**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 September 30,
                2007**




**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
                filerþ
            Non-accelerated
                filero




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
      November 1, 2007, there were 20,141,406 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.
            3Condensed
                    Consolidated
                    Balance Sheets - September 30, 2007 (Unaudited) and June 30,
                    2007
            3Condensed
                    Consolidated
                    Statements of Operations (Unaudited) - Three Months Ended September
                    30,
                    2007 and 2006
            4Condensed
                Consolidated Statements of Changes in
                Stockholders' Equity - Three Months Ended September 30, 2007
                (Unaudited) and Year Ended June 30, 2007
            5Condensed
                    Consolidated
                    Statements of Cash Flows (Unaudited) - Three Months Ended September
                    30,
                    2007 and 2006
            6Notes
                to Condensed Consolidated Financial
                Statements (Unaudited)
            7-15Item
                  2.
            Management's
                    Discussion and Analysis of Financial Condition and Results of
                    Operations.
            16-30Item
                3.
            Quantitative
                and Qualitative Disclosures About Market
                Risk.
            31Item
                4.
            Controls
                and Procedures.
            31**Part
                II.**
            **Other
                Information**Item
                1.
            Legal
                Proceedings.
            32Item1a.
            Risk
                Factors.
            32Item
                5.
            Other
                Information.
            32Item
                6.
            Exhibits.
            32Signatures
            32




2


**PART
      I. FINANCIAL INFORMATION**


**Item
            1. Financial Statements.**
  **EPOCH HOLDING CORPORATION AND SUBSIDIARIES**
 **CONDENSED CONSOLIDATED BALANCE SHEETS** ***( in thousands, except share data)***
 **September 30,**
                
                **June 30,****2007**
                
                **2007****(Unaudited)****ASSETS****Current assets:**Cash and cash equivalents
                
                $
                29,726
                
                $
                3,097Short-term investments - (**Note 2**)
                
                
                -
                
                
                21,850Accounts receivable
                
                
                5,792
                
                
                6,293Marketable securities (cost of $934 and $1,325, respectively) - (**Notes 2 and 5**)
                
                
                3,032
                
                
                3,789Deferred tax asset - (**Note 6**)
                
                
                759
                
                
                -Prepaid and other current assets
                
                
                1,158
                
                
                466Total current assets
                
                
                40,467
                
                
                35,495Property and equipment (net of accumulated depreciation of $1,053 and $949, respectively)
                
                
                1,934
                
                
                2,013Security deposits
                
                
                1,080
                
                
                1,072Other investments (cost of $758 and $756, respectively) - (**Note 2**)
                
                
                811
                
                
                794Total assets
                
                $
                44,292
                
                $
                39,374**LIABILITIES AND STOCKHOLDERS' EQUITY****Current liabilities:**Accounts payable and accrued liabilities
                
                $
                833
                
                $
                901Accrued compensation and benefits
                
                
                3,740
                
                
                1,810Income taxes payable
                
                
                -
                
                
                99Total current liabilities
                
                
                4,573
                
                
                2,810Deferred rent
                
                
                877
                
                
                898Subtenant security deposit
                
                
                225
                
                
                223Total liabilities
                
                
                5,675
                
                
                3,931**Commitments and contingencies - (Note 4)****Stockholders' equity:**Preferred stock, series A convertible, $1 par value per share, 1,000,000 shares authorized;10,000 shares issued and outstanding
                
                
                10
                
                
                10Common stock, $0.01 par value per share, 60,000,000 shares authorized; 20,122,645 and19,935,817 shares issued and outstanding, respectively
                
                
                201
                
                
                199Additional paid-in capital
                
                
                46,430
                
                
                43,852Accumulated deficit
                
                
                (4,260
                )
                
                (6,357
                )Unearned share-based compensation
                
                
                (5,915
                )
                
                (4,763
                )Accumulated other comprehensive income
                
                
                2,151
                
                
                2,502Total stockholders' equity
                
                
                38,617
                
                
                35,443Total liabilities and stockholders' equity
                
                $
                44,292
                
                $
                39,374
  *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)**
 ***(in thousands, except share data)***
  **For the Three Months Ended****September 30,****2007**
              
              **2006****Revenues:**Investment advisory and management fees
              
              $
              7,877
              
              $
              4,318**Operating expenses:**Employee related costs (excluding share-based compensation)
              
              
              4,249
              
              
              2,836Share-based compensation
              
              
              1,075
              
              
              1,587General, administrative and occupancy
              
              
              1,384
              
              
              780Professional fees and services
              
              
              757
              
              
              304Depreciation and amortization
              
              
              104
              
              
              95Total operating expenses
              
              
              7,569
              
              
              5,602**Operating income (loss)**
              
              
              308
              
              
              (1,284
              )**Other income: - (Note 5)**Realized gains on investments
              
              
              866
              
              
              -Interest and other income
              
              
              517
              
              
              246Total other income
              
              
              1,383
              
              
              246**Income (loss) from continuing operations, before income taxes**
              
              
              1,691
              
              
              (1,038
              )Provision for (benefit from) income taxes - (**Note 6**)
              
              
              (406
              )
              
              -**Net income (loss)**
              
              
              2,097
              
              
              (1,038
              )Cumulative preferred stock dividends - (**Note 7**)
              
              
              (115
              )
              
              -**Net income (loss) available to common****stockholders for basic earnings per share**
              
              $
              1,982
              
              $
              (1,038
              )**Earnings (loss) per share
                  - (Note 7)**Basic
              
              $
              0.10
              
              $
              (0.05
              )Diluted
              
              $
              0.10
              
              $
              (0.05
              )**Weighted Average Shares Outstanding:**Basic
              
              
              20,051
              
              
              19,517Diluted
              
              
              21,816
              
              
              19,517*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**
 **FOR THE YEAR ENDED JUNE 30, 2007 AND THREE MONTHS ENDED SEPTEMBER 30, 2007**
 ***(dollars and shares in thousands)***
  **Preferred
                        Stock**
                      **Series
                        A Convertible**
                  
                  **Common Stock**
                  
                  **Additional**
                          **Paid-in**
                          **Capital**
                  
                  **Accumulated**
                      **deficit**
                  
                  **Unearned**
                        **Share-Based
                          Compensation**
                  
                  **Accumulated
                          Other Comprehensive Income**
                  
                  **Total
                          Stockholders' Equity****Shares**
                  
                  **Amount**
                  
                  **Shares**
                  
                  **Amount**
                  
                  
                  
                  
                  ******Balances at June 30, 2006**
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  19,154
                  
                  $
                  191
                  
                  $
                  28,500
                  
                  $
                  (13,251
                  )
                  $
                  (6,585
                  )
                  $
                  -
                  
                  $
                  8,855Net income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  7,893
                  
                  
                  
                  
                  
                  
                  
                  
                  7,893Other comprehensive income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,502
                  
                  
                  2,502*Comprehensive income*
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  10,395Net issuance of restricted common stock
                  
                  
                  
                  
                  
                  
                  
                  
                  735
                  
                  
                  7
                  
                  
                  4,438
                  
                  
                  -
                  
                  
                  (3,933
                  )
                  
                  
                  
                  
                  512Amortization of unearned share-basedcompensation
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  5,755
                  
                  
                  
                  
                  
                  5,755Issuance of common stock upon exercise ofstock options
                  
                  
                  
                  
                  
                  
                  
                  
                  46
                  
                  
                  1
                  
                  
                  313
                  
                  
                  -
                  
                  
                  -
                  
                  
                  
                  
                  
                  314Issuance of series A convertible preferred stock
                  
                  
                  10
                  
                  
                  10
                  
                  
                  
                  
                  
                  
                  
                  
                  9,990
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  10,000Preferred stock issuance cost
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (89
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (89
                  )Preferred stock dividends
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (299
                  )
                  
