UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended ~~September 30, 2022~~March 31, 2023

☐ 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 001-37387

ASSOCIATED CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware		47-3965991
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

191 Mason Street, Greenwich, CT		06830
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (203) 629-9595

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

Title of each class		Trading Symbol		Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share		AC		New York Stock Exchange

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 ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the Registrant’s classes of Common Stock, as of the latest practical date.

Class		Outstanding at ~~November 7, 2022~~May 3, 2023
Class A Common Stock, .001 par value		~~3,039,448~~2,923,911
Class B Common Stock, .001 par value		18,962,754

As of ~~November 7, 2022, 3,039,448~~May 3, 2023, 2,923,911 shares of class A common stock and 18,962,754 shares of class B common stock were outstanding. GGCP, Inc., a private company controlled by the Company’s Executive Chairman, held 77,165 shares of class A common stock and indirectly held 18,423,741 shares of class B common stock. Other executive officers and directors of GGCP, Inc. held 29,866 and ~~36,758~~176,758 shares of class A and class B common stock, respectively. In addition, there are ~~211,910~~210,910 Phantom Restricted Stock Awards outstanding as of ~~September 30, 2022.~~March 31, 2023.

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

INDEX

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements:
	Condensed Consolidated Statements of Financial Condition (Unaudited)	3
	Condensed Consolidated Statements of Income (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	5
	Condensed Consolidated Statements of Equity (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	87
	Notes to the Condensed Consolidated Financial Statements:
	A.1. Organization	9
	2. Revenue	10
	~~B. Revenue~~3. Investments in Securities	11
	~~C. Investments in Securities~~4. Investment Partnerships and Other Entities	1211
	~~D. Investment Partnerships and Other Entities~~5. Fair Value	13
	~~E. Fair Value~~6. Income Taxes	15
	~~F. Income Taxes~~7. Earnings per Share	15
	8. Equity	15
	9. Goodwill	16
	10. Guarantees, Contingencies and Commitments	17
	~~G. Earnings per Share~~	18
	~~H. Equity~~	18
	~~I. Goodwill~~	20
	~~J. Guarantees, Contingencies and Commitments~~	20
	K.11. Subsequent Events	2017

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2118

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2722

Item 4.	Controls and Procedures	2722

PART II.	OTHER INFORMATION *

Item 1.	Legal Proceedings	2923

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2923

Item 6.	Exhibits	3024

	Signature	3226

* Items other than those listed above have been omitted because they are not applicable.

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(Dollars in thousands, except per share data)

	*September 30,*			*December 31,*			*March 31,*			*December 31,*
	*2022*			*2021*			*2023*			*2022*
ASSETS
Cash and cash equivalents (includes U.S. Treasury Bills with maturities of less than 3 months)	$	288,178		$	319,048		$	396,828		$	218,462
Investments in U.S. Treasury Bills with greater than 3 month maturities		133,755			60,996			4,948			186,001
Investments in equity securities (includes GBL stock with a value of $41.2 million and $60.4 million, respectively)		238,974			273,087
Investments in equity securities (includes GAMCO stock with a fair value of $45.6 million and $36.7 million, respectively)								217,006			195,585
Investments in affiliated registered investment companies		121,863			134,548			128,484			126,210
Investments in partnerships		149,083			154,460			150,361			150,498
Receivable from brokers		18,163			42,478			11,023			12,072
Investment advisory fees receivable		1,293			8,315			1,327			3,807
Receivable and investment in note receivable from affiliates		135			10,094
Receivable from affiliates								133			2,517
Income taxes receivable, including deferred tax assets, net		13,170			-			8,825			10,320
Goodwill		3,519			3,519			3,519			3,519
Other assets		18,628			21,682			20,432			18,699
Investments in marketable securities held in trust		-			175,109
Total assets	$	986,761		$	1,203,336		$	942,886		$	927,690

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Payable to brokers	$	56,356		$	9,339		$	15,208		$	7,784
Income taxes payable, including deferred tax liabilities, net		-			8,575			-			-
Compensation payable		7,662			19,730			8,894			13,936
Securities sold, not yet purchased		3,181			12,905			3,569			2,874
Accrued expenses and other liabilities		1,528			3,580			1,981			2,707
Tendered redeemable noncontrolling interests payable		29,001			-
Deferred underwriting fee payable		-			6,125
PMV warrant liability		-			5,280
Total liabilities		97,728			65,534			29,652			27,301

Redeemable noncontrolling interests		9,778			202,456			7,233			10,193

Commitments and contingencies (Note J)
Commitments and contingencies (Note 10)

Equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding		-			-			-			-
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized; 6,629,254 shares issued; 3,040,753 and 3,095,169 shares outstanding, respectively		6			6
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued; 18,962,754 and 18,962,918 outstanding, respectively		19			19
Class A Common Stock, $0.001 par value; 100,000,000 shares authorized; 6,629,254 shares issued; 2,975,234 and 3,027,541 shares outstanding, respectively								6			6
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued; 18,962,754 outstanding								19			19
Additional paid-in capital		999,047			990,069			999,047			999,047
Retained earnings		3,661			68,435			32,880			15,126
Treasury stock, at cost (3,588,665 and 3,534,085 shares, respectively)		(123,478	)		(121,427	)
Treasury stock, at cost (3,654,184 and 3,601,877 shares, respectively)								(125,951	)		(124,002	)
Total Associated Capital Group, Inc. equity		879,255			937,102			906,001			890,196
Noncontrolling interests		-			(1,756	)
Total equity		879,255			935,346
Total liabilities and equity	$	986,761		$	1,203,336		$	942,886		$	927,690

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, certain balances include amounts related to consolidated variable interest entities (“VIEs”) and voting interest entities (“VOEs”). See ~~Footnote D.~~Note 4.

See accompanying notes.

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(In thousands, except per share data)

	*Three Months Ended*						*Nine Months Ended*						*Three Months Ended*
	*September 30,*						*September 30,*						*March 31,*
	*2022*			*2021*			*2022*			*2021*			*2023*			*2022*
Revenues
Investment advisory and incentive fees	$	2,472		$	2,014		$	7,409		$	6,627		$	2,411		$	2,486
Other revenues		90			98			281			299			54			96
Total revenues		2,562			2,112			7,690			6,926			2,465			2,582
Expenses
Compensation		3,591			2,819			10,531			11,710			3,570			3,933
Management fee		-			226			-			7,209			2,543			-
Other operating expenses		2,100			(764	)		5,805			4,952			1,485			1,955
Total expenses		5,691			2,281			16,336			23,871			7,598			5,888
Operating loss		(3,129	)		(169	)		(8,646	)		(16,945	)		(5,133	)		(3,306	)
Other income/(loss)
Other income/(expense)
Net gain/(loss) from investments		(19,314	)		5,676			(72,727	)		79,303			20,511			(15,610	)
Interest and dividend income		2,797			1,119			5,533			9,119			5,193			804
Interest expense		(66	)		(97	)		(145	)		(251	)		(98	)		(33	)
Shareholder-designated contribution		(1,206	)		(541	)		(1,414	)		(2,717	)		(871	)		(208	)
Total other income/(loss), net		(17,789	)		6,157			(68,753	)		85,454
Total other income/(expense), net														24,735			(15,047	)
Income/(loss) before income taxes		(20,918	)		5,988			(77,399	)		68,509			19,602			(18,353	)
Income tax expense/(benefit)		(4,914	)		484			(17,798	)		15,094			1,580			(4,848	)
Income/(loss) before noncontrolling interests		(16,004	)		5,504			(59,601	)		53,415			18,022			(13,505	)
Income/(loss) attributable to noncontrolling interests		494			4,001			2,970			3,641
Income attributable to noncontrolling interests														268			2,681
Net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders	$	(16,498	)	$	1,503		$	(62,571	)	$	49,774		$	17,754		$	(16,186	)

Net income/(loss) per share attributable to Associated Capital Group, Inc.'s shareholders:
Basic	$	(0.75	)	$	0.07		$	(2.84	)	$	2.25		$	0.81		$	(0.73	)
Diluted	$	(0.75	)	$	0.07		$	(2.84	)	$	2.25		$	0.81		$	(0.73	)

Weighted average shares outstanding:
Weighted average shares outstanding (in thousands):
Basic		22,010			22,084			22,033			22,141			21,970			22,054
Diluted		22,010			22,084			22,033			22,141			21,970			22,054

Actual shares outstanding		22,004			22,062			22,004			22,062
Actual shares outstanding (in thousands)														21,938			22,051

See accompanying notes.

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(Dollars in thousands)

	*Three Months Ended*					*Nine Months Ended*					*Three Months Ended*
	*September 30,*					*September 30,*					*March 31,*
	*2022*			*2021*		*2022*			*2021*		*2023*		*2022*

Net income/(loss) before noncontrolling interests	$	(16,004	)	$	5,504	$	(59,601	)	$	53,415	$	18,022	$	(13,505	)
Less: Comprehensive income/(loss) attributable to noncontrolling interests		494			4,001		2,970			3,641
Less: Comprehensive income attributable to noncontrolling interests												268		2,681
Comprehensive income/(loss) attributable to Associated Capital Group, Inc.	$	(16,498	)	$	1,503	$	(62,571	)	$	49,774	$	17,754	$	(16,186	)

See accompanying notes.

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(Dollars in thousands)

For the three months ended March 31, ~~2022, June 30, 2022 and September 30, 2022~~2023

Associated Capital Group, Inc. shareholders

Additional

Redeemable

Common

Retained

Paid-in

Treasury

Noncontrolling

Total

Noncontrolling

Stock

Earnings

Capital

Stock

Total

Interests

Equity

Interests

Balance at December 31, 2021
$ 25 $ 68,435 $ 990,069 $ (121,427 ) $ 937,102 $ (1,756 ) $ 935,346 $ 202,456
Redemptions of noncontrolling interests
- - - - - - - (486 )
Net income/(loss)
- (16,186 ) - - (16,186 ) 197 (15,989 ) 2,484
Purchase of treasury stock
- - - (293 ) (293 ) - (293 ) -
Accretion of redeemable noncontrolling interest
- - (584 ) - (584 ) (292 ) (876 ) 876
Other changes to redeemable noncontrolling interests
- - - - - - - (10 )
Balance at March 31, 2022
$ 25 $ 52,249 $ 989,485 $ (121,720 ) $ 920,039 $ (1,851 ) $ 918,188 $ 205,320
Redemptions of noncontrolling interests
- - - - - - - (486 )
Net income/(loss)
- (29,887 ) - - (29,887 ) 83 (29,804 ) (288 )
Dividends declared ($0.10 per share)
- (2,203 ) - - (2,203 ) - (2,203 ) -
Purchase of treasury stock
- - - (1,317 ) (1,317 ) - (1,317 ) -
Accretion of redeemable noncontrolling interest
- - 662 - 662 331 993 (993 )
Other changes to redeemable noncontrolling interests
- - - - - - - (226 )
Balance at June 30, 2022
$ 25 $ 20,159 $ 990,147 $ (123,037 ) $ 887,294 $ (1,437 ) $ 885,857 $ 203,327
Redemptions of noncontrolling interests
- - - - - - - (29,001 )
Net income/(loss)
- (16,498 ) - - (16,498 ) - (16,498 ) 494
Purchase of treasury stock
- - - (441 ) (441 ) - (441 ) -
Accretion of redeemable noncontrolling interest
- - 8,900 - 8,900 4,305 13,205 (13,205 )
Effect of deconsolidation
- - - - - (2,868 ) (2,868 ) (152,100 )
Other changes to redeemable noncontrolling interests
- - - - - - - 263
Balance at September 30, 2022
$ 25 $ 3,661 $ 999,047 $ (123,478 ) $ 879,255 $ - $ 879,255 $ 9,778

					Additional								Redeemable
	Common		Retained		Paid-in		Treasury			Total			Noncontrolling
	Stock		Earnings		Capital		Stock			Equity			Interests
Balance at December 31, 2022	$	25	$	15,126	$	999,047	$	(124,002	)	$	890,196		$	10,193
Redemptions of noncontrolling interests		-		-		-		-			-			(3,228	)
Net income/(loss)		-		17,754		-		-			17,754			268
Purchases of treasury stock		-		-		-		(1,949	)		(1,949	)		-
Balance at March 31, 2023	$	25	$	32,880	$	999,047	$	(125,951	)	$	906,001		$	7,233

See accompanying notes.

