**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**






**FORM
      10-K**


**(Mark
      One)**


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


**For
        the fiscal year ended June 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**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            
            **20-1938886**
              (I.R.S.
                employer
              identification
                no.)**640
                Fifth Avenue, New York, NY, 10019**
              (Address
                of principal executive offices)**,**(Zip code)**(212)
                303 -7200**
              (Registrant’s
                telephone number, including area
                code)





**Securities
      registered pursuant to Section 12(b) of the Act:**




**Title of each
                class**
            
            **Name
                of each exchange on**
              **which
                registered**Common
                stock, $0.01 per share par value
            
            NASDAQ
                Capital Market




**Securities
      registered pursuant to Section 12(g) of the Act:
      None.**




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.  Yes **o** No x




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the
      Act.    Yes o No x




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 x No ࿠




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§229.405 of this chapter) is not contained herein, and will
      not be contained, to the best of registrant's knowledge, in definitive proxy
      or
      information statements incorporated by reference in Part III of this
      Form 10-K or any amendment to this Form 10-K.  x




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.




Large
                accelerated filer o
            
            Accelerated
                filer x
            
            Non-accelerated
                filer o




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




As
      of
      December 29, 2006, the last trading day of the registrant's most recently
      completed second fiscal quarter, the aggregate market value of common stock
      held
      by nonaffiliates of the registrant was approximately $85.3 million, computed
      by
      reference to the closing price of $9.94 on the NASDAQ Capital Market on December
      29, 2006.




As
      of
      September 6, 2007, there were 20,122,645 shares of the registrant's common
      stock, $.01 par value per share, issued and outstanding.




**DOCUMENTS
      INCORPORATED BY REFERENCE**




Portions
      of the following documents are incorporated herein by reference into the
      Form 10-K as indicated:




**Document**
            
            **Part
                of Form 10-K into**
              ******which
                incorporated**Company's
                Definitive Proxy Statement for the 2007 Annual Meeting of
                Shareholders
            
            Part III












**EPOCH
      HOLDING CORPORATION AND SUBSIDIARIES**





**Annual
      Report on Form 10-K**


**For
      the Fiscal Year Ended June 30, 2007**





**TABLE
      OF CONTENTS**




**Form
                10-K Item Number:**
            
            **Page**
              **Number****PART
                I**Item
                1.
            Business
            
            1Item
                1A.
            Risk
                Factors
            
            9Item
                1B.
            Unresolved
                Staff Comments
            
            15Item
                2.
            Properties
            
            16Item
                3.
            Legal
                Proceedings
            
            16Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            
            16**PART
                II**Item
                5.
            Market
                for Registrant's Common Equity, Related Stockholder Matters andIssuer
                Purchases of Equity Securities
            
            17Item
                6.
            Selected
                Financial Data
            
            21Item
                7.
            Management's
                Discussion and Analysis of Financial Condition and Resultsof
                Operations
            
            23Item
                7A.
            Quantitative
                and Qualitative Disclosures About Market
                Risk
            
            41Item
                8.
            Financial
                Statements and Supplementary
                Data
            
            42Item
                9.
            Changes
                in and Disagreements With Accountants on Accounting andFinancial
                Disclosure
            
            43Item
                9A.
            Controls
                and Procedures
            
            43Item
                9B.
            Other
                Information
            
            43**PART
                III**Item
                10.
            Directors,
                Executive Officers and Corporate
                Governance
            
            44Item
                11.
            Executive
                Compensation
            
            44Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management andRelated
                Stockholder Matters
            
            44Item
                13.
            Certain
                Relationships and Related Transactions and
                Director Independence
            
            44Item
                14.
            Principal
                Accountant Fees and
                Services
            
            44**PART
                IV**Item
                15.
            Exhibits
                and Financial Statement
                Schedules
            
            45Signatures
            
            47









**PART
      I**




**ITEM
                1.**
            
            **BUSINESS**




**Forward-Looking
      Statements**





*Certain
      information included, or incorporated by reference in this Annual Report on
      Form
      10-K 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 Item 1A.”Risk Factors."*





*These
      risks and uncertainties are not exhaustive. Other sections of this Annual Report
      on Form 10-K 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 Annual
      Report on Form 10-K, 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,*
 *•*
              *competition,
                  and*
 *•*
              *effect
                  from the impact of future legislation and regulation on the
                  Company.*




1




*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.




*Overview*





Epoch
      is
      a holding company headquartered in New York, NY 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”).





The
      Company uses a fiscal year which ends on June 30th. References to “FY 2007,” “FY
      2006,” and “FY 2005” in this document refer to the fiscal years ended June 30,
      2007, June 30, 2006, and June 30, 2005, respectively. This Annual Report on
      Form
      10-K may also include “forward-looking statements” which refer to fiscal years
      subsequent to the historical financial positions and results of operations
      contained herein. References to future fiscal years also apply to the June
      30
      year end.





*Company
      Structure and Discontinued Operations*




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





Prior
      to
      the June 2, 2004 business combination, J Net conducted operations in the
      internet-based e-commerce industry. Immediately following the consummation
      of
      the transaction with EIP, management initiated a formal plan to dispose of
      the
      internet-based business and shift its business focus and capital resources
      to
      the operations of EIP. In September 2004, the internet-based operations were
      sold to the management of that business segment. The results of operations
      for
      that business segment have been reported as discontinued
      operations.





EIP
      became the sole operating business segment in June 2004 immediately following
      the aforementioned business combination. Initially, one sub-advisory contract
      with assets under management (“AUM”) of $647 million was transferred to EIP by a
      former client of Mr. William W. Priest, the Chief Executive Officer of the
      Company. The FY 2007, FY 2006 and FY 2005 consolidated results reflect the
      first
      three full years of operations for the Company.




2




*Recent
      Events and FY 2007 Highlights*





The
      following highlights mark notable accomplishments or events of the Company
      during its third full year of operations:




1.
            AUM
                increased to $6.0 billion at June 30, 2007, an increase of approximately
                85% from $3.25 billion at June 30, 2006. The majority of growth is
                attributable to institutional and sub-advisory
                clients.





2.
            Revenues
                increased to $23.9 million for the year ended June 30, 2007, an increase
                of 134% from $10.2 million for the prior fiscal year.





3.
            The
                Company’s operating loss decreased to $2.5 million for the year ended June
                30, 2007, an improvement of 64% from an operating loss of $7.1 million
                for
                the year ended June 30, 2006.





4.
            The
                Company had net income of $7.9 million, which included $6.6 million
                of
                dividends and realized gains from the disposition, during the year,
                of
                certain of its privately held investments. Additional realized gains
                from
                the sale of marketable securities received in conjunction with one
                of the
                above dispositions contributed an additional $1.5
                million.





5.
            The
                Company issued $10 million of Series A Convertible Preferred Stock
                in a
                private placementtransaction.





6.
              The
                  Company’s net worth increased by approximately 300%, primarily as a result
                  of the items above.


*Operations
      and Products*





EIP,
      the
      sole operating segment of the Company, is a registered investment adviser under
      the Investment Advisers Act. EIP
      provides investment advisory and investment management services for
      retirement plans, mutual funds, endowments, foundations and high net worth
      individuals. As of June 30, 2007, EIP offered the following separate investment
      products to its clients:




1.
            *U.S.
                All Cap Value*-
                This product is comprised of a broad range of U.S. companies with
                market
                capitalizations that resemble stocks in the “Russell 3000,” a U.S. Equity
                index which measures the performance of the 3,000 largest U.S. companies
                based upon total market
                capitalization.


2.
              *U.S.
                  Value*-
                  This product reflects a selection of equities in U.S. companies
                  with
                  market capitalizations generally considered to be comparable to
                  the
                  “Russell 1000,” a U.S. Equity index which measures the performance of the
                  1,000 largest companies in the Russell 3000
                  index.
 
 3.
              *U.S.
                  Smid (small/mid) Cap**Value*-
                  This product comprises U.S. companies with capitalizations
                  generally**considered
                  to be comparable to the “Russell 2500,” a U.S. Equity index which measures
                  the performance of the 2,500 smallest companies in the Russell
                  3000
                  index.
 
 4.
              *U.S.
                  Small Cap Value*-
                  This product comprises U.S. companies with capitalizations generally
                  considered to be comparable to the “Russell 2000,” a U.S. Equity index
                  which measures the performance of the 2,000 smallest companies
                  in the
                  Russell 3000 index.
 
 5.
              *Global
                  Small Cap*-
                  This product seeks to capitalize upon the continuing globalization
                  of the
                  world economy by investing in small cap companies in the U.S. and
                  throughout the world. The benchmark for this product is the
                  S&P/Citigroup EMI World index.


3
 
 6.
                  *Global
                      Absolute Return*-
                      While this product uses the same security selection process
                      of other
                      products**offered
                      by EIP, its holdings are generally limited to fewer than 30
                      positions.
                      Individual positions can be as high as 15% and cash is used
                      to control
                      loss exposure. The objective of this product is absolute positive
                      return.
                      The benchmark for this product is the MSCI World
                      index.
 
 7.
                  *International
                      Small Cap*-
                      This product draws almost all of its holdings from companies
                      outside the
                      U.S., with “small cap” defined as companies with market capitalization in
                      the bottom 25% of the publicly traded companies in each country
                      where the
                      strategy is applied. Index comparisons for this product include
                      the
                      S&P/Citigroup Extended Market Index (“EMI”) and the Europe Pacific
                      Asia Composite (“EPAC”), commonly referred to as the “EMI EPAC
                      Index”.
 
 8.
                  *Balanced
                      Portfolios*-
                      This product is available primarily to our high net worth investors.
                      The
                      mix of debt and equity securities is tailored to reflect (i)
                      the client's
                      tolerance for risk and (ii) the client's marginal tax rate
                      or other
                      preferences. As a result, the mix can vary among individual
                      clients. The
                      equity components of these portfolios typically reflect EIP's
                      All-Cap
                      equity structure and generally contain 40-60 positions, almost
                      all of
                      which are held in other EIP products. The debt component of
                      the portfolio
                      is largely comprised of high quality
                      bonds.
 
 9.
                  *Global
                      Equity Shareholder Yield*-
                      This product seeks to invest in a diversified portfolio of
                      global equity
                      securities with a history of attractive dividend yields and
                      positive
                      growth in free cash flow. The primary objective of this product
                      is to seek
                      a high level of income, with capital appreciation as a secondary
                      investment objective. The benchmark for this product is the
                      S&P/Citigroup BMI World index.


The
      following chart shows the Company's investment products as a percentage of
      AUM
      at June 30, 2007:







4




The
      following table shows each product’s composite returns, before management fees,
      for the 6 months, 1 and 3 years ended June 30, 2007 as measured against their
      applicable benchmarks:




**Returns*****Product
                  (1)**
              
              **6
                  months**
              
              **1
                  year**
              
              **3
                  years**U.S.
                  All Cap Value
              
              
              8.8
              %
              
              21.5
              %
              
              15.9
              %*Russell
                  3000*
              
              
              7.1
              %
              
              20.1
              %
              
              12.4
              %U.S.
                  Value
              
              
              9.8
              %
              
              24.4
              %
              
              17.2
              %*Russell
                  1000*
              
              
              7.2
              %
              
              20.4
              %
              
              12.3
              %U.S.
                  Small Cap Value
              
              
              12.0
              %
              
              23.5
              %
              
              15.0
              %*Russell
                  2000*
              
              
              6.5
              %
              
              16.4
              %
              
              13.5
              %Global
                  Small Cap
              
              
              12.9
              %
              
              29.4
              %
              
              21.4
              %*S&P/Citigroup
                  EMI World Index*
              
              
              11.9
              %
              
              26.2
              %
              
              21.7
              %Global
                  Absolute Return
              
              
              11.7
              %
              
              25.5
              %
              
              20.0
              %*MSCI
                  World*
              
              
              9.5
              %
              
              24.2
              %
              
              17.3
              %International
                  Small Cap
              
              
              14.1
              %
              
              36.7
              %
              
              N/A*S&P/Citigroup
                  EMI EPAC Index*
              
              
              12.4
              %
              
              32.0
              %
              
              N/AGlobal
                  Equity Shareholder Yield
              
              
              8.5
              %
              
              28.8
              %
              
              N/A*S&P/Citigroup
                  BMI World Index*
              
              
              9.9
              %
              
              24.4
              %
              
              N/A





*
        - index
        returns assume dividend reinvestment


*(1)
      -
      Past performance is not indicative of future results*





EIP
      earns
      its revenues from managing client accounts under investment advisory and
      sub-advisory agreements. Such agreements provide for fees to EIP based on AUM.
      Generally, fees are computed quarterly and payable in arrears. Certain contracts
      contain provisions for the monthly payment of fees, or payment of quarterly
      fees in advance. The Company sponsors three mutual funds, the Epoch
      International Small Cap Fund (“EPIEX”), the Epoch Global Equity Shareholder
      Yield Fund (“EPSYX”), and the Epoch U.S. All-Cap Equity Fund (“EPACX”), for
      which fees are calculated based upon daily net assets and paid
      monthly.





5




The
      following table shows each of the Company-sponsored mutual funds performance
      for
      the 6 months and 1 year ended June 30, 2007 and return since fund inception
      as
      measured against their applicable benchmarks:




**Ticker**
              
              **Returns*****Mutual
                  Fund (1)**
              
              **Symbol**
              
              **6
                  months**
              
              **1
                  year**
              
              **Inception**Epoch
                  International Small Cap Fund
              
              
              EPIEX
              
              
              13.1
              %
              
              34.4
              %
              
              30.4
              %*S&P/Citigroup
                  EMI EPAC Index*
              
              
              
              
              
              12.4
              %
              
              32.0
              %
              
              27.4
              %Epoch
                  Global Equity Shareholder Yield Fund
              
              
              EPSYX
              
              
              7.6
              %
              
              27.0
              %
              
              21.8
              %*S&P/Citigroup
                  BMI World Index*
              
              
              
              
              
              9.9
              %
              
              24.4
              %
              
              20.3
              %Epoch
                  U.S. All Cap Equity Fund
              
              
              EPACX
              
              
              7.8
              %
              
              20.7
              %
              
              10.9
              %*Russell
                  3000*
              
              
              
              
              
              7.1
              %
              
              20.1
              %
              
              13.3
              %


*
        - index
        returns assume dividend reinvestment


*(1)
      -
      Past performance is not indicative of future results*




*Growth
      Strategy*





As
      the
      Company enters its fourth full year of operations, its growth strategy will
      continue to be focused on the development of distribution channels to offer
      its
      various products to a broad array of clients. These efforts have included,
      and
      will continue to include, developing relationships with investment advisory
      consultants, initiating managed accounts with third party institutions, and
      maintaining strong sub-advisory relationships.





6




The
      amount of AUM, by fiscal quarter, for the past three fiscal years is set forth
      in the graph below.











The
      following table provides information regarding the composition of our assets
      under management by distribution channel for the last three fiscal
      years:




**Assets
      Under Management By Distribution
      Channel**


***(Dollars
      in
      Millions)***




**As
                  of June 30,****2007**
              
              
              **2006**
              
              
              **2005****Distribution
                  Channel:**
              
              
              Amount
              
              
              %
                  of total
              
              
              
              Amount
              
              
              %
                  of total
              
              
              
              Amount
              
              
              %
                  of totalSub-advisory
              
              $
              2,876
              
              
              47.9
              %
              
              $
              1,715
              
              
              52.7
              %
              
              $
              922
              
              
              65.8
              %Institutional
              
              
              2,765
              
              
              46.1
              %
              
              
              1,245
              
              
              38.3
              %
              
              
              233
              
              
              16.6
              %High
                  net worth
              
              
              360
              
              
              6.0
              %
              
              
              293
              
              
              9.0
              %
              
              
              247
              
              
              17.6
              %Total
                  AUM
              
              $
              6,001
              
              
              100.0
              %
              
              $
              3,253
              
              
              100.0
              %
              
              $
              1,402
              
              
              100.0
              %




7


The
        Company routinely evaluates its strategic position and maintains a disciplined
        acquisition and alliance effort which seeks complementary products or new
        products which could benefit clients. While the Company continues to actively
        seek such opportunities, there can be no assurance that acquisitions will
        be
        identified and consummated on terms that are favorable to the Company, its
        business and its stockholders. Management believes that opportunities are
        available, but will only act on opportunities that it believes are accretive
        to
        the Company's long-term business strategy.





Paramount
      to the continued success of the business and the growth in existing products
      and
      retention of clients will be the Company's ability to attract and retain key
      employees. The Company believes it offers competitive compensation to its
      employees, including share-based compensation, which the Company believes
      promotes a common objective with shareholders.





*Competition*





The
      investment advisory and investment management business is highly competitive.
      The Company continuously encounters competitors in the marketplace which offer
      similar products and services. Many of the Company’s competitors have
      well-established national reputations and greater financial resources and market
      share than the Company. The Company competes primarily on the basis of
      investment philosophy, performance, product features, range of products, and
      client service. While the Company believes it will be successful in obtaining
      and retaining new clients, it may be necessary to expend additional resources
      to
      compete effectively.





*Significant
      Customers*





For
      the
      fiscal year ended June 30, 2007, two customers accounted for 41% of the
      Company’s consolidated revenues. CI Investments Inc. (“CI”), a leading
      Canadian-owned investment management company for whom EIP acts as a
      sub-advisor, accounted for approximately 17%. Genworth Financial Asset
      Management, Inc. (“Genworth”),  a prominent 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 24%. For the quarter ended June 30, 2007,
      CI and Genworth accounted for 18% and 29% of consolidated revenues,
      respectively. 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.





*Regulation*





The
      Company's business, as well as the financial services industry, is subject
      to
      extensive regulation throughout the world. As a matter of public policy,
      regulatory bodies are charged with safeguarding the integrity of the securities
      and other financial markets and with protecting the interests of customers
      participating in those markets. In the U.S., the SEC is the federal agency
      responsible for the administration of the federal securities laws. The stock
      exchanges, the National Association of Securities Dealers (“NASD”) and the
      National Futures Association are voluntary, self-regulatory bodies composed
      of
      members that have agreed to abide by the respective bodies' rules and
      regulations. Each of these U.S. regulatory organizations may examine the
      activities of, and may expel, fine and otherwise discipline, member firms and
      their employees. The laws, rules and regulations comprising this framework
      of
      regulation and the interpretation and enforcement of existing laws, rules and
      regulations are constantly changing. The effect of any such change cannot be
      predicted and may impact the manner of operation and profitability of the
      Company.





Effective
      October 4, 2005, the Company's common stock began trading on the NASDAQ Capital
      Market under the trading symbol “EPHC.” Prior to that date, the Company's stock
      was quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under the same
      trading symbol.





EIP, the
      Company's sole operating subsidiary, is registered as an investment adviser
      with
      the SEC. As a registered investment adviser, EIP is subject to the requirements
      of the Investment Advisers Act and the SEC's regulations thereunder.
      Requirements relate to, among other things, principal transactions between
      an
      adviser and advisory clients, as well as general anti-fraud prohibitions. The
      Company is subject to the filing and reporting obligations of the Securities
      Act
      of 1933, as amended (the “Securities Act”) and the Exchange Act. Regulators are
      empowered to conduct administrative proceedings that can result in censure,
      fine, the issuance of cease-and-desist orders or the suspension or expulsion
      of
      an investment adviser or its directors, officers or employees.





8




The previous
      descriptions of the regulatory and statutory provisions applicable to the
      Company and EIP are not complete and are qualified in its entirety by reference
      to the particular statutory or regulatory provision. Any change in applicable
      laws or regulations may have a material effect on the Company's business,
      prospects and opinions.





*Employees*




As
      of
      June 30, 2007, the Company employed 43 full-time employees, including 17
      investment management, research and trading professionals, 11 marketing and
      client service professionals and 15 operations and business management
      professionals. None of our employees are subject to any collective bargaining
      agreements.


**ITEM
                  1A.**
              
              **RISK
                  FACTORS**




In
      addition to factors mentioned elsewhere in this Form 10-K or previously
      disclosed in our SEC filings, the factors discussed below, among others, could
      cause actual results to differ materially from those contemplated by the
      forward-looking statements, and future results could differ materially from
      historical performance. Epoch undertakes no obligation to revise the
      forward-looking statements contained in this Form 10-K to reflect events after
      the date of this Form 10-K.





**Risks
      Related to Our Business**





*The
      Company has limited operating history as an asset management business and,
      therefore, most of the historical financial information presented may not be
      indicative of our future performance.*





Business
      operations in the investment advisory and investment management line of business
      began on April 14, 2004, and revenues were not earned until June 2004. Prior
      to
      such date, the Company's business was focused on enterprise software and
      technology infrastructure. The enterprise software business was sold in
      September 2004 and the technology infrastructure investment activities were
      suspended. Investment advisory and investment management remains the sole line
      of business of the Company.





Although
      the Company is confident that the management and employees of EIP have
      experience, good reputations and good prospects in the asset management
      business, and the Company is permitted under applicable rules promulgated by
      the
      SEC to report such experience and reputations to prospective clients, the
      acquisition of clients and generation of revenue cannot be assured. The Company
      could lose clients and suffer a decline in the Company's investment advisory
      and
      management revenue if the investments the Company chooses in the Company's
      asset
      management business perform poorly, regardless of overall trends in the prices
      of securities.





