities
              
              
              4,117
              
              
              3,491Deferred
                  rent
              
              
              942
              
              
              1,011Sub-tenant
                  security deposit
              
              
              211
              
              
              211Total
                  liabilities
              
              
              5,270
              
              
              4,713**Commitments
                  and contingencies - (Note 7)****Stockholders'
                  equity: - (Note 9)**Preferred
                  stock, series A convertible, $1 par valueper
                  share, 1,000,000 shares authorized; 10,000and
                  0 shares issued and outstanding, respectively
              
              
              10
              
              
              -Common
                  stock, $0.01 par value per share, 60,000,000shares
                  authorized; 19,662,564 and 19,153,996shares
                  issued and outstanding, respectively
              
              
              197
              
              
              191Additional
                  paid-in capital
              
              
              41,360
              
              
              28,500Accumulated
                  deficit
              
              
              (11,708
              )
              
              (13,251
              )Accumulated
                  other comprehensive income
              
              
              3,536
              
              
              -Unearned
                  share-based compensation
              
              
              (5,892
              )
              
              (6,585
              )Total
                  stockholders' equity
              
              
              27,503
              
              
              8,855Total
                  liabilities and stockholders' equity
              
              $
              32,773
              
              $
              13,568


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




3




**EPOCH
                  HOLDING CORPORATION AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                  (UNAUDITED)*****(Dollars
                  in thousands, except per share
                  data)***




**Three
                  Months Ended December 31,**
              
              **Six
                  Months Ended December 31,****2006**
              
              **2005**
              
              **2006**
              
              **2005****Revenues:**Investment
                  advisory and management fees
              
              $
              5,141
              
              $
              2,195
              
              $
              9,460
              
              $
              3,975Performance
                  fees
              
              
              971
              
              
              100
              
              
              971
              
              
              100Total
                  operating revenues
              
              
              6,112
              
              
              2,295
              
              
              10,431
              
              
              4,075**Operating
                  expenses:**Employee
                  related costs (excluding share-based
                  compensation)
              
              
              3,637
              
              
              2,342
              
              
              6,473
              
              
              4,053Share-based
                  compensation
              
              
              1,371
              
              
              1,068
              
              
              2,958
              
              
              2,252General,
                  administrative and occupancy
              
              
              866
              
              
              668
              
              
              1,646
              
              
              1,231Professional
                  fees and services
              
              
              548
              
              
              147
              
              
              853
              
              
              365Depreciation
                  and amortization
              
              
              96
              
              
              84
              
              
              190
              
              
              164Total
                  operating expenses
              
              
              6,518
              
              
              4,309
              
              
              12,120
              
              
              8,065**Loss
                  from operations**
              
              
              (406
              )
              
              (2,014
              )
              
              (1,689
              )
              
              (3,990
              )**Other
                  income, net**Dividend
                  income - **(Note
                  8)**
              
              
              2,354
              
              
              -
              
              
              2,354
              
              
              -Interest
                  and other income -**(****Note
                  4)**
              
              
              1,291
              
              
              222
              
              
              1,537
              
              
              435Realized
                  gain on investments
              
              
              209
              
              
              45
              
              
              209
              
              
              96Total
                  other income, net
              
              
              3,854
              
              
              267
              
              
              4,100
              
              
              531**Income
                  (loss) before income taxes**
              
              
              3,448
              
              
              (1,747
              )
              
              2,411
              
              
              (3,459
              )Provision
                  for income taxes
              
              
              99
              
              
              -
              
              
              99
              
              
              -**Net
                  income (loss)**
              
              $
              3,349
              
              $
              (1,747
              )
              $
              2,312
              
              $
              (3,459
              )Preferred
                  stock dividends
              
              
              69
              
              
              -
              
              
              69
              
              
              -Non-cash
                  charge attributable to beneficialconversion
                  feature of preferred stock
              
              
              700
              
              
              -
              
              
              700
              
              
              -**Net
                  income (loss) available to common stockholders**
              
              $
              2,580
              
              $
              (1,747
              )
              $
              1,543
              
              $
              (3,459
              )**Basic
                  earnings (loss) per share**
              
              $
              0.13
              
              
              ($0.09
              )
              $
              0.08
              
              
              ($0.19
              )**Diluted
                  earnings (loss) per share**
              
              $
              0.13
              
              
              ($0.09
              )
              $
              0.08
              
              
              ($0.19
              )**Weighted
                  average shares outstanding:**Basic
              
              
              19,667
              
              
              18,730
              
              
              19,592
              
              
              18,539Diluted
              
              
              20,663
              
              
              18,730
              
              
              20,090
              
              
              18,539*The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements*




4




**EPOCH
                  HOLDING CORPORATION AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
                  EQUITY*****(
                  in thousands)***




**Accumulated****Preferred
                  Stock**
              
              
              
              
              
              **Additional**
              
              
              
              **Other**
              
              **Unearned****Series
                  A Convertible**
              
              **Common
                  Stock**
              
              **Paid-in**
              
              **Accumulated**
              
              **Comprehensive**
              
              **Share-Based****Shares**
              
              **Amt**
              
              **Shares**
              
              **Amt**
              
              **Capital**
              
              **Deficit**
              
              **Income**
              
              **Compensation**
              
              **Totals****Balances
                  at June 30, 2005**
              
              
              -
              
              $
              -
              
              
              18,258
              
              $
              182
              
              $
              24,404
              
              $
              (7,529
              )
              $
              -
              
              $
              (7,480
              )
              $
              9,577Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (5,722
              )
              
              -
              
              
              -
              
              
              (5,722
              )*Comprehensive
                  loss*
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (5,722
              )Net
                  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
              
              
              -
              
              
              -
              
              
              -
              
              
              330**Balances
                  at June 30, 2006**
              
              
              -
              
              
              -
              
              
              19,154
              
              
              191
              
              
              28,500
              
              
              (13,251
              )
              
              -
              
              
              (6,585
              )
              
              8,855Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              
              
              
              -
              
              
              2,312
              
              
              -
              
              
              -
              
              
              2,312Net
                  unrealized gains on available-for-salesecurities
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              
              