                  
                  
                  
                  
                  
                  
                  (299
                  )Beneficial conversion feature associatedwith preferred stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  700
                  
                  
                  (700
                  )
                  
                  
                  
                  
                  
                  
                  
                  -**Balances at June 30, 2007**
                  
                  
                  10
                  
                  
                  10
                  
                  
                  19,935
                  
                  
                  199
                  
                  
                  43,852
                  
                  
                  (6,357
                  )
                  
                  (4,763
                  )
                  
                  2,502
                  
                  
                  35,443Net income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,097
                  
                  
                  
                  
                  
                  
                  
                  
                  2,097Other comprehensive income - (**Note 8**)
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (351
                  )
                  
                  (351
                  )*Comprehensive income*
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,746Net issuance of restricted common stock
                  
                  
                  
                  
                  
                  
                  
                  
                  187
                  
                  
                  2
                  
                  
                  2,225
                  
                  
                  -
                  
                  
                  (2,009
                  )
                  
                  
                  
                  
                  218Amortization of unearned share-basedcompensation
                  
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  857
                  
                  
                  
                  
                  
                  857Income tax benefit from the vesting ofrestricted shares
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  353
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  353**Balances at September 30, 2007**
                  
                  
                  10
                  
                  $
                  10
                  
                  
                  20,122
                  
                  $
                  201
                  
                  $
                  46,430
                  
                  $
                  (4,260
                  )
                  $
                  (5,915
                  )
                  $
                  2,151
                  
                  $
                  38,617**(Unaudited)**
  *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)**
 ***( in thousands)***
  **For the Three Months Ended****September 30,****2007**
              
              **2006****Cash flows from operating activities:**Net income (loss)
              
              $
              2,097
              
              $
              (1,038
              )Adjustments to reconcile net income (loss) to net cashprovided by (used in) operating activities:Deferred income taxes
              
              
              (759
              )
              
              -Share-based compensation
              
              
              1,075
              
              
              1,587Depreciation and amortization
              
              
              104
              
              
              95Realized gains on investments
              
              
              (866
              )
              
              -Decrease (increase) in operating assets:Accounts receivable
              
              
              501
              
              
              (941
              )Prepaid and other current assets
              
              
              (692
              )
              
              (49
              )(Decrease) increase in operating liabilities:Accounts payable and accrued liabilities
              
              
              (68
              )
              
              (83
              )Accrued compensation and benefits
              
              
              1,930
              
              
              (8
              )Income taxes payable
              
              
              (99
              )
              
              -Deferred rent
              
              
              (21
              )
              
              (34
              )**Net cash provided by (used in) operating activities**
              
              
              3,202
              
              
              (471
              )**Cash flows from investing activities:**Purchases and sales of short-term investments, net
              
              
              21,850
              
              
              (600
              )Proceeds from sale of marketable securities
              
              
              1,257
              
              
              -Capital expenditures
              
              
              (25
              )
              
              (30
              )Security deposits, net
              
              
              (6
              )
              
              (5
              )Purchases of other investments
              
              
              (2
              )
              
              -**Net cash provided by (used in) investing activities**
              
              
              23,074
              
              
              (635
              )**Cash flows from financing activities:**Income tax benefit from the vesting ofrestricted shares
              
              
              353
              
              
              -Preferred stock issuance costs
              
              
              -
              
              
              (15
              )**Net cash used in financing activities**
              
              
              353
              
              
              (15
              )**Net increase (decrease) in cash and cash****equivalents during period**
              
              
              26,629
              
              
              (1,121
              )Cash and cash equivalents at beginning of period
              
              
              3,097
              
              
              2,234Cash and cash equivalents at end of period
              
              $
              29,726
              
              $
              1,113*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**


**FOR
      THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006**


***(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").
      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, NY with an office in Sherman Oaks, CA, the Company's current product
      offerings include U.S. All Cap Value, U.S. Value, U.S. Smid (small/mid) Cap
      Value, U.S. Small Cap Value, Global Small Cap, Global Absolute Return,
      International Small Cap, Balanced Portfolios, and Global Equity Shareholder
      Yield.





***Business
      segments***


The
      Company's sole line of business is investment advisory and investment management
      services. 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.




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, 2007.





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 accounting principles
      generally accepted in the United States of America 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.





7





***Fair
      value of financial instruments***


The
      carrying values of the Company's cash and cash equivalents, short-term
      investments, accounts receivable and accounts payable approximate fair value
      due
      to their short-term nature. Marketable
      securities and other investments are carried at fair value based on quoted
      market prices.





***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, short-term
      investments, and marketable securities. Epoch invests its cash and cash
      equivalents with high-credit quality 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.





***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 auctions 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. All auction rate securities are bought and sold
      at
      par value.





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 Condensed Consolidated Statements of Cash Flows to
      reflect the purchases and sales of these securities as investing activities.
      Prior period amounts 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.




During
      the three months ended September 30, 2007, in response to increasing credit
      quality concerns present in the fixed income securities market with respect
      to
      increasing mortgage defaults and delinquencies, tighter lending conditions,
      and
      severely constricted liquidity in the asset-backed commercial paper market,
      the
      Company liquidated all of its short-term investments. The proceeds from these
      liquidations were invested solely in cash and cash equivalents on the Condensed
      Consolidated Balance Sheet as of September 30, 2007.





***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
      Accumulated Other Comprehensive Income, a separate component of stockholders’
equity. Realized gains and losses on the sales of these securities are
      calculated based on an average cost basis and reported in the Statement of
      Operations. These securities are classified as current assets on the Condensed
      Consolidated Balance Sheets as it is management’s intention to sell these
      securities within the next twelve months. See
      Note 5a - “eStara transaction” for further discussion.





8





***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,
      1 to 3 years for purchased software, and 3 to 10 years for leasehold
      improvements and exclude option periods, if any. Repairs and maintenance are
      charged to expense as incurred. Upon sale or disposition of property and
      equipment, the cost and related accumulated depreciation are removed from the
      accounts and any resulting gain or loss is recognized in
      operations.





***Other
      investments***


The
      Company made an initial investment of $750 thousand split equally into each
      of
      the three Company-sponsored mutual funds during the fiscal year ended June
      30,
      2007—the Epoch Global Equity Shareholder Yield Fund (“EPSYX”), the Epoch U.S.
      All Cap Equity Fund (“EPACX”), and the Epoch International Small Cap Fund
      (“EPIEX”). These investments are classified as Other investments on the
      Condensed Consolidated Balance Sheets, are treated as available-for-sale
      securities, and are carried at fair value based upon quoted market prices.
      The
      Company intends to hold these investments for a period in excess of one year
      from the time of purchase. Any resulting change in market value is recorded
      as
      unrealized gain or loss in Accumulated Other Comprehensive Income, a
      separate component of stockholders’ equity.





***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 earn 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
      -
      the Company’s second fiscal quarter. 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***


Employee
      and qualifying director share-based payments are accounted for in accordance
      with Statement of Financial Accounting Standards No. 123 (Revised 2004), *Share-Based
      Compensation* (“SFAS
      123R”) using the fair value method. The fair value of the Company's restricted
      stock awards is based on the closing price of the Company's common stock at
      the
      grant date. Share-based compensation costs related to equity instruments are
      charged against income ratably over the fixed vesting period for the related
      equity instruments, with the initial charge generally recorded in the first
      full
      month following the grant. All outstanding stock options were fully vested
      prior
      to the adoption of SFAS 123R, accordingly there were no additional compensation
      costs related to any non-vested stock options required to be recorded at that
      time. There were no additional stock options issued for all periods
      presented.




9





***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. Deferred tax assets are recognized for temporary
      differences that will result in deductible amounts in future years. Deferred
      tax
      liabilities are recognized for temporary differences that will result in taxable
      income in future years.  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 or all of the deferred
      tax asset will not be realized.