~~Table of Contents~~

~~ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF EQUITY~~

~~UNAUDITED~~

~~(Dollars in thousands)~~

For the three months ended March 31, ~~2021, June 30, 2021 and September 30, 2021~~2022

Associated Capital Group, Inc. shareholders

Additional

Redeemable

Common

Retained

Paid-in

Treasury

Noncontrolling

Total

Noncontrolling

Stock

Earnings

Capital

Stock

Total

Interests

Equity

Interests

Balance at December 31, 2020
$ 25 $ 13,649 $ 999,047 $ (113,783 ) $ 898,938 $ 2,451 $ 901,389 $ 206,828
Contributions from redeemable noncontrolling interests
- - - - - - - 136
Redemptions of noncontrolling interests
- - - - - - - (12,066 )
Net income
- 18,555 - - 18,555 - 18,555 172
Purchase of treasury stock
- - - (4,198 ) (4,198 ) - (4,198 ) -
Balance at March 31, 2021
$ 25 $ 32,204 $ 999,047 $ (117,981 ) $ 913,295 $ 2,451 $ 915,746 $ 195,070
Contributions from redeemable noncontrolling interests
- - - - - - - 665
Net income/(loss)
- 29,716 - - 29,716 - 29,716 (532 )
Dividends declared ($0.10 per share)
- (2,211 ) - - (2,211 ) - (2,211 ) -
Purchase of treasury stock
- - - (1,893 ) (1,893 ) - (1,893 ) -
Accretion of redeemable noncontrolling interest
- - (6,001 ) - (6,001 ) (2,892 ) (8,893 ) 8,893
Other changes to redeemable noncontrolling interests
- - - - - - - (7,527 )
Balance at June 30, 2021
$ 25 $ 59,709 $ 993,046 $ (119,874 ) $ 932,906 $ (441 ) $ 932,465 $ 196,569
Redemptions of noncontrolling interests
- - - - - - - (2,161 )
Net income/(loss)
- 1,503 - - 1,503 122 1,625 3,879
Purchase of treasury stock
- - - (1,396 ) (1,396 ) - (1,396 ) -
Accretion of redeemable noncontrolling interest
- - (1,028 ) - (1,028 ) (478 ) (1,506 ) 1,506
Balance at September 30, 2021
$ 25 $ 61,212 $ 992,018 $ (121,270 ) $ 931,985 $ (797 ) $ 931,188 $ 199,793

	Associated Capital Group, Inc. shareholders
						Additional															Redeemable
	Common		Retained			Paid-in			Treasury						Noncontrolling			Total			Noncontrolling
	Stock		Earnings			Capital			Stock			Total			Interests			Equity			Interests
Balance at December 31, 2021	$	25	$	68,435		$	990,069		$	(121,427	)	$	937,102		$	(1,756	)	$	935,346		$	202,456
Redemptions of noncontrolling interests		-		-			-			-			-			-			-			(486	)
Net income/(loss)		-		(16,186	)		-			-			(16,186	)		197			(15,989	)		2,484
Purchases of treasury stock		-		-			-			(293	)		(293	)		-			(293	)		-
Accretion of redeemable noncontrolling interest		-		-			(584	)		-			(584	)		(292	)		(876	)		876
Other changes to redeemable noncontrolling interests		-		-			-			-			-			-			-			(10	)
Balance at March 31, 2022	$	25	$	52,249		$	989,485		$	(121,720	)	$	920,039		$	(1,851	)	$	918,188		$	205,320

See accompanying notes.

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(Dollars in thousands)

	*Nine Months Ended*						*Three Months Ended*
	*September 30,*						*March 31,*
	*2022*			*2021*			*2023*			*2022*
Operating activities
Net income/(loss)	$	(59,601	)	$	53,415		$	18,022		$	(13,505	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Equity in net (gains)/losses from partnerships		7,710			(15,530	)		(1,773	)		1,202
Depreciation and amortization		251			289			90			90
Deferred income taxes		(17,959	)		8,411			(199	)		(4,954	)
Donated securities		517			2,052			700			127
Unrealized (gains)/losses on securities		73,569			(39,384	)		(14,214	)		21,166
Dividends received as securities		-			(5,066	)
Loss on deconsolidation of subsidiary		3,634			-
Realized gains on sales of securities		(11,684	)		(23,860	)		(2,246	)		(6,753	)
(Increase)/decrease in assets:
Investments in trading securities		(89,282	)		295,687			174,385			46,153
Investments in partnerships:
Contributions to partnerships		(6,410	)		(13,562	)		(1,790	)		(2,702	)
Distributions from partnerships		5,143			6,333			3,700			1,563
Receivable from affiliates		4,893			4,148			2,384			4,786
Receivable from brokers		19,428			(20,646	)		526			(137,995	)
Investment advisory fees receivable		6,976			5,989			2,480			6,961
Income taxes receivable		(1,746	)		(507	)		1,694			-
Other assets		2,770			697			(1,823	)		2,087
Increase/(decrease) in liabilities:
Payable to affiliates		-			(2,188	)
Payable to brokers		47,017			236,786			7,424			124,528
Income taxes payable		(2,040	)		(3,037	)		-			82
Compensation payable		(12,068	)		(1,260	)		(5,042	)		(13,092	)
Accrued expenses and other liabilities		(1,676	)		(696	)		(726	)		(1,186	)
Total adjustments		29,043			434,656			165,570			42,063
Net cash (used in)/provided by operating activities		(30,558	)		488,071
Net cash provided by operating activities								183,592			28,558

Investing activities
Maturities of marketable securities held in trust		-			175,085
Purchases of marketable securities held in trust		-			(175,085	)
Purchases of securities		(5,882	)		(2,452	)		(1,027	)		(2,601	)
Proceeds from sales of securities		620			16,724
Return of capital on securities		1,918			38,982			455			828
Deconsolidation of subsidiary cash		(1,471	)		-
Proceeds from maturities of debt securities held to maturity		5,066			-
Net cash provided by investing activities	$	251		$	53,254
Net cash used in investing activities							$	(572	)	$	(1,773	)

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(Dollars in thousands)

	*Nine Months Ended*						*Three Months Ended*
	*September 30,*						*March 31,*
	*2022*			*2021*			*2023*			*2022*
Financing activities
Dividends paid		(2,203	)		(2,211	)
Purchase of treasury stock		(2,051	)		(7,487	)
Purchases of treasury stock							$	(1,949	)	$	(293	)
Redemptions of redeemable noncontrolling interests		(1,196	)		(1,360	)		(3,228	)		(486	)
Net cash used in financing activities		(5,450	)		(11,058	)		(5,177	)		(779	)
Net (decrease)/increase in cash, cash equivalents and restricted cash		(35,757	)		530,267
Net increase in cash, cash equivalents and restricted cash								177,843			26,006
Cash, cash equivalents and restricted cash at beginning of period		328,594			39,509			221,269			328,594
Cash, cash equivalents and restricted cash at end of period	$	292,837		$	569,776		$	399,112		$	354,600

Supplemental disclosures of cash flow information:
Cash paid for interest	$	145		$	252		$	98		$	33
Cash paid for taxes	$	3,947		$	10,296		$	74		$	23

Reconciliation of Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	288,178		$	569,776		$	396,828		$	348,629
Restricted cash included in receivable from broker		4,659			-			2,284			5,971
Cash, cash equivalents and restricted cash	$	292,837		$	569,776		$	399,112		$	354,600

~~Supplemental disclosure of non-cash activity:~~

- For 2022, the Company deconsolidated certain subsidiaries which resulted in a reduction of $176.9 million of assets, $7.4 million of liabilities and $152.1 million of Redeemable noncontrolling interests. The deconsolidated assets are almost entirely attributable to $175.4 million of Investments in marketable securities held in trust and $1.5 million of cash held by Consolidated PMV, the latter of which is reflected as an Investing outflow. The deconsolidated liabilities are almost entirely attributable to $6.1 million Deferred underwriting fee payable, and $0.9 million of PMV warrant liability.

- For 2022, $29.0 million of redeemable noncontrolling interest holders tendered their shares in one of our consolidated VOE's prior to September 30, 2022. The cash payment for this tender occurred in October 2022.

See accompanying notes.

Table of Contents

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2022~~March 31, 2023

(UNAUDITED)

A.1. Organization

Unless we have indicated otherwise, or the context otherwise requires, references in this report to “Associated Capital Group, Inc.”, "Associated Capital", “AC Group”, “the Company”, “AC”, “we”, “us” and “our” or similar terms are to Associated Capital Group, Inc., its predecessors and its subsidiaries.

We are a Delaware corporation that provides alternative investment management, and we derive investment income/(loss) from proprietary investment of cash and other assets in our operating business.

Gabelli & Company Investment Advisors, Inc. (“GCIA”), a wholly-owned subsidiary of AC, and its wholly-owned subsidiary, Gabelli & Partners, LLC (“Gabelli & Partners”), collectively serve as general partners or investment managers to investment funds including limited partnerships and offshore companies (collectively, “Investment Partnerships”), and separate accounts. We primarily manage assets across a range of risk and event arbitrage portfolios and in equity event-driven value strategies. The businesses earn management and incentive fees from their advisory activities. Management fees are largely based on a percentage of assets under management. Incentive fees are based on the percentage of the investment returns of certain clients’ portfolios. GCIA is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).

PMV Consumer Acquisition Corp.

PMV Consumer Acquisition Corp. ("PMV"), a special purpose acquisition corporation, and its sponsor, PMV Consumer Acquisition Holding Company, LLC (“Sponsor”, collectively "Consolidated PMV") were previously consolidated in the financial statements of AC because AC had a controlling financial interest in these entities. Commencing in August 2022, as a result of management and organization restructuring negotiations at the Sponsor to extend the life of PMV, AC no longer controlled Consolidated PMV. As a result, Consolidated PMV was deconsolidated from the financial ~~statements.~~

~~As of~~statements in ~~December 31, 2021,~~August 2022. the Consolidated PMV entity resulted in the consolidation of $163.8 million of assets, $11.5 million of liabilities, $161.8 million of redeemable noncontrolling interests and $(1.8) million of noncontrolling interests.

~~See Note E in our~~ 10-K for a further discussion of PMV Consumer Acquisition Corp. as well as its registration statement, Annual Reports, and Quarterly Reports, which are all located on the U.S. Securities and Exchange Commission website ~~https://www.sec.gov~~ ~~under the symbol PMVC.~~

AC Spin-off

On November 30, 2015, GAMCO Investors, Inc. (“GAMCO” or ~~“GBL”~~“GAMI”) distributed all the outstanding shares of each class of AC common stock on a pro rata one-for-one basis to the holders of each class of GAMCO’s common stock (the “Spin-off”).

As part of the Spin-off, AC received 4,393,055 shares of GAMCO Class A common stock for $150 million. The Company held ~~2,417,500~~2,407,000 shares as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~ 2022, respectively.

Basis of Presentation

The unaudited interim condensed consolidated financial statements of AC Group included herein have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP in the United States for complete financial statements. The unaudited interim condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of financial position, results of operations and cash flows of the Company for the interim periods presented and are not necessarily indicative of a full year’s results.

The interim condensed consolidated financial statements include the accounts of AC Group and its subsidiaries. All material intercompany transactions and balances have been eliminated. The details on the impact of consolidating certain partnership entities on the condensed consolidated financial statements can be seen in Note D.4. Investment Partnerships and Other Entities.

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Table of Contents

~~These interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form~~ 10~~-K for the year ended~~ ~~December 31, 2021~~.

~~Use of Estimates~~

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported on the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Developments

In June 2016, the FASB issued ASU 2016-13, Accounting for Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Currently, U.S. GAAP requires an “incurred loss” methodology that delays recognition until it is probable a loss has been incurred. Under ASU 2016-13, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The condensed consolidated statements of income will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. In November 2019, the FASB issued ASU 2019-10, which deferred the effective date of this guidance for smaller reporting companies for three years. This guidance is effective for the Company on January 1, 2023. We adopted this standard on January 1, 2023 and ~~requires a modified retrospective transition method, which will result in a cumulative-effect adjustment in retained earnings upon adoption. Early~~the adoption ~~is permitted. The Company is currently assessing the potential impact~~ of this ~~new guidance~~standard did not have a material impact on ~~the Company’s consolidated~~our financial ~~statements.~~condition or results of operations.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, to simplify the process used to test for impairment of goodwill. Under the new standard, an impairment loss must be recognized in an amount equal to the excess of the carrying amount of a reporting unit over its fair value, limited to the total amount of goodwill allocated to that reporting unit. As a smaller reporting company pursuant to ASU 2019-10, the ASU is effective for the Company on January 1, 2023. ~~This guidance will be effective for the Company~~We adopted this standard on January 1, 2023 ~~using a prospective transition method~~ and ~~early~~the adoption ~~is permitted. The Company is currently evaluating the potential effect~~ of this ~~new guidance~~standard did not have a material impact on ~~the Company’s consolidated~~our financial ~~statements.~~

condition or results of operations.