              3,536
              
              
              
              
              
              3,536*Comprehensive
                  income*
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5,848Net
                  issuance of restricted common stock
              
              
              
              
              
              
              
              
              509
              
              
              6
              
              
              2,259
              
              
              -
              
              
              -
              
              
              (2,041
              )
              
              224Amortization
                  of unearned share-basedcompensation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -
              
              
              
              
              
              2,734
              
              
              2,734Issuance
                  of series A convertible preferred stock
              
              
              10
              
              
              10
              
              
              
              
              
              
              
              
              9,990
              
              
              
              
              
              -
              
              
              
              
              
              10,000Preferred
                  stock issuance cost
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (89
              )
              
              
              
              
              -
              
              
              
              
              
              (89
              )Preferred
                  stock dividends
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (69
              )
              
              
              
              
              
              
              
              (69
              )Beneficial
                  conversion feature associatedwith
                  preferred stock
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              700
              
              
              (700
              )
              
              -
              
              
              
              
              
              -**Balances
                  at December 31, 2006****(Unaudited)**
              
              
              10
              
              $
              10
              
              
              19,663
              
              $
              197
              
              $
              41,360
              
              $
              (11,708
              )
              $
              3,536
              
              $
              (5,892
              )
              $
              27,503


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




5




**EPOCH
                  HOLDING CORPORATION AND SUBSIDIARIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)*****(Dollars
                  in thousands)***




**Six
                  Months Ended December 31,****2006**
              
              **2005****Cash
                  flows from operating activities:**Net
                  income (loss)
              
              $
              2,312
              
              $
              (3,459
              )Adjustments
                  to reconcile net income (loss) to net cashused
                  in operating activities:Share-based
                  compensation
              
              
              2,958
              
              
              2,252Depreciation
                  and amortization
              
              
              190
              
              
              164Realized
                  gain on investment
              
              
              (209
              )
              
              (96
              )Dividend
                  income received in stock - **(Note 8)**
              
              
              (2,240
              )
              
              -Increase
                  in operating assets:Accounts
                  receivable
              
              
              (2,744
              )
              
              (746
              )Prepaid
                  and other current assets
              
              
              (33
              )
              
              (108
              )(Decrease)
                  increase in operating liabilities:Accounts
                  payable and accrued liabilities
              
              
              (882
              )
              
              43Accrued
                  compensation and benefits
              
              
              1,508
              
              
              774Deferred
                  rent
              
              
              (69
              )
              
              98Net
                  cash provided by (used in) operating activities
              
              
              791
              
              
              (1,078
              )**Cash
                  flows from investing activities:**Capital
                  expenditures
              
              
              (65
              )
              
              (157
              )Security
                  deposits
              
              
              (11
              )
              
              220Purchases
                  and sales of short-term investments, net
              
              
              (11,700
              )
              
              900Proceeds
                  from investment
              
              
              209
              
              
              96Net
                  cash (used in) provided by investing activities
              
              
              (11,567
              )
              
              1,059**Cash
                  flows from financing activities:**Proceeds
                  from issuance of Series A convertible preferred stock
              
              
              10,000
              
              
              -Preferred
                  stock issuance costs
              
              
              (89
              )
              
              -Preferred
                  stock dividends paid
              
              
              (69
              )
              
              -Net
                  cash provided by financing activities
              
              
              9,842
              
              
              -Net
                  decrease in cash and cash equivalents
              
              
              (934
              )
              
              (19
              )Cash
                  and cash equivalents at beginning of period
              
              
              2,445
              
              
              950Cash
                  and cash equivalents at end of period
              
              $
              1,511
              
              $
              931*The
                  accompanying notes are an integral part of these condensed consolidated
                  financial statements*




6


**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 sole 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 Company’s 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 sole 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.









7


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.




Certain
      reclassifications have been made to prior period financial statements to conform
      with the current period presentation.





***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.





***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, short-term
      investments, accounts receivable, accounts payable and accrued expenses
      approximates fair value due to their short-term nature.





***Cash
      equivalents***





Cash
      equivalents are liquid investments primarily comprising 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.




***Short-term
      investments***




Short-term
      investments consist of investment grade auction-rate securities with an active
      resale market and can be readily converted into cash to fund current operations,
      or satisfy other cash requirements as needed. Auction-rate securities have
      an
      underlying component of a long-term debt instrument. These securities mature
      on
      a shorter term than the underlying instrument based on an auction bid that
      resets the interest rate of the security. The auction or interest
      rate reset dates occur at intervals that are generally between 7 and 28
      days of the purchase. These securities provide a higher interest rate than
      similar short-term securities and provide higher liquidity than otherwise longer
      term investments. These securities are expected to be sold within one year,
      regardless of their legal maturity date. Accordingly these securities have
      been
      classified as current assets in the consolidated balance sheets. All auction
      rate securities are bought and sold at par value.




8


Prior
      to
      the quarter ended December 31, 2006, the Company had classified its auction-rate
      securities as cash equivalents, based on the period from the purchase date
      to
      the next interest rate reset date. Beginning in the quarter ended December
      31, 2006, the Company began classifying auction-rate securities as short-term
      investments that are available-for-sale because the underlying instruments
      have
      maturity dates exceeding three months. The Company also revised the presentation
      of the Consolidated Statements of Cash Flows to reflect the purchases and sales
      of these securities as investing activities. Prior periods have been
      reclassified to provide consistent presentation. This revision in classification
      had no impact on the total assets, current assets, or net income of the Company.




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





The
      financial instruments that potentially subject the Company to concentrations
      of
      credit risk consist principally of cash, cash equivalents, and short-term
      investments. 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 varied high-grade, short-term liquid
      investments, thereby limiting exposure to concentrations of credit
      risk.





***Marketable
      securities***





Marketable
      securities are classified as available-for-sale and are carried at fair value
      based upon quoted market prices, with unrealized gains or losses reported in
      Other Comprehensive Income, a separate component of stockholders' equity.
      Realized gains and losses on these securities are reported in the Statement
      of
      Operations. These securities are classified as current assets on the
      consolidated balance sheets as it is management’s intention to sell these
      securities within the next year. See Note 8 - “eStara Transaction” for further
      discussion.




