10-Q 1 brhc10023950_10q.htm 10-Q

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 March 31, 2021

☐ 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 Ruic I 2b-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 April 30, 2021
Class A Common Stock, .001 par value		3,158,127
Class B Common Stock, .001 par value		18,962,918

As of April 30, 2021, 3,158,127 shares of class A common stock and 18,962,918 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 19,100 and 36,758 shares of class A and class B common stock, respectively. In addition, there are 155,500 Phantom Restricted Stock Awards outstanding as of March 31, 2021.

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

INDEX


PART I.	FINANCIAL INFORMATION	Page

Item 1.	Unaudited Condensed Consolidated Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION *

Item 1.	Legal Proceedings	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 6.	Exhibits	33

	Signature	35

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

Index

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

UNAUDITED

(Dollars in thousands, except per share data)

	March 31, 2021			December 31, 2020
ASSETS

Cash and cash equivalents	$	279,725		$	39,509
Investments in U.S. Treasury Bills		75,000			344,453
Investments in equity securities (Including GBL stock with a value of $50.5 million and $48.9 million, respectively)		265,700			249,887
Investments in affiliated registered investment companies		184,129			170,605
Investments in partnerships		133,538			123,994
Receivable from brokers		31,412			24,677
Investment advisory fees receivable		1,190			7,346
Receivable from affiliates		1,247			4,743
Deferred tax assets, net		-			2,207
Goodwill		3,519			3,519
Other assets		20,732			28,565
Investments in marketable securities held in trust		175,074			175,040
Total assets	$	1,171,266		$	1,174,545

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Payable to brokers	$	10,488		$	6,496
Income taxes payable, including deferred tax liabilities of $506 in 2021		13,181			9,746
Compensation payable		9,526			18,567
Securities sold, not yet purchased		16,702			17,571
Payable to affiliates		242			2,188
Accrued expenses and other liabilities		4,186			5,635
Deferred underwriting fee payable		6,125			6,125
Total liabilities		60,450			66,328

Redeemable noncontrolling interests		195,070			206,828

Commitments and contingencies (Note J)

Equity:
Preferred stock, $.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, respectively; 3,192,040 and 3,311,127 shares outstanding, respectively		6			6
Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 19,196,792 shares issued; 18,962,918 outstanding, respectively		19			19
Additional paid-in capital		999,047			999,047
Retained earnings		32,204			13,649
Treasury stock, at cost (3,437,214 and 3,318,127 shares, respectively)		(117,981	)		(113,783	)
Total Associated Capital Group, Inc. equity		913,295			898,938
Noncontrolling interests		2,451			2,451
Total equity		915,746			901,389
Total liabilities and equity	$	1,171,266		$	1,174,545

As of March 31, 2021 and December 31, 2020, certain balances include amounts related to consolidated variable interest entities (“VIEs”) and voting interest entities (“VOEs”). See Footnote E.

See accompanying notes.

Index

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

UNAUDITED

(Dollars in thousands, except per share data)

	Three Months Ended March 31,
	2021			2020
Revenues
Investment advisory and incentive fees	$	2,225		$	2,700
Other revenues		100			262
Total revenues		2,325			2,962
Expenses
Compensation		3,868			2,232
Management fee		2,663			-
Other operating expenses		2,159			1,370
Total expenses		8,690			3,602
Operating loss		(6,365	)		(640	)
Other income/(expense)
Net gain from investments		31,321			(102,089	)
Interest and dividend income		1,189			2,274
Interest expense		(91	)		(49	)
Shareholder-designated contribution		(1,737	)		(227	)
Total other income, net		30,682			(100,091	)
Income/(loss) before income taxes		24,317			(100,731	)
Income tax expense/(benefit)		5,590			(23,662	)
Income/(loss) from continuing operations, net of taxes		18,727			(77,069	)
Income/(loss) from discontinued operations, net of taxes		-			(231	)
Income/(loss) before noncontrolling interests		18,727			(77,300	)
Income/(loss) attributable to noncontrolling interests		172			(3,945	)
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders	$	18,555		$	(73,355	)

Net income/(loss) per share attributable to Associated Capital Group, Inc.’s shareholders:
Basic - Continuing operations	$	0.83		$	(3.26	)
Basic - Discontinued operations		-			(0.01	)
Basic - Total	$	0.83		$	(3.27	)

Diluted - Continuing operations	$	0.83		$	(3.26	)
Diluted - Discontinued operations		-			(0.01	)
Diluted - Total	$	0.83		$	(3.27	)

Weighted average shares outstanding:
Basic		22,222			22,441
Diluted		22,222			22,441

Actual shares outstanding		22,155			22,394

See accompanying notes.