Any
      potential interest and penalties associated with a tax contingency, should
      one
      arise, would be included as a component of income tax expense in the period
      in
      which the assessment arises.





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


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





***Comprehensive
      income (loss)***


Total
      comprehensive income (loss) is reported on the Condensed Consolidated
      Statement of Stockholder’s Equity and includes net income (loss) and, for
      investment securities available-for-sale, the change in unrealized gains
      (losses) and the reclassification of realized gains (losses) to net
      income.





***Recently
      issued accounting standards***


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
      adopted FIN 48 at the beginning of its fiscal year commencing July 1, 2007.
      The
      adoption of FIN 48 did not have a material effect on the Company's consolidated
      financial position, results of operations, or cash flows.





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 does not expect the adoption of this statement to have
      a
      material impact on its consolidated financial position, results of operations,
      or cash flows.




In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* (“SFAS
      159”). SFAS 159 permits certain financial assets and financial liabilities to be
      measured at fair value, using an instrument-by-instrument election. The initial
      effect of adopting SFAS 159 must be accounted for as a cumulative effect
      adjustment to opening retained earnings for the fiscal year of adoption.
      Retrospective application to fiscal years preceding the effective date is not
      permitted. SFAS 159 is effective for the Company beginning July 1, 2008,
      although early adoption is permitted. The Company does not expect the adoption
      of this statement to have a material impact on its consolidated financial
      position, results of operations, or cash flows.




10




On
      June
      27, 2007, the Financial Accounting Standards Board (“FASB”) ratified the
      consensus reached by the Emerging Issues Task Force (“EITF”) in EITF Issue No.
      06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment
      Awards” (“EITF 06-11”). EITF 06-11 requires that the realized income tax benefit
      from dividends paid on nonvested equity-classified employee share-based payment
      awards that are charged to retained earnings be recorded as an increase to
      additional paid-in capital, rather than a reduction to tax expense. The amount
      recognized in additional paid-in capital for the realized income tax benefit
      from dividends on those awards should be included in the pool of excess tax
      benefits available to absorb tax deficiencies on share-based payment awards.
      EITF 06-11 applies prospectively to the income tax benefits on dividends
      declared by the Company, beginning on July 1, 2008. There were no dividends
      declared or paid on unvested common shares prior to the ratification of EITF
      06-11. The Company has declared a dividend to be paid in November 2007. The
      Company will account for the tax benefits on all dividends declared on unvested
      common shares as an increase to additional paid-in capital for all periods
      during our fiscal year ended June 30, 2008. The
      Company does not expect the adoption of this pronouncement to have a material
      impact on its consolidated financial position, results of operations, or cash
      flows.




**Note
      3 - Accounts Receivable**





The
      Company's accounts receivable balances do not include an allowance for doubtful
      accounts for the periods presented and there have been no bad debt expenses
      recognized during the three months ended September 30, 2007 and 2006,
      respectively. Management believes these receivables are fully
      collectible.




***Significant
      customers and contracts***


For
      the
      three months ended September 30, 2007, CI Investments Inc. (“CI”), a
      Canadian-owned investment management company, accounted for approximately
      17% of consolidated revenues, while Genworth Financial Asset Management, Inc.
      (“Genworth”), an investment adviser, through its investments in the
      EPIEX and EPSYX funds, as well as separate account mandates, accounted for
      approximately 29%. 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
      three months ended September 30, 2006, CI accounted for approximately 19% of
      consolidated revenues, while Genworth accounted for approximately 22% of
      consolidated revenues.





**Note
      4 - Commitments and Contingencies**





***Employment
      agreements***


There
      are
      no employment contracts with any employees or 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 $3.1 million at September 30, 2007. Of this amount,
      approximately $0.6 million is included in accrued compensation and benefits
      on
      the Condensed Consolidated Balance Sheet at September 30, 2007. An additional
      $1.2 million will be accrued during the fiscal year ending June 30, 2008.
      Approximately $1.3 million represents restricted stock awards to be issued
      during the remainder of fiscal year ending June 30, 2008, or shortly
      thereafter.





The
      Company was obligated to enter into an employment agreement with its Chief
      Executive Officer prior to June 2, 2007. The Company and its Chief Executive
      Officer are in the process of evaluating the terms of such an agreement and
      expect to complete a mutually acceptable arrangement in the near future. Terms
      of the contract are to be customary for Chief Executive Officers of peer group
      companies and will be reviewed and approved by the Company's Compensation
      Committee and the full Board of Directors.





11




***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
      consolidated financial statements.




**Note
      5 - Other Income**





**a)** ***eStara
      transaction***


During
      the fiscal year ended June 30, 2000, J Net, the predecessor company to Epoch,
      made a $4.0 million investment in eStara, Inc. ("eStara"), a technology-related
      company that provides conversion and tracking solutions to enhance on-line
      sales. This investment 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, by J Net’s
      management, impaired 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 down 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.





The
      Company, as a 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. Additionally, the Company was entitled to its
      approximately 5% proportionate share of remaining merger consideration.
      Accordingly, the Company received 2,431,577 common shares of ARTG and $267
      thousand in cash. An additional $36 thousand of cash is currently being held
      in
      escrow and is expected to 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 resultant
      shares held by the Company are currently classified as Marketable Securities
      on
      the Condensed Consolidated Balance Sheets in accordance with SFAS No. 115, *Accounting
      for Certain Investments in Debt and Equity Securities* .
      The
      common shares received from ARTG have been subject to a lock-up agreement
      pursuant to which the shares are being released to the Company in equal monthly
      installments over a period of 12 months, which commenced January 2007.





The
      Company sold approximately 1.0 million shares of ARTG during the second half
      of
      the fiscal year ended June 30, 2007 and continues to sell shares. During the
      quarter ended September 30, 2007, the Company sold approximately 0.4 million
      shares of ARTG and recorded realized gains of approximately $0.9 million. These
      gains were reclassified, in accordance with the provisions of SFAS No. 115,
      “ *Accounting
      for Certain Investments in Debt and Equity Securities,* ”
from
      Accumulated Other Comprehensive Income, a separate component of stockholders’
equity, to Realized gains on investments on the Condensed Statement of
      Operations. As of September 30, 2007, the Company had approximately 1.0 million
      shares of ARTG with a market value of approximately $3.0 million, the value
      of
      which is shown as marketable securities on the Condensed Consolidated Balance
      Sheet.





**b)**  ***Strategic
      Data Corporation transaction***


During
      the fiscal year ended June 30, 2000, J Net, the predecessor company to Epoch,
      made a $1.1 million investment in Strategic Data Corp. ("SDC"), a
      technology-related company that specializes in advertising optimization
      technology. This investment was comprised of 892,500 shares of Series B and
      1,966,963 shares of Series C, convertible preferred stock. As there was no
      readily available market for the securities and the investment represented
      less
      than a 20% interest in SDC, the securities were valued at the Company’s initial
      cost. During the fiscal year ended June 30, 2001, the carrying value of this
      investment was deemed to be impaired by J Net’s management and written down to
      zero. Accordingly, this investment had no carrying value at February 20, 2007.
      Additionally, no dividends had been paid through February 20, 2007.




12


On
      February 20, 2007, SDC’s stockholders approved the acquisition of its stock by
      Fox Interactive Media, Inc. (“FIM”). Under the terms of the agreement, FIM
      acquired all of the outstanding common stock, preferred stock, and vested and
      unvested stock options of SDC.





As
      a
      result of the above-mentioned merger, the Company, as holder of the preferred
      stock of SDC, received an initial cash payment of approximately $2.2 million
      on
      March 22, 2007.