***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.





***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 December 31, 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 December
      31, 2006. During the quarter ended December 31, 2006, one of the privately
      held,
      active technology-related companies, eStara, Inc., was acquired by a publicly
      traded technology company and is currently classified as marketable securities
      on the Consolidated Balance Sheet in accordance with SFAS No. 115, *Accounting
      for Certain Investments in Debt and Equity Securities* .
      See
      Note 8 - “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.





9


The
      Company recorded realized gains of $209 thousand from the eStara transaction
      in
      the three and six months ended December 31, 2006 and $45 thousand and $96
      thousand, respectively, from one of the inactive technology-related companies
      during the three and six months ended December 31, 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. 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 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 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 performance 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.





***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 restricted
      stock awards 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.





10


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 earnings (loss)
      available to common stockholders 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, or the common stock issuable upon
      conversion of the convertible preferred stock.





***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.





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.




11


In
      September 2006, the United States Securities and Exchange Commission (“SEC”)
      issued Staff Accounting Bulletin No. 108, *Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements* (“SAB
      108”). This SAB provides guidance on the consideration of the effects of prior
      year misstatements in quantifying current year misstatements for the purpose
      of
      a materiality assessment. SAB 108 establishes an approach that requires
      quantification of financial statement errors based on the effects of each of
      the
      company’s balance sheet and statement of operations and the related financial
      statement disclosures. SAB 108 permits existing public companies to record
      the
      cumulative effect of initially applying this approach in the first year ending
      after November 15, 2006 by recording the necessary correcting adjustments to
      the
      carrying values of assets and liabilities as of the beginning of that year
      with
      the offsetting adjustment recorded to the opening balance of retained earnings.
      Additionally, the use of the cumulative effect transition method requires
      detailed disclosure of the nature and amount of each individual error being
      corrected through the cumulative adjustment and how and when it arose. We do
      not
      expect the adoption of this statement to have a material impact on our
      consolidated financial condition, results of operations, or cash
      flows.





**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
      and six months ended December 31, 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 December 31, 2006, CI Investments Inc. (“CI”), a
      Canadian-owned investment management company, accounted for approximately
      18% of consolidated 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 23%. 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.





For
      the
      six months ended December 31, 2006, CI accounted for approximately 19% of
      consolidated revenues, while Genworth, through its investments in EPIEX and
      EPSYX, as well as separate account mandates, accounted for approximately
      23%.




12


**Note
        4 - Other Income**




In
      November 2000, J Net, the predecessor company to Epoch, recorded an accrued
      liability related to a sale of certain assets to an unrelated third party.
      The
      recorded amount of $950 thousand represented management’s best estimate of
      additional settlement amounts due. In late December 2006, a final assessment
      was
      made by management which resulted in the reversal of the previously recorded
      accrual.





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





Basic
      earnings (loss) per share is computed by dividing earnings (loss) available
      to
      common stockholders by the weighted average number of common shares outstanding
      during the period. Diluted earnings per share is computed by dividing net
      earnings, adjusted for the effect of dilutive securities, by the weighted
      average number of common and common equivalent shares outstanding during the
      period.





The
      Company had 1,130,000 and 1,267,500 issued and outstanding stock options at
      December 31, 2006 and 2005, respectively. Since the exercise price of these
      options was higher than the average market price of the common stock for all
      periods presented, the conversion of these options would have an anti-dilutive
      effect, and thus were excluded from the diluted earnings per share
      calculation.




Preferred
      stock issued on November 7, 2006 and convertible into 1,666,667 shares of common
      stock was included in the calculation for the three and six months ended
      December 31, 2006. No convertible preferred stock was outstanding during the
      three and six months ended December 31, 2005.




13


The
      following table sets forth the computation of basic
      and diluted earnings per share:


**Three
                  Months Ended**
              
              **Six
                  Months Ended****December
                  31,**
              
              **December
                  31,****2006**
              
              **2005**
              
              **2006**
              
              **2005****Net
                  income (loss) available to****common
                  shareholders:*****Numerator:***Net
                  income (loss)
              
              $
              3,349
              
              $
              (1,747
              )
              $
              2,312
              
              $
              (3,459
              )Preferred
                  stock dividends
              
              
              (69
              )
              
              -
              
              
              (69
              )
              
              -Non-cash
                  charge attributable to beneficialconversion
                  feature of preferred stock
              
              
              (700
              )
              
              -
              
              
              (700
              )
              
              -Earnings
                  (loss) available to common stockholdersfor
                  basic earnings per share
              
              
              2,580
              
              
              (1,747
              )
              
              1,543
              
              
              (3,459
              )Effect
                  of dilutive securities:Preferred
                  stock dividends
              
              
              69
              
              
              -
              
              
              69
              
              
              -Earnings
                  (loss) available to common stockholdersafter
                  assumed conversions
              
              $
              2,649
              
              $
              (1,747
              )
              $
              1,612
              
              $
              (3,459
              )***Denominator:***Average
                  common shares outstanding
              
              
              19,667
              
              
              18,730
              
              
              19,592
              
              
              18,539Effect
                  of dilutive securities:Average
                  shares issuable upon conversion of preferred stock
              
              
              996
              
              
              -
              
              
              498
              
              
              -Average
                  common and common equivalent shares outstanding -assuming
                  dilution
              
              
              20,663
              
              
              18,730
              
              
              20,090
              
              
              18,539Basic
                  earnings (loss) per share
              
              **$**
              **0.13**
              
              
              **($0.09**
              **)**
              **$**
              **0.08**
              
              
              **($0.19**
              **)**Diluted
                  earnings (loss) per share
              
              **$**
              **0.13**
              
              
              **($0.09**
              **)**
              **$**
              **0.08**
              
              
              **($0.19**
              **)**




**Note
      6 -Income Taxes**





The
      provision for income taxes presented on the consolidated Statement of Operations
      is the result of alternative minimum tax (“AMT”). AMT creates a deferred tax
      asset that results from a tax credit that may be carried forward indefinitely
      to
      reduce future regular federal income taxes payable. The Company has provided
      a
      full valuation allowance for such deferred tax asset because the ability to
      utilize AMT credits in the future cannot be reasonably determined.