*Investment
      performance affects the Company's AUM relating to existing clients and is one
      of
      the most important factors in retaining clients and competing for new asset
      management business. Poor investment performance could impair the Company's
      revenue and growth because:*




*•*
              existing
                  clients might withdraw funds from the Company's asset management
                  business
                  in favor of better performing products, which would result in lower
                  investment advisory fees;
 
 *•*
              third-party
                  financial intermediaries, advisers or consultants may rate the
                  Company's
                  products poorly, which may result in client withdrawals and reduced
                  asset
                  flows from these third parties or their clients;
                  or
 
 *•*
              firms
                  with which the Company has strategic alliances may terminate such
                  relationships with the Company, and future strategic alliances
                  may be
                  unavailable.




9




*Some
      members of management are critical to the Company's success, and the inability
      to attract and retain key employees could compromise the Company's future
      success.*





If
      key
      employees were to leave, whether to join a competitor or otherwise, the Company
      may suffer a decline in revenue or earnings and suffer an adverse effect on
      the
      Company's financial position. Loss of key employees may occur due to perceived
      opportunity for promotion, increased compensation, work environment or other
      individual reasons, some of which may be beyond the Company's
      control.





Future
      success will depend; to a significant extent; upon the services and efforts
      of
      the Company's executive officers, particularly William W. Priest, Chief
      Executive Officer and Chief Investment Officer, Timothy T. Taussig, President
      and Chief Operating Officer, and J. Philip Clark and David N. Pearl, Executive
      Vice Presidents. These executives are responsible for determining the strategic
      direction of our business, and are integral to our brand and our reputation.
      There are no employment agreements with any key employees. The loss of services
      of one or more these key employees, or failure to attract, retain and motivate
      qualified personnel could negatively impact the business, financial condition,
      results of operations and future prospects. As with other asset management
      businesses, future performance depends to a significant degree upon the
      continued contributions of certain officers, portfolio managers and other key
      marketing, client service and management personnel. There is substantial
      competition for these types of skilled personnel.





*Negative
      performance of the securities markets could reduce revenues.*





The
      Company's investment advisory and investment management business also would
      be
      expected to generate lower revenues in a market or general economic downturn.
      Under the Company's asset management business arrangements, investment advisory
      fees the Company receives typically are based on the market value of AUM.
      Accordingly, a decline in the prices of securities would be expected to cause
      the Company's revenue and income to decline by:


*•*
              causing
                  the value of the Company's AUM to decrease, which would result
                  in lower
                  investment advisory fees, and/or
 
 *•*
              causing
                  some of the Company's clients to withdraw funds from the Company's
                  asset
                  management business in favor of investments they perceive as offering
                  greater opportunity or lower risk, which also would result in lower
                  investment advisory fees.




*If
      the Company's revenue declines without a commensurate reduction in the Company's
      expenses, the Company's net income will be reduced.*





In
      particular, a considerable portion of AUM is expected to be invested in equity
      securities of companies with market capitalizations between $200 million and
      $10
      billion, often characterized as small or mid-sized companies. As a consequence,
      the Company is susceptible to the volatility associated with changes in the
      market for stocks that fall within this capitalization range.





*The
      Company's investment style in the asset management business may underperform
      other investment approaches, which may result in significant client or asset
      departures or a reduction in AUM.*





Even
      when
      securities prices are rising, performance can be affected by investment style.
      Many of the equity investment strategies in the Company's asset management
      business share a common investment orientation towards fundamental security
      selection. The Company believes this style tends to outperform the market in
      some market environments and underperform it in others. In particular, a
      prolonged “growth” environment (i.e., a prolonged period whereby growth stocks
      outperform value stocks) may cause the Company's investment strategy to go
      out
      of favor with some clients, consultants or third-party intermediaries. In
      combination with poor performance relative to peers, any changes in personnel,
      extensive periods in particular market environments, or other difficulties,
      may
      result in significant client or asset departures or a reduction in
      AUM.





10




*Because
      the Company's clients can remove the assets the Company manages on short notice,
      the Company may experience unexpected declines in revenue and
      profitability.*





The
      Company's investment advisory and sub-advisory contracts are generally
      cancellable upon very short notice. Institutional and individual clients, and
      firms with which the Company has strategic alliances, can terminate their
      relationship with the Company, reduce the aggregate amount of AUM or shift
      their
      funds to other types of accounts with different rate structures for a number
      of
      reasons - including investment performance, changes in prevailing interest
      rates
      and financial market performance. Poor performance relative to other investment
      management firms may result in decreased inflows into the Company's investment
      products, increased withdrawals from the Company's investment products, and
      the
      loss of institutional or individual accounts or strategic alliances. In
      addition, the ability to terminate relationships may allow clients to
      renegotiate for lower fees paid for asset management services.





In
      addition, in the U.S., as required by the Investment Advisers Act, each of
      the
      Company's investment advisory contracts with the mutual funds the Company
      advises or sub-advises automatically terminates upon its “assignment”, or
      transfer of the Company's responsibility for fund management. Each of the
      Company's other investment advisory contracts subject to the provisions of
      the
      Investment Advisers Act, as required by this act, provides that the contract
      may
      not be “assigned” without the consent of the customer. A sale of a sufficiently
      large block of shares of the Company's voting securities or other transactions
      could be deemed an “assignment” in certain circumstances. An assignment, actual
      or constructive, will trigger these termination provisions and could adversely
      affect the Company's ability to continue managing these client
      accounts.





To
      the
      extent that a technical “assignment” of investment advisory contracts arises,
      the Company will take the necessary steps to provide clients an opportunity
      to
      consent to the continuation of their advisory agreements. Such new agreements
      may need approval by the stockholders of the respective funds. In the event
      that
      any of these clients do not consent to a renewal of their agreement, the Company
      could lose AUM, which would result in a loss of revenue.





*There
      may not be a consistent pattern in the Company's financial results from period
      to period, which may make it difficult for the Company to achieve steady
      earnings growth on a quarterly basis and may cause the price of the Company's
      common stock and the Company's equity security units, to
      decline.*




The
      Company may experience significant fluctuations in revenue and profits. The
      Company's revenue is particularly sensitive to fluctuations in the Company's
      AUM. Asset management fees are often based on AUM as of the end of a quarter
      or
      month. As a result, a reduction in assets at the end of a quarter or month
      (as a
      result of market depreciation, withdrawals or otherwise) will result in a
      decrease in management fees. As a result of quarterly fluctuations, it may
      be
      difficult for the Company to achieve steady earnings growth on a quarterly
      basis, which could lead to large adverse movements in the price of the Company's
      common stock or increased volatility in the Company's stock price.





*Access
      to clients through intermediaries is important to the Company's asset management
      business, and reductions in referrals from such intermediaries or poor reviews
      of the Company's products or the Company's organization by such intermediaries
      could materially reduce the Company's revenue and impair the Company's ability
      to attract new clients.*





The
      Company's ability to market its services relies, in part, on receiving mandates
      from the client base of international and regional securities firms, banks,
      insurance companies, defined contribution plan administrators, investment
      consultants and other intermediaries. To an increasing extent, the Company's
      business uses referrals from accountants, lawyers, financial planners and other
      professional advisers. The inability to have this access could materially
      adversely affect the Company's business. In addition, many of these
      intermediaries review and evaluate the Company's products and the Company's
      organization. Poor reviews or evaluations of either the particular products
      or
      of the Company may result in client withdrawals or an inability to attract
      new
      assets through such intermediaries.




11




*The
      Company derives a substantial percentage of its revenues from two significant
      clients.*





CI
      and
      Genworth accounted for approximately 17% and 24%, respectively, of revenues
      for
      FY 2007 and 18% and 29%, respectively, of revenues for the quarter ended June
      30, 2007. A loss of either one of these clients could negatively impact results
      of operations and liquidity of the Company.





*Employee
      misconduct could harm the Company by impairing the Company's ability to attract
      and retain clients and subjecting the Company to significant legal liability
      and
      reputational harm, and this type of misconduct is difficult to detect and
      deter.*





There
      have been a number of highly publicized cases involving fraud or other
      misconduct by employees in the financial services industry, and the Company
      runs
      the risk that employee misconduct could occur in the Company's business, as
      well. For example, misconduct by employees could involve the improper use or
      disclosure of confidential information, which could result in regulatory
      sanctions and serious reputational or financial harm. In the Company's business,
      the Company has discretion to trade client assets on the client's behalf and
      must do so acting in the best interest of the client. As a result, the Company
      is subject to a number of obligations and standards, and the violation of those
      obligations or standards may adversely affect the Company's clients and the
      Company. The Company has adopted and implemented a number of insider trading,
      code of ethics, and other related policies and procedures to address such
      obligations and standards. It is not always possible to deter employee
      misconduct, and the precautions the Company takes to detect and prevent this
      activity may not be effective in all cases.





*The
      Company may pursue acquisitions or joint ventures that could present unforeseen
      integration obstacles or costs and could dilute the stock ownership of the
      Company's stockholders and holders of the Company's equity
      securities.*





As
      part
      of the Company's long-term business strategy, the Company may pursue joint
      ventures and other transactions aimed at expanding the geography and scope
      of
      the Company's operations. The Company expects to explore partnership
      opportunities that the Company believes to be attractive. While the Company
      is
      not currently in negotiations with respect to material acquisitions or joint
      ventures, the Company routinely assesses its strategic position and may in
      the
      future seek acquisitions or other transactions to further enhance the Company's
      competitive position. If the Company is not correct when it assesses the value,
      strengths and weaknesses, liabilities and potential profitability of acquisition
      candidates or is not successful in integrating the operations of the acquired
      business, the success of the combined business could be
      compromised.





Acquisitions
      and joint ventures involve a number of risks and present financial, managerial
      and operational challenges, including potential disruption of the Company's
      ongoing business and distraction of management, difficulty with integrating
      personnel and financial and other systems, hiring additional management and
      other critical personnel and increasing the scope, geographic diversity and
      complexity of the Company's operations. The Company's clients may react
      unfavorably to the Company's acquisition and joint venture strategy, the Company
      may not realize any anticipated benefits from acquisitions, and the Company
      may
      be exposed to additional liabilities of any acquired business or joint venture,
      any of which could materially adversely affect the Company's revenue and results
      of operations. In addition, future acquisitions or joint ventures may involve
      the issuance of additional shares of the Company's common stock, which would
      dilute existing ownership of the Company.





*Other
      operational risks may disrupt the Company's business, result in regulatory
      action against the Company, or limit the Company's growth.*





The
      Company's business is dependent on communications and information systems,
      including those of the Company's vendors. Any failure or interruption of these
      systems, whether caused by fire, other natural disaster, power or
      telecommunications failure, act of terrorism or war or otherwise, could
      materially adversely affect the Company's operating results. Although the
      Company has back-up systems in place, the Company's back-up procedures and
      capabilities in the event of a failure or interruption may not be
      adequate.




12




The
        Company relies heavily on its financial, accounting, trading, compliance
        and
        other data processing systems. If any of these systems do not operate properly
        or are disabled, the Company could suffer financial loss, a disruption of
        the
        Company's business, liability to clients, regulatory intervention or
        reputational damage. The inability of the Company's systems to accommodate
        an
        increasing volume of transactions also could constrain the Company's ability
        to
        expand its businesses. The Company expects that it will need to continue
        to
        upgrade and expand these capabilities in the future to avoid disruption of,
        or
        constraints on, the Company's operations.




*The
      Company may be* *exposed to data security risks* .





A
      failure
      to safeguard the integrity and confidentiality of client data from the
      infiltration by an unauthorized user that is either stored on or transmitted
      between our information systems or to other third party service provider systems
      may lead to modifications or theft of critical and sensitive data pertaining
      to
      our clients. The costs incurred to correct client data and prevent further
      unauthorized access could be extensive.





*Fluctuations
      in foreign currency exchange rates could lower the Company's net income or
      negatively impact the portfolios of the Company's clients and may affect the
      levels of the Company's AUM.*





Although
      most portfolios are in U.S. dollar base currency, certain client portfolios
      are invested in securities denominated in foreign currencies. Foreign currency
      fluctuations can adversely impact investment performance for a client's
      portfolio. Accordingly, foreign currency fluctuations may affect the levels
      of
      the Company's AUM. As the Company's AUM includes assets that are denominated
      in
      currencies other than U.S. dollars, an increase in the value of the U.S. dollar
      relative to those non-U.S. currencies may result in a decrease in the dollar
      value of the Company's AUM, which, in turn, would result in lower U.S. dollar
      denominated revenue in the Company's business. Additionally, while this risk
      may
      be limited by foreign currency hedging, some risks cannot be hedged and there
      is
      no guarantee that the Company's hedging activity will be successful. Poor
      performance may result in decreased AUM, stemming from withdrawal of client
      assets or a decrease in new assets being raised in the relevant
      product.





*Certain
      changes in accounting and/or financial reporting standards issued by the
      Financial Accounting Standards Board (“FASB”), the SEC or other standard-setting
      bodies could have a material adverse impact on the Company’s financial position
      or results of operations.*





The
      Company is subject to the application of U.S. generally accepted accounting
      principles (“GAAP”), which periodically are revised and/or expanded. As such,
      the Company periodically is required to adopt new or revised accounting and/or
      financial reporting standards issued by recognized accounting standard setters
      or regulators, including the FASB and the SEC. It is possible that future
      requirements could change the Company’s current application of GAAP, resulting
      in a material adverse impact on the Company’s financial position or results of
      operations.





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





The
      ownership interests of existing common stockholders will be diluted when
      additional shares of common stock are issued upon conversion of the Company’s
      Series A Convertible Preferred Stock. The number of shares of the Company’s
      common stock that can be issued upon conversion of the Series A Convertible
      Preferred Stock is 1,666,667 common shares. The preferred stock can be converted
      into common shares by the holder at anytime, but will automatically convert
      upon
      the fifth anniversary of the closing of the preferred stock
      transaction.




13





**Risks
      Related to Our Industry**





*The
      Company faces strong competition from financial services firms, many of whom
      have the ability to offer clients a wider range of products and services than
      the Company can offer, which could lead to pricing pressures that could
      materially adversely affect the Company's revenue and
      profitability.*





The
      financial services industry is intensely competitive and the Company expects
      it
      to remain so. In addition to performance, the Company competes on the basis
      of a
      number of factors including the quality of the Company's employees, transaction
      execution, the Company's products and services, innovation, reputation and
      price. The Company believes that it will experience pricing pressures in the
      future as some of the Company's competitors seek to obtain increased market
      share by reducing fees.





*The
      Company faces increased competition due to a trend toward
      consolidation.*





In
      recent
      years, there has been substantial consolidation and convergence among companies
      in the financial services industry. In particular, a number of large commercial
      banks, insurance companies and other broad-based financial services firms have
      established or acquired asset managers or have merged with other financial
      institutions. Many of these firms have the ability to offer a wide range of
      products, from loans, deposit-taking and insurance to brokerage and asset
      management services, which may enhance their competitive position. They also
      have the ability to support financial advisory services, with commercial
      banking, insurance and other financial services revenue in an effort to gain
      market share, which could result in pricing pressure in the Company's
      business.





*Any
      event that negatively affects the asset management industry could have a
      material adverse effect.*





Any
      event
      affecting the asset management industry that results in a general decrease
      in
      AUM or a significant general decline in the number of advisory clients or
      accounts could negatively impact revenues. Future growth and success depends,
      in
      part, upon the growth of the asset management industry.





*The
      financial services industry faces substantial litigation and regulatory risks,
      and the Company may face damage to the Company's professional reputation and
      legal liability if the Company's services are not regarded as satisfactory
      or
      for other reasons.*





As
      a
      financial services firm, the Company depends, to a large extent, on the
      Company's relationships with its clients and the Company’s reputation for
      integrity and high-caliber professional services to attract and retain clients.
      As a result, if a client is not satisfied with the Company's services, such
      dissatisfaction may be more damaging to the Company's business than to other
      types of businesses.





In
      recent
      years, the volume of claims and amount of damages claimed in litigation and
      regulatory proceedings against financial advisers has been increasing. In the
      Company's business, the Company makes investment decisions on behalf of its
      clients which could result in substantial losses. This may subject the Company
      to the risk of legal liabilities or actions alleging negligent misconduct,
      breach of fiduciary duty or breach of contract. These risks often may be
      difficult to assess or quantify and their existence and magnitude often remain
      unknown for substantial periods of time. The Company's engagements typically
      include broad indemnities from the Company's clients and provisions designed
      to
      limit the Company's exposure to legal claims relating to the Company's services,
      but these provisions may not protect the Company or may not be adhered to in
      all
      cases. The Company also may be subject to claims arising from disputes with
      employees for alleged discrimination or harassment, among other things. These
      risks often may be difficult to assess or quantify, and their existence and
      magnitude often remain unknown for substantial periods of time. As a result,
      the
      Company may incur significant legal expenses in defending against litigation.
      Substantial legal liability or significant regulatory action against the Company
      could materially adversely affect the Company's business, financial condition
      or
      results of operations or cause significant reputational harm to the Company,
      which could seriously harm the Company's business.





14




Due
      to
      the extensive laws and regulations to which the Company is subject, management
      is required to devote substantial time and effort to legal and regulatory
      compliance issues. In addition, the regulatory environment in which the Company
      operates is subject to change. The Company may be adversely affected as a result
      of new or revised legislation or regulations or by changes in the interpretation
      or enforcement of existing laws and regulations.





*Extensive
      regulation of the Company's business limits the Company's activities and results
      in ongoing exposure to the potential for significant penalties, including fines
      or limitations on the Company's ability to conduct its
      business.*





The
      financial services industry is subject to extensive regulation. The Company
      is
      subject to regulation by governmental and self-regulatory organizations in
      the
      jurisdictions in which the Company operates around the world. Many of these
      regulators, including U.S. and non-U.S. government agencies and self-regulatory
      organizations, as well as state securities commissions in the U.S., are
      empowered to conduct administrative proceedings that can result in censure,
      fine, the issuance of cease-and-desist orders or the suspension or expulsion
      of
      an investment adviser. The requirements imposed by the Company's regulators
      are
      designed to ensure the integrity of the financial markets and to protect
      customers and other third parties who deal with the Company and are not designed
      to protect the Company's stockholders. Consequently, these regulations often
      serve to limit the Company's activities, including customer protection and
      market conduct requirements.





The
      Company faces the risk of significant intervention by regulatory authorities,
      including extended investigation and surveillance activity, adoption of costly
      or restrictive new regulations and judicial or administrative proceedings that
      may result in substantial penalties. Among other things, the Company could
      be
      fined or be prohibited from engaging in some of the Company's business
      activities. In addition, the regulatory environment in which the Company
      operates is subject to modifications and further regulation. New laws or
      regulations or changes in the enforcement of existing laws or regulations
      applicable to the Company and the Company's clients also may adversely affect
      the Company's business, and the Company's ability to function in this
      environment will depend on the Company's ability to constantly monitor and
      react
      to these changes. In addition, the regulatory environment in which the Company's
      clients operate may impact the Company's business. For example, changes in
      antitrust laws or the enforcement of antitrust laws could affect the level
      of
      mergers and acquisitions activity and changes in state laws may limit investment
      activities of state pension plans.





In
      particular, for asset management businesses in general, there have been a number
      of highly publicized regulatory inquiries that focus on the mutual funds
      industry. These inquiries already have resulted in increased scrutiny in the
      industry and new rules and regulations for mutual funds and their investment
      managers. This regulatory scrutiny, along with rulemaking initiatives, may
      result in an increase in operational and compliance costs or the assessment
      of
      significant fines or penalties against the Company and may otherwise limit
      the
      Company's ability to engage in certain activities.





*In
      addition, financial services firms are subject to numerous conflicts of
      interests or perceived conflicts. The Company has adopted various policies,
      controls and procedures to address or limit actual or perceived conflicts and
      regularly seeks to review and update the Company's policies, controls and
      procedures. However, these policies and procedures may result in increased
      costs, additional operational personnel, and increased regulatory risk. Failure
      to adhere to these policies and procedures may result in regulatory sanctions
      or
      client litigation.*





Specific
      regulatory changes also may have a direct impact on the revenue of the Company's
      asset management business. In addition to regulatory scrutiny and potential
      fines and sanctions, regulators continue to examine different aspects of the
      asset management industry. Other proposed rules that are currently under
      consideration include potential limitations on investment activities in which
      an
      adviser may engage, such as hedge funds and mutual funds, increased disclosure
      of adviser and fund activities, and changes in compensation for mutual fund
      sales. These regulatory changes and other proposed or potential changes may
      result in a reduction of revenue associated with these activities.




**ITEM
                  1B.**
              **UNRESOLVED
                  STAFF COMMENTS**




None.