The
      SDC
      merger also calls for contingent payments, dependent upon the achievement of
      certain targets and milestones, payable over a period of approximately 3.5
      years, as well as release of an escrow fund. The Company’s share of additional
      contingent payments and escrow funds stemming from the acquisition ranges from
      zero to approximately $15.4 million. No amounts related to the contingent
      payments or escrow fund have been accrued as of September 30, 2007, as such
      amounts are not readily estimable or determinable at this time.





**Note
      6 - Income taxes**





In
      calculating the provision for income taxes, the Company uses an estimate of
      the
      annual effective tax rate based upon the facts and circumstances known at each
      interim period. On a quarterly basis, the actual effective tax rate is adjusted,
      as appropriate, based upon changed facts and circumstances, if any, as compared
      to those forecasted at the beginning of the fiscal year and each interim period
      thereafter.


***Valuation
        allowance release***
 The
        Company reviews its deferred tax asset valuation allowances on a quarterly
        basis, or whenever events or changes in circumstances indicate that a review
        is
        required. In determining the requirement for a valuation allowance, the
        historical and projected financial results of the legal entity or consolidated
        group recording the net deferred tax asset is considered, along with any
        other
        positive or negative evidence. Since future financial results may differ
        from
        previous estimates, periodic adjustments to the Company’s valuation allowances
        may be necessary.
  Based
        on
        the Company’s recent annual operating projections and the significant gains
        realized on sales of marketable securities, the Company concluded that it
        was
        more likely than not that the tax benefits from its tax basis on a previously
        impaired investment would be utilized in the future. As such, in the quarter
        ended September 30, 2007, the Company reversed the entire valuation allowance
        of
        approximately $1.1 million attributable to this fully valued deferred tax
        asset,
        as a credit to income tax expense. The effect of this valuation allowance
        release, together with the use of a projected annual effective tax rate,
        resulted in a benefit from income taxes of approximately $0.4 million for
        the
        three months ended September 30, 2007.


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





Basic
      earnings (loss) per share is computed by dividing net earnings (loss) by the
      weighted average number of common shares outstanding during the period.





Diluted
      earnings per share is computed by dividing net earnings, 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 1,035,000
      and
      1,130,000 issued and outstanding stock options at September 30, 2007 and 2006,
      respectively.





For
      the
      three months ended September 30, 2006, the exercise price of the options was
      higher than the average market price of the common stock. The conversion of
      those particular options would have had an anti-dilutive effect, and thus,
      were
      excluded from the diluted earnings per share calculation for the three months
      ended September 30, 2006.





The
      1,666,667 shares of common stock issuable upon conversion of preferred stock
      has
      no effect on basic earnings per share. These common stock equivalents were
      included in the calculation of diluted earnings per share for the three months
      ended September 30, 2007. The preferred stock was not outstanding as of
      September 30, 2006. Upon conversion, the issuable shares of common stock will
      be
      included in the calculation of both the basic and diluted earnings per
      share.





13


For
      purposes of determining basic earnings per share, dividends earned for the
      three
      month period ended September 30, 2007 on the cumulative preferred stock,
      although not yet declared, have been deducted from net income to arrive at
      income available to common stockholders. The table below sets forth
      the computation of basic and diluted earnings per share ( *in
      thousands, except per share data* ):




**Three Months Ended****September 30,****2007**
              
              
              
              **2006*****Numerator:*****Net income (loss) available to****common stockholders:**Net income (loss)
              
              $
              2,097
              
              
              
              
              $
              (1,038
              )Preferred stock dividends
              
              
              (115
              )
              
              
              
              
              -Net income (loss) available to common stockholdersfor basic earnings per share
              
              
              1,982
              
              
              
              
              
              (1,038
              )Effect of dilutive securities:Preferred stock dividends
              
              
              115
              
              
              
              
              
              -Net income (loss) available to common stockholdersafter assumed conversions
              
              $
              2,097
              
              
              
              
              $
              (1,038
              )***Denominator:***Average common shares outstanding
              
              
              20,051
              
              
              
              
              
              19,517Effect of dilutive securities:Weighted average shares issuable upon conversion of preferred stock
              
              
              1,667
              
              
              
              
              
              -Net common stock equivalents for the exercise ofin-the-money stock options
              
              
              98
              
              
              
              
              
              -Average common and common equivalent shares outstanding -assuming dilution
              
              
              21,816
              
              
              
              
              
              19,517Basic earnings (loss) per share
              
              $
              0.10
              
              
              
              
              $
              (0.05
              )Diluted earnings (loss) per share
              
              $
              0.10
              
              
              
              
              $
              (0.05
              )






14




**Note
        8 -** **Comprehensive
        Income (Loss)**
 
 A
        summary
        of comprehensive income (loss) is as follows ( *in
        thousands* ):
  **For the Three Months****Ended September 30,****2007**
                
                **2006**Net income (loss)
                
                $
                2,097
                
                $
                (1,038
                )Other comprehensive income:Change in unrealized gain on available-for-sale securities
                
                
                515
                
                
                -Reclassification of realized gains to net income
                
                
                (866
                )
                
                -Comprehensive income (loss)
                
                $
                1,746
                
                $
                (1,038
                )




The
        total
        aggregate proceeds from sales of available-for-sale securities were
        approximately $1.3 million during the three months ended September 30,
        2007.
 
 **Note
        9 - Subsequent Event**
 
 On
        October 9, 2007, the Company’s Board of Directors declared a quarterly cash
        dividend on the Company's Common Stock of $0.025 per share payable on November
        15, 2007 to stockholders of record at the close of business on October 31,
        2007.
        The total dividend to be paid is approximately $500 thousand.
  The
        Company expects quarterly dividends going forward to be paid in February,
        May,
        August and November of each fiscal year, and anticipates a total annual dividend
        of $0.10 per common share. However, the actual declaration of future cash
        dividends, and the establishment of record and payment dates, will be subject
        to
        final determination by the Board of Directors each quarter after its review
        of
        the Company's financial performance.
  *****
 
 15




**Item
        2.****Management's
        Discussion and Analysis of Financial Condition and Results of
        Operations.**
 
 Set
        forth
        on the following pages is management's discussion and analysis of our financial
        condition and results of operations for the three months ended September
        30,
        2007 and 2006. 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, or incorporated by reference in this Quarterly Report
        on
        Form 10-Q and other materials filed or to be filed by Epoch
        Holding Corporation (“Epoch" or the “Company") with the Securities and
        Exchange Commission (“SEC") contain statements that may be considered
        forward-looking within the meaning of the Private Securities Litigation Reform
        Act of 1995. 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. In particular, you should consider the risks
        and
        uncertainties outlined in “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.*
 
 *Forward-looking
        statements include, but are not limited to, statements about the
        Company’s:*
  *•*
              *business
                  strategies and investment policies,**•*
              *possible
                  or assumed future results of operations and operating cash
                  flows,*
 *•*
              *financing
                  plans and the availability of short-term
                  borrowing,**•*
              *competitive
                  position,*
 *•*
              *potential
                  growth opportunities,**•*
              *recruitment
                  and retention of the Company's key
                  employees,*
 *•*
              *potential
                  operating performance, achievements, productivity improvements,
                  efficiency
                  and cost reduction efforts,**•*
              *likelihood
                  of success and impact of
                  litigation,*
 *•*
              *expected
                  tax rates,**•*
              *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,*
 
 16
 *•*
              *competition,
                  and**•*
              *effect
                  from the impact of future legislation and regulation on the
                  Company.*
 
 **Available
        Information**
 
 Reports
        the Company files electronically with the SEC via the SEC’s Electronic Data
        Gathering, Analysis and Retrieval system (“EDGAR”) may be accessed through the
        internet. The SEC maintains an internet site that contains reports, proxy
        and
        information statements, and other information regarding issuers that file
        electronically with the SEC, at *www.sec.gov* .
 