14


**Note
      7 - 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 total
      approximately $1.4 million at December 31, 2006. Of this amount, $1.2 million
      is
      included in accrued compensation and benefits on the condensed consolidated
      balance sheet at December 31, 2006. Approximately $0.2 million represents
      unearned restricted stock awards still 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.





***Lease
      commitments***





The
      Company entered into a sublease agreement for additional office space on
      February 1, 2007. This agreement, which expires in June 2010, calls for payments
      totaling $310 thousand on an annual basis.





***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
      8 -*****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 was comprised of 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 October 2, 2006. Additionally, no
      dividends had been paid through October 2, 2006.





On
      October 2, 2006, eStara’s stockholders approved the acquisition of its stock 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.





15


As
      a
      result of the above-mentioned merger, the Company, as holder of the preferred
      stock of eStara, received an amount per share equal to the original issue price,
      plus the amount of any unpaid cumulative dividends. Also, the Company was
      entitled to its approximately 5% proportionate share of remaining merger
      consideration. Accordingly, the Company received 2,476,039 common shares of
      ARTG
      as well as $267 thousand in cash. An additional $56 thousand of cash is
      currently being held in escrow and will be released to the Company by the first
      anniversary of the closing. Additional lesser amounts, up to $150 thousand,
      may
      also be realized, pursuant to the earn-out provisions of the merger. The shares
      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 closing, pursuant to
      an effective registration statement. Such registration statement was filed
      by
      ARTG and deemed effective by the SEC on February 8, 2007.





The
      following table sets forth the reconciliation of the above transaction as it
      pertains to marketable securities ( *dollars
      in thousands* ):


Dividend
                  income
              
              
              
              
              $
              2,354Realized
                  gains
              
              
              
              
              
              209Unrealized
                  gains recognized through othercomprehensive
                  income
              
              
              
              
              
              4,098Gross
                  fair value of the eStara transaction
              
              
              
              
              
              6,661*Less
                  :*Cash
                  received
              
              $
              267Cash
                  held in escrow
              
              
              56
              
              
              323Fair
                  value of ARTG stockon
                  October 2, 2006
              
              
              
              
              
              6,338Unrealized
                  losses on marketablesecurities
                  recognized through othercomprehensive
                  income
              
              
              
              
              
              (562
              )Marketable
                  securities at December 31, 2006
              
              
              
              
              $
              5,776








16


**Note
      9 - Preferred Stock Issuance**




On
      November 6, 2006, 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 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 contained a beneficial conversion
      feature of $0.42 per share compared to the November 6, 2006 closing price of
      $6.42. This beneficial conversion feature of $0.7 million, which is the
      difference between the above closing price and the conversion price, was fully
      amortized through retained earnings (accumulated deficit) at the date of
      closing. A corresponding amount was 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 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 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 Preferred Stock is not registered under the Securities Act. The
      underlying common stock issuable upon conversion of the Series A Preferred
      Stock
      has been registered with the SEC and may be sold pursuant to an effective resale
      prospectus dated December 26, 2006.




17


**Note
      10 - Subsequent Event**





On
      January 31, 2007 the Company issued 194,884 restricted stock awards to employees
      of the Company. Recipients of the restricted awards were immediately vested
      in
      12.5% of the total shares received. The remaining 87.5% of unvested shares
      will
      vest over the next three years, subject to the recipients remaining as employees
      of the Company. Issuance of these awards will result in total stock compensation
      expense of $1.8 million over the vesting period, assuming no
      forfeitures.






























*******************





18





**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 and six months ended December
      31, 2006 and December 31, 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. 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.*





19







*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 sole
      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.





The
      following are additional critical accounting policies for the three and six
      months ended December 31, 2006:





20


***Short-Term
      Investments***




Prior
      to
      the quarter ended December 31, 2006, the Company had classified its auction-rate
      securities as cash equivalents, based on the period from the purchase date
      to
      the next interest rate reset date. Beginning in the quarter ended December
      31, 2006, the Company began classifying auction-rate securities as short-term
      investments that are available-for-sale because the underlying instruments
      have
      maturity dates exceeding three months. The Company also revised the presentation
      of the Consolidated Statements of Cash Flows to reflect the purchases and sales
      of these securities as investing activities. Prior periods have been
      reclassified to provide consistent presentation. This revision in classification
      had no impact on the total assets, current assets, or net income of the Company.




***Marketable
      Securities***




The
      Company received marketable securities during the three months ended December
      31, 2006 as a result of the eStara transaction. See "eStara Tranaction" for
      further details. These
      marketable securities are classified as available-for-sale and are carried
      at
      fair value based on quoted market prices, with unrealized gains or losses
      reported in Other Comprehensive Income, a separate component of stockholders’
equity. Realized gains and losses on these securities are reported in the
      Statement of Operations. These securities are classified as current assets
      on the consolidated Balance Sheets as it is management’s intention to sell these
      securities within the next year.




**Company
      Structure**





Operations
      commenced under the Company’s 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.





***Financial
      Highlights***





For 
      the quarter ended December 31, 2006, the Company continued to achieve positive
      operating leverage, which is defined as the total revenue growth rate that
      exceeds the rate of growth of expenses. Total operating revenue increased by
      166% from $2.3 million to $6.1 million, while total operating expenses increased
      by 51%. For the six months ended December 31, 2006, operating revenue increased
      by 156% from $4.1 million to $10.4 million, while total operating expenses
      increased by 50%. Operating margins continue to improve and approach break-even
      levels. The main driver of this positive trend has been the significant increase
      in assets under management (“AUM”), stemming from continued inflows, together
      with market appreciation. The Company finished the quarter ended December 31,
      2006 with AUM of $4.41 billion, nearly doubling AUM of $2.23 billion at the
      end
      of the same quarter a year ago.





