UNITED
      STATESSECURITIES
      AND EXCHANGE COMMISSIONWashington,
      D.C. 20549FORM
      10-K[ X
      ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF 1934For
      the fiscal year ended December 31, 2008or[   ]
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934For
      the transition period from ______ to ______Commission
      file number 000-53527Teton
      Advisors, Inc.(Exact
      name of registrant as specified in its charter)Delaware
                    
                    13-4008049(State
      or other jurisdiction of incorporation or organization)
                    
                    (I.R.S.
      Employer Identification No.)One
      Corporate Center, Rye, NY
                    
                    10580-1422(Address
      of principal executive offices)
                    
                    (Zip
      Code)Registrant’s telephone number,
      including area code: (914) 457-1071Securities
      registered pursuant to Section 12(b) of the Act: NoneSecurities
      registered pursuant to Section 12(g) of the Act: Class B Common Stock, par
      value $0.001 per shareIndicate
      by check mark if the registrant is a well-known seasoned issuer, as
      defined in Rule 405 of the Securities Act Yes o No x.Indicate
      by check mark if the registrant is not required to file reports pursuant
      to Section 13 or Section 15(d) of the Act Yes o No x.Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days Yes o No x.Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-K or any
      amendment to this Form 10-K x.Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting
      company.  See the definitions of “large accelerated filer",
      "accelerated filer", and "smaller reporting company” in Rule 12b-2 of the
      Exchange Act. (Check one):Large
      accelerated filer o
                    Accelerated
      filer oNon-accelerated
      filer o (Do  not check if a smaller reporting
      company)
                    Smaller
      reporting company xIndicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act) Yes o No
x.


The
registrant completed the spin-off of its class B common stock on March 20,
2009.  Accordingly, there was no public market for the registrant's
class A or class B common stock as of June 30, 2008 (the last day of the
registrant's most recently completed second fiscal quarter).




As of
March 20, 2009, 887,443 shares of class A common stock and 416,800
shares of class B common stock were outstanding.













Teton
      Advisors, Inc.Annual Report on Form 10-K for
      the Fiscal Year Ended December 31, 2008Part IItem 1
                  
                  Business
                  32008Selected
      Dynamics
                  3Overview
                  3Business Strategy
                  4Business
    Description
                  4Assets Under
      Management
                  8Competition
                  10Regulation
                  10Personnel
                  10Item 1A
                  
                  Risk
      Factors
                  11Item 1B
                  
                  Unresolved
      Staff Comments
                  16Item 2
                  
                  Properties
                  16Item 3
                  
                  Legal
      Proceedings
                  16Item 4
                  
                  Submission Of
      Matters To A Vote Of Security Holders
                  16Part IIItem 5
                  
                  Market For
      Registrant's Common Equity, Related Stockholder Matters And Issuer
      Purchases Of Equity Securities
                  16Item 6
                  
                  Selected
      Financial Data
                  17Item 7
                  
                  Management's
      Discussion And Analysis Of Financial Condition And Results Of
      Operations
                  18Item 7A
                  
                  Quantitative
      And Qualitative Disclosures About Market Risk
                  26Item 8
                  
                  Financial
      Statements And Supplementary Data
                  F-1Item 9
                  
                  Changes In And
      Disagreements With Accountants On Accounting And Financial
      Disclosure
                  II-1Item 9A
(T)
                  
                  Controls
      And Procedures
                  II-1Item 9B
                  
                  Other
      Information
                  II-1Part
IIIItem 10
                  
                  Directors,
      Executive Officers and Corporate Governance
                  II-2Item 11
                  
                  Executive
      Compensation
                  II-4Item 12
                  
                  Security
      Ownership Of Certain Beneficial Owners And Management And Related
      Stockholder Matters
                  II-5Item 13
                  
                  Certain Relationships And
      Related Transactions, and Director Independence
                  II-6Item 14
                  
                  Principal
      Accountant Fees And Services
                  II-6Part IVItem 15
                  
                  Exhibits and
      Financial Statement Schedules
                  II-7Signatures
                  II-7




2





PART
I




Forward-Looking
Statements




Our
disclosure and analysis in this report and in documents that are incorporated by
reference 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; and 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 Item 1A below and in our other public filings or in documents incorporated by
reference here or in prior filings or reports.




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.




ITEM
1: BUSINESS




Unless we
have indicated otherwise, or the context otherwise requires, references in this
report to “Teton,” “we,” “us,” “the Company” and “our” or similar terms are
to Teton Advisors, Inc. and its predecessors.