Index

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED

(Dollars in thousands)

	Three Months Ended March 31,
	2021		2020

Net income/(loss) before non-controlling interests	$	18,727	$	(77,300	)
Less: Comprehensive income/(loss) attributable to noncontrolling interests		172		(3,945	)

Comprehensive income/(loss) attributable to Associated Capital Group, Inc.	$	18,555	$	(73,355	)

See accompanying notes.

Index

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

UNAUDITED

(Dollars in thousands)

For the three months ended March 31, 2021

	Associated Capital Group, Inc. shareholders
	Common Stock		Retained Earnings		Additional Paid-in Capital		Treasury Stock			Total			Noncontrolling Interests		Total Equity			Redeemable Noncontrolling 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

See accompanying notes.

For the three months ended March 31, 2020

	Associated Capital Group, Inc. shareholders
	Common Stock		Retained Earnings/ (Accumulated Deficit)			Additional Paid-in Capital		Treasury Stock			Total			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance at December 31, 2019	$	25	$	(701	)	$	1,003,450	$	(106,342	)	$	896,432		$	1,003		$	897,435		$	50,385
Redemptions of noncontrolling interests		-		-			-		-			-			-						(531	)
Net income/(loss)		-		(73,355	)		-		-			(73,355	)		(52	)		(73,407	)		(3,945	)
Purchase of treasury stock		-		-			-		(3,225	)		(3,225	)		-			(3,225	)		-
Balance at March 31, 2020	$	25	$	(74,056	)	$	1,003,450	$	(109,567	)	$	819,852		$	951		$	820,803		$	45,909

See accompanying notes.

Index

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(Dollars in thousands)

	Three Months Ended March 31,
	2021			2020
Operating activities
Net income/(loss)	$	18,727		$	(77,300	)
Less: (Loss) from discontinued operations, net of taxes		-			(231	)
Income/(loss) from continuing operations		18,727			(77,069	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Equity in net (gains) losses from partnerships		(6,935	)		10,676
Depreciation and amortization		12			799
Deferred income taxes		2,714			(21,177	)
Donated securities		1,648			281
Unrealized (gains)/losses on securities		(18,548	)		99,377
Realized gains on sales of securities		(538	)		-
(Increase)/decrease in assets:		-
Investments in trading securities		250,884			15,206
Investments in partnerships:
Contributions to partnerships		(1,061	)		(3,429	)
Distributions from partnerships		1,663			1,266
Receivable from affiliates		3,875			3,884
Receivable from brokers		(8,578	)		6,239
Investment advisory fees receivable		6,209			8,271
Income taxes receivable		(507	)		1,176
Other assets		(808	)		5,649
Increase/(decrease) in liabilities:
Payable to affiliates		(1,946	)		919
Payable to brokers		3,991			(6,070	)
Income taxes payable		3,435			(3,680	)
Compensation payable		(9,041	)		(14,215	)
Accrued expenses and other liabilities		(1,628	)		(568	)
Total adjustments		224,841			104,604
Net cash provided by operating activities		243,568			27,535

Investing activities
Maturities of U.S. Treasury Bills held in trust		175,074			-
Purchases of money market funds held in trust		(175,074	)		-
Purchases of securities		(250	)		(193	)
Proceeds from sales of securities		805			321
Return of capital on securities		155			349
Purchase of building		-			(11,084	)
Net cash provided by/(used in) investing activities	$	710		$	(10,607	)

Index

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED (continued)

(Dollars in thousands)