15




**ITEM
                2.**
            
            **PROPERTIES**




The
      Company leases all office space. Our principal offices consist of the following
      properties:





**Location**
            ****
            **Lease
                Expiration**
            ****
            **Approximate**
              **Square
                Feet**640
                Fifth Avenue, New York, NY(**1**),
                (**2**)
            
            
            September
                2015
            
            
            13,10015303
                Ventura Boulevard, Sherman Oaks, CA
            
            
            Annual
            
            
            300





*(****1****)*
              *Our
                  principal executive office.**(****2****)*
              *To
                  accommodate for the growth in our business, the Company entered
                  into a
                  sublease agreement for an additional 3,100 square feet (included
                  above) at
                  its Company headquarters effective February 1, 2007. That sublease
                  expires
                  June 30, 2010.*




The
      Company is also the primary party to a lease in New York, NY with
      approximately 8,500 square feet, which expires in November 2010. In January
      2002, a sublease agreement was executed with an unrelated third party for this
      property. While the Company remains responsible under terms of the original
      lease, the subtenant has assumed those responsibilities and is performing its
      obligations under the sublease agreement. Proceeds from the sublease, net of
      profit sharing with the landlord, more than offset the Company's obligations
      under this lease.





Management
      believes the office space utilized by the Company is adequate for existing
      operating needs.





Additional
      information about our occupancy costs, including commitments under
      non-cancellable leases, is contained in Note 7 of the “Notes to Consolidated
      Financial Statements” included in this Form 10-K under Item 8.





**ITEM
                3.**
            
            **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
      consolidated financial position, liquidity or results of
      operations.




**ITEM
                4.**
            
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS**




No
      matters were submitted to a vote of the Company's security holders during the
      fourth quarter of our fiscal year ended June 30, 2007.




16




**PART
      II**




**ITEM
                5.**
            
            **MARKET
                FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURHCASES OF EQUITY
                SECURITIES**




Effective
      October 4, 2005, the Company's common stock began trading on the NASDAQ Capital
      Market under the trading symbol “EPHC.” Prior to that date the Company's common
      stock was quoted on the OTCBB under the same trading symbol.




**Stock
      Performance Graph**





The
      graph
      and table on the following page compares the performance of an investment in
      our
      Common Stock from June 30, 2002 through June 30, 2007 with the Russell 2000
      Index and an index comprised of public companies with the Standard Industrial
      Classification (“SIC”) Code 6282, Investment Advice. The graph assumes a $100
      investment in our Common Stock on June 30, 2002, and an equal investment in
      each
      of the selected indices, including reinvestment of dividends, if any. The
      performance shown in the graph represents past performance and should not be
      considered an indication of future performance.





It
      should
      be noted that we did not become involved in the investment advisory business
      until April 2004, and previously had been involved in other lines of business.
      Accordingly, we believe the selected indices represent a foundation for
      comparisons only since April 2004.




17









*The
      foregoing graph shall not be deemed to be “soliciting material” or “filed” or
      incorporated by reference in any previous or future documents filed by the
      Company with the SEC under the Securities Act or the Exchange Act, except to
      the
      extent that the Company specifically incorporates the information by reference
      in any such document.*




**Cumulative
                    Return****6/02**
              
              **6/03**
              
              **6/04**
              
              **6/05**
              
              **6/06**
              
              **6/07**Epoch
                  Holding Corporation
              
              
              100.00
              
              
              87.42
              
              
              375.00
              
              
              537.50
              
              
              635.00
              
              
              1673.75Russell
                  2000
              
              
              100.00
              
              
              98.36
              
              
              131.18
              
              
              143.57
              
              
              164.50
              
              
              191.53Peer
                  Group
              
              
              100.00
              
              
              101.14
              
              
              119.76
              
              
              164.69
              
              
              200.17
              
              
              290.52


18




The
      following table sets forth the high and low closing prices during each fiscal
      quarter for the past two years as well as the closing price at the end of each
      fiscal quarter presented.




**2007**
              
              **2006****Quarter-end**
              
              
              
              
              
              **Quarter-end****High
                  Price**
              
              **Low
                  Price**
              
              **Price**
              
              **High
                  Price**
              
              **Low
                  Price**
              
              **Price**Quarter
                  ended:September
                  30
              
              $
              6.62
              
              $
              4.12
              
              $
              6.34
              
              $
              5.35
              
              $
              4.12
              
              $
              5.00December
                  31
              
              $
              9.94
              
              $
              6.01
              
              $
              9.94
              
              $
              6.75
              
              $
              4.80
              
              $
              6.00March
                  31
              
              $
              16.35
              
              $
              8.96
              
              $
              13.22
              
              $
              5.80
              
              $
              4.69
              
              $
              4.80June
                  30
              
              $
              17.60
              
              $
              12.60
              
              $
              13.39
              
              $
              5.08
              
              $
              3.68
              
              $
              5.08





The
      closing price for our common stock as reported on the NASDAQ Capital Market
      on
      September 6, 2007 was $12.41. As of September 6, 2007 there were 1,076 holders
      of record of the Company's common stock. As many of the shares are held in
      street nominee name, management believes the number of beneficial owners of
      our
      common stock is substantially higher.




**Common
      Stock Dividends**





No
      cash
      dividends were paid on the Company’s common stock during the fiscal years ended
      June 30, 2007 and 2006, respectively. The declaration of dividends is within
      the
      discretion of the Company's board of directors. Our board of directors will
      take
      into account such matters as general business conditions, the Company's
      financial results, capital requirements, contractual, legal and regulatory
      restrictions. The Company does not anticipate declaring dividends in the
      immediate future.




**Preferred
      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, payable December 31 and June 30 of each year. The semi-annual dividend
      payments are $230 thousand. The Company paid $299 thousand in preferred
      dividends during the fiscal year end June 30, 2007 which represents dividends
      for the period November 7, 2006 through June 30, 2007.




19




**Equity
      Compensation Plan Information**




The
      following table provides information regarding the status of the Company’s
      equity plans at June 30, 2007:




**Plan
                  Category**
              
              **Number
                  of securities to be issued upon exercise of outstanding options
                  and
                  lifting of restrictions and common stock**
                **(A)**
              
              **Weighted-average
                  price of outstanding restricted stock and weighted-average exercise
                  price
                  of outstanding options(B)**
              
              **Number
                  of securities remaining available for future issuance under equity
                  compensation plans (excluding securities reflected in column (A))**
                **(C)**1992
                  Incentive andNon-qualified
                  Stock OptionPlan*(a)*
              
              
              460,000
              
              $
              10.18
              
              
              -2004
                  Omnibus Long-TermIncentive
                  CompensationPlan*(b)*
              
              
              1,455,911
              
              $
              5.20
              
              
              1,028,597Equity
                  compensation plansnot
                  approved by securityholders*(c)*
              
              
              575,000
              
              $
              12.59
              
              
              -Total
              
              
              2,490,911
              
              
              
              
              
              1,028,597


*(a)*
            *The
                Company’s 1992 Incentive and Non-qualified Stock Option Plan expired on
                September 30, 2002. The remaining options under this plan will remain
                outstanding until they are exercised, cancelled or
                expire.*




*(b)*
              *Stockholders of the Company approved the
                2004 Omnibus
                Long-Term Incentive Compensation Plan at the Company’s Annual Meeting of
                Stockholders on November 18, 2004. All securities currently issued
                under this plan are in the form of restricted stock, which vest over
                a
                three year period for employees and one year for non-employee directors.
                In the event recipients do not fulfill their continuing employment
                obligations, unvested shares of restricted stock will be cancelled
                and
                returned to the plan for future issuance, unless the Compensation
                Committee of the Company waives the forfeiture provisions in whole
                or in
                part.*


*(c)*
            *On
                September 14, 1999, non-qualified stock options to purchase an
                aggregate of 140,000 shares of Common Stock were granted to the J
                Net
                Board of Directors and a non-employee then serving as the Secretary
                at an
                exercise price of $9.00 per share, the fair market value on the date
                of
                grant. The options vested 50% on each of the first and second
                anniversaries of the date of grant and expire ten years from the
                date of
                grant. On October 31, 2001, 30,000 options were cancelled as a result
                of a director’s resignation.*





*On
                June 21, 2000, non-qualified stock options to purchase an aggregate
                of 500,000 shares of Common Stock were granted**to
                the former President and Chief Operating Officer and the former Executive
                Vice President and Chief Financial Officer at**an
                exercise price of $13.13 per share, the fair market value on the
                date of
                the grant. The options vested in thirds on each of**the
                first, second and third anniversaries of the date of grant and expire
                ten
                years from the date of the grant. As of  *June 30,
                2003, all of the options were exercisable. On June 21, 2003,
                the former President and Chief Operating Officer and**the
                former Executive Vice President and Chief Financial Officer’s employment
                contracts expired and were not renewed. The**expiration
                of those contracts did not affect the expiration of the options,
                which
                will occur on June 21, 2010. A total of**35,000
                options were exercised in FY
                2007.**




20




**Recent
      Sales of Unregistered Securities**





As
      reported in the Company’s Form 8-K filed on November 9, 2006, the
      Company entered into a Securities Purchase Agreement (the “Purchase Agreement”)
      with General American Investors Company, Inc. (“GAM” or the “Purchaser”) on
      November 6, 2006, whereby GAM invested $10 million in Epoch and Epoch issued
      GAM
      10,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred
      Stock”).





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




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





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




**Issuer
      Purchases of Equity Securities**





None.




**ITEM
                6.**
            
            **SELECTED
                FINANCIAL DATA**




The
      table
      on the following page presents selected financial data of the Company. This
      data
      was derived from the Company's consolidated financial statements and reflects
      the operations and financial position of the Company at the dates and periods
      indicated. Due to the reverse merger accounting treatment for the EIP business
      combination, the June 30, 2004 results of operations reflect the April 14,
      2004
      (the date on which EIP began conducting business operations) through June 30,
      2004 operations for EIP and June 2, 2004 (the date of the business combination)
      through June 30, 2004 operations for J Net.





The
      following selected historical consolidated financial data should be read in
      conjunction with Part II, Item 7, “Management's Discussion and Analysis of
      Financial Condition and Results of Operations,” and Item 8, “Financial
      Statements and Supplementary Data”, of this Form 10-K.




21




**Selected
                  Financial Data***(dollars
                  in thousands, except share
                  data)*


**Date
                  of inception****For
                  the Years Ended June 30,******
              
              **April
                  14, 2004****through****2007**
              
              **2006**
              
              **2005**
              
              **June
                  30, 2004****Consolidated
                  Statements of Operations Data:**Investment
                  advisory and management fees
              
              $
              22,964
              
              $
              10,136
              
              $
              4,120
              
              $
              70Performance
                  fees
              
              
              971
              
              
              95
              
              
              187
              
              
              -Total
                  operating revenues
              
              
              23,935
              
              
              10,231
              
              
              4,307
              
              
              70Expenses:Employee
                  related costs (excluding share-based compensation)
              
              
              13,878
              
              
              8,641
              
              
              5,777
              
              
              135Share-based
                  compensation
              
              
              6,267
              
              
              4,670
              
              
              3,427
              
              
              771Other
                  expenses
              
              
              6,307
              
              
              3,975
              
              
              3,378
              
              
              236Total
                  operating expenses
              
              
              26,452
              
              
              17,286
              
              
              12,582
              
              
              1,142Operating
                  loss
              
              
              (2,517
              )
              
              (7,055
              )
              
              (8,275
              )
              
              (1,072
              )Other
                  income (*1*)
              
              
              10,509
              
              
              1,106
              
              
              1,167
              
              
              59Provision
                  for (benefit from) income taxes
              
              
              99
              
              
              (227
              )
              
              -
              
              
              -Income
                  (loss) from continuing operations, net of taxes
              
              
              7,893
              
              
              (5,722
              )
              
              (7,108
              )
              
              (1,013
              )Income
                  from discontinued operations, net of $0 taxes
              
              
              -
              
              
              -
              
              
              571
              
              
              21Net
                  income (loss)
              
              
              7,893
              
              
              (5,722
              )
              
              (6,537
              )
              
              (992
              )Cumulative
                  preferred stock dividends
              
              
              299
              
              
              -
              
              
              -
              
              
              -Non-cash
                    charge attributable to beneficial conversion feature of preferred
                    stock
              
              
              700
              
              
              -
              
              
              -
              
              
              -Net
                    income (loss) available to commonstockholders
              
              $
              6,894
              
              $
              (5,722
              )
              $
              (6,537
              )
              $
              (992
              )**Balance
                  Sheet Data**(*4*)**:**Cash
                  and cash equivalents
              
              $
              3,097
              
              $
              2,234
              
              $
              739
              
              $
              7,090Short-term
                  investments
              
              
              21,850
              
              
              5,400
              
              
              7,600
              
              
              8,467Accounts
                  receivable
              
              
              6,293
              
              
              2,486
              
              
              1,221
              
              
              70Total
                  assets
              
              
              39,374
              
              
              13,568
              
              
              13,031
              
              
              17,152Long
                  term borrowings
              
              
              -
              
              
              -
              
              
              -
              
              
              -Total
                  liabilities
              
              
              3,931
              
              
              4,713
              
              
              3,454
              
              
              4,465Total
                  stockholders' equity
              
              
              35,443
              
              
              8,855
              
              
              9,577
              
              
              12,687**Common
                  Share Data:**Earnings
                  (loss) per share from continuing operations:Basic
              
              $
              0.35
              
              $
              (0.31
              )
              $
              (0.39
              )
              $
              (0.15
              )Diluted
              
              $
              0.35
              
              $
              (0.31
              )
              $
              (0.39
              )
              $
              (0.15
              )Basic
                  and diluted earnings per share from discontinued
                  operations
              
              $
              -
              
              $
              -
              
              $
              0.03
              
              $
              -Dividends
                  declared per common share
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Weighted
                  average shares outstanding: (*2*)Basic
              
              
              19,726
              
              
              18,724
              
              
              18,025
              
              
              6,718Diluted
              
              
              20,807
              
              
              18,724
              
              
              18,025
              
              
              6,718**Other
                  Supplemental Data:**Working
                  Capital
              
              $
              32,685
              
              $
              6,945
              
              $
              7,367
              
              $
              11,888Current
                  Ratio (*3*)
              
              
              12.63
              
              
              2.99
              
              
              4.26
              
              
              3.91Assets
                  under management (*in
                  millions*):Sub-advised
              
              $
              2,876
              
              $
              1,715
              
              $
              922
              
              $
              609Institutional
              
              
              2,765
              
              
              1,245
              
              
              233
              
              
              28High
                  net worth
              
              
              360
              
              
              293
              
              
              247
              
              
              211Total
                  AUM
              
              $
              6,001
              
              $
              3,253
              
              $
              1,402
              
              $
              848Number
                  of employees
              
              
              43
              
              
              38
              
              
              28
              
              
              28




*(1)*
            *Other
                income for FY 2007 includes $2.9 million in cumulative dividends
                received
                and $5.2 million in realized gains as a result of dispositions of
                three of
                the Company’s privately held investments. See Note 5 to the financial
                statements for further
                details.*


*(2)*
            *2004
                weighted average shares outstanding are based on 1,000 shares from
                April
                14, 2004 through June 1, 2004, representing issued and outstanding
                shares
                of Epoch up to the date of the merger. Beginning June 2, 2004, issued
                and
                outstanding shares were 17,834,737. Accordingly, the total weighted
                average shares outstanding from April 14, 2004 (date of inception)
                to June
                30, 2004 were 6,717,602.*


*(3)*
            *Current
                ratio is derived by dividing current assets by current
                liabilities.*


*(4)*
            *Certain
                prior year amounts have been reclassified to conform to the 2007
                presentation.*




22





**ITEM
                7.**
            
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS****OF
                OPERATIONS**





**Overview**




The
      Company provides investment advisory and investment management services to
      its
      clients. Its operating subsidiary, EIP, is a registered investment adviser
      under
      the Investment Advisers Act. Its business operations are to manage investment
      assets for retirement plans, mutual funds, endowments, foundations, and high
      net
      worth individuals. Revenues are generally derived as a percentage of assets
      under management (“AUM”). Therefore, among other factors, revenues are
      dependent on (i) performance of financial markets, (ii) the ability to
      maintain existing clients, and (iii) changes in the composition of AUM. The
      management team is led by William W. Priest. Mr. Priest has over 40 years of
      experience in the investment advisory business. The overall investment
      philosophy is focused on achieving a superior risk-adjusted return by investing
      in companies which are undervalued relative to the investment team's fair value
      determinations. Security selection and portfolio construction are designed
      to
      protect capital in declining markets while participating in rising
      markets.





**Financial
      Highlights**





The
      Company continued to achieve positive operating leverage for the fiscal year
      ended June 30, 2007, which is defined as the total revenue growth rate that
      exceeds the rate of growth of expenses. Total operating revenue increased by
      134% while total operating expenses increased by 53%. Operating margins continue
      to improve. The main driver of this positive trend has been the significant
      increase in 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 fiscal year ended June 30, 2007 with AUM of $6.0
      billion, an increase of $2.75 billion, or approximately 85% from $3.25 billion
      a
      year ago.




*(Dollars
                  in thousands)*
              
              **2007**
              
              **2006**
              
              **Increase****Net
                  income (loss)**
              
              $
              7,893
              
              $
              (5,722
              )
              $
              13,615


For
      the
      year ended June 30, 2007, the Company recorded net income of $7.9 million,
      compared to a net loss of $5.7 million for the same period a year ago. The
      primary reasons for this increase were the following:


*•*
              Total
                  operating revenues increased to $23.9 million from $10.2 million
                  as a
                  result of the significant increase in AUM discussed above. Performance
                  fees for FY 2007, which are included in these fees, increased to
                  $1.0
                  million compared with $0.1 million for FY 2006.*•*
              Other
                  income increased by $9.4 million, which included $6.6 million of
                  dividends
                  and realized gains from the disposition, during the
                  year, of certain of its privately held investments. Additional
                  realized gains from the sale of marketable securities received
                  in
                  conjunction with one of the above dispositions contributed an additional
                  $1.5 million.




**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 characterized by many factors, including a stable
      geopolitical climate, global economic growth, strong business profitability,
      robust investor confidence, low inflation, low unemployment, and financial
      market transparency. These factors can directly affect capital appreciation,
      which in turn, impacts our investment advisory and management
      business.





23




The
      global market environment improved steadily during the quarter ended June 30,
      2007 and generally was favorable for our business, despite slowing GDP growth
      in
      the U.S. and Japan. Global equities improved strongly following the sell-off
      at
      the end of February 2007, driven by better than expected earnings results in
      the
      U.S. and Europe. In the U.S., stocks peaked the first week of June and then
      fell
      back slightly at the end of the quarter. Inflation concerns arising from strong
      economic growth around the world, along with uncertainties in the U.S. economy
      -
      including high energy costs, the housing market downturn, sub-prime mortgage
      defaults, and large hedge fund losses - led investors to be more cautious about
      near-term financial prospects. Several foreign central banks raised their
      interest rates during the second calendar quarter and expectations of a
      near-term easing of the U.S. Federal Reserve’s monetary policy
      diminished.





In
      spite
      of these financial market conditions, U.S. equities produced strong returns
      for
      the quarter. For the quarter ended June 30, 2007, assuming dividend
      reinvestment, the S&P 500 index increased by 6.3%, while the Dow Jones
      Industrial Average and NASDAQ Composite Index increased by 9.1% and 7.5%,
      respectively. Investors with globally diversified exposure to equity markets,
      particularly stocks domiciled in emerging markets, also saw strong returns
      during the quarter. On a broad basis, developed global markets, as represented
      by the MSCI World Index, returned 6.7% for the quarter.





For
      FY
      2007, the S&P 500 Index increased by 20.6%, while the Dow Jones Industrial
      Average and NASDAQ Composite increased by 23.0% and 19.9%, respectively. For
      the
      same period, the MSCI World Index increased by 24.2%. This environment was
      favorable to our business as market appreciation contributed notably to the
      increase in AUM for FY
      2007.




**Results
      of Operations**





**Assets
      Under Management**





The
      Company’s AUM has continued to increase at a significant pace, most notably in
      the institutional and sub-advisory distribution channels. The table below
      depicts the AUM growth by quarter for the past two years on an overall basis,
      as
      well as by distribution channel.










24




AUM
      as of
      June 30, 2007 was $6.001 billion compared with AUM of $3.253 billion and $1.402
      billion at June 30, 2006 and 2005, respectively. A summary of AUM by
      distribution channel at each fiscal year end follows ( *dollars
      in millions* ):




**For
                  Fiscal Years Ended June 30,****2007**
              
              
              **2006**
              
              
              **2005****Percentage**
              
              
              
              
              **Percentage****Amount**
              
              **Change**
              
              
              **Amount**
              
              **Change**
              
              
              **Amount**Sub-advised
              
              $
              2,876
              
              
              68
              %
              
              $
              1,715
              
              
              86
              %
              
              $
              922Institutional
              
              
              2,765
              
              
              122
              %
              
              
              1,245
              
              
              434
              %
              
              
              233High
                  net worth
              
              
              360
              
              
              23
              %
              
              
              293
              
              
              19
              %
              
              
              247$
              6,001
              
              
              84
              %
              
              $
              3,253
              
              
              132
              %
              
              $
              1,402


The
      charts presented on the following page depict the fiscal year end
      composition of AUM by distribution channel, as a percentage of total AUM for
      FY
      2007, FY 2006, and FY 2005, respectively:




25







26




**FY
      2007 versus FY 2006**





***Assets
      Under Management and Flows***





AUM
      increased to $6.00 billion at June 30, 2007, from $3.25 billion at June 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.