For
      the
      quarter ended December 31, 2006, the Company recorded net income of $3.3
      million, compared to a net loss of $1.7 million for the same period a year
      ago.
      The significant increase in revenue, as noted above, coupled with income from
      the eStara transaction in October 2006 were the primary reasons for this
      increase. Basic earnings per share were $.13 per share for the quarter ended
      December 31, 2006, from a loss of $.09 per share for the same period a year
      ago.





21


For
      the
      six months ended December 31, 2006, the Company recorded net income of $2.3
      million, compared to a net loss of $3.5 million for the same period a year
      ago.
      Basic earnings per share were $.08 per share for the six month period ended
      December 31, 2006, from a loss of $.19 per share for the same period a year
      ago.




**Results
      of operations - three months ended December 31, 2006 and
      2005**





***Business
      Environment***





As
      an
      investment management and advisory 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 advisory and management
      business.





The
      global market environment during the quarter ended December 31, 2006 continued
      its positive trend, 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
      December 31, 2006, the S&P 500 Index increased by 6.1%, while the Dow Jones
      Industrial Average and NASDAQ Composite Index increased by 6.7% and 6.9%,
      respectively.




For
      the
      six months ended December 31, 2006, the S&P 500 Index increased by 11.7%,
      while the Dow Industrial Average Index and NASDAQ Composite Index increased
      by
      11.8% and 11.2%, respectively.




This
      environment was favorable to our business as market appreciation contributed
      notably to the increase in AUM for the three and six months ended December
      31,
      2006.




22


The
      following table sets forth the changes in our assets
      under management for the periods presented:




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




**Three
                  Months Ended****December
                  31,**2006
              
              2005Beginning
                  of period assets
              
              $
              3,847
              
              $
              1,770Net
                  inflows/(outflows)
              
              
              258
              
              
              448Market
                  appreciation
              
              
              303
              
              
              17End
                  of period assets
              
              $
              4,408
              
              $
              2,235**Six
                  Months Ended****December
                  31,**2006
              
              
              2005Beginning
                  of period assets
              
              $
              3,253
              
              $
              1,402Net
                  inflows/(outflows)
              
              
              692
              
              
              752Market
                  appreciation
              
              
              463
              
              
              81End
                  of period assets
              
              $
              4,408
              
              $
              2,235


AUM
        increased to $4.41 billion at December 31, 2006, from $2.23 billion at December
        31, 2005. This increase was primarily attributable to the ongoing expansion
        of
        the Company’s client base, as well as market appreciation.
  23




The
      following charts show the Company’s investment products as a percentage of AUM
      as of December 31, 2006 and 2005, respectively:



















24





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




**Assets
                  Under Management By Distribution Channel*****(Dollars
                  in Millions)*****As
                  of December 31,****Amount**
              
              **Percent****Distribution
                  Channel:**
              
              **2006**
              
              **2005**
              
              **Increased**
              
              **Increased**Sub-advisory
              
              $
              2,146
              
              $
              1,392
              
              $
              754
              
              
              54
              %Institutional
              
              
              1,940
              
              
              545
              
              
              1,395
              
              
              256
              %High
                  net worth
              
              
              322
              
              
              298
              
              
              24
              
              
              8
              %Total
                  AUM
              
              $
              4,408
              
              $
              2,235
              
              $
              2,173
              
              
              97
              %





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 40% at December
      31,
      2006 from approximately 50% at December 31, 2005.







25


















***Revenues***





Total
      revenues from investment advisory and management services for the three months
      ended December 31, 2006 were $6.1 million, increasing approximately 166%
      compared to the fees earned for the same period a year ago. This increase was
      attributable to the increase in assets under management. Also contributing
      to
      the revenue increase were calendar 2006 performance fees, which were
      approximately $1.0 million, compared with $0.1 million for calendar 2005. We
      expect this positive revenue trend to continue during the next quarter as AUM
      levels are notably higher than comparative periods from the prior
      year.





26




For
      the
      three months ended December 31, 2006, CI accounted for approximately 18% of
      consolidated 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 23% of consolidated revenues.





For
      the
      three months ended December 31, 2005, CI accounted for approximately 21% of
      revenues, while Genworth, through its investments in EPIEX, as well as separate
      account mandates, accounted for approximately 15%.





***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 December 31, 2006,
      these expenses were $3.6 million, an increase of $1.3 million or 55% from $2.3
      million for the three months ended December 31, 2005. Increased employee
      headcount to support the growth and expansion of the business was the primary
      reason for this increase. Also contributing to this increase was higher
      performance driven compensation. 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 December 31, 2006 was $1.4 million,
      up
      $0.3 million or 28% from $1.1 million for the three months ended December 31,
      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 six months ended December 31, 2006. The increase from the same quarter
      a
      year ago is primarily attributable to the increase in employees.





Share-based
      compensation expense is recognized as follows: 12.5% immediately, with the
      remaining 87.5% ratably over the subsequent three years. In the three months
      ended December 31, 2006 and 2005, zero and 5,208 shares of restricted stock,
      respectively, were issued to employees. A total of 651 shares of the awards
      issued in the three months ended December 31, 2005, or approximately 12.5%,
      were
      immediately vested. The remaining 87.5% of the shares vest ratably over the
      subsequent three years. During the three months ended December 31, 2006 and
      2005, a total of 9,369 and 13,573 shares, respectively, were forfeited by
      terminated employees.





During
      the three months ended December 31, 2006 and December 31, 2005 , **** no
      shares
      were granted to directors of the Company. 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.




27


***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
      December 31, 2006 such fees were $0.9 million, an increase of $0.2 million,
      or
      30% from the comparable period a year ago. Increases in market data services
      and
      information technology costs, as well as insurance and marketing expenses,
      were
      the primary contributors. We expect occupancy expenses to increase by
      approximately $0.1 million per quarter prospectively, due to additional office
      space leased by the Company beginning on February 1, 2007.





***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
      December 31, 2006 such fees were $0.5 million, an increase of $0.4 million,
      or
      273% from the comparable period a year ago. An increase in employee placement
      fees was the primary reason for this increase.