	Three Months Ended March 31,
	2021			2020
Financing activities
Redemptions of redeemable noncontrolling interests	$	-		$	(531	)
Dividends paid		-			(2,248	)
Purchase of treasury stock		(4,198	)		(3,225	)
Contributions from redeemable noncontrolling interests		136			-
Net cash provided by (used in) financing activities		(4,062	)		(6,004	)
Cash flows of discontinued operations
Net cash provided by (used in) operating activities		-			(918	)
Net increase in cash and cash equivalents		240,216			10,006
Cash and cash equivalents at beginning of period		39,509			342,001
Cash and cash equivalents at end of period	$	279,725		$	352,007

Supplemental disclosures of cash flow information:
Cash paid for interest	$	91		$	49
Cash paid/(received) for taxes	$	-		$	-

See accompanying notes

Index

ASSOCIATED CAPITAL GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2021

(UNAUDITED)

A. Organization

Unless we have indicated otherwise, or the context otherwise requires, references in this report to “Associated Capital Group, Inc.,” “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.

GCIA 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 in equity event-driven value strategies, across a range of risk and event arbitrage portfolios. 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”).

In April 2018, the Company sponsored a €110 million initial public offering of its first special purpose acquisition corporation, the Gabelli Value for Italy S.p.a., an Italian company listed on the London Stock Exchange’s Borsa Italiana AIM segment under the symbol “VALU”. VALU was created to acquire a small-to medium-sized Italian franchise business with the potential for international expansion, particularly in the United States. Gabelli Value for Italy S.p.a was subsequently liquidated on July 8, 2020 at the apex of the pandemic in Italy.

PMV Consumer Acquisition Corp.

On September 22, 2020, Associated Capital announced the $175 million initial public offering of its special purpose acquisition corporation, PMV Consumer Acquisition Corp. (NYSE:PMVC).

PMV Consumer Acquisition Corp. (“PMV”) was created to pursue an initial business combination following the consumer globally with companies having an enterprise valuation in the range of $200 million to $3.5 billion. PMV Consumer Acquisition Holding Company, LLC (“Sponsor”) was created to assist PMV in sourcing, analyzing and consummating acquisition opportunities for that initial business combination.

The Sponsor and PMV have been consolidated in the financial statements of AC beginning in September 2020 because AC has a controlling financial interest in these entities. This resulted in the consolidation $177.4 million of assets, $6.3 million of liabilities, $154.5 million of redeemable noncontrolling interests, $2.4 million of noncontrolling interests relating to PMV and the Sponsor as of March 31, 2021. In addition, there are several other entities that are consolidated within the financial statements. The details on the impact of consolidating these entities on the consolidated financial statements can be seen in Note D. Investment Partnerships and Other Entities.

See Note D for a further discussion of PMV Consumer Acquisition Corp. as well as its registration statement and Form 10K as of December 31, 2020 both located on the U.S. Securities and Exchange Commission website https://www.sec.gov/edgar/searchedgar/companysearch.html under the symbol PMVC.

Index

AC Spin-off

On November 30, 2015, GAMCO Investors, Inc. (“GAMCO” or “GBL”) 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 currently holds 2,722,473 shares as of March 31, 2021.

Morgan Group Spin-off

On October 31, 2019, the Company closed on a transaction whereby Morgan Group Holding Co., (“Morgan Group”) a company that trades in the over-the-counter market under the symbol “MGHL” and under common control of AC’s majority shareholder, acquired all of the Company’s interest in G.research LLC, the Company’s former institutional research business, for 50,000,000 shares of Morgan Group common stock. In addition, immediately prior to the closing, 5.15 million Morgan Group shares were issued under a private placement for $515,000. Subsequent to the transaction and private placement, the Company had an 83.3% ownership interest in Morgan Group. The transaction was accounted for pursuant to ASC 805-50, Transactions Between Entities Under Common Control. For transactions between entities under common control, there is no change in basis in the net assets received and therefore they are recorded at their historical cost.

On March 16, 2020, the Company announced that its Board of Directors approved the spin-off of Morgan Group to AC’s shareholders in which AC would distribute to its shareholders on a pro rata basis the 50,000,000 shares of Morgan Group that it owns.

On May 5, 2020, the Morgan Group board approved a reverse stock split of the issued and outstanding shares of their common stock, par value $0.01 per share, in a ratio of 1‑for‑100 that was effective on June 10, 2020.

Associated Capital held 83.3% of the outstanding shares of Morgan Group through August 5, 2020.

