-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AWULedECjAjrhpg9jQjdDMwYuAS4+MY04NiM4IM2L/N4wmKfsDLj0RbhunDYwYf2 7XR9RkynkYheMdaqz1tg5Q== 0001144204-06-020514.txt : 20060515 0001144204-06-020514.hdr.sgml : 20060515 20060515161529 ACCESSION NUMBER: 0001144204-06-020514 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20060515 DATE AS OF CHANGE: 20060515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EPOCH HOLDING CORP CENTRAL INDEX KEY: 0000351903 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 201938886 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09728 FILM NUMBER: 06841315 BUSINESS ADDRESS: STREET 1: 640 FIFTH AVENUE STREET 2: 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-303-7200 MAIL ADDRESS: STREET 1: 640 FIFTH AVENUE STREET 2: 18TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: J NET ENTERPRISES INC DATE OF NAME CHANGE: 20010123 FORMER COMPANY: FORMER CONFORMED NAME: JACKPOT ENTERPRISES INC DATE OF NAME CHANGE: 19920703 10-Q 1 v042827.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549  
 
 
FORM 10-Q  
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the quarterly period ended March 31, 2006
     
OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
    For the transition period from                              to                              
 
 Commission File Number 1-9728
 
Epoch Holding Corporation
(Exact name of Registrant as Specified in its Charter)  
     
Delaware
 
20-1938886
(State or Other Jurisdiction
 
(I.R.S. Employer
of Incorporation or Organization)
 
Identification No.)
640 Fifth Avenue, New York, NY 10019
(Address of Principal Executive Offices)
 
212-303-7200
(Registrant’s telephone number, including area code)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x  NO ¨ 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer ¨
 
Accelerated filer ¨
 
Non-accelerated filer x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x 
 
At May 5, 2006, there were 18,889,210 shares of the Company's common stock, $.01 par value per share, issued and outstanding.
 

EPOCH HOLDING CORPORATION AND SUBSIDIARIES
FORM 10-Q
 
 
 
Page No.
 
     
 
 
 
 
 
 
 
3
 
 
 
 
 
 
4
 
 
 
 
 
 
5
 
 
 
 
 
 
6
 
 
 
 
7-14
 
 
 
 
 
15-23
 
 
 
24
 
 
 
24
 
 
 
 
 
 
 
25
 
 
 
25
 
 
 
25
 
 
 
25

 
 

 
EPOCH HOLDING CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
   
March 31,
  
June 30,
  
   
2006
  
2005
  
 
  
 (unaudited)
  
 
  
ASSETS
          
Current assets:
          
   Cash and cash equivalents
  
$
6,408
  
$
8,550
  
   Accounts receivable
    
2,377
    
1,221
  
   Income taxes receivable
    
230
    
—
  
   Other current assets
    
172
    
69
  
 
     Total current assets
    
9,187
    
9,840
  
 
Property and equipment (net of accumulated
              
   depreciation of $461 and $211, respectively)
    
2,063
    
2,088
  
Security deposits
    
744
    
946
  
Investments in technology-related businesses
    
157
    
157
  
 
     Total assets
  
$
12,151
  
$
13,031
  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
   Accounts payable and accrued liabilities
  
$
1,188
  
$
1,065
  
   Accrued compensation and benefits
    
1,200
    
1,197
  
 
     Total current liabilities
    
2,388
    
2,262
  
 
Deferred rent
    
1,045
    
981
  
Sub-tenant security deposit
    
211
    
211
  
 
      Total liabilities
    
3,644
    
3,454
  
Commitments and contingencies (Note 6)
              
Stockholders' equity:
              
   Preferred stock - authorized 1,000,000
              
     shares of $1 par value; none issued
    
—
    
—
  
   Common stock - authorized 60,000,000 shares
              
     of $.01 par value; 18,889,210 and 18,257,749
              
      shares issued, respectively
    
189
    
182
  
   Additional paid-in capital
    
27,477
    
24,404
  
   Unearned stock compensation
    
(7,109
)
  
(7,480
)
   Accumulated deficit
    
(12,050
)
  
(7,529
)
 
       Total stockholders' equity
    
8,507
    
9,577
  
               
Total liabilities and stockholders' equity
   $ 12,151   $ 13,031  

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
EPOCH HOLDING CORPORATION AND SUBSIDIARIES
(Dollars in thousands, except per share data)
(Unaudited)

   
Three Months Ended
  
Nine Months Ended
  
   
March 31,
 
 March 31,
  
   
2006 
  
2005
 
2006  
  
2005
 
Revenues:
                  
   Investment advisory and
                  
     management fees
  
$
2,865
  
$
1,090
  
$
6,940
  
$
2,942
  
 
Operating expenses:
                          