B.2. Revenue

Refer to the Company’s audited consolidated financial statements included in our Annual Report on Form ~~10K~~10-K for the year ended December 31, ~~2021~~2022 for the Company’s revenue recognition policy.

The Company’s major revenue sources are as follows for the three ~~and~~ ~~nine~~months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022 (in thousands):

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*				*Three Months Ended March 31,*
	*2022*		*2021*		*2022*		*2021*		*2023*		*2022*
Investment advisory and incentive fees
Asset-based advisory fees	$	1,269	$	1,280	$	3,882	$	3,712	$	1,315	$	1,304
Performance-based advisory fees		2		64		46		120		1		44
Sub-advisory fees		1,201		670		3,481		2,795		1,095		1,138
Sub-total		2,472		2,014		7,409		6,627		2,411		2,486

Other
Miscellaneous		90		98		281		299		54		96

Total	$	2,562	$	2,112	$	7,690	$	6,926	$	2,465	$	2,582

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C.3. Investments in Securities

Investments in securities at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, consisted of the following (in thousands):

September 30, 2022

December 31, 2021

Cost

Fair Value

Cost

Fair Value

Debt - Trading Securities:

U.S. Treasury Bills
$ 133,146 $ 133,755 $ 60,992 $ 60,996
Equity Securities:

Common stocks
269,034 233,113 239,383 265,156
Mutual funds
537 929 524 1,351
Other investments
6,284 4,932 6,253 6,580
Total equity securities
275,855 238,974 246,160 273,087
Total investments in securities
$ 409,001 $ 372,729 $ 307,152 $ 334,083

Investments in marketable securities held in trust⁽¹⁾
$ - $ - $ 175,109 $ 175,109

(1~~) At~~ ~~December 31, 2021~~~~, marketable securities held in the trust account through PMV were comprised of U.S Treasury Bills which mature in less than~~ ~~one~~ ~~year with an amortized cost and fair value of approximately $175 million. Such investments were categorized as Level~~ 1.

~~The Company's held to maturity investments at~~ ~~September 30, 2022~~ ~~and~~ ~~December 31, 2021~~ ~~consisted of the following (in thousands):~~

~~September 30, 2022~~

~~Amortized cost~~

~~Gross Unrealized Holding Gains~~

~~Gross Unrealized Holding Losses~~

~~Estimated Fair Value~~

~~Held to maturity:~~

~~Investment in note receivable from affiliate~~

~~During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2022~~, the Company received proceeds of $5.1 million from the exercise of a put option on its investment in note receivable from affiliate. The exercise of the put option was determined to occur at the instrument's maturity date and no gain or loss was recognized.

December 31, 2021

Amortized cost
Gross Unrealized Holding Gains Gross Unrealized Holding Losses Estimated Fair Value
Held to maturity:

Investment in note receivable from affiliate⁽²⁾
$ 5,066 $ - $ - $ 5,066

(2~~) Investment in note receivable from affiliate relates to 2-Year Puttable and Callable Subordinated Notes due~~ ~~2023~~ ~~issued as part of a~~ ~~2021~~ ~~special dividend on GAMCO’s Class A Common Stock and Class B Common Stock. The Company had the intent to hold these investments until maturity, and as such they were recorded at amortized cost.~~


	*March 31, 2023*				*December 31, 2022*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*
Debt - Trading Securities:
U.S. Treasury Bills	$	4,948	$	4,948	$	184,636	$	186,001
Equity Securities:
Common stocks		229,635		211,712		221,794		189,977
Mutual funds		543		1,018		539		906
Other investments		5,540		4,276		6,364		4,702
Total investments in equity securities		235,718		217,006		228,697		195,585
Total investments in securities	$	240,666	$	221,954	$	413,333	$	381,586

Securities sold, not yet purchased at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, consisted of the following (in thousands):


	*September 30, 2022*				*December 31, 2021*				*March 31, 2023*				*December 31, 2022*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*
Equity securities:
Common stocks	$	2,373	$	1,725	$	9,021	$	9,838	$	3,520	$	3,302	$	2,918	$	2,509
Other investments		670		1,456		2,767		3,067		68		267		499		365
Total securities sold, not yet purchased	$	3,043	$	3,181	$	11,788	$	12,905	$	3,588	$	3,569	$	3,417	$	2,874

Investments in affiliated registered investment companies at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, consisted of the following (in thousands):


	*September 30, 2022*				*December 31, 2021*				*March 31, 2023*				*December 31, 2022*
	*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*		*Cost*		*Fair Value*
Equity securities:
Closed-end funds	$	45,427	$	56,006	$	42,484	$	64,381	$	45,572	$	58,237	$	45,029	$	56,772
Mutual funds		49,763		65,857		49,362		70,167		50,252		70,247		50,224		69,438
Total investments in affiliated registered investment companies	$	95,190	$	121,863	$	91,846	$	134,548	$	95,824	$	128,484	$	95,253	$	126,210

~~Table of Contents~~

D.4. Investment Partnerships and Other Entities

The Company is general partner or co-general partner of various affiliated entities whose underlying assets consist primarily of marketable securities (“Affiliated Entities”). We also had investments in unaffiliated partnerships, offshore funds and other entities of ~~$35.0~~$37.7 million and ~~$41.9~~$35.8 million at ~~September 30, 2022~~March 31, 2023, and December 31, ~~2021~~2022, respectively (“Unaffiliated Entities”). We evaluate each entity to determine its appropriate accounting treatment and disclosure. Certain of the Affiliated Entities, and none of the Unaffiliated Entities, are consolidated.

Investments in partnerships that are not required to be consolidated are accounted for using the equity method and are included in investments in partnerships on the condensed consolidated statements of financial condition. The Company had investments in Affiliated Entities totaling ~~$114.1~~$112.7 million and ~~$112.6~~$114.7 million at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, respectively. The Company reflects the equity in earnings of these Affiliated Entities and Unaffiliated Entities as net gain/(loss) from investments on the condensed consolidated statements of income.

Capital may generally be redeemed from Affiliated Entities on a monthly basis upon adequate notice as determined in the sole discretion of each entity’s investment manager. Capital invested in Unaffiliated Entities may generally be redeemed at various intervals ranging from monthly to annually upon notice of 30 to 95 days. Certain Unaffiliated Entities and Affiliated Entities may require a minimum investment period before capital can be voluntarily redeemed (a “Lockup Period”). No investment in any Investment Partnership has an unexpired Lockup Period. The Company has no outstanding capital commitments to any Affiliated or Unaffiliated Entity.

PMV Consumer Acquisition Corp.

~~Refer to the Company's audited consolidated financial statements included in our Annual Report on Form~~ 10~~-K for the year ended~~ ~~December 31, 2021~~ ~~for background on PMV Consumer Acquisition Corp.~~

Commencing in August 2022, as a result of management and organization restructuring negotiations at the Sponsor to extend the life of PMV, AC no longer controlled Consolidated PMV. As a result, Consolidated PMV was deconsolidated from the financial statements. and a loss of $3.6 million was recognized and recorded in Net gain/(loss) from investments in the condensed consolidated statements of income. The loss represents the difference between the carrying value and fair value of our remaining interest as of the transaction date.

We accounted for our remaining interest in PMV (comprising 1 million shares of Class A common stock and 500,000 PMV Public Warrants) at fair value. The initial fair value of these investments was $9.9 million based on the respective closing prices of both instruments on the transaction date. Our investment is recorded in Investments in equity securities in the condensed consolidated statements of financial condition and related earnings or loss from subsequent changes in fair value will be recognized in Net gain/(loss) from investments in the condensed consolidated statements of income. We have continuing involvement with PMV through our ownership interest.

~~We accounted for our remaining interest in the Sponsor (comprising our original~~ ~~$4.0~~ million investment) under the equity method. The initial fair value was $1.0 million which was valued using a market approach. Our investment is recorded in Investments in partnerships in the condensed consolidated statements of financial condition and related earnings or loss from our share of the underlying net income or loss will be recognized in Net gain/(loss) from investments in the condensed consolidated statements of income. We have continuing involvement with the Sponsor through our ownership interest.

In ~~2021~~ ~~and prior~~Prior to August 2022, AC consolidated the assets, liabilities and the results of operations of both PMV and Sponsor. AC invested $4.0 million, or approximately 62% of the $6.48 million total Sponsor partnership commitment. The Sponsor was managed primarily by AC executives. AC determined that the Sponsor iswas a variable interest entity (VIE) and that AC iswas the primary beneficiary and therefore consolidated the assets and liabilities and results of operations of the Sponsor. In addition, AC has determined that PMV iswas a VIE due to the lack of equity at risk and iswas consolidated by the Sponsor, who is deemed to be the primary beneficiary. Neither AC nor PMV had a right to the benefits from nor did it bear the risks associated with the marketable securities held in trust assets held by PMV. ~~Further, if PMV were to liquidate, the marketable securities held in trust assets would~~ ~~not~~ ~~be available to its general creditors, and as a result, the Company did~~ ~~not~~ ~~consider these assets available for the benefit of its investors.~~

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The following table reflects the net impact of the consolidated investment partnerships and other entities (“Consolidated Entities”) on the condensed consolidated statements of financial condition (in thousands):

	*September 30, 2022*							*March 31, 2023*
	*Prior to*		*Consolidated*					*Prior to*		*Consolidated*
Assets	*Consolidation*		*Entities*			*As Reported*		*Consolidation*		*Entities*			*As Reported*
Cash and cash equivalents	$	277,445	$	10,733		$	288,178	$	393,721	$	3,107		$	396,828
Investments in U.S. Treasury Bills		133,755		-			133,755		-		4,948			4,948
Investments in securities		148,218		90,756			238,974		148,552		68,454			217,006
Investments in affiliated registered investment companies		172,140		(50,277	)		121,863		183,627		(55,143	)		128,484
Investments in partnerships		165,763		(16,680	)		149,083		169,188		(18,827	)		150,361
Receivable from brokers		8,796		9,367			18,163		3,053		7,970			11,023
Investment advisory fees receivable		1,299		(6	)		1,293		1,335		(8	)		1,327
Other assets⁽¹⁾		35,444		8			35,452		29,335		3,574			32,909
Investments in marketable securities held in trust		-		-			-
Total assets	$	942,860	$	43,901		$	986,761	$	928,811	$	14,075		$	942,886
Liabilities and equity
Securities sold, not yet purchased	$	2,427	$	754		$	3,181	$	3,372	$	197		$	3,569
Payable to brokers and other liabilities⁽¹⁾		61,178		4,368			65,546		19,438		6,645			26,083
Tendered redeemable noncontrolling interests payable		-		29,001			29,001
Redeemable noncontrolling interests		-		9,778			9,778		-		7,233			7,233
Total equity		879,255		-			879,255		906,001		-			906,001
Total liabilities and equity	$	942,860	$	43,901		$	986,761	$	928,811	$	14,075		$	942,886

	*December 31, 2021*							*December 31, 2022*
	*Prior to*		*Consolidated*					*Prior to*		*Consolidated*
Assets	*Consolidation*		*Entities*			*As Reported*		*Consolidation*		*Entities*			*As Reported*
Cash and cash equivalents	$	315,009	$	4,039		$	319,048	$	209,941	$	8,521		$	218,462
Investments in U.S. Treasury Bills		60,996		-			60,996		183,528		2,473			186,001
Investments in securities		184,229		88,858			273,087		129,942		65,643			195,585
Investments in affiliated registered investment companies		186,474		(51,926	)		134,548		178,689		(52,479	)		126,210
Investments in partnerships		174,683		(20,223	)		154,460		168,286		(17,788	)		150,498
Receivable from brokers		21,993		20,485			42,478		4,002		8,070			12,072
Investment advisory fees receivable		8,320		(5	)		8,315		3,814		(7	)		3,807
Other assets⁽¹⁾		39,400		(4,105	)		35,295		35,045		10			35,055
Investments in marketable securities held in trust		-		175,109			175,109
Total assets	$	991,104	$	212,232		$	1,203,336	$	913,247	$	14,443		$	927,690
Liabilities and equity
Securities sold, not yet purchased		11,199		1,706			12,905	$	2,678	$	196		$	2,874
Accrued expenses and other liabilities⁽¹⁾		33,825		18,804			52,629
Payable to brokers and other liabilities⁽¹⁾									20,373		4,054			24,427
Redeemable noncontrolling interests		-		202,456			202,456		-		10,193			10,193
Total equity⁽²⁾		946,080		(10,734	)		935,346
Total equity									890,196		-			890,196
Total liabilities and equity	$	991,104	$	212,232		$	1,203,336	$	913,247	$	14,443		$	927,690

~~(1)~~(1) Represents the summation of multiple captions from the condensed consolidated statements of financial condition.