**Year
                  ended June 30,****(dollars
                  in millions)****2007**
              
              **2006**Beginning
                  of period assets
              
              $
              3,253
              
              $
              1,402Net
                  inflows/(outflows)
              
              
              1,778
              
              
              1,640Market
                  appreciation
              
              
              970
              
              
              211End
                  of period assets
              
              $
              6,001
              
              $
              3,253




The
      following charts show the Company’s products as a percentage of AUM as of June
      30, 2007 and 2006, respectively





27
  
 **Change***(Dollars
                    in thousands)*
                
                **2007**
                
                **2006**
                
                **$**
                
                **%*****Revenues****Investment
                    advisory and management fees*
                
                $
                22,964
                
                $
                10,136
                
                $
                12,828
                
                
                127
                %*Performance
                    fees*
                
                
                971
                
                
                95
                
                
                876
                
                
                922
                %***Total
                    operating revenues***
                
                $
                23,935
                
                $
                10,231
                
                $
                13,704
                
                
                134
                %




Total
      revenues for the fiscal year ended June 30, 2007 increased by $13.7 million
      or
      134% from for the fiscal year ended June 30, 2006. This increase was
      attributable to new business mandates, flows into existing accounts, as well
      as
      market appreciation.




AUM
        nearly doubled by fiscal year end 2007, increasing approximately 85% to $6.0
        billion. Institutional business increased 122%, or $1.5 billion during fiscal
        year 2007, while the sub-advisory business increased by 68%, or $1.2
        billion.


A
      significant percentage of revenues in FY 2007 were derived from two clients,
      CI
      and Genworth. CI represented 17% of FY 2007 total revenues while Genworth,
      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, represented approximately 24%.




28




**Change***(Dollars
                  in thousands)*
              
              **2007**
              
              **2006**
              
              **$**
              ****
              **%*****Employee
                  related costs (excluding share-******based
                  compensation)***
              
              $
              13,878
              
              $
              8,641
              
              $
              5,237
              
              
              61
              %


For
      the
      fiscal year ended June 30, 2007, these expenses increased by $5.2 million or
      61%
      from fiscal year ended June 30, 2006. Increased employee headcount to support
      the growth and expansion of the business was the primary reason for this
      increase. Employee headcount averaged 40 persons for FY 2007 compared with
      32
      persons for FY 2006. These expenses for the fiscal year ended June 30, 2007
      include $7.3 million of bonuses and sales commissions as compared to $3.9
      million for the fiscal year ended June 30, 2006. 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***
              
              $
              6,267
              
              $
              4,670
              
              $
              1,597
              
              
              34
              %


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.





For
      the
      fiscal year ended June 30, 2007, share-based compensation increased by $1.6
      million or 34% from the fiscal year ended June 30, 2006. As noted above,
      increased employee headcount as well as the annual vesting of prior year awards
      was the primary reason for this increase.





In
      the
      fiscal year ended June 30, 2007, a total of 695,893 shares of restricted stock
      were issued to employees. A total of 87,003 shares of the awards, or
      approximately 12.5% of the shares issued, were immediately vested. The remaining
      87.5% of the shares vest over the subsequent three years. A total of 26,201
      shares were forfeited by terminated employees in the fiscal year ended June
      30,
      2007.





During
      the fiscal year ended June 30, 2007, a total of 66,228 shares were granted
      to
      non-employee directors of the Company for FY 2007 services. These directors'
      shares are subject to a one-year vesting period, or immediately in the event
      of
      death or disability. The related share-based compensation expense is recognized
      ratably over the one-year vesting period of those awards.





Amortization
      of the aforementioned  shares issued to employee owners in connection with
      the acquisition of EIP was $3.1 million in FY 2007 and FY 2006. The fiscal
      year
      ended June 30, 2007 was the last year of amortization for these awards as they
      are now fully amortized.




**Change***(Dollars
                  in thousands)*
              
              **2007**
              
              **2006**
              
              **$**
              ****
              **%*****General,
                  administrative and occupancy***
              
              $
              3,891
              
              $
              2,584
              
              $
              1,307
              
              
              51
              %


General,
      administrative and occupancy expenses consist primarily of office rentals,
      travel and entertainment, marketing, information technology expenses, utilities,
      insurance, and other office related expenses. These expenses increased by $1.3
      million or 51% from the prior fiscal year.  Increases
      in market data services and information technology costs due to continued
      business expansion, increased insurance, as well as rent on additional office
      space leased at the Company’s headquarters, were the primary contributors. This
      increase is expected to continue during next fiscal year as a result of
      increased travel to support distribution efforts as well as increased market
      data services and technology costs.





29




**Change***(Dollars
                  in thousands)*
              
              **2007**
              
              **2006**
              
              **$**
              ****
              **%*****Professional
                  fees and services***
              
              $
              2,020
              
              $
              1,050
              
              $
              970
              
              
              92
              %


Professional
      fees and services consist primarily of outside legal fees for SEC compliance
      and
      general corporate legal affairs, independent accountants' fees, and other
      professional services. For the fiscal year ended June 30, 2007, such fees
      increased by $1.0 million or 92% from the fiscal year ended June 30, 2006.





Consulting
      and increased accounting fees in
      connection with compliance with Section 404 of the Sarbanes Oxley Act of 2002
      (“SOX”) accounted for approximately $0.4 million of this increase. At the end of
      the second fiscal quarter ended December 31, 2006, the Company achieved a market
      capitalization of shares held by non-affiliates in excess of $75 million. As
      a
      result, the Company has become an accelerated filer beginning with this Annual
      Report on Form 10-K. Accordingly, management is required to report on its
      assessment of, and the Company’s independent registered public accounting firm
      is required to express an opinion on, the Company’s internal control over
      financial reporting at June 30, 2007.





Other
      contributors to this increase included employee placement fees as several senior
      experienced professionals were added to staff, as well as technology consulting
      fees to help support the upgrading of systems and expansion of operations.




**Change***(Dollars
                  in thousands)*
              
              **2007**
              
              **2006**
              
              **$**
              ****
              **%*****Depreciation
                  and amortization***
              
              $
              396
              
              $
              341
              
              $
              55
              
              
              16
              %


Depreciation
      and amortization increased by $55 thousand, or 16% during the fiscal year ended
      June 30, 2007 compared with the fiscal year ended June 30, 2006. The increase
      in
      depreciation and amortization expense includes amortization of the costs of
      new
      leasehold improvements in connection with the Company's additional space
      obtained at its headquarters in February 2007.




**Change***(Dollars
                  in thousands)*
              
              **2007**
              
              **2006**
              
              **$**
              ****
              **%*****Other
                  income***
              
              $
              10,509
              
              $
              1,106
              
              $
              9,403
              
              
              850
              %


For
      the
      fiscal year ended June 30, 2007, other income increased by $9.4 million compared
      with the previous fiscal year. This increase stems from the October 2006 eStara
      transaction, which resulted in $2.6 million of other income, as well as the
      March 2007 Strategic Data transaction which resulted in $2.2 million of other
      income and the April 2007 Tellme transaction which accounted for $1.8 million
      in
      investment income. Additionally, realized gains from the sale of approximately
      1.0 million shares of Art Technology Group acquired in the eStara transaction
      contributed approximately $1.5 million to investment income. See “Significant
      Transactions” for further details.





In
      November 2000, J Net, the predecessor company to Epoch, recorded an accrued
      liability related to a sale of certain assets to an unrelated third party.
      The
      recorded amount of $950 thousand represented management’s best estimate of
      additional settlement amounts due. In late November 2006, a final assessment
      was
      made by management which resulted in the reversal of the previously recorded
      accrual. This amount is included in Interest and other income on the Statement
      of Operations for FY 2007.





Interest
      income on higher cash balances and short-term investments, stemming from higher
      management fees as well the preferred stock proceeds received in November 2006,
      generated the remaining increase in other income.





The
      Company does not anticipate other income levels being as high during the next
      fiscal year.





30




**Change***(Dollars
                  in thousands)*
              
              **2007**
              
              **2006**
              
              **$**
              ****
              **%*****Provision
                  for (benefit from) income taxes***
              
              $
              99
              
              $
              (227
              )
              $
              326
              
              
              (144
              %)


For
      the
      fiscal year ended June 30, 2007 the Company recorded an income tax expense
      of
      $99 thousand. The Company is not subject to regular income taxes because of
      its
      net operating loss carry forwards but is obligated to pay federal alternative
      minimum tax (“AMT”), which limits the application of net operating loss carry
      forwards to 90% of taxable income in addition to certain AMT adjustments. 
The Company has substantial net operating loss carry forwards and does not
      expect to pay significant income taxes during the next fiscal year.




**FY
      2006 versus FY 2005**




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****Revenues****Investment
                  advisory and management fees*
              
              $
              10,136
              
              $
              4,120
              
              $
              6,016
              
              
              146
              %*Performance
                  fees*
              
              
              95
              
              
              187
              
              
              (92
              )
              
              (49
              %)***Total
                  operating revenues***
              
              $
              10,231
              
              $
              4,307
              
              $
              5,924
              
              
              138
              %


Total
      revenues for the fiscal year ended June 30, 2006 increased by $5.9 million
      or
      138% from the fiscal year ended June 30, 2005. This
      increase was attributable to new business mandates, flows into existing
      accounts, as well as higher market appreciation.




AUM
      more than doubled by fiscal year end 2006 compared
      to the previous year, increasing 132% to $3.2 billion. Institutional business
      increased by more than five-fold, or $1.0 billion during fiscal year 2006,
      making up more than half of the annual AUM increase.




A
      significant percentage of revenues in FY 2006 were derived from two clients,
      CI
      and Genworth. CI represented 22% of FY 2006 total revenues while Genworth,
      through its investments in EPIEX and EPSYX, as well as separate account
      mandates, represented approximately 20%.




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****Employee
                  related costs (excluding share-******based
                  compensation)***
              
              $
              8,641
              
              $
              5,777
              
              $
              2,864
              
              
              50
              %


For
      the
      fiscal year ended June 30, 2006, employee related costs increased by $2.9
      million or 50% from the fiscal year ended June 30, 2005. Increased employee
      headcount to support the growth and expansion of the business was the primary
      reason for this increase. Employee headcount increased to 38 full-time employees
      at the end of FY 2006, from 28 full-time employees at the end of FY 2005. These
      expenses for the fiscal year ended June 30, 2006 included $3.9 million of
      bonuses and sales commissions as compared to $2.0 million for the fiscal year
      ended June 30, 2005.





31




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****Share-based
                  compensation***
              
              $
              4,670
              
              $
              3,427
              
              $
              1,243
              
              
              36
              %


For
      the
      fiscal year ended June 30, 2006, share-based compensation increased by $1.2
      million or 36% from the fiscal year ended June 30, 2005. As previously noted
      ,
      increased employee headcount was the primary reason for this increase as well
      as
      the annual vesting of prior year stock awards.





In
      the
      fiscal year ended June 30, 2006, a total of 838,905 shares of restricted stock
      were issued to employees. A total of 105,304 shares of the awards, or
      approximately 12.5% of the shares issued, were immediately vested. The remaining
      87.5% of the shares vest over the subsequent three years. A total of 26,533
      shares were forfeited by terminated employees in the fiscal year ended June
      30,
      2006.





During
      the fiscal year ended June 30, 2006, no stock awards were granted to
      non-employee directors of the Company. However, 128,316 shares were granted
      to
      non-employee directors of the Company during the fiscal year ended June 30,
      2005
      for FY 2005 services and in advance of FY 2006 services. These 128,316
      directors' shares are subject to a three-year vesting period and vest one-third
      each year, or immediately in the event of death or disability. The related
      share-based compensation expense is recognized ratably over the three-year
      vesting period of those awards.




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****General,
                  administrative and occupancy***
              
              $
              2,584
              
              $
              2,328
              
              $
              256
              
              
              11
              %


For
      the
      fiscal year ended June 30, 2006, general, administrative and occupancy expenses
      were up $0.3 million or 11% from the fiscal year ended June 30, 2005. Increased
      travel related expenses to support marketing and distribution efforts accounted
      for a significant portion of this increase. Occupancy costs also contributed
      to
      this increase as FY 2006 was the first full year in the Company’s
      new corporate headquarters .




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****Professional
                  fees and services***
              
              $
              1,050
              
              $
              848
              
              $
              202
              
              
              24
              %


For
      the
      fiscal year ended June 30, 2006, professional fees increased by $0.2 million
      or
      24% from the fiscal year ended June 30, 2005. Employee placement fees
      contributed to this increase for the fiscal year ended June 30, 2006, as several
      new staff positions were added. Decreased legal fees of approximately $150
      thousand partially offset this increase, as the prior year comparable period
      included incremental legal fees in conjunction with the Company’s first full
      year of operations.




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****Depreciation
                  and amortization***
              
              $
              341
              
              $
              202
              
              $
              139
              
              
              69
              %


Depreciation
      and amortization increased by $0.1 million during the fiscal year ended June
      30,
      2006 from the fiscal year ended June 30, 2005. The increase was primarily due
      to
      the impact of amortization of the costs of new leasehold improvements in
      connection with the Company’s relocation to its new headquarters in February
      2005 .





32




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****Other
                  income***
              
              $
              1,106
              
              $
              1,167
              
              $
              (61
              )
              
              (5.2
              %)


For
      the
      fiscal year ended June 30, 2006, other income decreased by $61 thousand from
      FY
      2005.





During
      FY
      2005, “Other income” included a $334 thousand gain from the collection of a
      previously, fully-reserved note receivable. Specifically, in FY 2005, the
      Company sold its internet-based, e-commerce business and accepted a note with
      a
      face value of $534 thousand as part of the purchase price. The Company recorded
      the Note at its estimated fair value of approximately $200 thousand. Factors
      affecting the estimate were the non-marketable status of the Note and certain
      risks in reaching cash flow targets for payment. On May 16, 2005, the Company
      collected the full $534 thousand. The receipt fully discharged the Note and
      required the Company to record a fourth quarter gain of $334
      thousand.





During
      FY
      2006, “Other income” included gains of approximately $169 thousand from two
      investments to which the Company had previously ascribed no value. Interest
      income during FY 2006 was higher than FY 2005 by approximately $100
      thousand as a result of higher cash balances during the year.




**Change***(Dollars
                  in thousands)*
              
              **2006**
              
              **2005**
              
              **$**
              ****
              **%*****Benefit
                  from income taxes***
              
              $
              (227
              )
              $
              -
              
              $
              (227
              )
              
              N/A





The
      $227
      thousand benefit from income taxes related to an Internal Revenue Service
      (“IRS”) refund received in April 2006 for an audit of the June 30, 2001 and June
      30, 2002 periods. No refund or assessable interest amounts had been accrued
      at
      June 30, 2005 because the Company had not received a final accounting from the
      IRS.





**Selected
      financial data - discontinued operations**





The
      following is a summary of operating results of the discontinued operations
      for FY 2005 ( *dollars
      in thousands* ):





Revenue
            
            $
            293Expenses
            
            
            (294
            )Loss
                from discontinued operations, net of $0 income taxes
            
            
            (1
            )Gain
                on sale of discontinued operations, net of $0 income
                taxes
            
            
            572Income
                from discontinued operations, net of income taxes
            
            $
            571




**Discontinued
      operations**





In
      September 2004, the Company completed the sale of its e-commerce software
      operations to the former management of that segment. Consideration to the
      Company came in the form of a 19.9% membership interest in the buyer's entity,
      the assumption by the buyer of liabilities of $466 thousand, and the issuance
      of
      a $534 thousand secured promissory note (the “Note”) to the Company. The Note
      was due five years from the date of issuance, bore interest at 6.5% per annum
      and was secured by all of the assets that were purchased in the transaction.
      Payments of principal on the Note were to be made at a rate of 50% of the annual
      cash flows from operations, as defined in the agreement, in excess of $300
      thousand. The Company recorded the Note at its estimated fair value of
      approximately $200 thousand. Factors affecting the estimate were the
      non-marketable status of the Note and certain risks in reaching cash flow
      targets for payment. On May 16, 2005 the Company collected the full $534
      thousand. The receipt fully discharged the Note and required the Company to
      record a fourth quarter gain of $334 thousand. Such gain is included in “Gain
      from collection of notes and other settlements” in the “Other Income” section in
      the Statement of Operations for FY 2005. This accounting treatment is consistent
      with the SEC's Staff Accounting Bulletin No. 93, *Accounting
      and Disclosures Relating to Discontinued Operations* ,
      which
      states the gains and losses associated with assets received in consideration
      for
      discontinued operations should be reported within continuing
      operations.




33




**Capital
      Resources and Liquidity**





A
      summary
      of cash flow data for the fiscal years ended June 30 is as follows *(in
      thousands):*




**2007**
              
              **2006**
              
              **2005**Cash
                  flows provided by (used in) :Operating
                  activities
              
              $
              2,389
              
              $
              (1,133)
              
              $
              (5,909)Investing
                  activities
              
              
              (11,451)
              
              
              2,298
              
              
              (442)Financing
                  activities
              
              
              9,925
              
              
              330
              
              
              -Net
                  increase (decrease) in cash and cash equivalents
              
              
              863
              
              
              1,495
              
              
              (6,351
              )Cash
                  and cash equivalents at beginning of period
              
              
              2,234
              
              
              739
              
              
              7,090Cash
                  and cash equivalents at end of period
              
              
              3,097
              
              
              2,234
              
              
              739Short-term
                  investments
              
              
              21,850
              
              
              5,400
              
              
              7,600Cash,
                    cash equivalents and short-term investmentsat
                    end of period
              
              $
              24,947
              
              $
              7,634
              
              $
              8,339




For
      the
      fiscal years ended June 30, 2006 and 2005, the use of cash flows from operations
      was primarily due to the process of establishing and expanding the business
      during the Company's first two full years of operations.




***2007
      Cash Flows:***





For
      the
      fiscal year ended June 30, 2007, net cash provided by operating activities
      was
      $2.4 million, an improvement of $3.5 million from the prior year. The increase
      in cash provided by operations stems primarily from improved operating
      results .





Sources
      of funds for the Company's operations are primarily derived from investment
      advisory and investment management fees and interest on the Company's cash,
      cash
      equivalents and short-term investments. As of June 30, 2007, the Company had
      $3.1 million of cash and cash equivalents, $21.9 million in short-term
      investments, and $6.3 million of accounts receivable to fund its business growth
      strategy.





Management
      believes the existing cash, cash equivalents, and short-term investments are
      adequate to provide the necessary resources to meets its operating needs for
      the
      foreseeable future as well as to implement its growth strategies. The Company's
      current financial condition is highly liquid, with cash, cash equivalents,
      and
      short-term investments comprising approximately 63% of its total assets. The
      Company has no debt.





The
      Company, from time to time, may also consider pursuing opportunities to
      raise additional capital to expand its market base and support its
      growth objectives. The Company's business does not require it to
      maintain significant capital balances.




34




***2006
      Cash Flows:***





For
      the
      fiscal year ended June 30, 2006, net cash used in operating activities was
      $1.1
      million, an improvement of $4.8 million from the prior year. The decrease in
      cash utilization was the result of improved operating results coupled with
      the
      fact that the fiscal year ended June 30, 2005 included expenditures of $1.4
      million related to payment of income taxes and interest for earlier year tax
      audits of J Net, the predecessor company to Epoch.





***Working
      Capital:***





The
      Company's working capital for the past two years is set forth in the table
      below
      ( *dollars
      in thousands* ):




**June
                  30,**
              
              **Change****2007**
              
              **2006**
              
              **$**
              
              **%**Current
                  Assets
              
              $
              35,495
              
              $
              10,436
              
              $
              25,059
              
              
              240
              %Current
                  Liabilities
              
              
              2,810
              
              
              3,491
              
              
              (681
              )
              
              (20
              %)Working
                  Capital
              
              $
              32,685
              
              $
              6,945
              
              $
              25,740
              
              
              371
              %Current
                  Ratio
              
              
              12.63
              
              
              2.99
              
              
              9.64
              
              
              322
              %





**Current
      Assets:**





Current
      assets increased $25.1 million at June 30, 2007 compared with June 30, 2006
      primarily as a result of the following three items:


*•*
              increases
                  in cash and accounts receivable balances as a result of business
                  expansion.
 
 *•*
              cash
                  dividends and proceeds received of approximately $6.8 million from
                  the
                  disposition of some of the Company’s privately held
                  investments.
                  See “Significant Transactions” for further
                  details.
 
 *•*
              $10
                  million proceeds received in November 2006 from the preferred stock
                  issuance. These proceeds are presently invested in auction-rate
                  securities, classified as short-term investments on the balance
                  sheet.