At
      the
      end of the second fiscal quarter ended December 31, 2006, the Company achieved
      a
      market capitalization from non-affiliates in excess of $75 million. As a result,
      the Company will become an accelerated filer beginning with its June 30, 2007
      annual report on Form 10-K. Accordingly, management will be required to report
      on its assessment of, and the Company’s independent registered public accounting
      firm will be required to express an opinion on, the Company’s internal control
      over financial reporting at June 30, 2007, in accordance with Section 404 of
      the
      Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). The Company anticipates
      professional fees and service costs to increase during the next two quarters
      due
      to the costs of compliance with Sarbanes-Oxley.





***Depreciation
      and amortization***





Depreciation
      and amortization increased to $96 thousand in the three months ended December
      31, 2006, an increase of $12 thousand from $84 thousand in the three months
      ended December 31, 2005.





***Other
      income***





Other
      income includes interest earnings from cash and cash equivalents, rental income
      from subleased office space in New York, dividend income, and realized gains
      on
      investments. For the three months ended December 31, 2006, other income
      increased to $3.9 million, an increase of $3.6 million from $267 thousand for
      the three months ended December 31, 2005. The primary reason for this increase
      was the result of the eStara transaction which occurred in October 2006. This
      transaction resulted in $2.6 million of other income - $2.4 million in dividend
      income and $0.2 million in realized gains.




In
      November 2000, J Net, the predecessor company to Epoch, recorded an accrued
      liability related to a sale of certain assets to an unrelated third party.
      The
      recorded amount of $950 thousand represented management’s best estimate of
      additional settlement amounts due. In late December 2006, a final assessment
      was
      made by management which resulted in the reversal of the previously recorded
      accrual.




28


Additional
      interest income of approximately $90 thousand was earned on the $10 million
      of
      proceeds received in conjunction with the Preferred Stock issuance on November
      7, 2006.





***Provision
      for income taxes***





The
      effective tax rate for the three months ended December 31, 2006 was
      approximately 2.9%. This tax provision is the result of alternative minimum
      tax
      (“AMT”). The Company, however, has substantial net operating loss carry
      forwards and does not expect to pay significant income taxes for the foreseeable
      future.





**Results
      of operations - six months ended December 31, 2006 and
      2005**





***Revenues***





Total
      revenues from investment advisory and management services, including
      performance-based fees, for the six months ended December 31, 2006 were $10.4
      million, increasing approximately 156% compared to the fees earned for 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
      six months ended December 31, 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 23% of revenues.





For
      the
      six months ended December 31, 2005, CI accounted for approximately 25% of
      revenues, while Genworth, through its investments in EPIEX, as well as separate
      account mandates, accounted for approximately 16%.





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





Expenses
      in this category include salaries, benefits, incentive compensation, signing
      bonuses and commission expenses. For the six months ended December 31, 2006,
      these expenses were $6.5 million, an increase of $2.4 million or 60% from $4.1
      million for the six months ended December 31, 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 six months ended December 31, 2006 was $3.0 million, up
      $0.7 million or 31% from $2.3 million for the six months ended December 31,
      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 six months ended December 31, 2006. The increase from the same period
      a
      year ago is primarily attributable to the increase in employees.





29


Share-based
      compensation expense is recognized as follows: 12.5% immediately, with the
      remaining 87.5% ratably over the subsequent three years. In the six months
      ended
      December 31, 2006 and 2005, a total of 460,658 and 477,000 shares of restricted
      stock, respectively, were issued to employees. A total of 57,582 and 59,625
      shares of the awards, or approximately 12.5% of the shares issued in the six
      months ended December 31, 2006 and 2005, respectively, were immediately vested.
      The remaining 87.5% of the shares vest ratably over the subsequent three years.
      Approximately 18,318 and 13,573 shares were forfeited by terminated employees
      in
      the six months ended December 31, 2006 and 2005, respectively.





During
      the six months ended December 31, 2006 and December 31, 2005 **,** a
      total
      of **** 66,228
      and zero shares, respectively, were granted to directors of the Company. The
      prior year’s director awards were granted in the quarter ended June 30, 2005, in
      advance of their fiscal 2006 services. 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.





***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 six months ended December
      31, 2006 such fees were $1.7 million, an increase of $0.4 million, or 34% from
      the comparable period a year ago. Increases in market data services and
      information technology costs, as well as insurance and marketing expenses,
      were
      the primary contributors. We expect occupancy expenses to be higher in fiscal
      year 2007 as we obtained additional office space on February 1,
      2007.





***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 six months ended
      December 31, 2006 such fees were $0.9 million, an increase of $0.5 million
      from
      the comparable period a year ago. An increase in employee placement fees, as
      well as an increase in public relations fees, were the primary reasons for
      this
      increase.





At
      the
      end of the second fiscal quarter ended December 31, 2006, the Company achieved
      a
      market capitalization from non-affiliates in excess of $75 million. As a result,
      the Company will become an accelerated filer beginning with its June 30, 2007
      annual report on Form 10-K. Accordingly, management will be required to report
      on its assessment of, and the Company’s independent registered public accounting
      firm will be required to express an opinion on, the Company’s internal control
      over financial reporting at June 30, 2007, in accordance with Section 404 of
      the
      Sarbanes Oxley Act of 2002 (“Sarbanes-Oxley”). The Company anticipates
      professional fees and service costs to increase during the next two quarters
      due
      to the costs of compliance with Sarbanes Oxley.





***Depreciation
      and amortization***





Depreciation
      and amortization increased to $190 thousand in the six months ended December
      31,
      2006, an increase of $26 thousand from $164 thousand in the six months ended
      December 31, 2005.





30


***Other
      income***





Other
      income includes interest earnings from cash and cash equivalents, rental income
      from subleased office space in New York, dividend income, and realized gains
      on
      investments. For the six months ended December 31, 2006, other income increased
      to $4.1 million, an increase of $3.6 million from $531 thousand for the six
      months ended December 31, 2005. As noted in the three month discussion, this
      increase is primarily the result of the October 2006 eStara transaction, which
      contributed $2.6 million in investment income to the Company.