 The
        Company maintains a website which contains current information on operations
        and
        other 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, free of charge, our Proxy Statement, 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 of 1934, as amended (the “Exchange Act”) as
        soon as reasonably practicable after we electronically file such material
        with,
        or furnish it to, the SEC.
 
 Also
        available free of charge on our website within the Investors Relations section
        is our code of ethics and business conduct and charters for the Audit,
        Nominating/Corporate Governance, and the Compensation committees of our board
        of
        directors.
 
 **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, 2007.
 
 **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 adviser
        under the Investment Advisers Act of 1940, as amended (the "Investment Advisers
        Act").
 
 **Critical
        Accounting Policies**  **and
        Critical Accounting Estimates**
 
 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, 2007. 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, 2007.
  17
 **Financial
        Highlights**
 
 The
        Company continued to achieve positive operating leverage for the quarter
        ended
        September 30, 2007, which is defined as the total revenue growth rate that
        exceeds the rate of growth of expenses. Total operating revenue increased
        by 82%
        while total operating expenses increased by 35%. Operating margins continued
        to
        improve as the Company achieved an operating profit of $0.3 million during
        the
        quarter. The main driver of this positive trend has been the significant
        increase in assets under management (“AUM”), led primarily by an increase in
        sub-advisory and institutional mandates, coupled with market appreciation
        of the
        Company's various products. The Company finished the quarter ended September
        30,
        2007 with AUM of $6.4 billion, a 67% increase from AUM of $3.8 billion a
        year
        ago.
  **Change***(Dollars in thousands)*
                
                **2007**
                
                **2006**
                
                $
                
                %***Net income (loss)***
                
                $
                2,097
                
                $
                (1,038
                )
                $
                3,135
                
                
                N/A
 
 For
        the
        three months ended September 30, 2007, the Company recorded net income of
        $2.1
        million, compared to a net loss of $1.0 million for the same period a year
        ago.
        Basic earnings per share were $0.10 per share for the three months ended
        September 30, 2007, from a loss of $0.05 per share for the same period a
        year
        ago.
 
 The
        primary reasons for the improvement in earnings were the following:
 
 *•*
              Total
                  operating revenues increased approximately 82%, to $7.9 million
                  from $4.3
                  million as a result of the significant increase in AUM discussed
                  above.*•*
              Share-based
                  compensation decreased by $0.5 million for the three months ended
                  September 30, 2007 when compared with the same period a year ago.Amortization
                  of the shares issued to employee owners in connection with the
                  acquisition
                  of EIP in June 2004, which equaled approximately $0.8 million per
                  quarter,
                  was completed as of June 30, 2007. This reduction was partially
                  offset by
                  amortization of new stock awards.*•*
              Other
                  income increased by $1.1 million, which included $0.9 million of
                  realized
                  gains from the sales of marketable securities.*•*
              The
                  release of a valuation allowance of approximately $1.1 million
                  against a
                  deferred tax asset, the benefit of which is expected to be realized
                  during
                  the current fiscal year.
 
 **Business
        Environment**
 
 As
        an
        investment advisory and management firm, our results of operations can be
        directly impacted by global market, political, and economic trends. A favorable
        business environment can be depicted by several factors, including strong
        business profitability, robust investor confidence, low unemployment, and
        financial market transparency. These factors can directly affect capital
        appreciation, which in turn, impacts our investment advisory and management
        business.
 
 The
        domestic market environment during the quarter ended September 30, 2007 was
        volatile, reaching new all-time highs during July. In August, however, market
        performance declined due to credit concerns and fears that increased mortgage
        defaults would lead to a substantial economic downturn. The markets rebounded
        during September as the Federal Reserve reduced short-term interest rates.
        These
        factors contributed to U.S.
        equities experiencing positive, yet smaller returns for the quarter than
        the
        previous one. For the quarter ended September 30, 2007, assuming dividend
        reinvestment ,
        the
        S&P 500 Index increased by 2.0%, while the Dow Jones Industrial Average
        increased by 4.2% and the NASDAQ Composite Index increased by 3.8%.
 
 18
 The
        global market environment was also volatile, while a significantly weaker
        U.S.
        dollar boosted returns of foreign equities in U.S. dollars terms. On
        a
        broad basis, developed global markets, as represented by the MSCI World Index,
        returned 2.5% for the quarter.
 
 **Results
        of operations - three months ended September 30, 2007 and
        2006**
 
 ***Assets
        Under Management and Flows (in millions)***
 
 AUM
        increased to $6.4 billion at September 30, 2007, from $3.8 billion at September
        30, 2006. This increase was primarily attributable to the ongoing expansion
        of
        the Company's client base, as well as market appreciation. The Company continued
        to expand its institutional and sub-advisory businesses. The Company experienced
        growth in AUM in virtually all products, and particularly in its Global Equity
        Shareholder Yield product as a percentage of AUM.
 **Three Months Ended****September 30,**2007
                
                2006Beginning of period assets
                
                $
                6,001
                
                $
                3,253Net Inflows/(Outflows)
                
                
                271
                
                
                433Market Appreciation
                
                
                154
                
                
                161End of period assets
                
                $
                6,426
                
                $
                3,847




The
        charts on the following page show the Company's products as a percentage
        of AUM
        as of September 30, 2007 and 2006, respectively:
  19
  
     
  20




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 September 30,****Amount**
                
                **Percent****Distribution Channel:**
                
                **2007**
                
                **2006**
                
                **Increased**
                
                **Increased**Sub-advisory
                
                $
                3,162
                
                $
                1,868
                
                $
                1,294
                
                
                69.3
                %Institutional
                
                
                2,914
                
                
                1,681
                
                
                1,233
                
                
                73.3
                %High net worth
                
                
                350
                
                
                298
                
                
                52
                
                
                17.4
                %Total AUM
                
                $
                6,426
                
                $
                3,847
                
                $
                2,579
                
                
                67.0
                %






21
















22







**Change***(Dollars in thousands)*
                
                **2007**
                
                **2006**
                
                $
                
                %***Investment advisory and management fees***
                
                $
                7,877
                
                $
                4,318
                
                $
                3,559
                
                
                82
                %  Total
            revenues from investment advisory and investment management services
            for the
            three months ended September 30, 2007 were $7.9 million, increasing
            approximately 82%, from $4.3 million, for the same period a year ago.
            This
            increase was attributable to the increase in assets under management
            from new
            customers as well as market appreciation. 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.
 
 For
            the
            three months ended September 30, 2007, CI accounted for approximately
            17% 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 29% of revenues.
 
 For
            the
            three months ended September 30, 2006, CI accounted for approximately
            19% of
            consolidated revenues, while Genworth accounted for approximately 22%
            of
            consolidated revenues.
  **Change***(Dollars in thousands)*
              
              **2007**
              
              **2006**
              
              $
              
              %***Employee
                      related costs (excluding share-based
                      compensation)***
              
              $
              4,249
              
              $
              2,836
              
              $
              1,413
              
              
              50
              %
  Expenses
          in this category include salaries, benefits, severance, incentive compensation,
          signing bonuses and commission expenses. For the three months ended September
          30, 2007, these expenses were $4.2 million, an increase of $1.4 million,
          or 50%
          from $2.8 million for the three months ended September 30, 2006. Increased
          headcount, including the addition of several senior experienced professionals
          to
          support the growth and expansion of the business, as well as higher incentive
          compensation levels, were the primary reasons 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.
  **Change***(Dollars in thousands)*
                      
                      **2007**
                      
                      **2006**
                      
                      $
                      
                      %***Share-based
                            compensation***
                      
                      $
                      1,075
                      
                      $
                      1,587
                      
                      $
                      (512
                      )
                      
                      (32
                      %)
  The
                  Company believes that share-based compensation promotes unity in
                  the workplace
                  and a common objective with shareholders. Employee share-based
                  compensation
                  expense is recognized as follows: 12.5% immediately, and the remaining
                  87.5%
                  ratably over the three-year vesting period of those awards.
 