(2) Debit adjustments to Total equity reflect the amortization of the discount related to the issuance of PMV SPAC’s redeemable noncontrolling interest. The discount is amortized through an adjustment to additional paid-in capital and noncontrolling interest (proportionate to ownership interest in PMV Sponsor) and is also adjusted periodically for income/loss allocated to redeemable noncontrolling interest.

The following table reflects the net impact of the consolidated entities on the condensed consolidated statements of income (in thousands):

	*Three Months Ended September 30, 2022*									*Three Months Ended March 31, 2023*
	*Prior to*			*Consolidated*						*Prior to*			*Consolidated*
	*Consolidation*			*Entities*			*As Reported*			*Consolidation*			*Entities*			*As Reported*
Total revenues	$	2,723		$	(161	)	$	2,562		$	2,578		$	(113	)	$	2,465
Operating loss		(2,359	)		(770	)		(3,129	)		(4,736	)		(397	)		(5,133	)
Total other income/(loss), net		(19,053	)		1,264			(17,789	)		27,622			(2,887	)		24,735
Income/(loss) before noncontrolling interests		(16,498	)		494			(16,004	)		17,754			268			18,022
Income/(loss) attributable to noncontrolling interests, net of taxes		-			494			494			-			268			268
Net income/(loss)	$	(16,498	)	$	-		$	(16,498	)	$	17,754		$	-		$	17,754

	*Three Months Ended September 30, 2021*									*Three Months Ended March 31, 2022*
	*Prior to*			*Consolidated*						*Prior to*			*Consolidated*
	*Consolidation*			*Entities*			*As Reported*			*Consolidation*			*Entities*			*As Reported*
Total revenues	$	2,657		$	(545	)	$	2,112		$	2,772		$	(190	)	$	2,582
Operating loss		(1,821	)		1,652			(169	)		(2,641	)		(665	)		(3,306	)
Total other income, net		3,777			2,380			6,157			(18,393	)		3,346			(15,047	)
Income/(loss) before noncontrolling interests		1,473			4,031			5,504			(16,186	)		2,681			(13,505	)
Income/(loss) attributable to noncontrolling interests, net of taxes		-			4,001			4,001			-			2,681			2,681
Net income	$	1,473		$	30		$	1,503
Net income/(loss)										$	(16,186	)	$	-		$	(16,186	)

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Nine Months Ended September 30, 2022

Prior to

Consolidated

Consolidation

Entities

As Reported

Total revenues
$ 8,229 $ (539 ) $ 7,690
Operating loss
(6,462 ) (2,184 ) (8,646 )
Total other income/(loss), net
(73,907 ) 5,154 (68,753 )
Income/(loss) before noncontrolling interests
(62,571 ) 2,970 (59,601 )
Income/(loss) attributable to noncontrolling interests, net of taxes
- 2,970 2,970
Net income/(loss)
$ (62,571 ) $ - $ (62,571 )

Nine Months Ended September 30, 2021

Prior to

Consolidated

Consolidation

Entities

As Reported

Total revenues
$ 9,658 $ (2,732 ) $ 6,926
Operating loss
(13,830 ) (3,115 ) (16,945 )
Total other income, net
78,710 6,744 85,454
Income/(loss) before noncontrolling interests
49,788 3,627 53,415
Income/(loss) attributable to noncontrolling interests, net of taxes
- 3,641 3,641
Net income/(loss)
$ 49,788 $ (14 ) $ 49,774

Variable Interest Entities

With respect to each consolidated VIE, its assets may only be used to satisfy its obligations. The investors and creditors of any consolidated VIE have no recourse to the Company’s general assets. In addition, the Company neither benefits from such VIE’s assets nor bears the related risk beyond its beneficial interest in the VIE.

The following table presents the balances related to VIEs that are consolidated and included on the condensed consolidated statements of financial condition as well as the Company’s net interest in these VIEs (in thousands):


	*September 30, 2022*			*December 31, 2021*
							*March 31, 2023*			*December 31, 2022*
Cash and cash equivalents	$	13		$	1,911		$	505		$	500
Investments in securities		8,306			11,227			8,919			8,396
Receivable from brokers		137			1,106			383			304
Investments in marketable securities held in trust		-			175,109
Other assets		-			103
Accrued expenses and other liabilities⁽¹⁾		(37	)		(7,074	)		(45	)		(33	)
PMV warrant liability		-			(5,280	)
Redeemable noncontrolling interests		(406	)		(162,314	)		(446	)		(428	)
Nonredeemable noncontrolling interests		-			1,757
AC Group's net interests in consolidated VIEs	$	8,013		$	16,545		$	9,316		$	8,739

(1) Represents the summation of multiple captions from the condensed consolidated statements of financial condition.

Voting Interest Entities

We have an investment partnership that is consolidated as a VOE for both ~~2022~~2023 and ~~2021~~2022 because AC has a controlling interest in the entity. This resulted in the consolidation of ~~$102.5~~$78.3 million of assets, ~~$34.3~~$7.0 million of liabilities, and ~~$9.4~~$6.8 million of redeemable noncontrolling interests at ~~September 30, 2022~~March 31, 2023 and ~~$109.3~~$75.6 million of assets, ~~$8.4~~$4.4 million of liabilities, and ~~$40.1~~$9.8 million of redeemable noncontrolling interests at December 31, ~~2021~~2022. AC’s net interest in the consolidated VOE at ~~September 30,~~ ~~2022~~March 31, 2023 and December 31, ~~2021~~ 2022was ~~$58.8~~$64.5 million and ~~$60.8~~$61.4 million, respectively. ~~Included in the $34.3~~Approximately $3.2 million ~~of liabilities that were consolidated at~~ ~~September 30, 2022~~ ~~was $29.0 million of tendered shares payable as a result~~ of redeemable noncontrolling interests ~~validly tendering~~tendered their shares in the entity ~~prior to~~in ~~September 30, 2022.~~ 2023.~~This is accrued in Tendered redeemable noncontrolling interests payable in our condensed consolidated statements of financial condition.~~

Equity Method Investments

The Company’s equity method investments include investments in partnerships and offshore funds. These equity method investments are not consolidated but on an aggregate basis exceed 10% of the Company’s consolidated total assets or income.

E.5. Fair Value

Accounting Standards Codification Topic 820, Fair Value Measurement (ASC 820) specifies a hierarchy of valuation classifications based on whether the inputs to the valuation techniques used in each valuation classification are observable or unobservable. These classifications are summarized in the three broad levels listed below:

•

Level 1 - Unadjusted quoted prices for identical instruments in active markets.

•

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable.

•

Level 3 - Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.

Inputs used to measure fair value might fall in different levels of the fair value hierarchy, in which case the Company defaults to the lowest level input that is significant to the fair value measurement in its entirety. These levels are not necessarily an indication of the risk or liquidity associated with the investments.

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The following tables present assets and liabilities measured at fair value on a recurring basis, unless otherwise noted, as of the dates specified (in thousands):

	*September 30, 2022*								*March 31, 2023*
Assets	*Quoted Prices in Active Markets for Identical Assets (Level 1)*		*Significant Other Observable Inputs (Level 2)*		*Significant Unobservable Inputs (Level 3)*		*Total*		*Level 1*		*Level 2*		*Level 3*		*Total*
Cash equivalents	$	276,423	$	-	$	-	$	276,423	$	393,121	$	-	$	-	$	393,121
Investments in securities (including GBL stock):
Investments in securities (including GAMCO stock):
Trading - U.S. Treasury Bills		133,755		-		-		133,755		4,948		-		-		4,948
Common stocks		229,449		1,567		2,097		233,113		208,296		1,380		2,036		211,712
Mutual funds		929		-		-		929		1,018		-		-		1,018
Other		4,056		642		234		4,932		3,574		483		219		4,276
Total investments in securities		368,189		2,209		2,331		372,729		217,836		1,863		2,255		221,954
Investments in affiliated registered investment companies:
Closed-end funds		44,520		-		11,486		56,006		45,751		-		12,486		58,237
Mutual funds		65,857		-		-		65,857		70,247		-		-		70,247
Total investments in affiliated registered investment companies		110,377		-		11,486		121,863		115,998		-		12,486		128,484
Total investments held at fair value		478,566		2,209		13,817		494,592		333,834		1,863		14,741		350,438
Total assets at fair value	$	754,989	$	2,209	$	13,817	$	771,015	$	726,955	$	1,863	$	14,741	$	743,559
Liabilities
Common stocks	$	1,725	$	-	$	-	$	1,725	$	3,302	$	-	$	-	$	3,302
Other		653		803		-		1,456		13		254		-		267
Securities sold, not yet purchased		2,378		803		-		3,181		3,315		254		-		3,569
Total liabilities at fair value	$	2,378	$	803	$	-	$	3,181	$	3,315	$	254	$	-	$	3,569

	*December 31, 2021*								*December 31, 2022*
Assets	*Quoted Prices in Active Markets for Identical Assets (Level 1)*		*Significant Other Observable Inputs (Level 2)*		*Significant Unobservable Inputs (Level 3)*		*Total*		*Level 1*		*Level 2*		*Level 3*		*Total*
Cash equivalents	$	314,172	$	-	$	-	$	314,172	$	216,313	$	-	$	-	$	216,313
Investments in securities (including GBL stock):
Investments in securities (including GAMCO stock):
Trading - U.S. Treasury Bills		60,996		-		-		60,996		186,001		-		-		186,001
Common stocks		260,763		2,320		2,073		265,156		185,952		1,990		2,035		189,977
Mutual funds		1,351		-		-		1,351		906		-		-		906
Other		4,833		1,220		527		6,580		4,132		317		253		4,702
Total investments in securities		327,943		3,540		2,600		334,083		376,991		2,307		2,288		381,586
Investments in affiliated registered investment companies:
Closed-end funds		56,381		-		8,000		64,381		45,286		-		11,486		56,772
Mutual funds		70,167		-		-		70,167		69,438		-		-		69,438
Total investments in affiliated registered investment companies		126,548		-		8,000		134,548		114,724		-		11,486		126,210
Total investments held at fair value		454,491		3,540		10,600		468,631		491,715		2,307		13,774		507,796
Total assets at fair value	$	768,663	$	3,540	$	10,600	$	782,803	$	708,028	$	2,307	$	13,774	$	724,109
Liabilities
Common stocks	$	9,838	$	-	$	-	$	9,838	$	2,509	$	-	$	-	$	2,509
Other		1,959		1,108		-		3,067		132		233		-		365
Securities sold, not yet purchased		11,797		1,108		-		12,905		2,641		233		-		2,874
PMV warrant liability		5,280		-		-		5,280
Total liabilities at fair value	$	17,077	$	1,108	$	-	$	18,185	$	2,641	$	233	$	-	$	2,874

~~Table of Contents~~

The following table presents additional information about assets ~~and liabilities by major category~~ measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

Three Months Ended September 30, 2022

Three Months Ended September 30, 2021

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

Assets:
Total Total Total Total
Beginning balance
$ 12,731 $ 6,135 $ 10,600 $ 6,498
Total gains/(losses)
- (489 ) 70 (538 )
Purchases
1,500 9 3,900 53
Sales/return of capital
(414 ) (1,046 ) (753 ) (1,046 )
Transfers
- - - (358 )
Ending balance
$ 13,817 $ 4,609 $ 13,817 $ 4,609
Changes in net unrealized gain/(loss) included in Net gain/(loss) from investments related to level 3 assets still held as of the reporting date
$ - $ (489 ) $ 70 $ (538 )

Three Months Ended September 30, 2022

Three Months Ended September 30, 2021

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

Liabilities:

Total

Total

Total

Total

Beginning balance
$ - $ 7,508 $ - $ -
Total (gains)/losses
- (1,918 ) - (2,743 )
Issuances
- - - 8,333
Ending balance
$ - $ 5,590 $ - $ 5,590
Changes in net unrealized (gain)/loss included in Net gain/(loss) from investments related to level 3 liabilities still held as of the reporting date
$ - $ (1,918 ) $ - $ (2,743 )

	*Three Months Ended March 31, 2023*			*Three Months Ended March 31, 2022*
Assets:	*Total*			*Total*
Beginning balance	$	13,774		$	10,600
Total gains/(losses)		(33	)		50
Purchases		1,000			2,400
Sales/return of capital		-			(330	)
Ending balance	$	14,741		$	12,720
Changes in net unrealized gain/(loss) included in Net gain/(loss) from investments related to level 3 assets still held as of the reporting date	$	(33	)	$	50

Total realized and unrealized gains and losses for Level 3 assets ~~and liabilities~~ are reported in net gain/(loss) from investments in the condensed consolidated statements of income.