   Employee related costs (excluding
                          
   stock-based compensation)
    
2,177
    
1,360
    
6,230
    
3,943
  
   Stock-based compensation
    
1,199
    
993
    
3,451
    
2,547
  
   General and administrative
    
648
    
624
    
1,881
    
1,714
  
   Professional fees and services
    
296
    
232
    
659
    
700
  
   Depreciation and amortization
    
86
    
53
    
250
    
113
  
 
       Total operating expenses
    
4,406
    
3,262
    
12,471
    
9,017
  
 
Operating loss from continuing
                          
   operations
    
(1,541
)
  
(2,172
)
  
(5,531
)
  
(6,075
)
 
Other income:
                          
   Interest and other income
    
249
    
202
    
684
    
592
  
   Realized gain on investments
    
—
    
—
    
96
    
—
  
 
       Total other income
    
249
    
202
    
780
    
592
  
 
Loss from continuing operations,
                          
   before income taxes
    
(1,292
)
  
(1,970
)
  
(4,751
)
  
(5,483
)
                           
Provision (benefit) for income taxes
    
(230
)
  
—
    
(230
)
  
—
  
Loss from continuing operations,
                          
   net of taxes
    
(1,062
)
  
(1,970
)
  
(4,521
)
  
(5,483
)
 
Loss from discontinued operations, net
                          
     of $0 taxes
    
—
    
—
    
—
    
(1
)
Gain from sale of discontinued
                          
   operations, net of $0 taxes
    
—
    
—
    
—
    
572
  
 
       Net loss
  
$
(1,062
)
$
(1,970
)
$
(4,521
)
$
(4,912
)
 
Basic and diluted earnings ( loss) per share:
                          
   Loss from continuing operations
  
$
(.06
)
$
(.11
)
$
(.24
)
$
(.31
)
   Income from discontinued operations
    
—
    
—
    
—
    
.03
  
 
Basic and diluted loss per share
  
$
(.06
)
$
(.11
)
$
(.24
)
$
(.28
)

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

 
 EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NINE MONTHS ENDED MARCH 31, 2006
(Dollars and shares in thousands)
(Unaudited)
 
           
Additional
  
Unearned
          
   
Common Stock
  
Paid-In
  
Stock
  
Accumulated
      
   
Shares
  
Amount
  
Capital
  
Compensation
  
Deficit
  
Totals
  
                           
Balance at June 30, 2005
    
18,258
  
$
182
  
$
24,404
  
$
(7,480
)
$
(7,529
)
$
9,577
  
Net issuance of restricted stock
    
631
    
7
    
3,073
    
(2,680
)
        
400
  
Amortization of stock-based compensation
                      
3,051
          
3,051
  
Net loss
                            
(4,521
)
  
(4,521
)
Balance at March 31, 2006
    
18,889
  
$
189
  
$
27,477
  
$
(7,109
)
$
(12,050
)
$
8,507
  

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

.
EPOCH HOLDING CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
(Unaudited)

   
Nine Months Ended
  
   
March 31, 
  
   
2006
  
2005
  
Cash flows from operating activities:
          
Net loss
  
$
(4,521
)
$
(4,912
)
Adjustments to reconcile net loss to net cash
              
used in operating activities:
              
Gain from sale of discontinued operations
    
—
    
(572
)
Loss from discontinued operations
    
—
    
1
  
Realized gain on investments
    
(96
)
  
—
  
Stock-based compensation
    
3,451
    
2,547
  
Depreciation and amortization
    
250
    
113
  
Deferred rent
    
64
    
673
  
Increase in operating assets:
              
Accounts receivable
    
(1,156
)
  
(1,655
)
Income taxes receivable
    
(230
)
  
—
  
Other current assets
    
(103
)
  
—
  
Increase (decrease) in operating liabilities:
              
Accounts payable and accrued liabilities
    
123
    
(446
)
Accrued compensation and benefits
    
3
    
207
  
Federal income taxes payable
    
—
    
(1,373
)
Other, net
    
—
    
(4
)
 
           Net cash used in operating activities
    
(2,215
)
  
(5,421
)
 
Cash flows from investing activities:
              
Capital expenditures
    
(225
)
  
(1,901
)
Security deposits
    
202
    
(503
)
Proceeds from investment
    
96
    
—
  
Redemption of short-term investments
    
—
    
4,967
  
 
         Net cash provided by investing activities
    
73
    
2,563
  
 
Net decrease in cash and cash equivalents
    
(2,142
)
  
(2,858
)
               