 Share-based
                  compensation for the three months ended September 30, 2007 decreased
                  by $0.5
                  million, or 32% from $1.6 million for the three months ended September
                  30, 2006.
                  Amortization of the shares issued to employee owners in connection
                  with the
                  acquisition of EIP in June 2004, which equaled approximately $0.8
                  million per
                  quarter, was completed as of June 30, 2007. This reduction was
                  partially offset
                  by amortization of new stock awards.
 
 In
                  the
                  three months ended September 30, 2007 and 2006, a total of 152,673
                  and 460,658
                  shares of restricted stock, respectively, were issued to employees.
                  A total of
                  19,085 and 57,581 shares of the awards issued in the three months
                  ended
                  September 30, 2007 and 2006, respectively, 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 September
                  30, 2007 and
                  2006, a total of 1,449 and 8,950 shares, respectively, were forfeited
                  by
                  terminated employees.
 
 23
  Commencing
                  in FY 2008, non-employee directors receive $80,000 per year for
                  their services.
                  Non-employee director compensation is to be paid either fully in
                  stock or a
                  combination of a minimum of $60,000 in stock and a maximum of $20,000
                  in cash,
                  at the election of the director. I n
                  FY
                  2007, non-employee directors received $50,000 for their services
                  payable fully
                  in stock.
 
 During
                  the three months ended September 30, 2007 and September 30, 2006,
                  there were
                  35,604 and 66,228 shares, respectively, granted to directors of
                  the Company.
                  Shares issued to directors in the current and the prior fiscal
                  year vest over
                  one year. Shares issued to directors' for FY 2006 were 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 the underlying vesting provisions.
 
 We
                  expect
                  share-based compensation costs will be lower than previous year
                  levels as a
                  result of the fully amortized employee owners’ shares noted above.
 **Change***(Dollars in thousands)*
                                
                                **2007**
                                
                                **2006**
                                
                                $
                                
                                %***General
                                      administrative and occupancy***
                                
                                $
                                1,384
                                
                                $
                                780
                                
                                $
                                604
                                
                                
                                77
                                %
 These
                  expenses consist primarily of office rentals, travel and entertainment,
                  advertising and marketing, information technology expenses, utilities,
                  insurance, and other office related expenses. For the three months
                  ended
                  September 30, 2007, such expenses were $1.4 million, an increase
                  of $0.6 million
                  from the comparable period a year ago. Increases in costs from
                  travel-related
                  expenses to support distribution efforts of new business relationships,
                  higher
                  market data services and information technology costs as a result
                  of increased
                  business activity levels, as well as increased rent expense as
                  a result of the
                  additional space leased at the Company’s headquarters beginning in February 2007
                  were the main reasons for the rise in general, administrative and
                  occupancy
                  costs.
 
 General,
                  administrative and occupancy costs are expected to be higher next
                  quarter when
                  compared with prior year amounts due to significantly higher business
                  activity
                  levels.
  **Change***(Dollars in thousands)*
                                
                                **2007**
                                
                                **2006**
                                
                                $
                                
                                %***Professional
                                      fees and services***
                                
                                $
                                757
                                
                                $
                                304
                                
                                $
                                453
                                
                                
                                149
                                %
 These
                  expenses consist primarily of outside legal fees for general corporate
                  legal
                  affairs, independent accountants' fees, consulting fees, and other
                  professional
                  services. For the three months ended September 30, 2007, such fees
                  were $0.8
                  million, an increase of $0.5 million from the comparable period
                  a year ago. The
                  primary reasons for this increase were higher consulting expenses
                  and audit fees
                  in connection with compliance with Section 404 of the Sarbanes
                  Oxley Act of 2002
                  (“SOX”), higher employment placement fees due to new additions of senior
                  level
                  employees, and increased legal fees in conjunction with our continued
                  business
                  expansion.
 24
 **Change***(Dollars in thousands)*
                                
                                **2007**
                                
                                **2006**
                                
                                $
                                
                                %***Other
                                      income***
                                
                                $
                                1,383
                                
                                $
                                246
                                
                                $
                                1,137
                                
                                
                                462
                                %
 
 Other
                  income includes interest income, dividend income, realized gains
                  on investments,
                  and rental income from subleased office space in New York. For
                  the three months
                  ended September 30, 2007, other income increased to $1.4 million,
                  an increase of
                  $1.1 million from the three months ended September 30, 2006. The
                  primary reason
                  for this increase was the result of realized gains from the sale
                  of ARTG shares
                  received in the eStara transaction, which contributed approximately
                  $0.9
                  million, while interest income on higher cash balances generated
                  the remaining
                  $0.2 million increase. We expect other income to be higher during
                  next quarter,
                  when compared with the quarter ended September 30, 2007, as the
                  Company
                  continues to sell ARTG shares at higher market price levels.
  **Change***(Dollars in thousands)*
                                
                                **2007**
                                
                                **2006**
                                
                                $
                                
                                %***Provision
                                    for (benefit from)
                                    income taxes***
                                
                                $
                                (406
                                )
                                $
                                —
                                
                                $
                                (406
                                )
                                
                                N/A
 For
                  the
                  three months ended September 30, 2007 the Company used an estimated
                  annual
                  effective income tax rate based upon facts and circumstances known
                  at the end of
                  the interim period. On a quarterly basis, the actual effective
                  tax rate is
                  adjusted, as appropriate, based upon changed facts and circumstances,
                  if any, as
                  compared to those forecasted at the beginning of the fiscal year
                  and each
                  interim period thereafter . In
                  addition, the Company released a valuation allowance of approximately
                  $1.1
                  million against a previously impaired investment. The effect of
                  this valuation
                  allowance release, together with the use of a projected annual
                  effective tax
                  rate, resulted in a benefit from income taxes of approximately
                  $0.4 million for
                  the three months ending September 30, 2007.
  **Liquidity
                  and Capital Resources**
 
 A
                  summary
                  of cash flow data, together with short-term investments for the
                  three months
                  ended September 30, 2007 and 2006, respectively, is as follows *(in
                  thousands):*
  **September 30,****2007**
                        
                        **2006**Cash flows provided by (used in):Operating activities
                        
                        $
                        3,202
                        
                        $
                        (471
                        )Investing activities
                        
                        
                        23,074
                        
                        
                        (635
                        )Financing activities
                        
                        
                        353
                        
                        
                        (15
                        )Net increase (decrease) in cash and cash equivalents
                        
                        
                        26,629
                        
                        
                        (1,121
                        )Cash and cash equivalents at beginning of year
                        
                        
                        3,097
                        
                        
                        2,234Cash and cash equivalents at end of the period
                        
                        
                        29,726
                        
                        
                        1,113Short-term investments
                        
                        
                        -
                        
                        
                        6,000Cash, cash equivalents and short-term investments at end of period
                        
                        $
                        29,726
                        
                        $
                        7,113
 25
  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 Condensed Consolidated Balance Sheet. All auction rate
            securities
            are bought and sold at par value.
 
 During
            the three months ended September 30, 2007, in response to increasing
            credit
            quality concerns present in the fixed income securities market such as
            increasing mortgage defaults and delinquencies, tighter lending conditions,
            and
            severely constricted liquidity in the asset-backed commercial paper market,
            the
            Company liquidated all of its short-term investments. The $21.9 million
            of
            proceeds from these liquidations were invested solely in cash and cash
            equivalents on the Condensed Consolidated Balance Sheet as of September
            30,
            2007.
  Sources
            of funds for the Company's operations are derived from investment advisory
            and
            investment management fees, interest on the Company's cash, cash equivalents,
            and short-term investments, and sublease income. As of September 30,
            2007, the
            Company had $29.7 million of cash and cash equivalents and $5.8 million
            of
            accounts receivable to fund its business growth strategy.
  At
            September 30, 2007, accounts payable and accrued liabilities, which consist
            of
            accrued professional fees, trade payables and other liabilities, were
            $0.8
            million. Accrued compensation and benefits, which consist primarily of
            accrued
            employee bonuses and sales commissions, were $3.8 million. There was
            no debt and
            management does not foresee any reason to incur debt unless a significant
            business opportunity warrants such action.
 