In
      November 2000, J Net, the predecessor company to Epoch, recorded an accrued
      liability related to a sale of certain assets to an unrelated third party.
      The
      recorded amount of $950 thousand represented management’s best estimate of
      additional settlement amounts due. In late December 2006, a final assessment
      was
      made by management which resulted in the reversal of the previously recorded
      accrual.





***Provision
      for income taxes***





The
      effective tax rate for the six months ended December 31, 2006 was approximately
      4.1%. This tax provision is the result of AMT. The Company, however, has
      substantial net operating loss carry fowards and does not expect to pay
      significant income taxes for the foreseeable future.





**Liquidity
      and Capital Resources**





A
      summary
      of cash flow data, together with short-term investments for the quarters ended
      December 31, 2006 and 2005, respectively, is as follows *(in
      thousands):*


**December
                  31,****2006**
              
              **2005**Cash
                  flows provided by (used in):Operating
                  activities
              
              $
              791
              
              $
              (1,078
              )Investing
                  activities
              
              
              (11,567
              )
              
              1,059Financing
                  activities
              
              
              9,842
              
              
              -Net
                  decrease in cash and cash equivalents
              
              
              (934
              )
              
              (19
              )Cash
                  and cash equivalents at beginning of period
              
              
              2,445
              
              
              950Cash
                  and cash equivalents at end of period
              
              
              1,511
              
              
              931Short-term
                  investments
              
              
              17,100
              
              
              6,700Cash,
                  cash equivalents and short-term investmentsat
                  end of period
              
              $
              18,611
              
              $
              7,631






31


Short-term
      investments consist of investment grade auction-rate securities with an active
      resale market and can be readily converted into cash to fund current operations,
      or satisfy other cash requirements as needed. Auction-rate securities have
      an
      underlying component of a long-term debt instrument. These securities mature
      on
      a shorter term than the underlying instrument based on an auction bid that
      resets the interest rate of the security. The auction or reset dates occur
      at
      intervals that are generally between 7 and 28 days of the purchase. These
      securities provide a higher interest rate than similar short-term securities
      and
      provide higher liquidity than otherwise longer term investments. These
      securities are expected to be sold within one year, regardless of their legal
      maturity date. Accordingly these securities have been classified as current
      assets in the consolidated balance sheets. All auction rate securities are
      bought and sold at par value.




Sources
      of funds for the Company's operations are derived from investment
      advisory and management fees, interest on the Company's cash and short-term
      investments, and sublease income. As of December 31, 2006, the Company had
      $1.5
      million of cash and cash equivalents, $17.1 of short-term investments, and
      $5.2
      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 $0.5 million. Accrued compensation and
      benefits, which consist primarily of accrued employee bonuses and sales
      commissions, were $3.6 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, as well as short-term investments comprising approximately 57%
      of
      its total assets at December 31, 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.
      Management believes the existing cash, cash equivalents, and short-term
      investments are adequate to provide the necessary resources to meet its
      operating needs for the foreseeable future as well as to implement its growth
      objectives.





The
      Company’s liquidity position strengthened during the second quarter ended
      December 31, 2006, as a result of the November 7, 2006 private placement -
      see
“Significant Transactions - Preferred Stock Issuance” discussion which follows.
      The Company believes that the proceeds from the private placement will enable
      the Company to accelerate its growth objectives.





**Preferred
      Dividends**





As
      a
      result of the November 7, 2006 private placement - see “Significant Transactions
      - 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 paid $69 thousand in preferred
      dividends on December 31, 2006 which represents dividends for the period
      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 December 31, 2006 and recent fiscal year
      ended June 30, 2006 is set forth in the table below ( *in
      thousands* ):





32




December
                  31,
              
              June
                  30,
              
              
              
              Percent2006
              
              2006
              
              Increase
              
              IncreaseCurrent
                  assets
              
              $
              29,966
              
              $
              10,647
              
              $
              19,319
              
              
              181
              %Current
                  liabilities
              
              
              4,117
              
              
              3,491
              
              
              626
              
              
              18
              %Working
                  capital
              
              $
              25,849
              
              $
              7,156
              
              $
              18,693
              
              
              261
              %Current
                  ratio
              
              
              7.28
              
              
              3.05
              
              
              4.23
              
              
              139
              %




**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 December 31, 2006, the remaining future
      minimum payments under this lease total $1.8 million. Future minimum receipts
      from the subtenant, net of profit sharing with the landlord, total $2.1 million
      as of December 31, 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.





The
      Company entered into a sublease agreement for additional office space on
      February 1, 2007. This agreement, which expires in June 2010, calls for payments
      totaling $310 thousand on an annual basis.





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.










33


**Summary
      of Contractual Obligations**





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


**Remaining**
              
              **Payments
                  due in****Payments
                  in**
              
              **Fiscal
                  Years Ended June 30,****2008
                  -**
              
              **2010
                  -**
              
              **2012
                  and****2007**
              
              **2009**
              
              **2011**
              
              **thereafter**
              
              **Total**Primary
                  New York operations
              
              $
              462
              
              $
              1,952
              
              $
              1,525
              
              $
              3,047
              
              $
              6,986Subleased
                  New York lease
              
              
              240
              
              
              961
              
              
              641
              
              
              -
              
              
              1,842Other
                  office locations
              
              
              17
              
              
              5
              
              
              -
              
              
              -
              
              
              22Other
                  operating leases
              
              
              16
              
              
              30
              
              
              11
              
              
              -
              
              
              57Total
                  obligations
              
              
              735
              
              
              2,948
              
              
              2,177
              
              
              3,047
              
              
              8,907Sublease
                  income
              
              
              (184
              )
              
              (1,148
              )
              
              (765
              )
              
              -
              
              
              (2,097
              )Net
                  obligations
              
              $
              551
              
              $
              1,800
              
              $
              1,412
              
              $
              3,047
              
              $
              6,810





**Off-Balance
      Sheet Arrangements**





As
      of
      December 31, 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.





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 .





34


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 the fiscal year 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.