Cash and cash equivalents - Beginning of year
    
8,550
    
10,801
  
 
Cash and cash equivalents - End of period
  
$
6,408
  
$
7,943
  
               
Supplemental disclosures of cash flow data: 
              
Cash paid for:
              
    Federal income taxes
  
$ 
—
  
$ 
1,373
  
    Interest
  
$ 
—
  
$ 
  110  
Non-cash investing and financing activities:
              
        Note receivable for sale of discontinued operations  
$ 
—
  
$ 
  200  
               
               
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

EPOCH HOLDING CORPORATION AND SUBSIDIARIES

(Unaudited)


NOTE 1 - ORGANIZATION
Epoch Holding Corporation ("Epoch" or the "Company") is a holding company whose primary line of business is investment management and investment advisory services. The operations of the Company are conducted through its wholly-owned subsidiary, Epoch Investment Partners, Inc. ("EIP"). EIP is a registered investment advisor under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). EIP's primary operations are to provide investment advisory and investment management services to retirement plans, mutual funds, endowments, foundations and high net worth individuals. Headquartered in New York with an office in Sherman Oaks, CA, the Company’s current product offerings include U.S. Value; U.S. Small Cap Value, U.S. All Cap Value, U.S. Balanced, Global Small Cap Value, Global Absolute Return, Global Shareholder Yield, and International Small Cap Value.

Company structure and discontinued operations
Operations commenced under the existing structure on June 2, 2004 when a subsidiary of J Net Enterprises, Inc. ("J Net"), the predecessor to Epoch, merged with EIP in a business combination which resulted in the former EIP stockholders owning 51% of the issued and outstanding equity securities of J Net immediately following the transaction. 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 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 primary line of business is the investment advisory and investment management business. There are no other operating or reportable segments.
 
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation
The unaudited condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial condition and interim results of operations have been made. The results for the interim periods ended March 31 are not necessarily indicative of the results to be obtained for a full fiscal year.

7

EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 
The Company’s unaudited condensed consolidated financial statements and the related notes should be read together with the consolidated financial statements and the related notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2005 and the unaudited condensed consolidated financial statements and the related notes included in the Company’s Quarterly Reports on Form 10-Q for the periods ended September 30, 2005 and December 31, 2005.

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

Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Cash equivalents
Cash equivalents are liquid investments comprised primarily of debt instruments and money market accounts 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
The Company owned short-term investments in Mariner Partners, L.P. ("Mariner"), a private investment fund. The Company classified those securities as short-term investments and recorded changes in the value of these investments in the item captioned “interest and other income” in the accompanying Condensed Consolidated Statement of Operations for the nine months ended March 31, 2005. In July 2004, the Company began liquidating its short-term investments in Mariner. The account was fully liquidated by September 2004. The Company has not held a position with Mariner or any other short-term investments since that date.

Fair value of financial instruments
The carrying value of the Company's cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximate fair value due to their short-term nature.
 
8

EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 
 Financial instruments with concentration of credit risk
The financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. Epoch invests its cash and cash equivalents with financial institutions in amounts which, at times, may be in excess of the FDIC insurance limits. Cash is also invested in several high-grade securities which limits exposure to concentrations of credit risk.

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. 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 assets 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 contracts' 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.

Investments in technology-related businesses
The Company holds minority investments in a few privately held, active technology-related companies. Ownership in these companies ranges from less than 1% to 19.9%. As of March 31, 2006, the Company also held investments in several inactive technology-related companies. The Company uses the cost method to account for the above investments. Only one such investment, Tellme Networks, Inc., continues to have any value ascribed.
 
It is the policy of the Company to evaluate its investments in technology-related businesses for possible impairment on an annual basis. Management uses a number of different criteria when evaluating an asset for possible impairment. Indicators such as significant decreases in book value of an investment, discounted cash flow analyses, adverse changes in the business climate, legal matters, losses of significant customers, new technologies which could accelerate obsolescence of business products, sustained operating losses, and cash flows which cannot be resolved or improved within a reasonable amount of time to justify continued business operations are used by management when making its evaluations.

9

EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 
The Company received $96 thousand from one of the inactive technology-related companies for the nine months ended March 31, 2006 and expects that investment to be fully liquidated by June 30, 2006 with an immaterial amount of proceeds still to be received. There are no plans to make additional investments in technology-related businesses.

Share-based compensation
Effective July 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”) which requires employee and qualifying director share-based payments to be accounted for using the fair value method. The fair value of the Company’s restricted stock awards is based on the closing price of the Company’s common stock at the grant date. Share-based compensation costs related to equity instruments are charged against income ratably over the fixed vesting period for the related equity instruments, with the initial charge generally recorded in the first full month following the grant. The accounting treatment of restricted stock awards under SFAS 123R is consistent with that of the Company’s previous policies under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and the pro forma disclosures required in accordance with Statement of Financial Accounting Standards No. 123, “Accounting for Share-Based Compensation” (“SFAS 123”).