**Current
      Liabilities:**





Current
      liabilities at June 30, 2007 decreased $0.7 million. The reduction of current
      liabilities includes the reversal of a previously recorded estimate. See
      discussion on “Other income” in the Results of Operations section for further
      details.




**Preferred
      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, payable December 31 and June 30 of each year. The semi-annual dividend
      payments are $230 thousand. The Company paid $299 thousand in preferred
      dividends during the fiscal year end June 30, 2007 which represents dividends
      for the period November 7, 2006 through June 30, 2007.





35




**Contractual
      Obligations**





The
      Company's primary headquarters and operations are located in New York, NY.
      Business is conducted at a location with approximately 10,000 square feet under
      a long-term lease that expires in September 2015. To
      accommodate for the growth in business, the Company entered into a sublease
      agreement for an additional 3,100 square feet at its Company headquarters
      effective February 1, 2007. This sublease expires in June 2010.





The
      Company is also the primary party to another lease in New York, NY with
      approximately 8,500 square feet, 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 June 30,
      2007, the remaining future minimum payments under this lease total $1.6 million.
      Future minimum receipts from the subtenant, net of profit sharing with the
      landlord, total $1.8 million as of June 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.





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 third anniversary of the business
      combination with EIP. 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.




**Summary
      of Contractual Obligations**





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


**Payments
                  Due In****Fiscal
                  Years Ended June 30,****2009
                  -**
              
              **2011
                  -**
              
              **2013
                  and****2008**
              
              **2010**
              
              **2012**
              
              **thereafter**
              
              **Total**Primary
                  New York operations
              
              $
              975
              
              $
              1,952
              
              $
              1,421
              
              $
              2,330
              
              $
              6,678Subleased
                  New York lease
              
              
              481
              
              
              961
              
              
              200
              
              
              -
              
              
              1,642Other
                  office locations
              
              
              30
              
              
              5
              
              
              -
              
              
              -
              
              
              35Other
                  operating leases
              
              
              39
              
              
              74
              
              
              -
              
              
              -
              
              
              113Total
                  obligations
              
              
              1,525
              
              
              2,992
              
              
              1,621
              
              
              2,330
              
              
              8,468Sublease
                  income
              
              
              (574
              )
              
              (1,148
              )
              
              (95
              )
              
              -
              
              
              (1,817
              )Net
                  obligations
              
              $
              951
              
              $
              1,844
              
              $
              1,526
              
              $
              2,330
              
              $
              6,651




36




**Off-Balance
      Sheet Arrangements**





As
      of
      June 30, 2007, the Company had no off-balance sheet arrangements.





**Significant
      Transactions**





**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 resultant shares held
      by
      the Company are currently classified as Marketable Securities on the
      Consolidated Balance Sheet in accordance with SFAS No. 115, *Accounting
      for Certain Investments in Debt and Equity Securities* .





The
      Company, as holder of the preferred stock of eStara, received an amount per
      share equal to the original issue price, plus the amount of certain 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 $42 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 common shares
      received from ARTG are subject to a lock-up agreement pursuant to which the
      shares will be released in equal monthly installments over a period of
      12 months, which commenced January 2007. As a result of the above-mentioned
      merger, the Company recognized dividend income of approximately $2.4 million
      and
      realized gains of approximately $0.2 million for a portion of cash received.
      Such amounts have been recorded in the Statement of Operations for the FY
      2007.





The
      Company sold approximately 1.0 million shares of ARTG during the fiscal year
      ended June 30, 2007 and recorded realized gains of approximately $1.5
      million.





**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.





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.




37




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. Such amount consisted of realized gain of $1.6 million and
      dividend income $0.6 million. The SDC merger also calls for contingent payments,
      dependent upon the achievement of certain targets and milestones after the
      merger is consummated, 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 June 30, 2007, as such amounts are not
      readily estimable or determinable at this time.





**c)** ***Tellme
      Corporation Transaction:***


During
      the fiscal year ended June 30, 2001, J Net, the predecessor company to Epoch,
      made a $2.0 million investment in Tellme Networks, Inc. (“Tellme”), a
      technology-related company that specializes in voice technologies. This
      investment was comprised of 137,450 shares of Series D convertible preferred
      stock. As there was no readily available market for the securities and the
      investment represented less than a 20% interest in Tellme, the securities were
      valued at the Company’s initial cost. The investment in Tellme was reduced from
      $2.0 million to $157 thousand at June 1, 2004. This reduction was due to
      purchase accounting adjustments in the J Net merger. As of March 12, 2007,
      the
      carrying value of the investment remained at $157 thousand.




On
      March
      12, 2007, Tellme announced an agreement by Microsoft Corporation (“Microsoft”)
      to acquire all of the outstanding common stock, preferred stock, and vested
      and
      unvested stock options of Tellme. This merger closed on April 30, 2007. As
      a
      result of the merger, the Company, as holder of the preferred stock of Tellme,
      received a cash payment of approximately $2.0 million during the quarter ended
      June 30, 2007. Accordingly, approximately $1.8 million was recorded as realized
      gains for the fiscal year ended June 30, 2007.





**d)** ***Preferred
      Stock Issuance:***


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





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




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





The
      conversion price of $6.00 per common share contained a beneficial conversion
      feature of $0.42 per share to the November 6, 2006 closing price of $6.42.
      This
      beneficial conversion feature of $0.7 million, which is the difference between
      the above closing price and the conversion price, was fully amortized through
      retained earnings (accumulated deficit) at the date of closing. A corresponding
      amount was credited to additional paid-in capital.




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




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




38




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




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




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





**Critical
      Accounting Policies and Critical Accounting Estimates**





***General***


The
      policies outlined below are critical to the Company's operations and the
      understanding of the results of operations. The impact of these policies on
      operations is discussed throughout Management's Discussion and Analysis of
      Financial Condition and Results of Operations where such policies affect the
      reported and expected financial results. For a detailed discussion on the
      application of these and other accounting policies, refer to Note 2 in the
      Notes
      to the Consolidated Financial Statements contained in this Annual Report on
      Form
      10-K. Note that preparation of this Annual Report on Form 10-K requires the
      Company to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities, disclosure of contingent assets and liabilities, and
      the
      reported amounts of revenue and expenses during the reporting period. Actual
      results may differ from those estimates.





***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 AUM. Generally, fees are billed on a quarterly
      basis, in arrears, based on the account's net asset value at the end of a
      quarter. Advance payments, if received, are deferred and recognized during
      the
      periods for which services are provided.





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





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




***Share-based
      compensation***


Effective
      July 1, 2005, the Company adopted Statement of Financial Accounting Standards
      No. 123 (Revised 2004), *Share-Based Compensation* (“SFAS
      123R”), which requires employee and qualifying director share-based payments to
      be accounted for using the fair value method. The fair value of the Company's
      restricted stock awards is based on the closing price of the Company's common
      stock at the grant date. Share-based compensation costs related to equity
      instruments are charged against income ratably over the fixed vesting period
      for
      the related equity instruments, with the initial charge generally recorded
      in
      the first full month following the grant. The Company's accounting treatment
      of
      restricted stock awards under SFAS 123R is consistent with that of the Company's
      previous policies under Accounting Principles Board (“APB”)  Opinion No.
      25, *Accounting for Stock Issued to Employees* and the
      pro forma disclosures required in accordance with SFAS 123, *Accounting for Stock-Based Compensation* .
      The
      adoption of this standard did not have a material effect on the Company's
      financial statements in FY 2006.




39




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





***Provision
      for (benefit from) income taxes***


Management's
      judgment is required in developing the Company's provision for (benefit from)
      income taxes, including the determination of deferred tax assets and liabilities
      and any valuation allowances that might be required against net deferred tax
      assets. The Company's ability to utilize accumulated net operating losses
      (“NOLs”) to their full extent prior to their expiration cannot be reasonably
      assured. Until a history of profitability can be achieved, and utilization
      of
      NOLs can be more definitive, the Company has provided a full valuation allowance
      on its accumulated NOLs and temporary differences for all years presented. The
      Company is obligated to pay tax under the federal AMT, which limits the
      application of net operating loss carry forwards to 90% of taxable income in
      addition to certain AMT adjustments.




***Marketable
      Securities***


The
      company received marketable securities during the quarter ended December 31,
      2006 as a result of the eStara transaction (see “eStara Transaction” for further
      details).  These marketable securities are classified as available-for-sale
      and are carried at fair value based on quoted market prices, with unrealized
      gains or losses reported in Other Comprehensive Income, a separate component
      of
      stockholders' equity.  Realized gains and losses on these securities are
      reported in the Statement of Operations.  These securities are
      classified as current assets on the Consolidated Balance Sheet as it is
      management's intention to sell these securities within the next twelve
      months.





**Recently
      issued accounting standards:**





In
      June
      2005, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 154, *Accounting Changes and Error Corrections* (“SFAS
      154”), replacing Accounting Principles Board (“APB”) Opinion
      No. 20, *Accounting Changes* ,
      and
      SFAS No. 3, *Reporting Accounting Changes in Interim Financial Statements.* SFAS 154
      alters the requirements for the accounting for and reporting of a change in
      accounting principle. Previously, most voluntary changes in accounting
      principles required recognition via a cumulative effect adjustment within net
      income of the period of the change.


SFAS
      154
      requires retrospective application to prior periods' financial statements,
      unless it is impracticable to determine either the period-specific effects
      or
      the cumulative effect of the change. SFAS 154 is effective for accounting
      changes made in fiscal years beginning after December 15, 2005; however,
      SFAS 154 does not change the transition provisions of any existing accounting
      pronouncements. The adoption of SFAS 154 did not have a material effect on
      the
      Company’s consolidated financial position, results of operations, or cash flows,
      as the Company did not make any change in accounting principles.





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
      has completed its initial evaluation of the impact of FIN 48 and believes the
      adoption of FIN 48 will not have a material effect on its
      consolidated financial position, results of operations, or cash
      flows.




40




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





**ITEM
                7A.**
            
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**





***Investment
      advisory and management fees***




As
      noted
      in “Risk Factors” in Item 1A, the Company's exposure to market risk is directly
      related to its role as an investment adviser for the mutual funds and separate
      accounts the Company manages. The revenues earned under these agreements are
      typically based on the market value of AUM which can be affected by changes
      in
      interest rates, fluctuations in financial markets, and fluctuations in foreign
      currency. Accordingly, a decline in the prices of securities may cause the
      Company's revenue to decline by:





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




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




41




***Marketable
      securities***





The
      Company is exposed to fluctuations in the market price of its marketable
      securities presented on its consolidated balance sheet. These securities were
      acquired during the current fiscal year in connection with the eStara
      transaction. The total fair value of these securities as of June 30, 2007 was
      $3.8 million. The Company does not hedge its market risk related to these
      securities and does not intend to do so in the future.





At
      June
      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'****June
                  30, 2007**
              
              **Change**
              
              **Change**
              
              **Equity
                  (1)**Marketable
                  securities
              
              $
              3,789
              
              
              10
              %
              $
              3,334
              
              $
              455




*(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,
      cash equivalents, and short-term investments***





Cash,
      cash equivalents, and short-term investments are exposed to market risk due
      to
      changes in interest rates, which impacts interest income. The Company maintains
      its cash in institutions which have superior credit ratings. The Company
      consistently monitors the quality of the institution where its cash is
      deposited, the balance of which, at times, may be in excess of the FDIC
      insurance limits. Presently, the Company neither participates in hedging
      activities nor does it have any derivative financial
      instruments.





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. These securities are backed by
      either federal or state government agencies. All auction rate securities are
      bought and sold at par value.




**ITEM
                8.**
            
            **FINANCIAL
                STATEMENTS AND SUPPLEMENTARY
                DATA**




The
      financial statements and supplementary financial information required by this
      Item, included in this Report in Item 15 (a) (1) (2), beginning on page F-1 ,
      are
      listed in the Index to Financial Statements appearing on page F-1 and are
      incorporated herein by reference.




42




**ITEM
                9.**
            
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND****FINANCIAL
                DISCLOSURE**





None.




**ITEM
                9A.**
            
            **CONTROLS
                AND PROCEDURES**





***Disclosure
      Controls and Procedures***





The
      Company has established and maintains disclosure controls and other procedures
      that are designed to ensure that material information relating to Epoch Holding
      Corporation and its subsidiaries on a consolidated basis required to be
      disclosed in its reports filed or submitted under the Securities Exchange Act
      of
      1934, as amended, is recorded, processed, summarized, and reported within the
      time periods specified in the SEC’s rules and forms, and that such information
      is accumulated and communicated to the Company’s management, including its Chief
      Executive Officer and Chief Financial Officer, as appropriate, to allow timely
      decisions regarding required disclosure. For the fiscal quarter ended June
      30,
      2007, the Company carried out an evaluation, under the supervision and with
      the
      participation of the Company’s management, including its Chief Executive Officer
      and Chief Financial Officer, of the effectiveness of the design and operation
      of
      the Company’s disclosure controls and procedures. Based on the evaluation of
      these disclosure controls and procedures, the Chief Executive Officer and Chief
      Financial Officer concluded that the Company’s disclosure controls and
      procedures were effective as of June 30, 2007.





The
      Company has also established and maintains internal control over financial
      reporting as a process designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of consolidated financial
      statements for external purposes in accordance with accounting principles
      generally accepted in the United States. In the ordinary course of business,
      the
      Company routinely enhances its internal controls and procedures for financial
      reporting by either upgrading its current systems or implementing new systems.
      Changes have been made to the Company’s internal controls and procedures for
      financial reporting as a result of these efforts. During the fiscal quarter
      ended June 30, 2007, there was no change in the Company’s internal controls over
      financial reporting that has materially affected, or is reasonably likely to
      materially affect, the Company’s internal control over financial
      reporting.





The
      Report of Management on Internal Control over Financial Reporting and the Report
      of Independent Registered Public Accounting Firm are set forth in Part II,
      Item 8 of the Annual Report on Form 10-K.




**ITEM
              9B**.
            
            **OTHER
              INFORMATION**




None.





43





**PART
      III**




**ITEM
                10.**
            
            **DIRECTORS,
                EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE****ITEM
                11.**
            
            **EXECUTIVE
                COMPENSATION****ITEM
                12.**
            
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS****ITEM
                13.**
            
            **CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
                INDEPENDENCE****ITEM
                14.**
            
            **PRINCIPAL
                ACCOUNTANT FEES AND SERVICES**




The
      information required by items 10, 11, 12, 13 and 14 are incorporated by
      reference from the definitive proxy statement for our 2007 Annual Meeting of
      Stockholders to be filed with the Securities and Exchange Commission pursuant
      to
      Regulation 14A under the Exchange Act.




44




**PART
      IV**




**ITEM
                15.**
            
            **EXHIBITS
                AND FINANCIAL STATEMENT SCHEDULES**




(a)
      (1)
      and (2) Consolidated Financial Statements and Schedules.





For
      a
      list of the consolidated financial statements and consolidated financial
      statement schedules filed as a part of this Annual Report on Form 10-K, see
      “Index to Financial Statements, Supplementary Data and Financial Statement
      Schedules” on F-1 .





(a)
      (3)
      The exhibits filed and incorporated by reference are listed in the Index of
      Exhibits required by Item 601 of Regulation S-K at Item b
      below.




(b)
      Exhibits




2.1
            
            Agreement
                and Plan of Reorganization dated June 2, 2004. (A)3.1
            
            Articles
                of Incorporation of the Registrant, as amended. (B)3.2
            
            By-laws
                of the Registrant, as amended. (B)4.1
            
            Stockholder
                Rights Agreement dated as of July 11, 1994 between the Registrant
                and
                Continental Stock Transfer & Trust Company, as Rights Agent.
                (C)4.2
            
            Certificate
                of Designation, Preferences and Rights of Series A Convertible Preferred
                Stock. (K)4.3
            
            Registration
                Rights Agreement dated November 7, 2006 by and between Epoch Holding
                Corporation andand
                between General American Investors Company, Inc. (K)10.2
            
            1992
                Incentive and Non-qualified Stock Option Plan. (E)10.40
            
            Indemnification
                Agreement. (D)10.40
            
            Stockholders
                Agreement dated as of June 2, 2004 among J Net Enterprises, Inc.
                and
                certain of its stockholders. (A)10.41
            
            Registration
                Rights Agreement dated as of June 2, 2004 among J Net Enterprises,
                Inc.
                and certain of its stockholders. (A)10.43
            
            Asset
                Purchase Agreement by and between InterWorld Holdings, LLC as buyer
                and IW
                Holdings, Inc. as seller dated September 9, 2004. (G)10.44
            
            2004
                Omnibus Long-Term Incentive Compensation Plan. (H)10.45
            
            Office
                lease between Vornado 640 Fifth Avenue LLC (Landlord) and Epoch Investment
                Partners, Inc. (Tenant). (I)10.46
            
            Form
                of Restricted Stock Award. (J)10.47
            
            Office
                lease between 680 Fifth Avenue Associates, L.P. (Landlord) and JNet
                Enterprises (Tenant). (J)10.48
            
            Office
                sublease between JNet Enterprises (Tenant) and The Game Show Network
                (subtenant). (J)10.49
            
            Securities
                Purchase Agreement dated November 6, 2006 by and between Epoch Holding
                Corporation andand
                General American Investors Company, Inc. (K)21.1
            
            List
                of Registrant's significant subsidiaries. (L)23.1
            
            Consent
                of CF & Co., L.L.P. (L)31.1
            
            Principal
                Executive Officer Certification. (L)31.2
            
            Principal
                Financial Officer Certification. (L)32
            
            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. (L)




(A)
            Incorporated
                by reference to Registrant's Form 8-K dated June 3,
                2004.(B)
            Incorporated
                by reference to Registrant's Form 8-K dated December 7,
                2004.(C)
            Incorporated
                by reference to Registrant's Form 8-K dated July 12,
                1994.




45




(D)
            Incorporated
                by reference to Registrant's Quarterly Report on Form 10-Q for the
                fiscal
                quarter ended March 31, 2003.(E)
            Incorporated
                by reference to Registrant's 1992 Proxy Statement.(F)
            Incorporated
                by reference to Registrant's Annual Report on Form 10-K for the fiscal
                year ended June 30, 2004.(G)
            Incorporated
                by reference to Registrant's Form 8-K dated September 14,
                2004.(H)
            Incorporated
                by reference to Registrant's Form 8-K dated November 19,
                2004.(I)
            Incorporated
                by reference to Registrant's Annual Report on Form 10-K for the fiscal
                year ended June 30, 2005.(J)
            Incorporated
                by reference to Registrant's Annual Report on Form 10-K/A for the
                fiscal
                year ended June 30, 2007.(K)
            Incorporated
              by
              reference to Registrant's Form 8-K dated November 9, 2006.(L)
            Included
              herein.





46





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.






Dated:
                September 12, 2007
            EPOCH
                HOLDING CORPORATION(Registrant)By:
            /s/ William
                W. PriestWilliam
                W. Priest
              Chief
                Executive Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.




Signature
            
            Title
            Date/s/
                Allan R. Tessler
            
            Chairman
                of the Board
            September
                12, 2007Allan
                R. Tessler/s/
                William W. Priest
            
            Chief
                Executive Officer
            September
                12, 2007William
                W. Priest
            
            (Principal
                Executive Officer)/s/
                Adam Borak
            
            Chief
                Financial Officer
            September
                12, 2007Adam
                Borak
            
            (Principal
                Financial Officer)/s/
                Enrique R. Arzac
            
            Director
            September
                12, 2007Enrique
                R. Arzac/s/
                Jeffrey L. Berenson
            
            Director
            September
                12, 2007Jeffrey
                L. Berenson/s/
                Peter A. Flaherty
            
            Director
            September
                12, 2007Peter
                A. Flaherty/s/
                Eugene M. Freedman
            
            Director
            September
                12, 2007Eugene
                M. Freedman/s/
                David R. Markin
            
            Director
            September
                12, 2007David
                R. Markin




47




**EPOCH
      HOLDING CORPORATION AND SUBSIDIARIES**


**INDEX
      TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA**


**AND
      FINANCIAL STATEMENT SCHEDULES**


**[ITEMS
      8 AND 15(a)]**





**(1)
      FINANCIAL STATEMENTS:**




Report
                of Management on Internal Control over Financial Reporting
            
            
            F
              -
              2Report
                of Independent Registered Public Accounting Firm
            
            
            F -
              3Consolidated
                Balance Sheets at June 30, 2007 and 2006
            
            
            F
              -
              4Consolidated
                  Statements of OperationsFor the years ended June 30, 2007, 2006
                  and 2005
            
            
            F
              -
              5Consolidated
                  Statements of Changes in Stockholders' EquityFor the years ended
                  June 30, 2007, 2006, and 2005
            
            
            F
              -
              6Consolidated
                  Statements of Cash FlowsFor the years ended June 30, 2007, 2006,
                  and 2005
            
            
            F -
              7Notes
                to Consolidated Financial Statements
            
            
            F
              -
              8**(2)
                SUPPLEMENTARY DATA:**Quarterly
                  Financial Information (Unaudited)For the years ended June 30, 2007
                  and 2006.Certain
                financial statement schedules are omitted because the required information
                is provided in the Consolidated Financial Statements or the notes
                thereto.All
              other schedules for which provision is made
              in the applicable accounting regulation of the Securities and Exchange
              Commission are not required under the related instructions or are
              inapplicable and therefore have been omitted.