During the three ~~and~~ ~~nine~~months ended ~~September 30, 2022~~March 31, 2023 and ~~the~~ ~~three~~2022 ~~months ended~~ ~~September 30, 2021,~~ , there were no transfers into or out of Level 3. ~~For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~~~, the Company transferred an investment with a value of approximately $0.4 million from Level~~ 3 ~~to Level~~ 1 ~~due to increased availability of market price quotations.~~

~~The following table presents the carrying amounts and estimated fair values~~

Table of ~~financial assets that are~~ ~~not~~ ~~measured at fair value on a recurring basis and their respective levels within the fair value hierarchy:~~

September 30, 2022

December 31, 2021

Assets

Level within Fair Value Hierarchy

Fair Value

Amortized Cost

Level within Fair Value Hierarchy

Fair Value

Amortized Cost

Investment in note receivable from affiliate⁽¹⁾
- $ - $ - 2 $ 5,066 $ 5,066
Total assets
$ - $ - $ 5,066 $ 5,066

(1~~) Included in Receivable and investment in note receivable from affiliates in the condensed consolidated statements of financial condition.~~

Contents

F.6. Income Taxes

The effective tax rate (“ETR”) for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~September 30, 2021~~March 31, 2022 was ~~23.0%~~8.1% and ~~22.0%~~26.4%, respectively. The ETR in the year to date period of ~~2022~~2023 differs from the U.S. corporate tax rate of 21% primarily due to (a) deferred tax benefits from a foreign investment, (b) state and local taxes (net of federal benefit)~~, (b) excluded income on certain consolidated entities,~~ and (c) ~~deferred tax asset valuation allowances related to~~ the ~~carryforward~~deductibility of ~~charitable contributions and (d) the dividends received deduction.~~officers' compensation. The ETR in the year to date period of ~~2021~~2022 differs from the standard corporate tax rate of 21% primarily due to (a) state and local taxes (net of federal benefit), (b) the ~~deductibility of officers' compensation, (c) the~~ dividends received deduction, ~~(d)~~(c) the deferred tax asset valuation allowances related to the carryforward of charitable contributions and ~~(e)~~(d) excluded income on certain consolidated entities.

At ~~September 30, 2022~~March 31, 2023 the Company had net deferred tax assets, before valuation allowance of approximately ~~$12.9~~$8.2 million that were recorded within income taxes receivable in the condensed consolidated statements of financial condition. The Company believes that it is more-likely-than-not that the benefit from a portion of the shareholder-designated charitable contribution carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of ~~$1.5~~$0.3 million and $1.3 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, respectively, on the deferred tax assets related to these charitable contribution carryforwards.

As of and for the periods ended ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, the Company has not identified any uncertain tax positions.

The Company remains subject to income tax examination by the IRS for the years ~~2018~~2019 through ~~2020~~2021 and state examinations for years after 2016.

~~Table of Contents~~

G.7. Earnings per Share

Basic earnings per share is computed by dividing net income/(loss) attributable to our shareholders by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net income/(loss) attributable to our shareholders by the weighted average number of shares, plus any potentially dilutive securities (if any), outstanding during the period.

The computations of basic and diluted net income/(loss) per share are as ~~follows (in thousands, except per share data):~~follows:

	*Three Months Ended September 30,*					*Nine Months Ended September 30,*					*Three Months Ended March 31,*
(In thousands, except per share amounts)	*2022*			*2021*		*2022*			*2021*		*2023*		*2022*
Income/(loss) before noncontrolling interests	$	(16,004	)	$	5,504	$	(59,601	)	$	53,415	$	18,022	$	(13,505	)
Less: Income/(loss) attributable to noncontrolling interests		494			4,001		2,970			3,641
Less: Income attributable to noncontrolling interests												268		2,681
Net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders	$	(16,498	)	$	1,503	$	(62,571	)	$	49,774	$	17,754	$	(16,186	)

Weighted average number of shares of Common Stock outstanding - basic		22,010			22,084		22,033			22,141		21,970		22,054
Weighted average number of shares of Common Stock outstanding - diluted		22,010			22,084		22,033			22,141		21,970		22,054

Basic and Diluted EPS	$	(0.75	)	$	0.07	$	(2.84	)	$	2.25	$	0.81	$	(0.73	)

H.8. Equity

Voting Rights

The holders of Class A Common stock (“Class A Stock”) and Class B Common stock (“Class B Stock”) have identical rights except that holders of Class A Stock are entitled to one vote per share, while holders of Class B Stock are entitled to ten votes per share on all matters to be voted on by shareholders in general. Holders of each share class, however, are not eligible to vote on matters relating exclusively to the other share class.

Stock Award and Incentive Plan

The Company’s Board of Directors periodically grants shares of Phantom Restricted Stock awards (“Phantom RSAs”). Under the terms of the grants, the Phantom RSAs vest 30% and 70% after three and five years, respectively. The Phantom RSAs will be settled by a cash payment, net of applicable withholding tax, on the vesting dates. In addition, an amount equivalent to the cumulative dividends declared on shares of the Company’s Class A common stock during the vesting period will be paid to participants on vesting.

The Phantom RSAs are treated as a liability because cash settlement is required and compensation will be recognized over the vesting period. In determining the compensation expense to be recognized each period, the Company will re-measure the fair value of the liability at each reporting date taking into account the remaining vesting period attributable to each award and the current market value of the Company’s Class A stock. In making these determinations, the Company will consider the impact of Phantom RSAs that have been forfeited prior to vesting (e.g., due to an employee termination). The Company has elected to consider forfeitures as they occur. Based on the closing price of the Company’s Class A Common Stock on ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, the total liability recorded by the Company in compensation payable in our condensed consolidated statements of financial condition as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, with respect to the Phantom RSAs was ~~$3.8~~$4.7 million and ~~$3.0~~$4.8 million, respectively.

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The following table summarizes our stock-based compensation as well as unrecognized compensation for the three ~~and~~ ~~nine~~month periods ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022, respectively. Stock-based compensation expense is included in compensation expense in the condensed consolidated statements of income (dollars in ~~thousands)~~thousands, unless otherwise noted):


									*Three Months Ended March 31,*
	*Three Months Ended September 30,*				*Nine Months Ended September 30,*				*2023*			*2022*
	*2022*		*2021*		*2022*		*2021*
Stock-based compensation expense	$	452	$	365	$	769	$	1,223	$	(118	)	$	439

Remaining expense to be recognized, if all vesting conditions are met⁽¹⁾						4,408		6,264		3,197			5,922

Weighted average remaining contractual term (in years)						1.9		2.3		1.7			2.1

(1) Does not include an estimate for projected future dividends.

The following table summarizes Phantom RSA ~~activity (in thousands, except per share data):~~("PRSA") activity:

	*PRSA's*			*Weighted Average Grant Date Fair Value*		*PRSA's*		*Weighted Average Grant Date Fair Value*
Balance at December 31, 2021		222,905		$	36.03
Balance at December 31, 2022							210,910	$	36.17
Granted		-			-		-		-
Forfeited		(945	)		37.40		-		-
Vested		-			-		-		-
Balance at March 31, 2022		221,960		$	36.02
Granted		-			-
Forfeited		(6,050	)		35.63
Vested		-			-
Balance at June 30, 2022		215,910		$	36.04
Granted		4,500			41.70
Forfeited		(8,500	)		35.82
Vested		-			-
Balance at September 30, 2022		211,910		$	36.16
Balance at March 31, 2023							210,910	$	36.17

Stock Repurchase Program

In December 2015, the Board of Directors established a stock repurchase program authorizing the Company to repurchase up to 500,000 shares. On February 7, 2017, the Board of Directors reset the available number of shares to be purchased under the stock repurchase program to 500,000 shares. On August 3, 2017 and May 8, 2018, the Board of Directors authorized the repurchase of an additional 1 million and 500,000 shares, respectively. Our stock repurchase program is not subject to an expiration date.

The following table presents the Company's stock repurchase activity and remaining authorization:

For the period ended September 30, 2022:
Number of shares

Average price per share

Remaining repurchase authorization at December 31, 2021
677,144
Shares purchased under repurchase plan ⁽¹⁾
(7,536 ) $ 38.84
Remaining repurchase authorization at March 31, 2022
669,608
Shares purchased under repurchase plan ⁽¹⁾
(35,292 ) $ 37.32
Remaining repurchase authorization at June 30, 2022
634,316
Shares purchased under repurchase plan ⁽¹⁾
(11,752 ) $ 37.52
Remaining repurchase authorization at September 30, 2022
622,564
For the period ended September 30, 2021:
Remaining repurchase authorization at December 31, 2020
893,102
Shares purchased under repurchase plan ⁽¹⁾
(119,087 ) $ 35.24
Remaining repurchase authorization at March 31, 2021
774,015
Shares purchased under repurchase plan ⁽¹⁾
(53,992 ) $ 35.06
Remaining repurchase authorization at June 30, 2021
720,023
Shares purchased under repurchase plan ⁽¹⁾
(38,577 ) $ 36.19
Remaining repurchase authorization at September 30, 2021
681,446

	*Number of shares purchased*			*Average price per share*
Remaining repurchase authorization December 31, 2022		609,352
Share repurchases under stock repurchase program (1)		(52,307	)	$	37.27
Remaining repurchase authorization March 31, 2023		557,045

Remaining repurchase authorization December 31, 2021		677,144
Share repurchases under stock repurchase program (1)		(7,536	)	$	38.84
Remaining repurchase authorization March 31, 2022		669,608

(1) Repurchases totaled ~~$0.4~~$1.9 million and ~~$1.4~~$0.3 million for the three-month periods ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022, respectively. ~~Repurchases totaled $2.1 million and $7.5 million for the~~ ~~nine~~~~-month periods ended~~ ~~September 30, 2022~~ ~~and~~ ~~2021~~~~, respectively.~~

Dividends

There were no dividends declared during the three-month periods ended ~~September 30, 2022~~March 31, 2023 or ~~2021.~~2022. ~~During the~~ ~~nine~~~~-month periods ended~~ ~~September 30, 2022~~ ~~and~~ ~~2021~~~~, the Company declared dividends of $0.10 per share to Class A and Class B shareholders.~~

~~Table of Contents~~

I.9. Goodwill

At ~~September 30, 2022~~March 31, 2023, goodwill on the condensed consolidated statements of financial condition includes $3.4 million of goodwill related to GCIA. The Company assesses the recoverability of goodwill at least annually, or more often should events warrant, using a qualitative assessment of whether it is more likely than not that an impairment has occurred to determine if a quantitative analysis is required. There were no indicators of impairment for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 or ~~September 30, 2021~~March 31, 2022, and as such there was no impairment analysis performed or charge recorded.

Table of Contents

J.10. Guarantees, Contingencies and Commitments

From time to time, the Company may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or regulatory examinations or investigations. The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the condensed consolidated financial statements include the necessary provisions for losses, if any, that the Company believes are probable and estimable. Furthermore, the Company evaluates whether losses exist which may be reasonably possible and will, if material, make the necessary disclosures. Management ~~believes, however, that such amounts, both those that are~~is not aware of any probable ~~and those that are~~or reasonably possible ~~are~~ ~~not~~ ~~material to the Company’s financial condition, results of operations or cash flows~~losses at ~~September 30, 2022~~March 31, 2023.

The Company has also entered into arrangements with various other third parties, many of which provide for indemnification of the third parties against losses, costs, claims and liabilities arising from the performance of obligations under the agreements. The Company has had no claims or payments pursuant to these or prior agreements and believes the likelihood of a claim being made is remote, and, therefore, no accrual has been made on the condensed consolidated financial statements.

K.11. Subsequent Events

From ~~October~~April 1, ~~2022~~2023 to ~~November 14, 2022,~~May 11, 2023, the Company repurchased ~~2,205~~59,566 shares at ~~$39.65~~$36.43 per share.

On ~~October 6, 2022,~~ ~~GAMCO Investors, Inc. voluntarily delisted its class A common stock from the NYSE and began trading on the OTCQX platform under the symbol GAMI.~~

On ~~October 7, 2022,~~ our consolidated VOE completed its payment to tendered holders. This payment was accrued in Tendered redeemable noncontrolling interests payable in our condensed consolidated statements of financial condition as of ~~September 30, 2022.~~

On ~~November 11, 2022,~~May 10, 2023, the Board of Directors declared a semi-annual dividend of $0.10 per share, which is payable on ~~December 15, 2022~~June 29, 2023 to Class A and Class B shareholders of record on ~~December 1, 2022.~~June 15, 2023.

On ~~November 11, 2022,~~ the Board of Directors approved a $0.15 per share shareholder designated charitable contribution. If all eligible shares outstanding were registered to participate at the record date, the total contribution would approach $3.3 million.