 The
            Company's business does not require it to maintain significant capital
            balances.
            The Company's current financial condition is highly liquid, with cash
            and cash
            equivalents comprising approximately 67% of its total assets at September
            30,
            2007.
 
 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 and cash equivalents are adequate
            to
            provide the necessary resources to meets its operating needs for the
            foreseeable
            future as well as to implement its growth objectives.
 
 **Preferred
            Stock Dividends**
 
 As
            a
            result of the November 7, 2006 preferred stock issuance, the Company
            began
            paying semi-annual dividends on newly issued Series A Convertible Preferred
            Stock on December 31 and June 30 of each year. The semi-annual dividend
            payments
            are approximately $230 thousand, each June and December.
 
 **Common
            Stock Dividends**
 
 On
            October 9, 2007, the Company’s Board of Directors declared a quarterly cash
            dividend on the Company's Common Stock of $0.025 per share payable on
            November
            15, 2007 to stockholders of record at the close of business on October
            31, 2007.
            The total dividend to be paid is approximately $500 thousand.
 
 The
            Company expects quarterly dividends going forward to be paid in February,
            May,
            August and November of each fiscal year, and anticipates a total annual
            dividend
            of $0.10 per common share. However, the actual declaration of future
            cash
            dividends, and the establishment of record and payment dates, will be
            subject to
            final determination by the Board of Directors each quarter after its
            review of
            the Company's financial performance.
 
 26
  **Working
            Capital**
 
 The
            Company's working capital and current ratio (current assets divided by
            current
            liabilities) for the three months ended September 30, 2007 and recent
            fiscal
            year ended June 30, 2007 is set forth in the table below ( *in
            thousands* ):
  **September 30,**
                    
                    **June 30,**
                    
                    **Increase**
                    
                    **Percent****2007**
                    
                    **2007**
                    
                    **(Decrease)**
                    
                    **Change**Current Assets
                    
                    $
                    40,467
                    
                    $
                    35,495
                    
                    $
                    4,972
                    
                    
                    14.0
                    %Current Liabilities
                    
                    
                    4,573
                    
                    
                    2,810
                    
                    
                    1,763
                    
                    
                    62.7
                    %Working Capital
                    
                    $
                    35,894
                    
                    $
                    32,685
                    
                    $
                    3,209
                    
                    
                    9.8
                    %Current Ratio
                    
                    
                    8.85
                    
                    
                    12.63
                    
                    
                    (3.78
                    )
                    
                    (29.9
                    %)




**Current
        Assets**
 
 Current
        assets increased $5.0 million at September 30, 2007 compared with June 30,
        2007
        primarily attributable to increases in cash and cash equivalents as a result
        of
        business expansion and the resultant revenue increases.
 
 **Current
        Liabilities**
 
 Current
        liabilities increased by $1.8 million at September 30, 2007 compared with
        June
        30, 2007 primarily as a result of the increase in accrued incentive compensation
        and benefits. In addition, bonuses for certain executives were paid at June
        30,
        2007.
 
 **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 entered into
        a
        sublease agreement for an additional 3,100 square feet at its Company
        headquarters effective February 1, 2007.
 
 The
        Company is also the primary party to another lease in New York, New York
        which
        expires in December 2010. This property is subleased to an unrelated third
        party. While the Company remains responsible for obligations under the lease,
        the sublease income, net of profit sharing with the landlord, more than offsets
        the Company's obligations under this lease. The subtenant has performed its
        obligations under the sublease agreement and the Company is not aware of
        any
        credit issues with the subtenant. As of September 30, 2007, the remaining
        future
        minimum payments under this lease total $1.5 million. Future minimum receipts
        from the subtenant, net of profit sharing with the landlord, total $1.7 million
        as of September 30, 2007.
 
 The
        Company also has an office lease in Sherman Oaks, California with an annual
        option to renew. The obligations under this lease are minimal.
 
 27
  There
        are
        no employment contracts with any officers or employees of the Company. The
        Company was obligated to enter into an employment agreement with its Chief
        Executive Officer prior to June 2, 2007. The Company and its Chief Executive
        Officer are in the process of evaluating the terms of such an agreement and
        expect to complete a mutually acceptable arrangement in the near future.
        Terms
        of the contract are to be customary for Chief Executive Officers of peer
        group
        companies and will be reviewed and approved by the Company's Compensation
        Committee and the full Board of Directors.
 
 **Summary
        of Contractual Obligations**
 
 The
        following table summarizes all contractual obligations, including the
        aforementioned office leases ( *in
        thousands* ):




**Remaining**
              
              **Payments Due In****Payments**
              
              
              
              **Fiscal Years Ended June 30,****in
                  Fiscal****Year
                  Ended**
              
              
              
              **2009 -**
              
              **2011 -**
              
              **2013 and****June
                  30, 2008**
              
              
              
              **2010**
              
              **2012**
              
              **thereafter**
              
              **Total**Primary New York operations
              
              $
              732
              
              
              
              $
              1,952
              
              $
              1,421
              
              $
              2,330
              
              $
              6,435Subleased New York lease
              
              
              361
              
              
              
              
              961
              
              
              200
              
              
              -
              
              
              1,522Other office locations
              
              
              22
              
              
              
              
              5
              
              
              -
              
              
              -
              
              
              27Other operating leases
              
              
              29
              
              
              
              
              74
              
              
              -
              
              
              -
              
              
              103Total obligations
              
              
              1,144
              
              
              
              
              2,992
              
              
              1,621
              
              
              2,330
              
              
              8,087Sublease income
              
              
              (431
              )
              
              
              
              (1,148
              )
              
              (95
              )
              
              -
              
              
              (1,674
              )Net obligations
              
              $
              713
              
              
              
              $
              1,844
              
              $
              1,526
              
              $
              2,330
              
              $
              6,413




**Off-Balance
        Sheet Arrangements**
 
 As
        of
        September 30, 2007 the Company had no off-balance sheet
        arrangements.
  **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, by J
        Net’s
        management, impaired 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 down 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.
 
 28
  The
        Company, as a 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. Additionally, the Company was entitled to its
        approximately 5% proportionate share of remaining merger consideration.
        Accordingly, the Company received 2,431,577 common shares of ARTG and $267
        thousand in cash. An
        additional $36 thousand of cash is currently being held in escrow and is
        expected to 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 resultant shares held by the
        Company are currently classified as Marketable Securities on the Condensed
        Consolidated Balance Sheets in accordance with SFAS No. 115, *Accounting
        for Certain Investments in Debt and Equity Securities*.The common shares received from ARTG have been subject to a lock-up
        agreement pursuant to which the shares are being released to the Company
        in
        equal monthly installments over a period of 12 months, which commenced
        January 2007.
 
 The
        Company sold approximately 1.0 million shares of ARTG during the second half
        of
        the fiscal year ended June 30, 2007 and continues to sell shares. During
        the
        quarter ended September 30, 2007, the Company sold approximately 0.4 million
        shares of ARTG and recorded realized gains of approximately $0.9 million.
        These
        gains were reclassified, in accordance with the provisions of SFAS No. 115,
        “ *Accounting
        for Certain Investments in Debt and Equity Securities,* ”
from
        Accumulated Other Comprehensive Income, a separate component of stockholders’
equity, to Realized gains on investments on the Condensed Consolidated Statement
        of Operations. As of September 30, 2007, the Company had approximately 1.0
        million shares of ARTG with a market value of approximately $3.0 million,
        the
        value of which is shown as marketable securities on the Condensed Consolidated
        Balance Sheet.
 