Under the modified prospective transition method chosen by the Company, compensation costs related to the non-vested portion of stock option awards outstanding at the adoption date are based on the grant-date fair value of those awards as calculated for pro forma disclosures under the original provisions of SFAS 123. Outstanding stock options previously granted under the Company’s plan that expired on September 30, 2002 were fully vested prior to June 30, 2004; therefore, there are no deferred compensation costs resulting from stock options to be accounted for on a prospective basis.

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 three and nine month periods ended March 31, 2006 and 2005. These receivables are advisory and sub-advisory fees, and management believes they are fully collectible.

Property and equipment
Leasehold improvements are recorded at cost and are depreciated on a straight-line basis over the shorter of their estimated useful lives or remaining lease term, as applicable. All other capital assets are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives. Generally, the useful lives are 3 to 10 years for leasehold improvements and 3 to 7 years for equipment, and exclude option periods, if any. Property sold or retired is eliminated from the accounts in the period of disposition. Software used to conduct the investment advisory and investment management services is amortized using a three-year estimated useful life.  

10

EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 
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 enacted rates at the time such temporary differences 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 assets will not be realized.

Reclassifications
Certain reclassifications have been made to prior period condensed consolidated financial statements to conform to the current period presentation.

NOTE 3 - 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 (loss) per share is computed by dividing net earnings (loss) by the weighted average number of common and common equivalent shares outstanding during the period. The calculation of earnings (loss) per share excluded 1,267,500 and 1,377,500 issued and outstanding stock options at March 31, 2006 and 2005, respectively, as their effect was antidilutive. While there were 137,500 options deemed to be "in the money" at March 31, 2006, the effect of their exercise would still be considered antidilutive as the Company was in a net loss position.

The following is the amount of loss and number of shares used in the basic and diluted earnings (loss) per share computations for the three and nine months ended March 31, 2006 and 2005 (dollars and shares in thousands, except per share data):
 
     
Three Months Ended
    
Nine Months Ended
  
     
March 31,
    
March 31, 
  
     
2006
    
2005
    
2006
    
2005
  
     
 
    
 
    
 
    
 
  
Loss from continuing operations
  
$
(1,062
)
$
(1,970
)
$
(4,521
)
$
(5,483
 )
Income from discontinued operations
  
$
—
  
$
—
  
$
—
  
$
571
  
                           
Shares:
                          
   Weighted average number of
                          
     common shares outstanding
    
18,825
    
18,175
    
18,635
    
17,968
  
 
Basic and diluted loss per share from
                          
   continuing operations
  
$
(.06
)
$
(.11
)
$
(.24
)
$
(.31
 )
 
Basic and diluted earnings per share
                          
   from discontinued operations
  
$
—
  
$
—
  
$
—
  
$
.03
  
 
11
 
EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 

NOTE 4 - RELATED PARTY TRANSACTIONS
There have been no related party transactions for the three and nine months ended March 31, 2006. For the three and nine months ended March 31, 2005, the Company incurred rent and other related occupancy expenses payable to Berenson & Company of approximately $34 thousand and $187 thousand, respectively. The Chief Executive Officer of Berenson & Company is a Director and stockholder of the Company. 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 Berenson & Company since such date.

NOTE 5 - FEDERAL INCOME TAX
The Company completed a reverse merger business combination with EIP on June 2, 2004. As a result, the ability to utilize certain net operating loss carryfowards ("NOL's") became limited as a result of a greater than 50% change in ownership. These limitations are covered by Section 382 of the Internal Revenue Code ("IRC"). Section 382 limits the annual utilization of NOL's accumulated prior to the ownership change to a percentage of the acquired entity's fair value at the time of the change in ownership. As a result, the Company's ability to utilize accumulated NOL's to their full extent prior to their expiration cannot be reasonably assured. Until profitability can be achieved, and utilization of NOL's can be more definitive, the Company has provided a full valuation allowance on its accumulated NOL's and temporary differences.

The Company recently underwent an audit by the Internal Revenue Service (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. In May 2005, the Company met with the IRS and presented pertinent data and other factual information which demonstrated that no additional taxes were due. In August 2005, the Company received notice indicating the IRS submitted a special report to the congressional Joint Committee on Taxation (the "Joint Committee"), outlining the findings of the audit, and concurring with the Company's position. In September 2005, the Company received notice from the IRS that the Joint Committee had completed its consideration of the IRS' report, and had taken no exception to the conclusions reached by the IRS. 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.