F
          -
          1




**Report
      of Management on Internal Control over Financial
      Reporting**





The
      management of the Company is responsible for establishing and maintaining
      adequate internal control over the Company’s financial reporting, as such term
      is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act
      of
      1934, as amended. A company’s internal control over financial reporting is a
      process designed by, or under the supervision of, the company’s principal
      executive and principal financial officers, or persons performing similar
      functions, and effected by the company’s board of directors, management and
      other personnel to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in conformity with accounting principles generally accepted in the
      United States of America.





There
      are
      inherent limitations in the effectiveness of internal control over financial
      reporting, including the possibility that misstatements may not be prevented
      or
      detected. Accordingly, even effective internal controls over financial
      reporting, no matter how well designed and operated, can provide only
      reasonable, not absolute, assurance with respect to financial statement
      preparation. Furthermore, the effectiveness of internal controls can change
      with
      circumstances.





Management
      has assessed the effectiveness of the Company’s internal control over financial
      reporting as of June 30, 2007 based on the framework set forth by the Committee
      of Sponsoring Organizations of the Treadway Commission (“COSO”) in *Internal
      Control-Integrated Framework* .
      Based
      on that assessment, management has concluded that, as of June 30, 2007, the
      Company’s internal control over financial reporting is effective.





CF
&
      Co., L.L.P., an independent registered public accounting firm, has issued an
      attestation report on the effective operation of Epoch
      Holding Corporation and Subsidiaries' internal control over financial
      reporting as of June 30, 2007. As stated in their report appearing herein,
      CF & Co., L.L.P. has expressed an unqualified opinion on the effective
      operation of internal control over financial reporting as of June 30,
      2007.




F
          - 2


**Report
      of Independent Registered Public Accounting Firm**














To
      the
      Board of Directors and Stockholders of


Epoch
      Holding Corporation and Subsidiaries:





We
      have
      audited the accompanying balance sheets of Epoch Holding Corporation and
      Subsidiaries as of June 30, 2007 and 2006, and the related statements of
      operations, stockholders' equity and comprehensive income, and cash flows for
      each of the years in the three-year period ended June 30, 2007. We also have
      audited Epoch Holding Corporation and Subsidiaries' internal control over
      financial reporting as of June 30, 2007, based on criteria established in *Internal
      Control - Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
      Epoch Holding Corporation and Subsidiaries’ management is responsible for these
      financial statements, for maintaining effective internal control over financial
      reporting, and for its assessment of the effectiveness of internal control
      over
      financial reporting, included in the accompanying management report on internal
      control over financial reporting. Our responsibility is to express an opinion
      on
      these financial statements and an opinion on the company's internal control
      over
      financial reporting based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement and whether effective
      internal control over financial reporting was maintained in all material
      respects. Our audits of the financial statements included examining, on a test
      basis, evidence supporting the amounts and disclosures in the financial
      statements, assessing the accounting principles used and significant estimates
      made by management, and evaluating the overall financial statement presentation.
      Our audit of internal control over financial reporting included obtaining an
      understanding of internal control over financial reporting, assessing the risk
      that a material weakness exists, and testing and evaluating the design and
      operating effectiveness of internal control based on the assessed risk. Our
      audits also included performing such other procedures as we considered necessary
      in the circumstances. We believe that our audits provide a reasonable basis
      for
      our opinions.





A
      company's internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company's internal control
      over
      financial reporting includes those policies and procedures that (1) pertain
      to
      the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company; (2)
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the company are
      being made only in accordance with authorizations of management and directors
      of
      the company; and (3) provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use, or disposition of the company's
      assets that could have a material effect on the financial
      statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Epoch Holding Corporation and
      Subsidiaries as of June 30, 2007 and 2006, and the results of their operations
      and their cash flows for each of the years in the three-year period ended June
      30, 2007 in conformity with accounting principles generally accepted in the
      United States of America. Also in our opinion, Epoch Holding Corporation and
      Subsidiaries maintained, in all material respects, effective internal control
      over financial reporting as of June 30, 2007, based on criteria established
      in *Internal
      Control - Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission
      (COSO).




/s/
      CF
& Co., L.L.P.


CF
&
      Co., L.L.P.





Dallas,
      Texas


September
      12, 2007




F
          - 3





**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
        BALANCE SHEETS**
 ***(
        in thousands, except share data)***


**June
                  30,****2007**
              
              **2006****ASSETS****Current
                  assets:**Cash
                  and cash equivalents
              
              $
              3,097
              
              $
              2,234Short-term
                  investments - (**Note
                  2**)
              
              
              21,850
              
              
              5,400Accounts
                  receivable
              
              
              6,293
              
              
              2,486Marketable
                  securities (cost of $1,325) - (**Note
                  5**)
              
              
              3,789
              
              
              -Prepaid
                  and other current assets
              
              
              466
              
              
              316Total
                  current assets
              
              
              35,495
              
              
              10,436Property
                  and equipment (net of accumulated depreciation of $949 and $553,
                  respectively)
              
              
              2,013
              
              
              2,015Security
                  deposits
              
              
              1,072
              
              
              960Other
                  investments (cost of $755) - (**Note
                  2**)
              
              
              794
              
              
              -Investments
                  in technology-related businesses - (**Note
                  5**)
              
              
              -
              
              
              157Total
                  assets
              
              $
              39,374
              
              $
              13,568**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****Current
                  liabilities:**Accounts
                  payable and accrued liabilities
              
              $
              901
              
              $
              1,423Accrued
                  compensation and benefits
              
              
              1,810
              
              
              2,068Income
                  taxes payable
              
              
              99
              
              
              -Total
                  current liabilities
              
              
              2,810
              
              
              3,491Deferred
                  rent
              
              
              898
              
              
              1,011Subtenant
                  security deposit
              
              
              223
              
              
              211Total
                  liabilities
              
              
              3,931
              
              
              4,713**Commitments
                  and contingencies - (Note 7)****Stockholders'
                  equity:**Preferred
                  stock, series A convertible, $1 par value per share, 1,000,000
                  shares
                  authorized;10,000
                  shares issued and outstanding - (**Note
                  8**)
              
              
              10
              
              
              -Common
                  stock, $0.01 par value per share, 60,000,000 shares authorized;
                  19,935,817
                  and19,153,996
                  shares issued and outstanding, respectively
              
              
              199
              
              
              191Additional
                  paid-in capital
              
              
              43,852
              
              
              28,500Accumulated
                  deficit
              
              
              (6,357
              )
              
              (13,251
              )Unearned
                  share-based compensation
              
              
              (4,763
              )
              
              (6,585
              )Accumulated
                  other comprehensive income
              
              
              2,502
              
              
              -Total
                  stockholders' equity
              
              
              35,443
              
              
              8,855Total
                  liabilities and stockholders' equity
              
              $
              39,374
              
              $
              13,568




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





F
            - 4


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 ***(in
        thousands, except share data)***


**For
                the Years Ended June 30,****2007**
            
            **2006**
            
            **2005****Revenues:**Investment
                advisory and management fees
            
            $
            22,964
            
            $
            10,136
            
            $
            4,120Performance
                fees
            
            
            971
            
            
            95
            
            
            187Total
                operating revenues
            
            
            23,935
            
            
            10,231
            
            
            4,307**Operating
                expenses:**Employee
                related costs (excluding share-based compensation)
            
            
            13,878
            
            
            8,641
            
            
            5,777Share-based
                compensation
            
            
            6,267
            
            
            4,670
            
            
            3,427General,
                administrative and occupancy
            
            
            3,891
            
            
            2,584
            
            
            2,328Professional
                fees and services
            
            
            2,020
            
            
            1,050
            
            
            848Depreciation
                and amortization
            
            
            396
            
            
            341
            
            
            202Total
                operating expenses
            
            
            26,452
            
            
            17,286
            
            
            12,582**Operating
                loss**
            
            
            (2,517
            )
            
            (7,055
            )
            
            (8,275
            )**Other
                income: - (Notes 5, 11)**Realized
                gains on investments
            
            
            5,176
            
            
            169
            
            
            -Dividend
                income
            
            
            2,942
            
            
            -
            
            
            -Interest
                and other income
            
            
            2,391
            
            
            937
            
            
            808Gain
                from collection of notes and other settlements
            
            
            -
            
            
            -
            
            
            359Total
                other income
            
            
            10,509
            
            
            1,106
            
            
            1,167**Income
                (loss) from continuing operations, before income
                taxes**
            
            
            7,992
            
            
            (5,949
            )
            
            (7,108
            )Provision
                for (benefit from) income taxes
            
            
            99
            
            
            (227
            )
            
            -**Income
                (loss) from continuing operations, net of taxes**
            
            
            7,893
            
            
            (5,722
            )
            
            (7,108
            )Income
                from discontinued operations (including gain on disposal
                in2005
                of $572, net of $0 taxes) - (**Note
                13**)
            
            
            -
            
            
            -
            
            
            571**Net
                income (loss)**
            
            
            7,893
            
            
            (5,722
            )
            
            (6,537
            )Cumulative
                preferred stock dividends
            
            
            299
            
            
            -
            
            
            -Non-cash
                charge attributable to beneficial conversionfeature
                of preferred stock - (**Note
                8**)
            
            
            700
            
            
            -
            
            
            -**Net
                income (loss) available to common****stockholders**
            
            $
            6,894
            
            $
            (5,722
            )
            $
            (6,537
            )**Earnings
                (loss) per share****Basic:**Income
                (loss) from continuing operations
            
            $
            0.35
            
            $
            (0.31
            )
            $
            (0.39
            )Income
                from discontinued operations
            
            
            -
            
            
            -
            
            
            0.03**Total
                basic earnings (loss) per share**
            
            $
            0.35
            
            $
            (0.31
            )
            $
            (0.36
            )**Diluted:**Income
                (loss) from continuing operations
            
            $
            0.35
            
            $
            (0.31
            )
            $
            (0.39
            )Income
                from discontinued operations
            
            
            -
            
            
            -
            
            
            0.03**Total
                diluted earnings (loss) per share**
            
            $
            0.35
            
            $
            (0.31
            )
            $
            (0.36
            )




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




F
          - 5


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**
 **FOR
        THE YEARS ENDED JUNE 30, 2007, 2006 AND 2005**
 ***(Dollars
        and shares in thousands)***
 **Preferred****Stock**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                **Unearned**
                
                
                **Accumulated****Series
                    A**
                
                
                **Common**
                
                
                **Additional**
                
                
                
                
                
                **Share-**
                
                
                **Other**
                
                
                **Treasury**
                
                
                **Total****Convertible**
                
                
                **Stock**
                
                
                **Paid-in**
                
                
                **Accumulated**
                
                
                **Based**
                
                
                **Comprehensive**
                
                
                **Stock**
                
                
                **Stockholders'****Shares**
                
                
                **Amount**
                
                
                **Shares**
                
                
                **Amount**
                
                
                **Capital**
                
                
                **Deficit**
                
                
                **Compensation**
                
                
                **Income**
                
                
                **Shares****Amount**
                
                
                **Equity****Balances
                    at June 30, 2004**
                
                -
                
                $
                -
                
                
                19,529
                
                $
                195
                
                $
                38,696
                
                $
                (992
                )
                $
                (9,157
                )
                $
                -
                
                
                (1,694
                )
                $
                (16,055
                )
                $
                12,687Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (6,537
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                (6,537
                )*Comprehensive
                    loss*
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (6,537
                )Net
                    issuance of restricted common stock
                
                
                
                
                
                
                
                423
                
                
                4
                
                
                1,746
                
                
                -
                
                
                (1,587
                )
                
                
                
                
                -
                
                
                -
                
                
                163Amortization
                    of unearned share-based compensation
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,264
                
                
                
                
                
                -
                
                
                -
                
                
                3,264Recapitalization
                    to State of Delaware from Nevada:Retirement
                    of treasury stock
                
                
                
                
                
                
                
                (1,694
                )
                
                (17
                )
                
                (16,038
                )
                
                -
                
                
                -
                
                
                
                
                
                1,694
                
                
                16,055
                
                
                -Retirement
                    of outstanding J Net stock
                
                
                
                
                
                
                
                (17,905
                )
                
                (179
                )
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                (179
                )Reissuance
                    of Epoch Holding Corporation shares
                
                
                
                
                
                
                
                17,905
                
                
                179
                
                
                -
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                179**Balances
                    at June 30, 2005**
                
                -
                
                
                -
                
                
                18,258
                
                
                182
                
                
                24,404
                
                
                (7,529
                )
                
                (7,480
                )
                
                -
                
                
                -
                
                
                -
                
                
                9,577Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (5,722
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                (5,722
                )*Comprehensive
                    loss*
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (5,722
                )Net
                    issuance of restricted common stock
                
                
                
                
                
                
                
                812
                
                
                8
                
                
                3,767
                
                
                -
                
                
                (3,285
                )
                
                
                
                
                -
                
                
                -
                
                
                490Amortization
                    of unearned share-based compensation
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                4,180
                
                
                
                
                
                -
                
                
                -
                
                
                4,180Issuance
                    of common stock upon exercise of stock options
                
                
                
                
                
                
                
                84
                
                
                1
                
                
                329
                
                
                -
                
                
                -
                
                
                
                
                
                -
                
                
                -
                
                
                330**Balances
                    at June 30, 2006**
                
                -
                
                
                -
                
                
                19,154
                
                
                191
                
                
                28,500
                
                
                (13,251
                )
                
                (6,585
                )
                
                -
                
                
                -
                
                
                -
                
                
                8,855Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7,893
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7,893Other
                    comprehensive income (**Note
                    15**)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,502
                
                
                
                
                
                
                
                
                2,502*Comprehensive
                    income*
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                10,395Net
                    issuance of restricted common stock
                
                
                
                
                
                
                
                735
                
                
                7
                
                
                4,438
                
                
                -
                
                
                (3,933
                )
                
                
                
                
                -
                
                
                -
                
                
                512Amortization
                    of unearned share-based compensation
                
                
                
                
                
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                5,755
                
                
                
                
                
                -
                
                
                -
                
                
                5,755Issuance
                    of common stock upon exercise of stock 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 associated with preferred stock - (**Note
                    8**)
                
                
                
                
                
                
                
                
                
                
                
                
                
                700
                
                
                (700
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                -**Balances
                    at June 30, 2007**
                
                10
                
                $
                10
                
                
                19,935
                
                $
                199
                
                $
                43,852
                
                $
                (6,357
                )
                $
                (4,763
                )
                $
                2,502
                
                
                -
                
                $
                -
                
                $
                35,443


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




F
          - 6


**EPOCH
        HOLDING CORPORATION AND SUBSIDIARIES**


**CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 ***(
        in thousands)***


**For
                the Years Ended June 30,****2007**
            
            **2006**
            
            **2005****Cash
                flows from operating activities:**Net
                income (loss)
            
            $
            7,893
            
            $
            (5,722
            )
            $
            (6,537
            )Adjustments
                to reconcile net income (loss) to net cashprovided
                by (used in) operating activities:Share-based
                compensation
            
            
            6,267
            
            
            4,670
            
            
            3,427Depreciation
                and amortization
            
            
            396
            
            
            341
            
            
            202Realized
                gain on investments
            
            
            (5,176
            )
            
            (169
            )
            
            -Dividend
                income received in stock
            
            
            (2,240
            )
            
            -
            
            
            -Income
                from sale of discontinued operations
            
            
            -
            
            
            -
            
            
            (571
            )Gain
                from collection of notes
            
            
            -
            
            
            -
            
            
            (334
            )(Increase)
                decrease in operating assets:Accounts
                receivable
            
            
            (3,807
            )
            
            (1,265
            )
            
            (1,151
            )Prepaid
                and other current assets
            
            
            (150
            )
            
            (247
            )
            
            7(Decrease)
                increase in operating liabilities:Accounts
                payable and accrued liabilities
            
            
            (522
            )
            
            357
            
            
            6Accrued
                compensation and benefits
            
            
            (258
            )
            
            872
            
            
            205Income
                taxes payable
            
            
            99
            
            
            -
            
            
            (1,373
            )Deferred
                rent
            
            
            (113
            )
            
            30
            
            
            194Other,
                net
            
            
            -
            
            
            -
            
            
            (4
            )Net
                cash provided by (used in) continuing operations
            
            
            2,389
            
            
            (1,133
            )
            
            (5,929
            )Net
                cash provided by discontinued operations
            
            
            -
            
            
            -
            
            
            20**Net
                cash provided by (used in) operating activities**
            
            
            2,389
            
            
            (1,133
            )
            
            (5,909
            )**Cash
                flows from investing activities:**Purchases
                and sales of short-term investments, net
            
            
            (16,450
            )
            
            2,200
            
            
            867Proceeds
                from sales of investments
            
            
            6,247
            
            
            169
            
            
            -Purchases
                of other investments
            
            
            (754
            )
            
            -
            
            
            -Capital
                expenditures
            
            
            (394
            )
            
            (270
            )
            
            (1,961
            )Security
                deposits, net
            
            
            (100
            )
            
            197
            
            
            (497
            )Proceeds
                from sale of property and equipment
            
            
            -
            
            
            2
            
            
            -Landlord
                contributions to leasehold improvements
            
            
            -
            
            
            -
            
            
            615Collection
                of notes receivable
            
            
            -
            
            
            -
            
            
            534**Net
                cash (used in) provided by investing activities**
            
            
            (11,451
            )
            
            2,298
            
            
            (442
            )**Cash
                flows from financing activities:**Proceeds
                from issuance of Series A convertible preferred stock
            
            
            10,000
            
            
            -
            
            
            -Proceeds
                from stock option exercise
            
            
            313
            
            
            330
            
            
            -Preferred
                stock issuance costs
            
            
            (89
            )
            
            -
            
            
            -Preferred
                stock dividends paid
            
            
            (299
            )
            
            -
            
            
            -**Net
                cash provided by financing activities**
            
            
            9,925
            
            
            330
            
            
            -**Net
                increase (decrease) in cash and cash****equivalents
                during year**
            
            
            863
            
            
            1,495
            
            
            (6,351
            )Cash
                and cash equivalents at beginning of year
            
            
            2,234
            
            
            739
            
            
            7,090Cash
                and cash equivalents at end of year
            
            $
            3,097
            
            $
            2,234
            
            $
            739**Supplemental
                cash flow information:**Cash
                paid for interest
            
            $
            -
            
            $
            -
            
            $
            110Cash
                paid for income taxes
            
            $
            -
            
            $
            -
            
            $
            1,373Cash
                received from income tax refund
            
            $
            -
            
            $
            227
            
            $
            -**Supplemental
                disclosures of non-cash investing and financing
                activities:**Change
                in accumulated other comprehensive income
            
            $
            2,502
            
            $
            -
            
            $
            -




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




F
          - 7




**EPOCH
      HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE YEARS ENDED JUNE 30, 2007, 2006, AND 2005**





**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 Value, Global Absolute Return,
      International Small Cap, Balanced Portfolios, and Global Equity Shareholder
      Yield.





Unless
      specifically stated otherwise, references to FY 2007, FY 2006 and FY 2005 refer
      to the fiscal years ended June 30, 2007, June 30, 2006, and June 30, 2005,
      respectively.





***Company
      Structure and Discontinued Operations:***


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





Prior
      to
      the June 2, 2004 business combination, J Net conducted its operations in the
      internet-based, e-commerce industry. Immediately following the closing of the
      transaction with EIP, management initiated a formal plan to dispose of the
      internet-based business and shift its business focus and capital resources
      to
      the operations of EIP. In September 2004, the internet-based operations were
      sold to the management of that business segment. The results of operations
      for
      that business segment have been reported as discontinued
      operations.





***Business
      segments*** **:**


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




**Note
      2 - Summary of Significant Accounting Policies**





***Principles
      of consolidation and basis of presentation*** **:**


The
      accompanying consolidated financial statements include the accounts of the
      Company and its subsidiaries. All material intercompany accounts and
      transactions have been eliminated in consolidation.





Certain
      reclassifications have been made to prior period financial statements to conform
      with the current period presentation. See discussion of “short term investments”
on the next page.





***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 consolidated financial statements
      and
      the reported amounts of revenue and expenses during the reporting periods.
      Actual results could differ from those estimates.




F
          - 8




***Fair
      value of financial instruments*** **:**


The
      carrying value of the Company's cash and cash equivalents, short-term
      investments, accounts receivable, accounts payable and accrued expenses
      approximates fair value due to their short-term nature. 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 in the consolidated balance sheets. 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 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.





***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, net of tax,
      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
      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.





***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.





F
          - 9




***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
      Consolidated Balance Sheet and 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 at time of
      purchase. Any resulting change in market value is record as unrealized gain
      or
      loss, net of tax, in Accumulated Other Comprehensive Income, a
      separate component of stockholders’ equity.





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


The
      Company holds minority investments in a few privately held, active
      technology-related companies. Ownership in each of these companies is less
      than
      20%. The Company uses the cost method to account for these investments.