On August 5, 2020, Morgan Group shares held by the Company were distributed to the Company’s shareholders of record as of July 30, 2020. Based on the distribution ratio, AC stockholders of record received approximately 0.022356 shares of Morgan Group common stock for each share of AC common stock held.

The historical financial results of Morgan Group have been reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented through March 31, 2020.

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. In the opinion of management, 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.

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, 2020.

Index

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.

Investment in Marketable Securities held in trust account

Marketable securities of our consolidated SPAC, PMV, are held in short-term investments such as money market funds that invest primarily in U.S. Treasury Bills or directly in U.S. Treasury Bills. At December 31, 2020 such investments were accounted for as held to maturity. During the period ended March 31, 2021, those held to maturity investments matured and were invested in money market funds recorded at fair value.

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 Statement 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 and requires a modified retrospective transition method, which will result in a cumulative-effect adjustment in retained earnings upon adoption. Early adoption is permitted. The Company is currently assessing the potential impact of this new guidance on the Company’s consolidated financial statements.

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 on January 1, 2023 using a prospective transition method and early adoption is permitted. The Company is currently evaluating the potential effect of this new guidance on the Company’s consolidated financial statements.

Index

B. Revenue

Refer to the Company’s audited consolidated financial statements included in our Annual Report on Form 10K for the year ended December 31, 2020 for the Company’s revenue recognition policy.

The Company’s major revenue sources are as follows for the quarters ended March 31, 2021 and 2020 (in thousands):

	Three Months Ended March 31,
	2021		2020
Revenues
Investment advisory and incentive fees
Asset-based advisory fees	$	1,183	$	1,820
Performance-based advisory fees		9		-
Sub-advisory fees		1,033		880
		2,225		2,700

Other
Miscellaneous		100		262
		100		262

Total	$	2,325	$	2,962

C. Investments in Securities

Investments in securities at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):

	March 31, 2021				December 31, 2020
	Cost		Fair Value		Cost		Fair Value
Debt - Trading Securities:
U.S. Treasury Bills	$	74,966	$	75,000	$	344,367	$	344,453
Equity Securities:
Common stocks		253,928		253,109		239,240		237,377
Mutual funds		529		1,329		546		1,294
Other investments		8,907		11,262		8,806		11,216
Total investments in securities	$	338,330	$	340,700	$	592,959	$	594,340

Investments in marketable securities held in trust	$	175,074	$	175,074	$	175,040	$	175,040

Securities sold, not yet purchased at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):

	March 31, 2021				December 31, 2020
	Cost		Fair Value		Cost		Fair Value
Equity securities:
Common stocks	$	14,903	$	14,996	$	14,369	$	16,090
Other investments		1,570		1,706		1,209		1,481
Total securities sold, not yet purchased	$	16,473	$	16,702	$	15,578	$	17,571

Index

Investments in affiliated registered investment companies at March 31, 2021 and December 31, 2020 consisted of the following (in thousands):

	March 31, 2021				December 31, 2020
	Cost		Fair Value		Cost		Fair Value
Equity securities:
Closed-end funds	$	76,420	$	117,656	$	76,462	$	106,719
Mutual funds		48,427		66,473		48,395		63,886
Total investments in affiliated
registered investment companies	$	124,847	$	184,129	$	124,857	$	170,605

D. 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 $27.7 million and $24.9 million at March 31, 2021, and December 31, 2020, 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 consolidated statements of financial condition. This caption includes investments in Affiliated Entities and Unaffiliated Entities which the Company accounts for under the equity method of accounting. The Company had investments in Affiliated Entities totaling $105.8 million and $99.1 million at March 31, 2021 and December 31, 2020, respectively. The Company reflects the equity in earnings of these Affiliated Entities and Unaffiliated Entities as net gain/(loss) from investments on the 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.