NOTE 6 - COMMITTMENTS AND CONTINGENCIES

Employment agreements
There are no employment contracts with any officers of the Company. There are written agreements with certain employees, which provide for sales commissions or bonuses, subject to the attainment of certain performance criteria or continuation of employment. Such obligations under the various agreements total approximately $1.5 million at March 31, 2006 and are accrued for over the applicable service period. Of this amount, approximately $0.5 million represents restricted stock awards still to be issued during the fiscal year ended June 30, 2006.

12
 
EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 
The Company is obligated to enter into an employment agreement with its Chief Executive Officer prior to June 2, 2007, the third anniversary of the business combination with EIP. Terms of the contract are to be customary for Chief Executive Officers of peer group companies.

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.

Significant customers and contracts
For the three months ended March 31, 2006, CI Mutual Funds Inc. of Canada ("CI") accounted for approximately 21% of revenues while the Epoch International Small Cap Fund ("EPIEX"), a publicly traded mutual fund for which the Company acts as the advisor, accounted for approximately 13%. For the three months ended March 31, 2005, CI and EPIEX accounted for approximately 38% and 11% of consolidated revenues, respectively.

For the nine months ended March 31, 2006, CI and EPIEX accounted for 33% and 19% of consolidated revenues, respectively. For the nine months ended March 31, 2005, CI and EPIEX accounted for 37% and 4% of consolidated revenues, respectively.

The Company's services and relationship with these clients is important to its ongoing growth strategy, and retention of these customers is significant to the ongoing results of operations and liquidity of the Company.

NOTE 7 - 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 gain of $334 thousand in the fourth quarter of fiscal year 2005.

13
 
EPOCH HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
 
Selected financial data - discontinued operations
Following are the final summary operating results of the discontinued operations, which represent the fiscal 2005 period of July 1, 2004 through the date of sale, September 9, 2004 (dollars in thousands):
 
   
 July 1, 2004 - September 9, 2004
  
               
Revenues
  
$
293
      
Costs and expenses
    
(294
)
      
Loss from discontinued operations
              
   before taxes
    
(1
)
      
Provision for income taxes
    
—
 (a)
  
 
 
Gain from sale of discontinued operations
    
572
      
Income from discontinued operations
  
$
571
      

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



Set forth on the following pages is management’s discussion and analysis of our financial condition and results of operations for the three and nine months ended March 31, 2006 and March 31, 2005. Such information should be read in conjunction with our unaudited condensed consolidated financial statements together with the notes to the unaudited condensed consolidated financial statements. When we use the terms the “Company”, “management”, “we”, “us”, and “our”, we mean Epoch Holding Corporation, a Delaware corporation, and its consolidated subsidiaries.
 
Forward-Looking Statements

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

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

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

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

•
the Company's business strategies and investment policies,

 
•
the Company's possible or assumed future results of operations and operating cash flows,

 
•
the Company's financing plans and the availability of short-term borrowing,

•
the Company's competitive position,

•
potential growth opportunities available to the Company,

 
•
the recruitment and retention of the Company's managing directors and employees,

•
the Company's expected levels of compensation,

 
•
the Company's potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts,

•
the likelihood of success and impact of litigation,

•
the Company's expected tax rates,

 
•
the Company's expectations with respect to the economy, securities markets, the market for mergers and acquisitions activity, the market for asset management activity and other industry trends,

 
•
the benefits to the Company resulting from the effects of separation and recapitalization transactions and additional financing transactions,

•
the effects of competition on the Company, and

•
the impact of future legislation and regulation on the Company.

Available Information

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

Overview

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

Critical Accounting Policies 

Our significant accounting policies are described in Note 1 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended June 30, 2005. A discussion of critical accounting policies is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended June 30, 2005. There were no significant changes in our critical accounting policies during the nine months ended March 31, 2006.
 
Company Structure and Discontinued Operations

On June 2, 2004, a subsidiary of J Net Enterprises, Inc. ("J Net"), the predecessor to Epoch, merged with EIP in a business combination which resulted in the former EIP stockholders owning 51% of the issued and outstanding equity securities of J Net immediately following the transaction. 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 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.
 
Results of operations - three months ended March 31, 2006 and 2005

Assets Under Management

Assets under management increased to $2.51 billion at March 31, 2006, or 101%, from $1.25 billion at March 31, 2005. This increase was primarily attributable to the ongoing expansion of the Company’s client base.

The percentage of assets under management from CI Mutual Funds, Inc. of Canada ("CI"), a significant customer, declined to approximately 50% at March 31, 2006 from approximately 71% at March 31, 2005.