Table of Contents

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”) OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited interim consolidated financial statements and accompanying notes thereto included in this Quarterly Report on Form 10-Q, as well as the Company’s audited annual financial statements included in our Form 10-K filed with the SEC on March ~~17, 2022~~15, 2023 to help provide an understanding of our financial condition, changes in financial condition and results of operations. Unless the context otherwise requires, all references to “we,” “us,” “our,” “AC Group” or the “Company” refer collectively to Associated Capital Group, Inc., a holding company, and its subsidiaries through which our operations are actually conducted.

Overview

We are a Delaware corporation, incorporated in 2015, that provides alternative investment management services and operates a direct investment business that over time invests in businesses that fit our criteria. Additionally, we derive income from proprietary investments.

Alternative Investment Management

We conduct our investment management activities through our wholly-owned subsidiary Gabelli & Company Investment Advisers, Inc. (“GCIA”) and its wholly-owned subsidiary, Gabelli & Partners, LLC (“Gabelli & Partners”). GCIA is an investment adviser registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). GCIA and Gabelli & Partners together serve as general partners or investment managers to investment funds including limited partnerships and offshore companies (collectively, “Investment Partnerships”), and separate accounts. We primarily manage assets across a range of risk and event arbitrage portfolios and in equity event-driven value strategies. The business earns management and incentive fees from its advisory activities. Management fees are largely based on a percentage of assets under management (“AUM”). Incentive fees are based on a percentage of the investment returns of certain client portfolios.

We manage assets on a discretionary basis and invest in a variety of U.S. and foreign securities mainly in the developed global markets. We primarily employ absolute return strategies with the objective of generating positive returns. We serve a wide variety of investors globally including private wealth management clients, corporations, corporate pension and profit-sharing plans, foundations and endowments, as well as serving as sub-advisor to certain third-party investment funds.

In merger arbitrage, the goal is to earn absolute positive returns. We introduced our first limited partnership, Gabelli Arbitrage (renamed Gabelli ~~Associates)~~Associates Fund), in February 1985. Our typical investment process begins at the time of deal announcement, buying shares of the target at a discount to the stated deal terms, earning the spread until the deal closes, and reinvesting the proceeds in new deals in a similar manner. By owning a diversified portfolio of transactions, we mitigate the adverse impact of ~~singular~~single deal-specific risks.

As the business and investor base expanded, we launched an offshore version in 1989. Building on our strengths in global event-driven value investing, several investment vehicles have been added to balance investors’ geographic, strategic and sector-specific needs. Today, we manage investments in multiple categories, including merger arbitrage, event-driven value and other strategies.

Proprietary Capital

Proprietary capital is earmarked for our direct investment business that invests in new and existing businesses, using a variety of techniques and structures. We launched our direct private equity and merchant banking activities in August 2017. The direct investment business is developing along several core pillars:

●

Gabelli Private Equity Partners, LLC (“GPEP”), formed in August 2017 with $150 million of authorized capital as a “fundless” sponsor.

●

Gabelli Principal Strategies Group, LLC (“GPS”) was created to pursue strategic operating initiatives broadly.

~~Table of Contents~~

Our direct investing efforts are organized to invest in various ways, including growth capital, leveraged buyouts and restructurings, with an emphasis on small and mid-sized companies. Our investment sourcing is across a variety of channels including direct owners, private equity funds, classic agents, and corporate carve outs (which are positioned for accelerated growth, as businesses seek to enhance shareholder value through financial engineering). The Company’s direct investing vehicles allow us to acquire companies and create long-term value with no pre-determined exit timetable.

We have a proprietary portfolio of cash and investments which we expect to use to invest primarily in funds that we will manage, provide seed capital for new products, expand our geographic presence, develop new markets and pursue strategic acquisitions and alliances.

A novel strain of coronavirus, and its variants, (“COVID-19”) continue to disrupt global supply chains, adding broad inflationary pressures impacting companies worldwide. As a result of this pandemic, many of our employees (“teammates”) were working remotely. The Company’s remote work arrangements were mostly discontinued as of July 2021 and a majority of our teammates are now back in our offices. Furthermore, inIn response to the invasion of Ukraine by Russia, economic sanctions were imposed on individuals and entities within Russia by governments around the world, including the U.S. and the European Union. Furthermore, a novel strain of coronavirus, and its variants, (“COVID-19”) continue to disrupt global supply chains, adding broad inflationary pressures impacting companies worldwide. The resulting economic dislocations from the ~~pandemic~~Ukraine-Russia conflict and the ~~Ukraine-Russia conflict~~pandemic did not have a significant adverse impact on our AUM.

~~There continues to be no material impact~~

Table of remote work arrangements on our operations, including our financial reporting systems, internal control over financial reporting, and disclosure controls and procedures, and there has been no material challenge in implementing our business continuity plan.Contents

Financial Highlights

The following is a summary of the Company’s financial performance for the quarters ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

($000s except per share data or as noted)

	Third Quarter					First Quarter
	2022			2021		2023		2022
AUM - end of period (in millions)	$	1,752		$	1,680	$	1,799	$	1,839
AUM - average (in millions)		1,807			1,651		1,841		1,801
Net income/(loss) per share-diluted	$	(0.75	)	$	0.07	$	0.81	$	(0.73	)
Book value per share at September 30	$	39.96		$	42.24
Book value per share at March 31						$	41.30	$	41.72

Condensed Consolidated Statements of Income

Investment advisory and incentive fees, which are based on the amount and composition of AUM in our funds and accounts, represent our largest source of revenues. Growth in revenues depends on good investment performance, which influences the value of existing AUM as well as contributes to higher investment and lower redemption rates and attracts additional investors while maintaining current fee levels. Growth in AUM is also dependent on being able to access various distribution channels, which is usually based on several factors, including performance and service. In light of the ongoing dynamics created by rising interest rates, high inflation, geo-political conflict, COVID-19 and the related impact on the global supply chain and banks, oil, travel and leisure, we could experience higher volatility in short term returns of our funds.

Incentive fees generally consist of an incentive allocation on the absolute gain in a portfolio generally equating to 20% of the economic profit, as defined in the agreements governing the investment vehicle or account. We recognize such revenue only when the measurement period has been completed generally in December or at the time of an investor redemption.

Compensation includes variable and fixed compensation and related expenses paid to officers, portfolio managers, sales, trading, research and all other professional staff. Variable compensation is paid to sales personnel and portfolio management and may represent up to 55% of revenues.

Management fee expense is incentive-based compensation equal to 10% of adjusted aggregate pre-tax profits paid to the Executive Chair or his designees for his services pursuant to an employment agreement.

Other operating expenses include general and administrative operating costs.

Other income and expense includes net gains and losses from investments (which include both realized and unrealized gains and losses from securities and equity in earnings of investments in partnerships), interest and dividend income, and interest expense. Net gains and losses from investments are derived from our proprietary investment portfolio consisting of various public and private investments and from consolidated investment funds.

Net ~~income/(loss)~~income attributable to noncontrolling interests represents the share of net income attributable to third-party limited partners of certain partnerships and offshore funds we consolidate. Please refer to Notes A1 and D4 in our consolidated financial statements included elsewhere in this report.

Condensed Consolidated Statements of Financial Condition

We ended the ~~third~~first quarter of ~~2022~~2023 with approximately ~~$884~~$894.1 million in cash and investments, net of securities sold, not yet purchased of ~~$3 million and net of payables to broker of $45 million relating to an unsettled T-bill rollover trade.~~$3.6 million. This includes ~~$288~~$396.8 million of cash and cash equivalents; ~~$134~~$4.9 million of short-term U.S. Treasury obligations; ~~$236~~$213.4 million of securities, net of securities sold, not yet purchased, including shares of GAMCO with a market value of ~~$41.2~~$45.6 million; and ~~$271~~$278.8 million invested in affiliated and third-party funds and partnerships, including investments in affiliated closed end funds which have a value of ~~$56~~$58.2 million and more limited liquidity. Our financial resources provide flexibility to pursue strategic objectives that may include acquisitions, lift-outs, seeding new investment strategies, and co-investing, as well as shareholder compensation in the form of share repurchases and dividends.

Total shareholders’ equity was ~~$879~~$906.0 million or ~~$39.96~~$41.30 per share as of ~~September 30, 2022,~~March 31, 2023, compared to ~~$937~~$890.2 million or ~~$42.48~~$40.48 per share as of December 31, ~~2021.~~2022. Shareholders’ equity per share is calculated by dividing the total equity by the number of common shares outstanding. The ~~decrease~~increase in equity from the end of ~~2021~~2022 was largely attributable to ~~loss~~income for the year to date period.

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RESULTS OF OPERATIONS

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2022			2021			2022			2021			2023			2022
Revenues
Investment advisory and incentive fees	$	2,472		$	2,014		$	7,409		$	6,627		$	2,411		$	2,486
Other revenues		90			98			281			299			54			96
Total revenues		2,562			2,112			7,690			6,926			2,465			2,582
Expenses
Compensation		3,591			2,819			10,531			11,710			3,570			3,933
Management fee		-			226			-			7,209			2,543			-
Other operating expenses		2,100			(764	)		5,805			4,952			1,485			1,955
Total expenses		5,691			2,281			16,336			23,871			7,598			5,888
Operating loss		(3,129	)		(169	)		(8,646	)		(16,945	)		(5,133	)		(3,306	)
Other income/(loss)
Other income/(expense)
Net gain/(loss) from investments		(19,314	)		5,676			(72,727	)		79,303			20,511			(15,610	)
Interest and dividend income		2,797			1,119			5,533			9,119			5,193			804
Interest expense		(66	)		(97	)		(145	)		(251	)		(98	)		(33	)
Shareholder-designated contribution		(1,206	)		(541	)		(1,414	)		(2,717	)		(871	)		(208	)
Total other income/(loss), net		(17,789	)		6,157			(68,753	)		85,454
Total other income/(expense), net														24,735			(15,047	)
Income/(loss) before income taxes		(20,918	)		5,988			(77,399	)		68,509			19,602			(18,353	)
Income tax expense/(benefit)		(4,914	)		484			(17,798	)		15,094			1,580			(4,848	)
Income/(loss) before noncontrolling interests		(16,004	)		5,504			(59,601	)		53,415			18,022			(13,505	)
Income/(loss) attributable to noncontrolling interests		494			4,001			2,970			3,641			268			2,681
Net income/(loss) attributable to Associated Capital Group, Inc.'s shareholders	$	(16,498	)	$	1,503		$	(62,571	)	$	49,774		$	17,754		$	(16,186	)

Net income/(loss) per share attributable to Associated Capital Group, Inc.'s shareholders:
Basic	$	(0.75	)	$	0.07		$	(2.84	)	$	2.25		$	0.81		$	(0.73	)
Diluted	$	(0.75	)	$	0.07		$	(2.84	)	$	2.25		$	0.81		$	(0.73	)

Weighted average shares outstanding:
Weighted average shares outstanding (thousands):
Basic		22,010			22,084			22,033			22,141			21,970			22,054
Diluted		22,010			22,084			22,033			22,141			21,970			22,054

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Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to Three Months Ended ~~September 30, 2021~~March 31, 2022

Overview

Our operating loss for the quarter was ~~$3.1~~$5.1 million compared to ~~$0.2~~$3.3 million for the comparable quarter of ~~2021.~~2022. The increase in operating loss was driven primarily by ~~a $2.4 million one-time credit recorded in the third quarter~~management fee expense of ~~2021. Other income/(loss), net was a loss of $17.8~~$2.5 million in the 2023 period, there was no management fee expense in 2022 due to pre-tax losses. This increase was partially offset by lower stock-based compensation expense, resulting from a drop in AC's stock price in the 2023 period. Other income was $24.7 million in the 2023 quarter compared to a ~~gain~~loss of ~~$6.2~~$15.0 million in the prior year’s quarter primarily due to mark-to-market changes in our holdings of our securities ~~portfolio.~~portfolio, brought on by market volatility that negatively impacted the first quarter 2022. The Company recorded an income tax ~~benefit~~expense in the current quarter of ~~$4.9~~$1.6 million compared to ~~expense~~a benefit of ~~$0.5~~$4.8 million in the prior year’s quarter. Consequently, our current quarter net ~~income/(loss)~~income was ~~$(16.5)~~$17.8 million, or ~~$(0.75)~~$0.81 per diluted share, compared to net ~~income~~loss of ~~$1.5~~$16.2 million, or ~~$0.07~~$(0.73) per diluted share, in the prior year’s comparable quarter.

Revenues

Total revenues were ~~$2.6~~$2.5 million for the quarter ended ~~September 30, 2022, 21.3% higher than~~March 31, 2023, roughly the ~~prior year’s period.~~same as the first quarter of 2022.