The Company has determined that PMV is a voting interest entity (VOE) and since the Sponsor has substantive control of PMV due to its ability to control the board of directors of PMV, the Sponsor consolidates the assets and liabilities of PMV and the results of its operations. The Company invested $4.0 million, or approximately 62% of the $6.48 million total Sponsor partnership commitment. The Sponsor is managed by Company executives. The Company has determined that the Sponsor is a variable interest entity (VIE) and that the Company is the primary beneficiary and therefore consolidates the assets and liabilities and results of operations of the Sponsor which includes PMV. However, neither AC nor PMV have a right to the benefits from nor does it bear the risks associated with the marketable securities held in trust assets held by PMV. Further, if the Company were to liquidate, the marketable securities held in trust assets would not be available to its general creditors, and as a result, the Company does not consider these assets available for the benefit of its investors.

The registration statement for the PMV initial public offering was declared effective on September 21, 2020. On September 24, 2020, PMV consummated the initial public offering of 17,500,000 units (the “Units” and, with respect to the shares of common stock included in the Units Sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $175,000,000. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment.

Simultaneously with the closing of the initial public offering, PMV consummated the sale of 6,150,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant in a private placement to the Sponsor, generating gross proceeds of $6,150,000.

Index

AC invested $10 million in the Class A shares in PMV and the Sponsor invested $6.1 million in Private Warrants.

Following the closing of the initial public offering on September 24, 2020, an amount of $175,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the initial public offering and the sale of the Private Warrants was placed in a trust account (the “Trust Account”) located in the United States, which will only be invested in U.S. U.S. Treasury Bills or funds that invest primarily in them.

PMV will have until September 24, 2022 to complete a business combination. If PMV is unable to complete a business combination by September 24, 2022, PMV will cease all operations except for the purpose of winding up, and as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account. The deferred fee will be forfeited by the underwriters solely in the event that we fail to complete a business combination within the required time period, subject to the terms of the underwriting agreement.

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

	March 31, 2021
	Prior to Consolidation		Consolidated Entities		As Reported
Total assets	$	956,450	$	214,816	$	1,171,266
Liabilities and equity
Total liabilities		40,704		19,746		60,450
Redeemable noncontrolling interests		-		195,070		195,070
Total equity		915,746		-		915,746
Total liabilities and equity	$	956,450	$	214,816	$	1,171,266

	December 31, 2020
	Prior to Consolidation		Consolidated Entities		As Reported
Total assets	$	947,807	$	226,738	$	1,174,545
Liabilities and equity
Total liabilities		46,418		19,910		66,328
Redeemable noncontrolling interests		-		206,828		206,828
Total equity		901,389		-		901,389
Total liabilities and equity	$	947,807	$	226,738	$	1,174,545

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

	Three Months Ended March 31, 2021
	Prior to Consolidation			Consolidated Entities			As Reported
Total revenues	$	2,140		$	185		$	2,325
Operating loss		(5,852	)		(513	)		(6,365	)
Total other income, net		30,056			626			30,682
Loss from continuing operations, net of taxes		18,614			113			18,727
Income attributable to noncontrolling interests		-			172			172
Net income/(loss)	$	18,614		$	(59	)	$	18,555

	Three Months Ended March 31, 2020
	Prior to Consolidation			Consolidated Entities			As Reported
Total revenues	$	2,318		$	644		$	2,962
Operating loss		(1,086	)		446			(640	)
Total other income, net		(95,700	)		(4,391	)		(100,091	)
Loss from continuing operations, net of taxes		(73,124	)		(3,945	)		(77,069	)
Loss from discontinued operations, net of taxes		(231	)		-			(231	)
Income attributable to noncontrolling interests		-			(3,945	)		(3,945	)
Net loss	$	(73,355	)	$	-		$	(73,355	)

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.

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

	March 31, 2021			December 31, 2020

Cash and cash equivalents	$	1,952		$	1,925
Investments in securities (1)		15,870			20,739
Receivable from brokers		467			2,784
Investments in partnerships and affiliates		-			376
Other assets		-			7,105
Accrued expenses and other liabilities		(71	)		(138	)
Nonredeemable noncontrolling interests		(2,451	)		(2,451	)
Redeemable noncontrolling interests		(559	)		(12,661	)
AC Group’s net interests in consolidated VIEs	$	15,208		$	17,679

(1) Includes $6.15 million in private placement warrants eliminated in consolidation with PMV

Voting Interest Entities

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

	March 31, 2021		December 31, 2020

Cash and cash equivalents	$	4,225	$

SEC Form 10-Q filed by Associated Capital Group, Inc.