 ***Strategic
        Data Corporation transaction***
 During
        the fiscal year ended June 30, 2000, J Net, the predecessor company to Epoch,
        made a $1.1 million investment in Strategic Data Corp. ("SDC"), a
        technology-related company that specializes in advertising optimization
        technology. This investment was comprised of 892,500 shares of Series B and
        1,966,963 shares of Series C, convertible preferred stock. As there was no
        readily available market for the securities and the investment represented
        less
        than a 20% interest in SDC, the securities were valued at the Company’s initial
        cost. During the fiscal year ended June 30, 2001, the carrying value of this
        investment was deemed to be impaired by J Net’s management and written down to
        zero. Accordingly, this investment had no carrying value at February 20,
        2007.
        Additionally, no dividends had been paid through February 20, 2007.
 
 On
        February 20, 2007, SDC’s stockholders approved the acquisition of its stock by
        Fox Interactive Media, Inc. (“FIM”). Under the terms of the agreement, FIM
        acquired all of the outstanding common stock, preferred stock, and vested
        and
        unvested stock options of SDC.
 
 As
        a
        result of the above-mentioned merger, the Company, as holder of the preferred
        stock of SDC, received an initial cash payment of approximately $2.2 million
        on
        March 22, 2007.
 
 The
        SDC
        merger also calls for contingent payments, dependent upon the achievement
        of
        certain targets and milestones, payable over a period of approximately 3.5
        years, as well as release of an escrow fund. The Company’s share of additional
        contingent payments and escrow funds stemming from the acquisition ranges
        from
        zero to approximately $15.4 million. No amounts related to the contingent
        payments or escrow fund have been accrued as of September 30, 2007, as such
        amounts are not readily estimable or determinable at this time.
 
 29
  **New
        Accounting Pronouncements**
 
 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
        adopted FIN 48 at the beginning of its fiscal year commencing July 1, 2007.
        The
        adoption of FIN 48 did not have a material effect on the Company's consolidated
        financial position, results of operations, or cash flows.
 
 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 does not expect the adoption of this statement to
        have a
        material impact on its consolidated financial position, results of operations,
        or cash flows.
  In
        February 2007, the FASB issued SFAS No. 159, *The
        Fair Value Option for Financial Assets and Financial
        Liabilities* (“SFAS
        159”). SFAS 159 permits certain financial assets and financial liabilities to
        be
        measured at fair value, using an instrument-by-instrument election. The initial
        effect of adopting SFAS 159 must be accounted for as a cumulative effect
        adjustment to opening retained earnings for the fiscal year of adoption.
        Retrospective application to fiscal years preceding the effective date is
        not
        permitted. SFAS 159 is effective for the Company beginning July 1, 2008,
        although early adoption is permitted. The Company does not expect the adoption
        of this statement to have a material impact on its consolidated financial
        position, results of operations, or cash flows.
 
 On
        June
        27, 2007, the Financial Accounting Standards Board (“FASB”) ratified the
        consensus reached by the Emerging Issues Task Force (“EITF”) in EITF Issue No.
        06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment
        Awards” (“EITF 06-11”). EITF 06-11 requires that the realized income tax benefit
        from dividends paid on nonvested equity-classified employee share-based payment
        awards that are charged to retained earnings be recorded as an increase to
        additional paid-in capital, rather than a reduction to tax expense. The amount
        recognized in additional paid-in capital for the realized income tax benefit
        from dividends on those awards should be included in the pool of excess tax
        benefits available to absorb tax deficiencies on share-based payment awards.
        EITF 06-11 applies prospectively to the income tax benefits on dividends
        declared by the Company, beginning on July 1, 2008. There were no dividends
        declared or paid on unvested common shares prior to the ratification of EITF
        06-11. The Company has declared a dividend to be paid in November 2007. The
        Company will account for the tax benefits on all dividends declared on unvested
        common shares as an increase to additional paid-in capital for all periods
        during our fiscal year ended June 30, 2008. The Company does not expect the
        adoption of this pronouncement to have a material impact on its consolidated
        financial position, results of operations, or cash flows.
 
 30
  **Item
                  3.****Quantitative
                  and Qualitative Disclosures About Market Risk.**
  ***Marketable
        securities***
 
 The
        Company is exposed to fluctuations in the market price of its marketable
        securities presented on its Condensed Consolidated Balance Sheets. These
        securities were acquired in connection with the eStara transaction. The total
        fair value of these securities as of September 30, 2007 was $3.0 million.
        The
        Company does not hedge its market risk related to these securities and does
        not
        intend to do so in the future.
 
 At
        September 30, 2007, the Company performed sensitivity analysis to assess
        the
        potential loss in the fair value of these market-risk sensitive securities.
        The
        following table represents the impact on the Company’s financial position
        assuming a hypothetical 10% decline in the S&P 500 Index ( *dollars
        in thousands* ):
  **Estimated Fair****Value After****Hypothetical**
                
                **Hypothetical**
                
                **Decrease in****Fair Value at**
                
                **Percentage**
                
                **Percentage**
                
                **Stockholders'****September 30, 2007**
                
                **Change**
                
                **Change**
                
                **Equity (****1****)**Marketable securities
                
                $
                3,032
                
                
                10
                %
                $
                2,668
                
                $
                364




*1)*
              *-
                  Unrealized losses on available-for-sale securities are excluded
                  from
                  earnings and recorded in other comprehensive income as a separate
                  component of stockholders’ equity until
                  realized.*




***Cash
        and cash equivalents***
 
 Cash
        and
        cash equivalents are exposed to market risk due to changes in interest rates,
        which impacts interest income. We do not expect our interest income to be
        significantly affected by a sudden change in market interest rates. Presently,
        the Company neither participates in hedging activities nor does it have any
        derivative financial instruments.
 
 **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 the design
        and operation 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 Form10-Q. Based on such evaluation, the Company's principal executive
        officer and principal financial officer have concluded that, as of the end
        of
        the period covered by this report, the Company's disclosure controls and
        procedures are effective 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 required time periods and are
        designed to ensure that information required to be disclosed in our reports
        is
        accumulated and communicated to our management, including our principal
        executive officer and principal financial officer, as appropriate to allow
        timely decisions regarding required disclosure.
 
 ***Changes
        in Internal Control Over Financial Reporting*** .
 
 There
        has
        been no change in our internal control over financial reporting (as defined
        in
        Rules 13a-5(f) and 15d-15(f) under the Exchange Act) during the period covered
        by this Quarterly Report on Form 10-Q that has materially affected, or that
        is
        reasonably likely to materially affect, our internal control over financial
        reporting.
 
 31
 **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.**
 
 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, 2007.
 
 **Item
        5. Other Information.**
 
 The
        Company’s Annual Meeting of Stockholders will be held on Thursday, November 29,
        2007 at 9 a.m at The Cornell Club of New York City, 6 East 44th Street, New
        York, New York 10017.
  **Item
        6.****Exhibits.**
  (a)
        Exhibits:
 
 Exhibit
                  No.
              Description31.1
              
              Chief
                  Executive Officer Certification (A)31.2
              
              Principal
                  Financial Officer Certification (A)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 (A)99.1
              
              Press
                release announcing AUM as of September 30, 2007 (B)99.2
              
              Press
                  release announcing declaration of common stock dividend (C)(A)-
                Included herein.(B)
                -
                Incorporated by reference to Registrant’s Form 8-K dated October 3, 2007.(C) -
                Incorporated by reference to Registrant’s Form 8-K dated October 9,
                2007.
  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
                  BorakChief
                  Financial OfficerDate:
                  November 8, 2007
 
 32