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





Investments
      in technology-related businesses had no carrying value as of June 30, 2007
      and
      only one such investment, Tellme Networks, Inc. (“Tellme”) had any value
      ascribed to it at June 30, 2006. The carrying value of Tellme had been written
      down due to purchase accounting adjustments in the J Net merger. All other
      investments in technology-related businesses had been fully impaired in periods
      prior to June 30, 2005. Dispositions of certain investments in
      technology-related businesses during FY 2007 are discussed in Note 5c).





There
      are
      no plans to make additional investments in technology-related businesses.





***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.





F
          - 10





***Share-based
      compensation:***


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




Under
      the
      modified prospective method transition of SFAS 123R, compensation costs related
      to any non-vested portion of stock option awards outstanding at the adoption
      date are based on the grant date fair value of those awards. All outstanding
      stock options were fully vested prior to the adoption of SFAS 123R. There were
      no further stock options issued for all years presented.




***Income
      taxes*** **:**


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





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


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





***Comprehensive
      income (loss):***


Total
      comprehensive income (loss) is reported on the consolidated statements of
      stockholder’s equity and includes net income (loss) and the change in unrealized
      gains (losses) on investment securities available-for-sale.





***Recently
      issued accounting standards*** **:**


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





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
      has completed its initial evaluation of the impact of FIN 48 and believes the
      adoption of FIN 48 will not have a material effect on its
      consolidated financial position, results of operations, or cash
      flows.





F
          - 11




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





**Note
      3 - Accounts Receivable**





The
      Company's accounts receivable balances do not include an allowance for doubtful
      accounts and there have been no bad debt expenses recognized during the fiscal
      years ended June 30, 2007, 2006 and 2005, respectively. Management believes
      these receivables are fully collectible.





***Significant
      customers and contracts*** **:**


For
      the
      fiscal year ended June 30, 2007, two customers accounted for 41% of consolidated
      revenues. CI Investments Inc. (“CI”), a Canadian-owned investment
      management company, accounted for approximately 17%, 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 24%. The Company's
      services and relationships with these clients are important to the Company's
      ongoing growth strategy, and retention of these customers is significant to
      the
      ongoing results of operations and liquidity of the Company.





During
      FY
      2006, two customers accounted for 42% of consolidated revenues. CI accounted
      for
      approximately 22% of FY 2006 revenues while Genworth accounted for approximately
      20%.





F
          - 12




During
      FY
      2005, two customers accounted for 43% of consolidated revenues. CI accounted
      for
      approximately 36% of FY 2005 revenues while Genworth, through its investments
      in
      EPIEX, accounted for approximately 7%




**Note
      4 - Property and Equipment**





As
      of
      June 30, 2007 and 2006, property and equipment consisted of the following
      ( *dollars
      in thousands* ) *:*




**June
                  30,****2007**
              
              **2006**Leasehold
                  improvements
              
              $
              1,855
              
              
              1,656Equipment
                  and office furniture
              
              
              786
              
              $
              684Purchased
                  software
              
              
              321
              
              
              228Total
                  property and equipment
              
              
              2,962
              
              
              2,568Less:
                  accumulated depreciation and amortization
              
              
              (949
              )
              
              (553
              )Total
                  property and equipment, net
              
              $
              2,013
              
              $
              2,015


**Note
      5 - Investments in Technology-Related Businesses**





**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 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 it’s
        approximately 5% proportionate share of remaining merger consideration.
        Accordingly, the Company received 2,431,577 common shares of ARTG and $267
        thousand in cash. The resultant shares received by the Company were classified
        as Marketable Securities on the Consolidated Balance Sheet in accordance
        with
        SFAS No. 115, *Accounting
        for Certain Investments in Debt and Equity Securities,* and
        recorded at their fair value of $6.3 million on October 2, 2006. Unrealized
        gains of $4.0 million were recognized in comprehensive income for ARTG common
        shares received as consideration for eStara preferred stock. Realized gains
        of
        $0.2 million were recorded for cash received as payment for eStara preferred
        shares. Dividend income of $2.4 million was recognized for common shares
        and
        cash received in payment of cumulative dividends on the eStara preferred
        stock.
 
 F
            -
            13
  An
        additional $42 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 common shares received from
        ARTG
        are subject to a lock-up agreement pursuant to which the shares will be released
        in equal monthly installments over a period of 12 months, which commenced
        January 2007. Realized gains of $1.5 million from subsequent sales of $1.0
        million ARTG shares were reclassified from comprehensive income and recognized
        in the statement of operations in FY 2007.


**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.





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. Such amount consisted of realized gain of $1.6 million and
      dividend income $0.6 million. The SDC merger also calls for contingent payments,
      dependent upon the achievement of certain targets and milestones after the
      merger is consummated, 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 June 30, 2007, as such amounts are not
      readily estimable or determinable at this time.





**c)** ***Tellme
      Corporation Transaction:***


During
      the fiscal year ended June 30, 2001, J Net, the predecessor company to Epoch,
      made a $2.0 million investment in Tellme Networks, Inc. (“Tellme”), a
      technology-related company that specializes in voice technologies. This
      investment was comprised of 137,450 shares of Series D convertible preferred
      stock. As there was no readily available market for the securities and the
      investment represented less than a 20% interest in Tellme, the securities were
      valued at the Company’s initial cost. The investment in Tellme was reduced from
      $2.0 million to $157 thousand at June 1, 2004. This reduction was due to
      purchase accounting adjustments in the J Net merger. As of March 12, 2007,
      the
      carrying value of the investment remained at $157 thousand.




On
      March
      12, 2007, Tellme announced an agreement by Microsoft Corporation (“Microsoft”)
      to acquire all of the outstanding common stock, preferred stock, and vested
      and
      unvested stock options of Tellme. This merger closed on April 30, 2007. As
      a
      result of the merger, the Company, as holder of the preferred stock of Tellme,
      received a cash payment of approximately $2.0 million during the quarter ended
      June 30, 2007. Accordingly, approximately $1.8 million was included in realized
      gains for the fiscal year ended June 30, 2007.





***d)
      Other Transactions:***


The
      Company recorded gains of $169 thousand from two of the inactive
      technology-related companies during the year ended June 30, 2006.





F
          - 14




**Note
      6 - Accounts Payable and Accrued Liabilities**





Accounts
      payable and accrued liabilities consisted of the following ( *in
      thousands* ) *:*


**June
                  30,****2007**
              
              **2006**Trade
                  accounts payable
              
              $
              511
              
              
              173Accrued
                  professional fees
              
              
              67
              
              $
              86Accrued
                  expenses and other
              
              
              323
              
              
              1,164Total
                  accounts payable and accrued liabilities
              
              $
              901
              
              $
              1,423




**Note
      7 - 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 $1.8 million at June
      30,
      2007.  Of
      this
      amount, approximately $0.4 million is included in accrued compensation and
      benefits on the Consolidated Balance Sheet at June 30, 2007 .
      An
      additional $0.9 million will be accrued during the fiscal year ended June
      30,
      2008. Approximately $0.5 million represents restricted stock awards to be issued
      during the fiscal year ending June 30, 2008.




The
      Company was obligated to enter into an employment agreement with its Chief
      Executive Officer prior to June 2, 2007, the third anniversary of the business
      combination with EIP. 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.





***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.





***Leases*** **:**


The
      Company's primary headquarters and operations are located in New York, NY.
      Business is conducted at a location with approximately 10,000 square feet under
      a long-term lease that expires in September 2015. To
      accommodate for the growth in business, the Company entered into a sublease
      agreement for an additional 3,100 square feet at its Company headquarters
      effective February 1, 2007. This lease expires in June 2010.





The
      Company is also the primary party to another lease in New York, NY with
      approximately 8,500 square feet, which expires in November 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 June 30,
      2007, the remaining future minimum payments under this lease total $1.6 million.
      Future minimum receipts from the subtenant, net of profit sharing with the
      landlord, total $1.8 million as of June 30, 2007.





F
          - 15




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





Total
      rental expenses for the Company's continuing operations were $1.2 million,
      $1.1
      million and $975 thousand for the fiscal years ended June 30, 2007, 2006 and
      2005, respectively. Rental income under the sublease, net of profit sharing
      expenses with the primary landlord were $559 thousand, $570 thousand and $560
      thousand for the fiscal years ended June
      30,
      2007, 2006, and 2005, respectively. Rental expenses for the discontinued
      operations in FY 2005 were $26 thousand.





The
      following table outlines the minimum annual lease obligations of the Company
      and
      related sub-lease receipts ( *dollars
      in thousands* )


**For
                      the Years Ending June 30,**
                  
                  **Gross**
                  
                  **Sublease**
                    **Receipts**
                  
                  **Net**
                    **Commitment**2008
                  
                  $
                  1,525
                  
                  $
                  (574
                  )
                  $
                  9512009
                  
                  
                  1,500
                  
                  
                  (574
                  )
                  
                  9262010
                  
                  
                  1,491
                  
                  
                  (574
                  )
                  
                  9172011
                  
                  
                  905
                  
                  
                  (95
                  )
                  
                  8102012
                  
                  
                  717
                  
                  
                  -
                  
                  
                  7172013
                      and thereafter
                  
                  
                  2,330
                  
                  
                  -
                  
                  
                  2,330Total
                      minimum lease payments(receipts)
                  
                  $
                  8,468
                  
                  $
                  (1,817
                  )
                  $
                  6,651


***Investment
      management contracts:***


Most
      of
      the Company's revenues are derived pursuant to written investment advisory
      and
      management agreements. These agreements may be terminated by either party with
      notice or terminated in the event of an “assignment” (as defined in the
      Investment Company Act of 1940 as amended (the “1940 Act”)). Generally, any
      change in control of the Company would constitute an “assignment” under the 1940
      Act. Additionally, mutual fund agreements generally must be approved and renewed
      annually.





**Note
      8 - Preferred Stock Issuance**




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





The
      Company intends to use the proceeds for general business purposes and to support
      the Company's future growth. Stock issuance costs of $89 thousand were for
      legal
      and accounting services. No placement or other broker fees were paid in
      connection with this transaction.




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





F
          - 16




The
      conversion price of $6.00 per common share contained a beneficial conversion
      feature of $0.42 per share to the November 6, 2006 closing price of $6.42.
      This
      beneficial conversion feature of $0.7 million, which is the difference between
      the above closing price and the conversion price, was fully amortized through
      retained earnings (accumulated deficit) at the date of closing. A corresponding
      amount was credited to additional paid-in capital.




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




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




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




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




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





**Note
      9 - Long-Term Incentive Compensation**





***2004
      Omnibus Long-Term Incentive Compensation Plan:***


At
      the
      annual meeting of shareholders on November 18, 2004, stockholders approved
      the
      2004 Omnibus Long-Term Incentive Compensation Plan (the “2004 Plan”). The 2004
      Plan allows the Company to issue 3,000,000 shares of common stock subject to
      stock options, restricted stock awards or other share-based compensation. The
      Plan
      terminates at the earliest of (a) the time no shares remain available for
      issuance under the Plan, (b) the Plan is terminated by the Board, or (c) the
      tenth anniversary of the Effective Date.  Awards outstanding upon
      expiration of the Plan remain in effect until they have been exercised or
      terminated, or have expired. Restricted
      stock awards issued to employees under the 2004 Plan vest at the rate of 12.5%
      immediately and remaining amounts vest at the rate of 12.5%, 25%, and 50% upon
      the completion of the first, second, and third years of service,
      respectively. During fiscal year ended June 30, 2007, a total
      of 695,893 shares of restricted stock were issued to employees of the
      Company under the Company's 2004 Plan at a weighted average price of $6.13,
      while 838,906 and 294,796 shares, respectively were issued during fiscal years
      ended June 30, 2006 and 2005 at a weighted average price of $4.64 and $4.41
      per
      share, respectively. At June 30, 2007 there were 1,971,403 shares issued and
      1,028,597 shares available for issuance under this Plan.





Subsequent
      to June 30, 2007, the Company granted 152,673 shares of restricted stock to
      employees at a weighted average price of $11.56 per share.





F
          - 17




In
      addition, for FY 2007, 2006, and 2005 non-employee directors of the Company
      received common stock equal to $50,000 per year for their services. One award
      was made in FY 2007. Two awards were made to non-employee directors in FY 2005,
      one for FY 2005 services and one in advance of FY 2006 services. Total shares
      issued to non-employee directors for FY 2007 were 66,228 shares at a weighted
      average price of $5.08. These shares vest fully in one year, as do all future
      grants issued to non-employee directors. The awards issued in FY 2005 were
      128,316 shares at a weighted average price of $3.51 per share. Those shares
      vest
      one-third per year over a three year period from the date of issuance. Commencing
      in FY 2008, non-employee directors will receive $80,000 per year for their
      services. Non-employee director compensation is to be paid in all stock, or
      $60,000 in stock and $20,000 in cash at the election of the director.




Subsequent
      to June 30, 2007, 35,604 shares were issued to non-employee directors at a
      weighted average price of $13.39 in advance of FY 2008 services.





A
      summary
      of the status of the Company's nonvested shares under the 2004 Plan and Merger
      Agreement, as of June 30, 2007, 2006, and 2005 respectively, as well as changes
      during the years ended June 30, 2007, 2006, and 2005 is presented
      below *(shares in thousands):*




**For
                  the Years Ended June
                  30,****2007**
              
              **2006**
              
              **2005****Weighted**
              
              
              
              **Weighted**
              
              
              
              **Weighted****Average**
              
              
              
              **Average**
              
              
              
              **Average******Grant-Date****
              
              
              
              **Grant-Date**
              
              
              
              **Grant-Date****Shares**
              
              **Fair
                  Value**
              
              **Shares**
              
              **Fair
                  Value**
              
              **Shares**
              
              **Fair
                  Value**Nonvested
                  at beginning of
                  the period
              
              
              4,176
              
              $
              2.35
              
              
              5,127
              
              $
              1.84
              
              
              5,531
              
              $
              1.66Granted
                  under the 2004 Plan
              
              
              762
              
              
              6.04
              
              
              839
              
              
              4.64
              
              
              423
              
              
              4.14Shares
                  vested under:Merger
                Agreement
              
              
              (3,160
              )
              
              1.66
              
              
              (1,580
              )
              
              1.66
              
              
              (790
              )
              
              1.662004
                Plan
              
              
              (296
              )
              
              4.87
              
              
              (183
              )
              
              4.33
              
              
              (37
              )
              
              4.41Forfeited
              
              
              (26
              )
              
              6.08
              
              
              (27
              )
              
              4.49
              
              
              —
              
              
              —Nonvested
                at end of the period
              
              
              1,456
              
              $
              5.20
              
              
              4,176
              
              $
              2.35
              
              
              5,127
              
              $
              1.84




As
      of
      June 30, 2007, there was $4.8 million of total unrecognized compensation cost
      related to nonvested share-based compensation arrangements granted under the
      Plan.  That cost is expected to be recognized over a weighted-average
      period of 2.0 years.  The total fair value, based on grant date, of
      shares vested during the years ended June 30, 2007, 2006, and 2005, was $6.3
      million, $4.7 million, and $3.4 million, respectively.





***Rights
      plan*** **:**


In
      June
      1994, the Board of Directors approved a Stockholder Rights Plan. On July 11,
      1994, J Net declared a dividend distribution of one Preferred Stock purchase
      right (the “Rights”) payable on each outstanding share of the Company's common
      stock, as of July 15, 1994. The Rights became exercisable only in the event,
      with certain exceptions, an acquiring party accumulated 15% or more of the
      Company's voting stock, or if a party announced an offer to acquire 30% or
      more
      of the Company's voting stock. Each Right entitled the holder to purchase
      one-hundredth of a share of a Series A Junior Preferred Stock at a price of
      $30.
      In addition, upon the occurrence of certain events, holders of the Rights were
      entitled to purchase either Preferred Stock or shares in an “acquiring entity”
at half of market value. The June 2, 2004 business combination with EIP did
      not
      create an event contemplated by the Rights Plan. The Rights expired, according
      to their terms, on July 15, 2004.




F
          - 18




***Expired
      stock option plans*** **:**


On
      January 12, 1993, J Net's stockholders approved the 1992 Incentive and
      Non-qualified Stock Option Plan (the “1992 Plan”). On August 17, 1994, the Board
      adopted certain amendments (the “Amendments”) to the 1992 Plan which were
      approved by J Net's stockholders on January 10, 1995. The Amendments increased
      the number of shares of J Net's common stock authorized for issuance pursuant
      to
      the 1992 Plan from 1,045,000 to 2,545,000. The 1992 Plan terminated in
      accordance with its terms on September 30, 2002. Options outstanding at the
      termination date totaled 877,500 and remain outstanding until they are exercised
      or expire. As of June 30, 2007 and 2006, options outstanding under the 1992
      Plan
      were 460,000 and 520,000, respectively.





Although
      the 1992 Plan has expired, the issued and outstanding options remain in force
      until they are exercised, canceled or expire. Options outstanding under the
      1992
      stock option plan are summarized as follows *(shares in thousands)* :





**For
                  the Years Ended June 30,****2007**
              
              **2006**
              
              **2005****Weighted**
              
              
              
              **Weighted**
              
              
              
              **Weighted****Average**
              
              
              
              **Average**
              
              
              
              **Average****Exercise**
              
              
              
              **Exercise**
              
              
              
              **Exercise****Shares**
              
              **Price**
              
              **Shares**
              
              **Price**
              ****
              **Shares**
              
              **Price**Fixed
                  options:Outstanding
                  atbeginning
                  of period
              
              
              520
              
              $
              10.20
              
              
              658
              
              $
              8.91
              
              
              795
              
              $
              9.05Granted
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              (60
              )
              
              10.42
              
              
              (110
              )
              
              4.00
              
              
              -
              
              
              -Cancelled
              
              
              -
              
              
              -
              
              
              (28
              )
              
              4.00
              
              
              (137
              )
              
              9.73Outstanding
                  and exercisableat
                  the end of the year
              
              
              460
              
              $
              10.18
              
              
              520
              
              $
              10.20
              
              
              658
              
              $
              8.91




The
      intrinsic value of options exercised during FY 2007 and FY 2006 was
      approximately $0.3 million and $22 thousand, respectively.




The
      following table summarizes information about the 1992 Plan stock options
      outstanding at June 30, 2007 *(shares in thousands):*


**Options
                  Outstanding****Weighted****Remaining**
              
              **Average****Exercise**
              
              **Number**
              
              **Contractual**
              
              **Exercise****Prices**
              
              **Outstanding**
              
              **Life**
              
              **Price**$10.1250
              
              
              450
              
              
              2.59
                  years
              
              $
              10.1250$12.4375
              
              
              10
              
              
              2.92
                  years
              
              $
              12.4375








All
      of
      the options in the table on the previous page are exercisable as of June 30,
      2007. The intrinsic value of outstanding options under the above plan at June
      30, 2007 was $1.5 million.




F
          - 19




***Other
      nonqualified stock options*** **:**


On
      September 14, 1999, nonqualified stock options to purchase an aggregate of
      140,000 shares of common stock were granted to the J Net Board of Directors
      and
      a non-employee then serving as the Secretary at an exercise price of $9.00
      per
      share, the fair market value on the date of grant. The options vested 50% on
      each of the first and second anniversaries of the date of grant and expire
      ten
      years from the date of grant. On October 31, 2001, a total of 30,000 options
      were cancelled as a result of a director's resignation.





On
      June
      21, 2000, nonqualified stock options to purchase an aggregate of 500,000 shares
      of common stock were granted to the former President and Chief Operating Officer
      and the former Executive Vice President and Chief Financial Officer at an
      exercise price of $13.13 per share, the fair market value on the date of the
      grant. The options vested in thirds on each of the first, second and third
      anniversaries of the date of grant and expire ten years from the date of the
      grant. As of June 30, 2003, all the options were exercisable. On June 21, 2003,
      the former President and Chief Operating Officer and the former Executive Vice
      President and Chief Financial Officer's employment contracts expired and were
      not renewed. The expiration of those contracts did not affect the expiration
      of
      the options, which expire on June 21, 2010.





There
      were no nonqualified options granted during the fiscal years ended June 30,
      2007, 2006 and 2005, respectively.





Changes
      in nonqualified options outstanding are summarized below ( *shares
      in thousands* ):





**For
                  the Years Ended June 30,****2007**
              
              **2006**
              
              **2005****Weighted**
              
              
              
              **Weighted**
              
              
              
              **Weighted****Average**
              
              
              
              **Average**
              
              
              
              **Average****Exercise**
              
              
              
              **Exercise**
              
              
              
              **Exercise****Shares**
              
              **Price**
              
              **Shares**
              
              **Price**
              
              **Shares**
              
              **Price**Fixed
                  options:Outstanding
                  atbeginning
                  ofperiod
              
              
              610
              
              $
              12.38
              
              
              610
              
              $
              12.38
              
              
              610
              
              $
              12.38Granted
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              (35
              )
              
              9.00
              
              
              -
              
              
              -
              
              
              -
              
              
              -Cancelled
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Outstanding
                  and exercisableat
                  the end of year
              
              
              575
              
              $
              12.59
              
              
              610
              
              $
              12.38
              
              
              610
              
              $
              12.38




The
      intrinsic value of options exercised during FY 2007 was approximately $0.2
      million.