In
      September 2006, the United States Securities and Exchange Commission (SEC)
      issued Staff Accounting Bulletin No. 108, *Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements* (“SAB
      108”). SAB 108 provides guidance on the consideration of the effects of prior
      year misstatements in quantifying current year misstatements for the purpose
      of
      a materiality assessment. SAB 108 establishes an approach that requires
      quantification of financial statement errors based on the effects of each of
      the
      company’s balance sheets and statement of operations and the related financial
      statement disclosures. The SAB permits existing public companies to record
      the
      cumulative effect of initially applying this approach in the first year ending
      after November 15, 2006 by recording the necessary correcting adjustments to
      the
      carrying values of assets and liabilities as of the beginning of that year
      with
      the offsetting adjustment recorded to the opening balance of retained earnings.
      Additionally, the use of the cumulative effect transition method requires
      detailed disclosure of the nature and amount of each individual error being
      corrected through the cumulative adjustment and how and when it arose. We do
      not
      expect the adoption of this statement to have a material impact on our
      consolidated financial condition, results of operations, or cash
      flows.





**Significant
      Transactions**





***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 was comprised of 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 October 2, 2006. Additionally, no
      dividends had been paid through October 2, 2006.





On
      October 2, 2006, eStara’s stockholders approved the acquisition of its stock 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.





35


As
      a
      result of the above-mentioned merger, the Company, as holder of the preferred
      stock of eStara, received an amount per share equal to the original issue price,
      plus the amount of any unpaid cumulative dividends. Also, the Company was
      entitled to its approximately 5% proportionate share of remaining merger
      consideration. Accordingly, the Company received 2,476,039 common shares of
      ARTG
      as well as $267 thousand in cash. An additional $56 thousand of cash is
      currently being held in escrow and will be released to the Company by the first
      anniversary of the closing. Additional lesser amounts, up to $150 thousand,
      may
      also be realized, pursuant to the earn-out provisions of the merger. The shares
      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 closing, pursuant to
      an effective registration statement. Such registration statement was filed
      by
      ARTG and deemed efffective by the SEC on February 8, 2007.





The
      following table sets forth the reconciliation of the above transaction as it
      pertains to marketable securities ( *dollars
      in thousands* ):


Dividend
                  income
              
              
              
              
              $
              2,354Realized
                  gains
              
              
              
              
              
              209Unrealized
                  gains recognized through othercomprehensive
                  income
              
              
              
              
              
              4,098Gross
                  fair value of the eStara transaction
              
              
              
              
              
              6,661*Less
                  :*Cash
                  received
              
              $
              267Cash
                  held in escrow
              
              
              56
              
              
              323Fair
                  value of ARTG stockon
                  October 2, 2006
              
              
              
              
              
              6,338Unrealized
                  losses on marketablesecurities
                  recognized through othercomprehensive
                  income
              
              
              
              
              
              (562
              )Marketable
                  securities at December 31, 2006
              
              
              
              
              $
              5,776







36


*Preferred
      Stock
      Issuance*




On
      November 6, 2006, 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 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 contained a beneficial conversion
      feature of $0.42 per share compared to the November 6, 2006 closing price
      of $6.42. This beneficial conversion feature of $0.7 million, which is the
      difference between the above closing price and the conversion price, was fully
      amortized through retained earnings (accumulated deficit) at the date of
      closing. A corresponding amount was 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 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 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 Preferred Stock is not registered under the Securities Act. The
      underlying common stock issuable upon conversion of the Series A Preferred
      Stock
      has been registered with the SEC and may be sold pursuant to an effective resale
      prospectus dated December 26, 2006.




37


**Subsequent
      Event**





On
      January 31, 2007 the Company issued 194,884 restricted stock awards to employees
      of the Company. Recipients of the restricted awards were immediately vested
      in
      12.5% of the total shares received. The remaining 87.5% of unvested shares
      will
      vest over the next three years, subject to the recipients remaining as employees
      of the Company. Issuance of these awards will result in total stock compensation
      expense of $1.8 million over the vesting period, assuming no
      forfeitures.





**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, they 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.





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




***Available-for-sale
      securities***





The
      Company is exposed to fluctuations in the market price of its marketable
      securities presented on its condensed consolidated balance sheet. The total
      fair
      value of these securities as of December 31, 2006 was $5.8 million. The Company
      does not hedge its market risk related to these securities and does not intend
      to do so in the future.





At
      December 31, 2006, the Company performed sensitivity analysis to assess the
      potential loss in the fair value of these market-risk sensitive securities.
      If
      the S&P 500 Index were to decline in fair value by 10%, we estimate this
      would cause an approximate $1.1 million decline in the fair value of its
      marketable securities.




38


***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.




**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.




39


**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 will be diluted when
      additional shares of common stock are issued upon conversion 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 Preferred Stock, the contents of
      which are incorporated by reference herein. Also see Note 9 to the condensed
      consolidated financial statements as well as the discussion in the MD&A
      section of this Quarterly Report on Form 10-Q.




The
      Series A Convertible Preferred Stock is not registered under the Securities
      Act.
      The underlying common stock issuable upon conversion of the Series A Convertible
      Preferred Stock has been registered with the SEC and may be sold pursuant to
      an
      effecitve resale prospectus dated December 26, 2006.





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





On
      November 30, 2006, the stockholders of Epoch Holding Corporation re-elected
      the
      chairman and the other six (6) directors at the annual meeting. Allan R. Tessler
      was re-elected as Chairman of the Board of Directors with 17,581,323 votes.
      The
      following individuals were also re-elected to the Company's Board of Directors
      and won with the following number of affirmative votes: William W. Priest
      (18,973,261), Eugene M. Freedman (18,739,264), David R. Markin (18,972,853),
      Jeffrey L. Berenson (18,739,245), Enrique R. Arzac (18,973,274), and Peter
      A.
      Flaherty (18,739,564).








40


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





(a)
      Exhibits:





Exhibit
                No.
            Description





4.2
            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 of Epoch Holding Corporation.
                (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
            Chief
                Executive Officer Certification (B)31.2
            Principal
                Financial Officer Certification (B)32.1
            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. (B)








(A)
            -
                Incorporated by reference to Registrant’s Form 8-K dated November 6,
                2006.


(B)
            -
                Included herein.






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
                BorakChief
                Financial OfficerDate:
                February 14, 2007




41