Revenues

Total revenues from investment advisory and management services for the three months ended March 31, 2006 were $2.9 million, an increase of $1.8 million or 163% over the comparable period of the prior year. This increase was attributable to the increase in assets under management.

The sub advisory contract with CI accounted for approximately 21% of revenues for the three months ended March 31, 2006. For the three months ended March 31, 2005, CI accounted for approximately 38% of revenues.
 
Employee related costs (excluding stock-based compensation)

Expenses in this category include salaries, benefits, incentive compensation, signing bonuses and commission expenses. For the three months ended March 31, 2006, these expenses were $2.2 million, an increase of $0.8 million or 60% from $1.4 million for the three months ended March 31, 2005. Increased employee headcount to support the growth and expansion of the business was the primary reason for this increase. The total expenses for the three months ended March 31, 2006 include $0.9 million of performance and guaranteed bonuses, or advances on sales commissions which are non-refundable but can be applied against future sales, as compared to $0.3 million for the three months ended March 31, 2005. 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.

Stock-based compensation

Stock-based compensation for the three months ended March 31, 2006 was $1.2 million, up $0.2 million or 21% from $1.0 million for the three months ended March 31, 2005. Stock-based compensation includes 5.5 million shares of restricted stock that was issued to employee owners associated with the acquisition of EIP, as well as restricted stock issued to employees during fiscal year 2005 and the nine months ended March 31, 2006. An increase in employees is primarily attributable to this increase.

Stock-based compensation expense is recognized ratably over the three-year vesting period of those awards, in accordance with their underlying vesting provisions. In the three months ended March 31, 2006 and 2005, 179,648 and 279,510 shares of restricted stock, respectively, were issued to employees. A total of 22,886 and 34,939 shares of the awards, or approximately 12.5% of the shares issued in the three months ended March 31, 2006 and 2005, respectively, were immediately vested. The remaining 87.5% of the shares vest ratably over the subsequent three years. Approximately 11,617 shares were forfeited by terminated employees in the three months ended March 31, 2006. There were no forfeitures in the three months ended March 31, 2005. 

During the three months ended March 31, 2006 and March 31, 2005, no stock awards were granted to Directors of the Company. The currently outstanding 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. Stock-based compensation expense is recognized ratably over the three-year vesting period of those awards, in accordance with their underlying vesting provisions.

General and administrative expenses

These expenses consist primarily of office rentals, travel and entertainment, advertising and marketing, information technology expenses, utilities, insurance, and other office related expenses. For the three months ended March 31, 2006 and March 31, 2005, these fees were virtually unchanged, amounting to $0.6 million for each period.

Professional fees and services

These expenses consist primarily of outside legal fees for Securities and Exchange Commission compliance and general corporate legal affairs, independent accountants' fees, and other professional services. For the three months ended March 31, 2006 such fees were $0.3 million, an increase of $0.1 million, or 28% from the comparable period a year ago. The prior year comparable period included incremental legal fees in conjunction with the Company’s first year of operations.

Depreciation and amortization

Depreciation and amortization increased to $86 thousand in the three months ended March 31, 2006, an increase of $33 thousand or 62%, from $53 thousand in the three months ended March 31, 2005. The increase in depreciation and amortization expense is primarily due to the impact of amortization of new leasehold improvements in connection with the Company’s move to its new headquarters in February 2005.

Other income

Other income includes interest earnings from cash and cash equivalents and rental income from subleased office space in New York. For the three months ended March 31, 2006, other income increased to $249 thousand, an increase of $47 thousand or 23%, from $202 thousand for the three months ended March 31, 2005. Increased interest income was the primary reason for the increase from the comparable period of the prior year.

 
Results of operations - nine months ended March 31, 2006 and 2005

Assets Under Management

Assets under management increased to $2.51 billion at March 31, 2006, or 101%, from $1.25 billion at March 31, 2005. This increase was primarily attributable to the ongoing expansion of the Company’s client base.

The percentage of assets under management from CI Mutual Funds, Inc. of Canada ("CI"), a significant customer, declined to approximately 50% at March 31, 2006 from approximately 71% at March 31, 2005.

Revenues

Total revenues from investment advisory and management services for the nine months ended March 31, 2006 were $6.9 million, an increase of $4.0 million or 136% over the comparable period of the prior year. This increase was attributable to the increase in assets under management.

The sub advisory contract with CI accounted for approximately 22% of revenues for the nine months ended March 31, 2006. For the nine months ended March 31, 2005, CI accounted for approximately 37% of revenues.