F
          - 20




The
      following table summarizes information about the nonqualified stock options
      outstanding at June 30, 2007 ( *shares
      in thousands* ):


**Options
                  Outstanding****Weighted****Remaining**
              
              **Average****Exercise**
              
              **Numbe**r
              
              **Contractual**
              
              **Exercise****Prices**
              
              **Outstanding**
              
              **Life**
              
              **Price**$9.00
              
              
              75
              
              
              2.21
                  years
              
              $
              9.00$13.125
              
              
              500
              
              
              2.98
                  years
              
              $
              13.125





All
      of
      the above options are exercisable as of June 30, 2007. The
      intrinsic value of outstanding options under the above plan at June 30, 2007
      was
      $0.5 million.





**Note
      10 - Defined Contribution Plan**





The
      Company sponsors a defined contribution plan (the “Plan”) for all of its
      employees. The Plan qualifies as a deferred salary arrangement under Section
      401(k) of the Internal Revenue Code. Under the Plan, participating employees
      may
      defer up to 60% of their pre-tax gross wages, subject to annual Internal Revenue
      Code contribution limits. Employees vest immediately in their contributions.
      The
      Plan allows ** the
      Company to make discretionary contributions. The Company made a contribution
      of
      approximately $84 thousand to the Plan during FY 2007, its first such
      contribution. The Company intends to contribute to the Plan on an annual basis.
      These annual company contributions vest immediately.





During
      the fiscal year ended June 30, 2005, the Company eliminated a 401(k)
      contribution plan that was in place prior to the business combination. All
      participants in that former plan have been transitioned to the surviving
      plan.





**Note
      11 - Other Income**




In
      November 2000, J Net, the predecessor company to Epoch, recorded an accrued
      liability related to a sale of certain assets to an unrelated third party.
      The
      recorded amount of $950 thousand represented management’s best estimate of
      additional settlement amounts due. In late November 2006, a final assessment
      was
      made by management which resulted in the reversal of the previously recorded
      accrual. This
      amount is included in "Interest and other income" on the statement of operations
      for FY 2007.




F
          - 21




**Note
      12 - Income Taxes**





The
      Company files a consolidated U.S. federal income tax return reflecting the
      income (loss) of Epoch Holding Corporation and its subsidiaries. The components
      of the provision for (benefit from) income tax are as follows ( *dollars
      in thousands* ):




**For
                  the Years Ended June 30,****2007**
              
              **2006**
              
              **2005**Current
                  income tax expense (benefit):Federal
              
              $
              1,265
              
              $
              (1,166
              )
              $
              (292
              )State
                  and local
              
              
              387
              
              
              (353
              )
              
              (88
              )Alternative
                  minimum tax
              
              
              99
              
              
              -
              
              
              -Settlements/
                  adjustments resulting fromIRS
                  audit
              
              
              -
              
              
              (227
              )
              
              6,998Total
                  current income tax expense (benefit)
              
              
              1,751
              
              
              (1,746
              )
              
              6,618Deferred
                  income tax (benefit) expense :Federal
              
              
              (1,265
              )
              
              1,166
              
              
              292State
                  and local
              
              
              (387
              )
              
              353
              
              
              88Benefit
                  of NOLs offsetting IRS auditadjustment
              
              
              -
              
              
              -
              
              
              (4,438
              )Benefit
                  of capital losses offsetting IRSaudit
                  adjustment
              
              
              -
              
              
              -
              
              
              (2,560
              )Total
                  deferred income tax (benefit) expense
              
              
              (1,652
              )
              
              1,519
              
              
              (6,618
              )Total
                  income tax provision (benefit)
              
              $
              99
              
              $
              (227
              )
              $
              -




In
      May
      2003 the Company underwent an audit by the IRS with respect to its fiscal years
      ended June 30, 2001 and June 30, 2002 (the “audit period”). In July 2004, the
      Company paid $1.5 million for tax items associated with the IRS
      audit.




In
      January 2005 the Company received an additional inquiry from the IRS related
      to
      calculations of alternative minimum taxes for the audit period. The Company
      met
      with the IRS and presented pertinent data and other factual information which
      demonstrated that no additional taxes were due. The IRS concurred with the
      Company’s position. In April 2006, the Company received a refund of $227
      thousand with respect to the above and management now considers this matter
      to
      be closed. This amount was included in “benefit from income taxes” on the
      Statement of Operations for the year ended June 30, 2006.





F
          - 22




The
      Company’s effective income tax rate for the years ended June 30, 2007, 2006, and
      2005 differs from the amount computed using income before income taxes and
      applying the U.S. federal income tax rate to such amounts because of the effect
      of the following items:




**For
                  the Years Ended June 30,****2007**
              
              **2006**
              
              **2005**U.S.
                  federal statutory income tax rate
              
              
              34.0
              %
              
              (34.0
              %)
              
              (34.0
              %)Increase
                  (decrease) in tax resulting from:Share-based
                  compensation
              
              
              13.0
              
              
              17.4
              
              
              15.9Alternative
                  minimum tax
              
              
              1.2
              
              
              —
              
              
              —Basis
                  difference on sale of investment
              
              
              (7.8
              )
              
              —
              
              
              —Dividend
                  received deduction
              
              
              (8.8
              )
              
              —
              
              
              (0.1
              )Valuation
                  allowance
              
              
              (29.6
              )
              
              (83.9
              )
              
              (97.0
              )Built-in
                  losses disallowed (in excess of Section 382 limits)
              
              
              —
              
              
              100.4
              
              
              —IRS
                  audit adjustments
              
              
              —
              
              
              (3.8
              )
              
              111.6Other
              
              
              (0.8
              )
              
              0.1
              
              
              3.6Effective
                  income tax rate
              
              
              1.2
              %
              
              (3.8
              %)
              
              0.0
              %




In
      accordance with SFAS 109, deferred tax assets should be reduced by a valuation
      allowance if it is more likely than not that some portion or all of the deferred
      tax assets will not be realized. The future realization of the Company’s
      deferred tax assets depends upon the availability of sufficient future taxable
      income. In making this determination, the Company considered all available
      positive and negative evidence. The Company considered, among other things,
      the
      overall business environment, the Company’s historical earnings including
      significant pretax losses since inception, and industry outlook. As a result
      of
      the Company’s limited earnings history, a full valuation allowance has been
      placed on its deferred tax assets. The Company will assess the need for a
      deferred tax asset valuation allowance on an ongoing basis considering the
      factors mentioned above as well as other relevant criteria.




InterWorld
      Corporation, an inactive subsidiary, completed bankruptcy proceedings in August
      of 2005. This investment had been written down to zero in prior years
      for financial reporting purposes. For tax purposes, this built-in loss
      was recognized at the time of bankruptcy completion in FY 2006. A
      significant portion of the built-in loss resulting from this bankruptcy is
      disallowed under section 382 of the IRC.





F
          - 23





Deferred
      income taxes are provided for the effects of temporary differences between
      the
      tax basis of assets and liabilities and their reported amounts in the
      consolidated financial statements. These temporary differences will result
      in
      future income or deductions for income tax purposes and are measured using
      the
      federal enacted rate together with the state and local enacted tax rates, net
      of
      federal benefit that will be in effect when such items are expected to reverse.
      This rate is approximately 44.3% for all years presented. The Company has
      recorded a valuation allowance equal to the entire amount of the net deferred
      tax asset, as, based upon currently available evidence, it is more
      likely than not that these tax benefits will not be realized. Significant
      components of the Company's deferred income tax assets and liabilities are
      as
      follows *(dollars
      in thousands)* :


**2007**
              
              **2006**Deferred
                  tax assets:Net
                  operating loss carryfowards
              
              $
              5,251
              
              $
              7,192Share-based
                  compensation
              
              
              1,258
              
              
              495Equity
                  method losses and impairments
              
              
              1,095
              
              
              2,276Accrued
                  compensation
              
              
              721
              
              
              910Leasehold
                  improvement impairments
              
              
              213
              
              
              276Alternative
                  minimum tax credit
              
              
              99
              
              
              -Depreciation
                  and amortization
              
              
              81
              
              
              51Accruals
                  and other
              
              
              18
              
              
              521Total
                  gross deferred tax assets
              
              
              8,736
              
              
              11,721Total
                  deferred tax liability
              
              
              -
              
              
              -Total
                  gross deferred tax assets, net of deferred tax liability
              
              
              8,736
              
              
              11,721Less:
                  valuation allowance
              
              
              (8,736
              )
              
              (11,721
              )Total
                  net deferred tax assets
              
              $
              -
              
              $
              -




The
      Company reversed a valuation allowance of approximately $3 million at June
      30,
      2007 primarily as a result of the application of net operating loss carryfowards
      to reduce current taxable income to zero, as well as to reflect changes in
      other
      temporary items.





The
      Company's net operating losses (“NOLs”) can be carried forward pursuant to
      Federal tax regulations. The Company has $11.9 million of NOLs which expire
      between 2022 and 2026.




An
      additional $1.4 million of stock compensation costs resulting in tax benefits
      is
      also being carried forward for the same period. Future income taxes payable
      amounts will be reduced by these stock compensation costs when the Company
      is in a regular income tax position.




The
      Company completed a reverse merger business combination with EIP on June 2,
      2004. As a result, the ability to utilize certain NOLs became limited as a
      result of a greater than 50% change in ownership. These limitations are covered
      by Section 382 of the Internal Revenue Code (“IRC”). IRC Section 382 limits the
      annual utilization of NOLs accumulated prior to the ownership change to a
      percentage of the acquired entity's fair value at the time of the change in
      ownership. Approximately $10.2 million of such NOLs can be utilized against
      taxable income only at a rate of approximately $600 thousand per year due to
      limitations imposed by Section 382 of the IRC.




F
          - 24




**Note
      13 - Discontinued Operations**




***Selected
      financial data - discontinued operations:***


Following
      is the summary operating results of the discontinued operations for FY 2005,
      which represent the fiscal 2005 period of July 1, 2004 through the date of
      sale,
      September 9, 2004 ( *dollars
      in thousands* ) *:*


**FY
                  2005****(July
                  1, 2004 —****September
                  9, 2004)**Revenues
              
              $
              293Costs
                  and expenses
              
              
              (294
              )Loss
                  from discontinuedoperations
                  before income taxes
              
              
              (1
              )Provision
                  for income taxes
              
              
              -
              (a)Loss
                  from discontinued operations, netof
                  income taxes
              
              
              (1
              )Gain
                  on sale of discontinuedoperations
              
              
              572Income
                  from discontinued operations,net
                  of income taxes
              
              $
              571




(a) *There
      are no income taxes due to utilization of available net operating loss
      carryforwards.*





In
      September 2004, the Company completed the sale of its e-commerce software
      operations to the former management of that segment. Consideration to the
      Company came in the form of a 19.9% membership interest in the buyer's entity,
      the assumption by the buyer of liabilities of $466 thousand, and the issuance
      of
      a $534 thousand secured promissory note (the “Note”) to the Company. The Note
      was due 5 years from the date of issuance, bore interest at 6.5% per annum
      and
      was secured by all of the assets that were purchased in the transaction.
      Payments of principal on the Note were to be made at a rate of 50% of the annual
      cash flows from operations, as defined in the agreement, in excess of $300
      thousand. The Company recorded the Note at its estimated fair value of
      approximately $200 thousand. Factors affecting the estimate were the
      non-marketable status of the Note and certain risks in reaching cash flow
      targets for payment. On May 16, 2005 the Company collected the full $534
      thousand. The receipt fully discharged the Note and required the Company to
      record a fourth quarter gain of $334 thousand. Such gain is included in “Gain
      from collection of notes and other settlements” in the “Other Income” section in
      the Consolidated Statement of Operations.




**Note
      14 - 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 each 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, 1,130,000 and 1,267,500 issued and outstanding stock
      options at June 30, 2007, 2006, and 2005 respectively. The calculation of
      earnings (loss) per share excluded 960,000, 1,130,000 and 1,267,500 issued
      and
      outstanding stock options, at June 30, 2007, 2006, and 2005, respectively as
      the
      exercise price of these options was higher than the average market price of
      the
      common stock, for the respective periods presented. The conversion of those
      particular options, whose exercise price was higher than the average market
      price of the common stock during the respective period, would have an
      anti-dilutive effect.





F
          - 25




The
      1,666,667 shares of common stock issuable upon conversion of the preferred
      stock
      has no effect on basic earnings per share, but has been included in the
      calculation of diluted earnings per share for the fiscal year ended June 30,
      2007. Upon conversion, the issuable shares of common stock will be included
      in
      the calculation of both basic and diluted earnings per share.





The
      table
      on the following page presents the computation of basic and diluted earnings
      (loss) per share for the years ended June 30 2007, 2006, and 2005
      respectively *:*




***(in
                  thousands except per share data)*****For
                  the Years Ended June 30,****2007**
              
              **2006**
              
              **2005*****Numerator:*****Net
                  income (loss) available to****common
                  stockholders:**Net
                  income (loss) from continuing operations
              
              $
              7,893
              
              $
              (5,722
              )
              $
              (7,108
              )Preferred
                  stock dividends
              
              
              (299
              )
              
              -
              
              
              -Non-cash
                  charge attributable to beneficialconversion
                  feature of preferred stock
              
              
              (700
              )
              
              -
              
              
              -Net
                  income (loss) available to common stockholdersfor
                  basic earnings per share
              
              
              6,894
              
              
              (5,722
              )
              
              (7,108
              )Income
                  from discontinued operations, net of taxes
              
              
              -
              
              
              -
              
              
              571Effect
                  of dilutive securities:Preferred
                  stock dividends
              
              
              299
              
              
              -
              
              
              -Net
                  income (loss) available to common stockholdersafter
                  assumed conversions for diluted earnings per share
              
              $
              7,193
              
              $
              (5,722
              )
              $
              (6,537
              )***Denominator:***Average
                  common shares outstanding
              
              
              19,726
              
              
              18,724
              
              
              18,025Effect
                  of dilutive securities:Weighted
                  average shares issuable upon conversion of preferred stock
              
              
              1,078
              
              
              -
              
              
              -Net
                  common stock equivalents for the exercise ofin-the-money
                  stock options
              
              
              3
              
              
              -
              
              
              -Average
                  common and common equivalent shares outstanding -assuming
                  dilution
              
              
              20,807
              
              
              18,724
              
              
              18,025Basic:Income
                  (loss) from continuing operations
              
              $
              0.35
              
              $
              (0.31
              )
              $
              (0.39
              )Income
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              0.03Total
                  basic earnings (loss) per share
              
              $
              0.35
              
              $
              (0.31
              )
              $
              (0.36
              )Diluted:Income
                  (loss) from continuing operations
              
              $
              0.35
              
              $
              (0.31
              )
              $
              (0.39
              )Income
                  from discontinued operations
              
              
              -
              
              
              -
              
              
              0.03Total
                  diluted earnings (loss) per share
              
              $
              0.35
              
              $
              (0.31
              )
              $
              (0.36
              )




F
          - 26




**Note
      15 - Comprehensive Income (Loss)**





A
      summary
      of comprehensive income (loss) is as follows ( *in
      thousands* ):


**For
                  the Years Ended June 30,****2007**
              
              **2006**
              
              **2005**Net
                  income (loss)
              
              $
              7,893
              
              $
              (5,722
              )
              $
              (6,537
              )Other
                comprehensive income:Change
                  in unrealized gain on available-for-sale securities
              
              
              4,046
              
              
              -
              
              
              -Reclassification
                  of unrealized gain on available-for-sale
              
              
              
              
              
              -
              
              
              -securities
                  to realized gain
              
              
              (1,544
              )Comprehensive
                  income (loss)
              
              $
              10,395
              
              $
              (5,722
              )
              $
              (6,537
              )


Total
      aggregate proceeds from sales of available-for-sale securities were
      approximately $2.5 million during the year ended June 30, 2007.





**Note
      16 - Related Party Transactions**





For
      the
      period July 1, 2004 through February 15, 2005, Epoch incurred rent and other
      related occupancy expenses with a company whose Chief Executive Officer is
      also
      a director and stockholder of Epoch. Rental and other related occupancy expenses
      incurred with this company totaled approximately $187 thousand. Epoch entered
      into a long-term lease on September 15, 2004 with an unrelated party and
      relocated its offices on February 14, 2005. There have been no related party
      transactions with the above company since such date.





**Note
      17 - Quarterly Financial Data (unaudited)**





The
      table
      on the following page presents selected quarterly financial data for fiscal
      years ended June 30, 2007 and 2006, respectively. The data presented should
      be
      read in conjunction with the consolidated financial statements and “Management's
      Discussion and Analysis of Financial Condition and Results of Operations”
included herein.




F
          - 27


**June
                  30, 2007****First**
              
              **Second**
              
              **Third**
              
              **Fourth****Quarter**
              
              **Quarter**
              
              **Quarter**
              
              **Quarter**
              
              **Total*****(in
                  thousands, except per share and AUM data)***Investment
                  advisory and management fees
              
              $
              4,318
              
              $
              5,141
              
              $
              6,133
              
              $
              7,372
              
              $
              22,964Performance
                  fees
              
              
              —
              
              
              971
              
              
              —
              
              
              —
              
              
              971Total
                  operating revenues
              
              
              4,318
              
              
              6,112
              
              
              6,133
              
              
              7,372
              
              
              23,935Employee
                  related costs andShare-based
                  compensation
              
              
              4,423
              
              
              5,008
              
              
              5,318
              
              
              5,396
              
              
              20,145Operating
                  expenses
              
              
              5,602
              
              
              6,518
              
              
              6,873
              
              
              7,459
              
              
              26,452Operating
                  loss
              
              
              (1,284
              )
              
              (406
              )
              
              (740
              )
              
              (87
              )
              
              (2,517
              )Other
                  income
              
              
              246
              
              
              3,854
              
              
              3,032
              
              
              3,377
              
              
              10,509(Loss)
                  income from continuing operations before taxes
              
              
              (1,038
              )
              
              3,448
              
              
              2,292
              
              
              3,290
              
              
              7,992Net
                  (loss) income
              
              
              (1,038
              )
              
              3,349
              
              
              2,288
              
              
              3,294
              
              
              7,893(Loss)
                  earnings per share from continuing operations:Basic
              
              
              (0.05
              )
              
              0.13
              
              
              0.11
              
              
              0.16
              
              
              0.35Diluted
              
              
              (0.05
              )
              
              0.13
              
              
              0.11
              
              
              0.15
              
              
              0.35Weighted-average
                  shares outstanding:Basic
              
              
              19,517
              
              
              19,667
              
              
              19,804
              
              
              19,914
              
              
              19,726Diluted
              
              
              19,517
              
              
              20,663
              
              
              21,507
              
              
              21,740
              
              
              20,807Assets
                  under management (*in
                  millions*)
              
              
              3,847
              
              
              4,408
              
              
              5,375
              
              
              6,001
              
              
              6,001
  **June
                  30,
                  2006****First**
              
              **Second**
              
              **Third**
              
              **Fourth****Quarter**
              
              **Quarter**
              
              **Quarter**
              
              **Quarter**
              
              **Total**Investment
                  advisory and management fees
              
              $
              1,780
              
              $
              2,200
              
              $
              2,865
              
              $
              3,291
              
              $
              10,136Performance
                  fees
              
              
              -
              
              
              95
              
              
              -
              
              
              -
              
              
              95Total
                  operating revenues
              
              
              1,780
              
              
              2,295
              
              
              2,865
              
              
              3,291
              
              
              10,231Employee
                  related costs andShare-based
                  compensation
              
              
              2,895
              
              
              3,410
              
              
              3,376
              
              
              3,630
              
              
              13,311Operating
                  expenses
              
              
              3,756
              
              
              4,309
              
              
              4,406
              
              
              4,815
              
              
              17,286Operating
                  loss
              
              
              (1,976
              )
              
              (2,014
              )
              
              (1,541
              )
              
              (1,524
              )
              
              (7,055
              )Other
                  income
              
              
              264
              
              
              267
              
              
              249
              
              
              326
              
              
              1,106Loss
                  from continuing operations before taxes
              
              
              (1,712
              )
              
              (1,747
              )
              
              (1,292
              )
              
              (1,198
              )
              
              (5,949
              )Net
                  loss
              
              
              (1,712
              )
              
              (1,747
              )
              
              (1,062
              )
              
              (1,201
              )
              
              (5,722
              )Basic
                  and diluted loss per share:From
                  continuing operations
              
              
              (0.09
              )
              
              (0.09
              )
              
              (0.06
              )
              
              (0.07
              )
              
              (0.31
              )Weighted-average
                  shares outstanding:Basic
                  and diluted
              
              
              18,349
              
              
              18,730
              
              
              18,825
              
              
              18,999
              
              
              18,724Assets
                  under management (*in
                  millions*)
              
              
              1,770
              
              
              2,230
              
              
              2,510
              
              
              3,253
              
              
              3,253




F
          - 28