We earn advisory fees based on the average level of AUM in our products. Advisory and incentive fees were ~~$2.5~~$2.4 million for ~~2022, $0.5 million higher than~~2023, in line with the comparable quarter of ~~2021 mainly due to higher average AUM.~~2022. Incentive fees are not recognized until the uncertainty surrounding the amount of variable consideration ends and the fee is crystalized, typically on an annual basis on December 31. There were no material unrecognized incentive fees for the quarter ended ~~September 30,~~March 31, 2023 and 2022, ~~compared to $9.4 million for the quarter ended September 30, 2021.~~respectively.

Expenses

Compensation, which include variable compensation, salaries, bonuses and benefits, was $3.6 million and ~~$2.8~~$3.9 million for the three month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and September 30, 2021,~~ respectively. Fixed compensation, which includes salaries and benefits and stock based compensation, ~~increased~~decreased to $2.7 million for the ~~2022~~2023 period from ~~$2.3~~$3.1 million in the prior ~~year.~~year primarily driven by lower stock-based compensation expense. The remainder of the compensation expense represents variable compensation that fluctuates with management fee and incentive allocation revenues and gains on investment portfolios. Variable payouts as a percent of revenues are impacted by the mix of products upon which performance fees are earned and the extent to which they may exceed their allocated costs. For ~~2022,~~2023, these variable payouts were $0.9 million, ~~an increase from $0.5 million accrued~~roughly in ~~2021 driven primarily by higher management fees in 2022 as a result~~line with the accrual for the first quarter of ~~higher average AUM.~~2022.

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Management fee expense represents incentive-based and entirely variable compensation in the amount of 10% of the aggregate pre-tax profits which is payable to Mario J. Gabelli pursuant to his employment agreement. ~~No management~~Management fee expense of $2.5 million was recorded for the three-month period ended ~~September 30,~~March 31, 2023. No management fee expense was recorded or the three-month period ended March 31, 2022 due to the ~~year to date~~ pre-tax loss. ~~AC recorded management fee expense of $0.2 million for the three-month period ended September 30, 2021.~~

Other operating expenses were ~~$2.1~~$1.5 million during the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$(0.8)~~$2.0 million in the prior year's ~~quarter, driven primarily by the $2.4 million one-time credit recorded in the third quarter of 2021.~~quarter.

Other

Net gain/(loss) from investments is primarily related to the performance of our securities portfolio and investments in partnerships. Investment ~~gains/(losses)~~gains were ~~losses of $19.3~~$20.5 million in the ~~2022~~2023 quarter versus ~~gains~~losses of ~~$5.7~~$15.6 million in the comparable ~~2021~~2022 quarter, the ~~decrease~~increase driven by market volatility ~~in Q3~~that impacted Q1 2022 brought on by rising interest rates, geo-political factors and accelerating inflation.

Interest and dividend income ~~decreased~~increased to ~~$2.8~~$5.2 million in the ~~2022~~2023 quarter from ~~$1.1~~$0.8 million in the ~~2021~~2022 quarter primarily driven by increased interest income ~~on our treasury bills~~ as a result of higher interest rates in ~~2022.~~2023.

Shareholder-designated contributions in the ~~2022~~2023 quarter increased to ~~$1.2~~$0.9 million compared to ~~$0.5~~$0.2 million in the prior year’s quarter, driven by timing of contributions.

Income taxes

Our provision for income taxes was ~~a benefit of $4.9~~$1.6 million for the quarter compared to ~~expense~~a benefit of ~~$0.5~~$4.8 million in the comparable period of ~~2021, primarily driven by losses in the 2022 period.~~2022. The effective ~~tax~~ rate for the three months ended ~~September 30,~~March 31, 2023 and March 31, 2022 was 8.1% and ~~September 30, 2021 was 23.5% and 8.1%~~26.4%, respectively.

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~~Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021~~

~~Overview~~

~~Our operating loss for the year to date~~The difference in effective rate period ~~was $8.6 million compared to $16.9 million for the comparable~~over period of 2021. The decrease in operating loss was driven primarily by no management fee expense, lower compensation accruals and lower mark to market expense on stock-based compensation in the 2022 year to date period. Other income/(loss), net was a loss of $68.8 million in the 2022 period compared to a gain of $85.5 million in the prior year’s period primarily due to mark-to-market changes in our securities. The Company recorded an income tax benefit in the current period of $17.8 million compared to expense of $15.1 million in the prior year’s period. Consequently, our current period net income/(loss) was $(62.6) million, or $(2.84) per diluted share, compared to $49.8 million, or $2.25 per diluted share, in the prior year’s comparable period.

~~Revenues~~

~~Total revenues were $7.7 million for the year to date period ended September 30, 2022, $0.8 million higher than the prior year’s period.~~

We earn advisory fees based on the average level of AUM in our products. Advisory fees were $7.4 million for 2022, $0.8 million higher than the comparable period of 2021 as a result of higher average AUM.

~~Expenses~~

Compensation, which include variable compensation, salaries, bonuses and benefits, was $10.5 million for the nine months ended September 30, 2022, $1.2 million lower than the $11.7 million for the nine months ended September 30, 2021. Fixed compensation, which includes salaries and benefits and stock based compensation, increased to $7.8 million for the 2022 period from $7.5 million in the prior year. Salaries and benefits were $4.1 million and $3.8 million in the 2022 and 2021 periods, respectively. The remainder of the compensation expense represents variable compensation that fluctuates with management fee and incentive allocation revenues and gains on investment portfolios. Variable payouts as a percent of revenues are impacted by the mix of products upon which performance fees are earned and the extent to which they may exceed their allocated costs. For 2022, these variable payouts were $2.7 million, down $1.5 million from $4.2 million in 2021 due to performance in 2022.

~~Management fee expense represents incentive-based and entirely variable compensation in the amount of 10% of the aggregate pre-tax profits which~~ is payable to Mario J. Gabelli pursuant to his employment agreement. No management fee expense was recorded for the nine-month period ended September 30, 2022 due to the year to date pre-tax loss. AC recorded management fee expense of $7.2 million for the nine-month period ended September 30, 2021.

~~Other operating expenses were $5.8 million during the nine months ended September 30, 2022 compared to $5.0 million in the prior year.~~

~~Other~~

Net gain/(loss) from investments is primarily related to the performance of our securities portfolio and investments in partnerships. Investment gains/(losses) were losses of $72.7 million in the 2022 period versus gains of $79.3 million in the comparable 2021 period. In the 2022 period, our investments, other than investments in the Arb funds, were impacted mainly on a mark to market basis due to the market volatility brought on by rising interest rates, geo-political factors, and accelerating inflation.

Interest and dividend income decreased to $5.5 million in the 2022 period from $9.1 million in 2021 primarily due to the special dividend declared on our holdings of GAMCO in the 2021 period, partially offset by higher interest income on our treasury bills in 2022 driven by higher interest rates.

~~Shareholder-designated contributions were $1.4 million in 2022 compared to $2.7 million in 2021, driven by timing of contributions.~~

~~Income taxes~~

~~Our provision for income taxes was a benefit of $17.8 million for the period compared to expense of $15.1 million in the comparable period of 2021,~~ primarily driven by ~~losses in~~deferred tax benefits from a foreign investment which reduced the ~~2022 period. The~~current quarter's effective tax ~~rate for the nine months ended September 30, 2022 and September 30, 2021 was 23.0% and 22.0%, respectively.~~ rate.

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ASSETS UNDER MANAGEMENT

Our revenues are highly correlated to the level of assets under management and fees associated with our various investment products, rather than our own corporate assets. Assets under management, which are directly influenced by the level and changes of the overall equity markets, can also fluctuate through acquisitions, the creation of new products, and the addition of new accounts or the loss of existing accounts. Since various equity products have different fees, changes in our business mix may also affect revenues. At times, the performance of our equity products may differ markedly from popular market indices, and this can also impact our revenues.

Assets under management were $1.8 billion as of ~~September 30, 2022, a decrease of 1.6% over~~March 31, 2023, down slightly from December 31, ~~2021~~2022 and ~~an increase of 4.3% over September 30, 2021.~~March 31, 2022. The changes were primarily attributable to investor outflows and market ~~appreciation/(depreciation), foreign currency and investor net inflows/(outflows).~~depreciation.

Assets Under Management (in millions)

							% Change From												% Change From
	September 30,		December 31,		September 30,		December 31,			September 30,			March 31,		December 31,		March 31,		December 31,			March 31,
	2022		2021		2021		2021			2021			2023		2022		2022		2022			2022
Merger Arbitrage	$	1,518	$	1,542	$	1,438		(1.6	)		5.6		$	1,537	$	1,588	$	1,606		(3.2	)		(4.3	)
Event-Driven Value		203		195		198		4.1			2.5			229		222		191		3.2			19.9
Other		31		44		44		(29.5	)		(29.5	)		33		32		42		3.1			(21.4	)
Total AUM	$	1,752	$	1,781	$	1,680		(1.6	)		4.3		$	1,799	$	1,842	$	1,839		(2.3	)		(2.2	)

Fund flows for the three months ended ~~September 30, 2022~~March 31, 2023 (in millions):

			Market													Market
	June 30,		Appreciation/			Foreign			Net Inflows/			September 30,		December 31,		Appreciation/			Foreign		Net Inflows/			March 31,
	2022		(Depreciation)			Currency(1)			(Outflows)			2022		2022		(Depreciation)			Currency(1)		(Outflows)			2023
Merger Arbitrage	$	1,591	$	18		$	(39	)	$	(52	)	$	1,518	$	1,588	$	(12	)	$	16	$	(55	)	$	1,537
Event-Driven Value		174		(9	)		-			38			203		222		7			-		-			229
Other		37		(1	)		-			(5	)		31		32		1			-		-			33
Total AUM	$	1,802	$	8		$	(39	)	$	(19	)	$	1,752	$	1,842	$	(4	)	$	16	$	(55	)	$	1,799

(1) Reflects the impact of currency fluctuations of non-US dollar classes of investment funds.

The majority of our AUM have calendar year-end measurement periods, and our incentive fees are primarily recognized in the fourth quarter. Assets under management decreased on a net basis by ~~$50~~$43 million for the quarter ended ~~September 30, 2022~~March 31, 2023 due to net investor outflows of $55 million and market depreciation of $4 million, partially offset by the impact of currency fluctuations of non-US dollar classes of investment funds of ~~$39 million, net investor outflows of $19 million, partially offset by market appreciation of $8~~$16 million.

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Liquidity and Capital Resources

Our principal assets consist of cash and cash equivalents; short-term treasury securities; marketable securities, primarily equities, including 2.4 million shares of GAMCO; and interests in affiliated and third-party funds and partnerships. Although Investment Partnerships may be subject to restrictions as to the timing of distributions, the underlying investments of such Investment Partnerships are generally liquid, and the valuations of these products reflect that underlying liquidity.

Summary cash flow data is as follows (in thousands):

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2022			2021			2023			2022
Cash flows provided by (used in):
Operating activities	$	(30,558	)	$	488,071		$	183,592		$	28,558
Investing activities		251			53,254			(572	)		(1,773	)
Financing activities		(5,450	)		(11,058	)		(5,177	)		(779	)
Net (decrease)/increase in cash, cash equivalents and restricted cash		(35,757	)		530,267			177,843			26,006
Cash, cash equivalents and restricted cash at beginning of period		328,594			39,509			221,269			328,594
Cash, cash equivalents and restricted cash at end of period	$	292,837		$	569,776		$	399,112		$	354,600

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We require relatively low levels of capital expenditures and have a highly variable cost structure where costs increase and decrease based on the level of revenues we receive. Our revenues, in turn, are highly correlated to the level of AUM and to investment performance. We anticipate that our available liquid assets should be sufficient to meet our cash requirements as we build out our operating business. At ~~September 30, 2022,~~March 31, 2023, we had cash and cash equivalents of ~~$288.2~~$396.8 million, Investments in U.S. Treasury Bills of ~~$133.8~~$4.9 million and ~~$235.8~~$213.4 million of investments net of securities sold, not yet purchased of ~~$3.2~~$3.6 million. Included in cash and cash equivalents are ~~$10.7~~$3.1 million as of ~~September 30, 2022~~March 31, 2023 which were held by consolidated investment funds and may not be readily available for the Company to access.