Employee related costs (excluding stock-based compensation)

Expenses in this category include salaries, benefits, incentive compensation, signing bonuses and commission expenses. For the nine months ended March 31, 2006, these expenses were $6.2 million, an increase of $2.3 million or 58% from $3.9 million for the nine months ended March 31, 2005. Increased employee headcount to support the growth and expansion of the business was the primary reason for this increase. The total expenses for the nine months ended March 31, 2006 include $2.8 million of performance and guaranteed bonuses, or advances on sales commissions which are non-refundable but can be applied against future sales, as compared to $1.1 million for the nine months ended March 31, 2005. We expect the level of overall employee related costs will increase in future periods due to changes in staffing levels to support the growth and expansion of our business.

Stock-based compensation

Stock-based compensation for the nine months ended March 31, 2006 was $3.5 million, up $1.0 million or 35% from $2.5 million for the nine months ended March 31, 2005. Stock-based compensation includes 5.5 million shares of restricted stock that was issued to employee owners associated with the acquisition of EIP, as well as restricted stock issued to employees during fiscal year 2005 and the nine months ended March 31, 2006. An increase in employees is primarily attributable to this increase.

Stock-based compensation expense is recognized ratably over the three-year vesting period of those awards, in accordance with their underlying vesting provisions. In the nine months ended March 31, 2006, 656,648 shares of restricted stock were issued to employees. A total of 82,511 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. Approximately 25,190 shares were forfeited by terminated employees in the nine months ended March 31, 2006. There were no forfeitures in the nine months ended March 31, 2005. 

During the nine months ended March 31, 2006 no stock awards were granted to Directors of the Company. Approximately 70,176 shares were granted to Directors of the Company during the nine months ended March 31, 2005. The currently outstanding 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. Stock-based compensation expense is recognized ratably over the three-year vesting period of those awards, in accordance with their underlying vesting provisions.

General and administrative expenses

These expenses consist primarily of office rentals, travel and entertainment, advertising and marketing, information technology expenses, utilities, insurance, and other office related Expenses. For the nine months ended March 31, 2006, general and administrative expenses were $1.9 million, up $0.2 or 10% from $1.7 million for the nine months ended March 31, 2005. Increased travel related expenses to support marketing and distribution efforts accounted for most of this increase.

Professional fees and services

These expenses consist primarily of outside legal fees for Securities and Exchange Commission compliance and general corporate legal affairs, independent accountants' fees, and other professional services. For the nine months ended March 31, 2006, such fees were $0.6 million, a decrease of $0.1 million or 6% from $0.7 million for the nine months ended March 31, 2005. The prior year comparable period included incremental legal fees in conjunction with the Company’s first year of operations.

Depreciation and amortization

Depreciation and amortization increased to $0.3 million in the nine months ended March 31, 2006, an increase of $0.2 million or 121%, from $0.1 million in the nine months ended March 31, 2005. The increase in depreciation and amortization expense is primarily due to the impact of amortization of new leasehold improvements in connection with the Company’s move to its new headquarters in February 2005.

Other income

Other income includes interest earnings from cash and cash equivalents and rental income from subleased office space in New York. Also included in other income is a gain of approximately $96 thousand from an investment to which the Company ascribed no value. For the nine months ended March 31, 2006, other income increased to $0.8 million, an increase of $0.2 million or 32%, from $0.6 million for the nine months ended March 31, 2005. Increased interest income and realized gain on investments were the primary reasons for the increase from the comparable period of the prior year.


Liquidity and Capital Resources

Sources of funds for the Company's operations are derived from investment advisory and investment management fees and interest on the Company's cash and cash equivalent investments. As of March 31, 2006, the Company had $6.4 million of cash and cash equivalents and $2.4 million of accounts receivable to fund its business growth strategy. Accounts payable and accrued liabilities, which consist of professional fees, trade payables and other liabilities were $1.2 million. Accrued compensation and benefits, which consist primarily of accrued employee bonuses and sales commissions, was $1.2 million. There was no debt and management does not foresee any reason to incur debt unless a significant business opportunity warrants such action.

For the nine months ended March 31, 2006, net cash used in operating activities was $2.2 million, primarily attributable to cash-based operating expenses, as compared to $5.4 million in the nine months ended March 31, 2005. The nine month period ended March 31, 2005 included expenditures of $1.5 million related to payment of income taxes and interest for fiscal year 2001 and 2002 for audits, start-up and signing bonus costs of $0.4 million, and $0.5 million to secure a letter of credit for the Company's lease deposit at 640 Fifth Avenue, New York, New York.

The Company expects to continue to increase staff to support the growth and expansion of its business and the related distribution efforts for its products. Despite the occurrence of operating losses in the fiscal year ended June 30, 2006, management believes the existing cash and cash equivalents are adequate to provide the necessary resources to implement its growth objectives.

Contractual obligations

Leases

The Company has a long-term office space lease in New York City, where its primary business operations are conducted.

Future minimum lease payments under this lease total $6.6 million and are presented on the table which follows (fiscal years ending June 30, dollars in thousands).
 
   
Fiscal Years Ended June 30,                     
  
 
  
   
 
 
2007-
 
2010-
 
2012 and
 
 
 
 
 
2006
 
2009
 
2011
 
thereafter
 
Total 
  
                       
Future minimum payments
  
$
166
  
$
1,997
  
$
1,370
  
$
3,048
  
$
6,581
  
 
The Company also has another office lease commitment in New York, and one in California, as well as operating leases for office equipment. The other office lease in New York is subleased to an unrelated third party. While the Company remains the primary responsible party under that lease, the tenant is performing its obligations under the sublease in a timely fashion. A schedule of these other lease commitments and the related sublease income as of March 31, 2006 follows (fiscal years ending June 30, dollars in thousands):
 
     
Fiscal Years Ended June 30,
        
           
2007 -
    
2010 -
    
2012 and
        
     
2006 
    
2009
    
2011
    
thereafter
    
Total
  
                                 
Lease payments
  
$
131
  
$
1,496
  
$
652
  
$
—
  
$
2,279
  
Sublease income
    
(137
)
  
(1,708
)
  
(765
)
  
—
    
(2,610
)
   Net (income) commitment
  
$
(6
)
$
(212
)
$
(113
)
$
—
  
$
(331
)
 
Off-Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any leasing activities that expose us to any liability that is not reflected in our unaudited condensed consolidated financial statements.

 Factors Which May Affect Future Results

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

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

These and other risks related to our Company are discussed in greater detail in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005.

 

The Company invests its free cash in various financial instruments and money market instruments, which entail certain risks. Presently, the Company does not participate in hedging activities nor does it have any derivative financial instruments.

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

The value of AUM can be affected by changes in interest rates and fluctuations in financial markets. The Company's revenue is derived from the value of AUM. Therefore, revenues and results of operations can be negatively affected by adverse changes in the prices of securities or interest rates.

The Company has had no significant changes in its exposure to market risks from that previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005.
 

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

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


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.


There were no material changes from the risk factors set forth under Part I, Item 1 “Cautionary Statements” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2005.
 

(a) Exhibits:

  Exhibit No. Description
     
31.1
Principal Executive Officer Certification
31.2
Principal Financial Officer Certification
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
     
  EPOCH HOLDING CORPORATION
 
(Registrant)
 
 		  
 		  
 
  By:   /s/ Adam Borak 
 
Adam Borak
  Chief Financial Officer
   
Date: May 15, 2006  

25
 
 
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Exhibit 31.1
CERTIFICATE OF THE CHIEF EXECUTIVE OFFICER
OF EPOCH HOLDING CORPORATION

I, William W. Priest, certify that:

 
(1)
I have reviewed this quarterly report on Form 10-Q of Epoch Holding Corporation;

 
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of registrant as of, and for, the periods presented in this report;

 
(4)
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)
[paragraph omitted in accordance with SEC transition instructions contained in SEC release 34-47986]

 
(c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
(d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth annual quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
     
 
(5)
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

 
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
 
     
 
 		  
 		  
 
Date: May 15, 2006 By:    
 
William W. Priest
  Chief Executive Officer
  (Principal Executive Officer)
 
 EX-31.2 4 v042827_ex31-2.htm
 
 
Exhibit 31.2
CERTIFICATE OF THE CHIEF FINANCIAL OFFICER
OF EPOCH HOLDING CORPORATION

I, Adam Borak, certify that:

 
(1)
I have reviewed this quarterly report on Form 10-Q of Epoch Holding Corporation;

 
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of registrant as of, and for, the periods presented in this report;

 
(4)
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)
[paragraph omitted in accordance with SEC transition instructions contained in SEC release 34-47986]

 
(c)
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
(d)
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth annual quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
     
 
(5)
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

 
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

     
 
 		  
 		  
 
Date: May 15, 2006 By:    
 
Adam Borak
  Chief Financial Officer
  (Principal Financial Officer)
EX-32.1 5 v042827_ex32-1.htm
 
 Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Epoch Holding Corporation (the “Company") on Form 10-Q for the quarter ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), William W. Priest, Chief Executive Officer of the Company, and Adam Borak, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Report.

     
 
 		  
 		  
 
Date: May 15, 2006 By:    
 
William W. Priest
  Chief Executive Officer
  (Principal Executive Officer)
     
 
 		  
 		  
 
Date: May 15, 2006 By:    
 
Adam Borak
  Chief Financial Officer
  (Principal Financial Officer)
 
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 
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