Net cash ~~used in~~provided by operating activities was ~~$30.6~~$183.6 million for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 due to ~~$90.5~~$176.3 million of net decreases of securities and net distributions from investment partnerships, ~~and~~ our net ~~loss~~income of ~~$59.6~~$18.0 million and $6.9 million of net receivables/payables, partially offset by ~~$56.0~~$17.6 million of adjustments for noncash items, primarily ~~losses~~gains on investments securities and partnership investments and deferred ~~taxes and $63.6 million of net receivables/payables.~~taxes. Net cash ~~provided by~~used in investing activities was ~~$0.3~~$0.6 million primarily due to ~~proceeds from maturities~~purchases of ~~debt~~ securities ~~held to maturity~~ of ~~$5.1~~$1.0 million, partially offset by return of capital on securities of ~~$1.9 million and proceeds from sales of securities of $0.6 million, partially offset by purchases of securities of $5.9 million and the impact of deconsolidation of our subsidiary of $1.4~~$0.5 million. Net cash used in financing activities was ~~$5.5~~$5.2 million resulting primarily from ~~dividends paid of $2.2 million, stock buyback payments of $2.1 million and~~ redemptions of redeemable noncontrolling interests of ~~$1.2~~$3.2 million and stock buyback payments of $1.9 million.

Net cash provided by operating activities was ~~$488.1~~$28.6 million ~~which includes the impact of the $225 million unsettled T-bill rollover trade,~~ for the ~~nine~~three months ended ~~September 30, 2021. Excluding the impact of that unsettled rollover, net cash provided by operating activities was $262.8 million,~~March 31, 2022 due to ~~$288.5~~$45.0 million of net decreases of securities and net contributions to investment partnerships and ~~our net income of $53.4 million, offset by $73.1~~$10.9 million of adjustments for noncash items, primarily ~~gains~~losses on investment securities and partnership investments and deferred taxes, partially offset by our net loss of $13.5 million and ~~$6.0~~$13.8 million of net receivables/payables. Net cash ~~provided by~~used in investing activities was ~~$53.3~~$1.8 million due to purchases of securities of ~~$2.4~~$2.6 million offset by ~~proceeds from sales of securities of $16.7 million and~~ return of capital on securities of ~~$39.0~~$0.8 million. Net cash used in financing activities was ~~$11.1~~$0.8 million resulting from stock buyback payments of ~~$7.5~~$0.3 million and ~~dividends paid~~redemptions of ~~$2.2~~redeemable noncontrolling interests of $0.5 million.

Critical Accounting Policies and Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from those estimates. See Note A1 and the Company’s Critical Accounting Policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations in AC’s ~~2021~~2022 Annual Report on Form 10-K filed with the SEC on March ~~17, 2022~~15, 2023 for details on Critical Accounting Policies.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

Smaller reporting companies are not required to provide the information required by this item.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Co-Chief Financial Officers, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our Chief Executive Officer and Co-Chief Financial Officers have concluded that our disclosure controls and procedures were effective as of and for the period covered by this report.

Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting as defined by Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Forward-Looking Information

Our disclosure and analysis in this report contain some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements because they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. They also appear in any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results. Although we believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, there can be no assurance that our actual results will not differ materially from what we expect or believe. Some of the factors that could cause our actual results to differ from our expectations or beliefs include, without limitation:

•

the adverse effect from a decline in the securities markets

•

a decline in the performance of our products

•

a general downturn in the economy

•

changes in government policy or regulation

•

changes in our ability to attract or retain key employees

•

unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations

We also direct your attention to any more specific discussions of risk contained in our Form 10 and other public filings. We are providing these statements as permitted by the Private Litigation Reform Act of 1995. We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matters of our forward-looking statements.

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PART II: Other Information

ITEM 1: Legal Proceedings

Currently, we are not subject to any legal proceedings that individually or in the aggregate involved a claim for damages in excess of 10% of our consolidated assets. From time to time, we may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or regulatory examinations or investigations. Examinations or investigations can result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the consolidated financial statements include the necessary provisions for losses that we believe are probable and estimable. Furthermore, we evaluate whether there exist losses which may be reasonably possible and, if material, make the necessary disclosures. However, management believes such matters, both those that are probable and those that are reasonably possible, are not material to the Company’s consolidated financial condition, operations, or cash flows at ~~September 30, 2022.~~March 31, 2023. See also Note J,10, Guarantees, Contingencies and Commitments, to the consolidated financial statements in Part I, Item 1 of this Form 10-Q.

ITEM 1A: Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.

ITEM 2: Unregistered Sales of Equity Securities And Use Of Proceeds

The following table provides information for our repurchase of our Class A Stock during the quarter ended ~~September 30, 2022:~~March 31, 2023:

Total Number of

Maximum

Total

Average

Shares Repurchased as

Number of Shares

Number of

Price Paid Per

Part of Publicly

That May Yet Be

Shares

Share, net of

Announced Plans

Purchased Under

Period

Repurchased

Commissions

or Programs

the Plans or Programs

07/01/22 - 07/31/22
4,100 $ 36.42 4,100 630,216
08/01/22 - 08/31/22
695 39.51 695 629,521
09/01/22 - 09/30/22
6,957 37.97 6,957 622,564
Totals
11,752 $ 37.52 11,752

Period	Total Number of Shares Repurchased		Average Price Paid Per Share, net of Commissions		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Maximim Number of Shares That May Yet Be Purchased Under the Plans or Programs
01/01/23 - 01/31/23		8,723	$	38.75		8,723		600,629
02/01/23 - 02/28/23		21,388		37.23		21,388		579,241
03/01/23 - 03/31/23		22,196		36.72		22,196		557,045
Totals		52,307	$	37.27		52,307

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ITEM 6: (a) Exhibits

Exhibit Number		Description of Exhibit

2.1		Separation and Distribution Agreement, dated November 30, 2015, between GAMCO Investors, Inc., a Delaware corporation (“GAMCO”), and Associated Capital Group, Inc., a Delaware corporation (the “Company”). (Incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K dated November 30, 2015 filed with the Securities and Exchange Commission on December 4, 2015).

3.1		Amended and Restated Certificate of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K dated November 19, 2015 filed with the Securities and Exchange Commission on November 25, 2015).

3.2		Amended and Restated Bylaws of the Company. (Incorporated by reference to Exhibit 3.2 to the Company’s Report on Form 8-K dated November 19, 2015 filed with the Securities and Exchange Commission on November 25, 2015).

4.1		Form of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to Amendment No. 4 to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on October 21, 2015).

4.2		Description of The Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (Incorporated by reference to Exhibit 4.2 of the Company’s Report on Form 10-K filed with the Commission on March 16, 2020).

10.1		Service Mark and Name License Agreement, dated November 30, 2015, by and between the Company and GAMCO. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015).

10.2		Transitional Administrative and Management Services Agreement, dated November 30, 2015, by and between the Company and GAMCO. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015).

10.3		Employment Agreement between the Company and Mario J. Gabelli dated November 30, 2015 (Incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015).

10.4		Promissory Note in aggregate principal amount of $250,000,000, dated November 30, 2015, issued by GAMCO in favor of the Company (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015).

10.5		Tax Indemnity and Sharing Agreement, dated November 30, 2015, by and between the Company and GAMCO. (Incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K dated November 30, 2015 filed with the Commission on December 4, 2015).

10.6		2015 Stock Award Incentive Plan (Incorporated by reference to Exhibit 10.11 to Amendment No. 4 to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on October 21, 2015).

10.7		Form of Indemnification Agreement by and between the Company and the Indemnitee defined therein (Incorporated by reference to Exhibit 10.7 to Amendment No. 4 to the Company’s Registration Statement on Form 10 filed with the Securities and Exchange Commission on October 21, 2015).

10.8		Agreement and Plan of Merger, dated as of October 31, 2019, by and among Morgan Group Holding Co., G.R. acquisition, LLC, G.research, LLC, Institutional Services Holdings, LLC and Associated Capital Group, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K of Morgan Group Holding Co. filed with the Securities and Exchange Commission on November 6, 2019).

31.1		Certification of CEO pursuant to Rule 13a-14(a).

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31.2		Certification of Co-CFO pursuant to Rule 13a-14(a).

31.3		Certification of Co-CFO pursuant to Rule 13a-14(a)

32.1		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Co-CFOs pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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SIGNATURES

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.

ASSOCIATED CAPITAL GROUP, INC.
(Registrant)

By: /s/	Patrick B. Huvane	By: /s/	Ian J. McAdams
Name:	Patrick B. Huvane	Name:	Ian J. McAdams
Title:	Interim Co-Chief Financial Officer	Title:	Interim Co-Chief Financial Officer

Date: ~~November 14, 2022~~May 11, 2023		Date: ~~November 14, 2022~~May 11, 2023

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	*Associated Capital Group, Inc. shareholders*
						*Additional*															*Redeemable*
	*Common*		*Retained*			*Paid-in*			*Treasury*						*Noncontrolling*			*Total*			*Noncontrolling*
	*Stock*		*Earnings*			*Capital*			*Stock*			*Total*			*Interests*			*Equity*			*Interests*
Balance at December 31, 2021	$	25	$	68,435		$	990,069		$	(121,427	)	$	937,102		$	(1,756	)	$	935,346		$	202,456
Redemptions of noncontrolling interests		-		-			-			-			-			-			-			(486	)
Net income/(loss)		-		(16,186	)		-			-			(16,186	)		197			(15,989	)		2,484
Purchase of treasury stock		-		-			-			(293	)		(293	)		-			(293	)		-
Accretion of redeemable noncontrolling interest		-		-			(584	)		-			(584	)		(292	)		(876	)		876
Other changes to redeemable noncontrolling interests		-		-			-			-			-			-			-			(10	)
Balance at March 31, 2022	$	25	$	52,249		$	989,485		$	(121,720	)	$	920,039		$	(1,851	)	$	918,188		$	205,320
Redemptions of noncontrolling interests		-		-			-			-			-			-			-			(486	)
Net income/(loss)		-		(29,887	)		-			-			(29,887	)		83			(29,804	)		(288	)
Dividends declared ($0.10 per share)		-		(2,203	)		-			-			(2,203	)		-			(2,203	)		-
Purchase of treasury stock		-		-			-			(1,317	)		(1,317	)		-			(1,317	)		-
Accretion of redeemable noncontrolling interest		-		-			662			-			662			331			993			(993	)
Other changes to redeemable noncontrolling interests		-		-			-			-			-			-			-			(226	)
Balance at June 30, 2022	$	25	$	20,159		$	990,147		$	(123,037	)	$	887,294		$	(1,437	)	$	885,857		$	203,327
Redemptions of noncontrolling interests		-		-			-			-			-			-			-			(29,001	)
Net income/(loss)		-		(16,498	)		-			-			(16,498	)		-			(16,498	)		494
Purchase of treasury stock		-		-			-			(441	)		(441	)		-			(441	)		-
Accretion of redeemable noncontrolling interest		-		-			8,900			-			8,900			4,305			13,205			(13,205	)
Effect of deconsolidation		-		-			-			-			-			(2,868	)		(2,868	)		(152,100	)
Other changes to redeemable noncontrolling interests		-		-			-			-			-			-			-			263
Balance at September 30, 2022	$	25	$	3,661		$	999,047		$	(123,478	)	$	879,255		$	-		$	879,255		$	9,778

	*December 31, 2021*
	*Amortized cost*		*Gross Unrealized Holding Gains*		*Gross Unrealized Holding Losses*		*Estimated Fair Value*
Held to maturity:
Investment in note receivable from affiliate⁽²⁾	$	5,066	$	-	$	-	$	5,066

For the period ended September 30, 2022:	*Number of shares*			*Average price per share*
Remaining repurchase authorization at December 31, 2021		677,144
Shares purchased under repurchase plan ⁽¹⁾		(7,536	)	$	38.84
Remaining repurchase authorization at March 31, 2022		669,608
Shares purchased under repurchase plan ⁽¹⁾		(35,292	)	$	37.32
Remaining repurchase authorization at June 30, 2022		634,316
Shares purchased under repurchase plan ⁽¹⁾		(11,752	)	$	37.52
Remaining repurchase authorization at September 30, 2022		622,564
For the period ended September 30, 2021:
Remaining repurchase authorization at December 31, 2020		893,102
Shares purchased under repurchase plan ⁽¹⁾		(119,087	)	$	35.24
Remaining repurchase authorization at March 31, 2021		774,015
Shares purchased under repurchase plan ⁽¹⁾		(53,992	)	$	35.06
Remaining repurchase authorization at June 30, 2021		720,023
Shares purchased under repurchase plan ⁽¹⁾		(38,577	)	$	36.19
Remaining repurchase authorization at September 30, 2021		681,446

					Total Number of		Maximum
	Total		Average		Shares Repurchased as		Number of Shares
	Number of		Price Paid Per		Part of Publicly		That May Yet Be
	Shares		Share, net of		Announced Plans		Purchased Under
Period	Repurchased		Commissions		or Programs		the Plans or Programs
07/01/22 - 07/31/22		4,100	$	36.42		4,100		630,216
08/01/22 - 08/31/22		695		39.51		695		629,521
09/01/22 - 09/30/22		6,957		37.97		6,957		622,564
Totals		11,752	$	37.52		11,752