2008
Selected Dynamics




In May,
Nicholas F. Galluccio was named as the President and CEO of Teton, a subsidiary
of GAMCO Investors, Inc. (“GAMCO”) (New York Stock Exchange (“NYSE”): GBL),
effective July 1.  Teton is the adviser to six open-end mutual funds
under the GAMCO Westwood brand (“Westwood Funds”) and also the B.B. Micro Cap
Growth Fund.  Mr. Galluccio was with Trust Company of the West for 25
years, where he served as the Group Managing Director, U.S. Equities and Senior
Portfolio Manager.





During
November, the B.B. Micro Cap Growth Fund selected Teton as the interim
investment adviser.  Shareholders of the fund have approved merging
the fund into our GAMCO Westwood Mighty MitesSM Fund,
which took place in March 2009.





Overview




Teton was
spun-off from GAMCO on March 20, 2009.  The board of directors and
management of both Teton and GAMCO decided to pursue the separation primarily
for the following reasons:




·
            The
      senior management and board of directors of each company will be able to
      more fully focus on its business with a resulting increase in
      accountability for decisions;




·
            Create
      a class of publicly traded equity securities, including restricted stock
      units, for Teton which should enable it to provide incentive compensation
      arrangements for its key employees which are directly related to the
      performance of Teton.  Teton believes such equity-based
      compensation arrangements should provide enhanced incentives for
      performance, and improve the ability for Teton to attract, retain and
      motivate qualified personnel.




·
            Separate
      trading of Teton’s stock should increase the flexibility for it to issue
      its equity as consideration in future acquisitions and
      alliances;




·
            Increase
      transparency and clarity into the businesses of GAMCO and Teton and allow
      investors to more appropriately value the merits, performance and future
      prospects of each company; and




·
            Reduce
      brand confusion between the “Gabelli” and “GAMCO” funds, on the one hand,
      and the “Westwood” funds, on the other
hand.




Teton
serves as the investment manager for the Westwood Funds and the B.B. Micro Cap
Growth Fund, seven funds with aggregate assets of $449.8 million at December 31,
2008.




The
Westwood Funds consist of the following six funds:




·
            GAMCO
      Westwood Income Fund


·
            GAMCO
      Westwood Balanced Fund


·
            GAMCO
      Westwood Equity Fund


·
            GAMCO
      Westwood SmallCap Equity Fund


·
            GAMCO
      Westwood Mighty MitesSMFund


·
            GAMCO
      Westwood Intermediate Bond Fund




Teton has
retained Westwood Management Corporation, a subsidiary of Westwood Holdings
Group, Inc., a NYSE listed company, to act as sub-advisor for the GAMCO Westwood
Balanced Fund, the GAMCO Westwood Equity Fund and the GAMCO Westwood
Intermediate Bond Fund.  The remainder of the funds are advised
directly by Teton.




Gabelli
& Company, Inc. (“Gabelli & Company”), an affiliate of Teton and a
subsidiary of GAMCO, distributes the Westwood Funds pursuant to distribution
agreements with each fund.




3




Business
Strategy




Our
business strategy targets global growth of the franchise through continued
leveraging of our proven asset management strengths including our brand name and
long-term performance record.




Business
Description





Teton
acts as investment advisor to the Westwood Funds.  Teton was formed in
Texas as Teton Advisers LLC in December 1994.  On March 2, 1998, Teton
Advisers LLC was renamed Gabelli Advisors LLC and, on the same date, merged into
Gabelli Advisers, Inc., a Delaware corporation.  On January 25, 2008,
Gabelli Advisers, Inc. was renamed Teton Advisors, Inc.  Teton’s
principal executive office is located at One Corporate Center, Rye, New York
10580 and our
website is www.tetonadv.com.





As of
March 20, 2009, Mr. Mario J. Gabelli (“Mr. Gabelli”) controlled approximately
65.8% of the voting power of Teton and is deemed to be its controlling
shareholder by virtue of his ownership and control of GGCP, Inc. (“GGCP”) and
his control of MJG-IV Limited Partnership (“MJG-IV”) and his direct ownership of
shares in Teton.  Mr. Gabelli is the Chief Executive Officer, a
director and owns approximately 75% of the shares of GGCP.  GGCP is
the holder of approximately 59% of the combined voting power of the outstanding
Teton common stock and approximately 23% of the equity interest of
Teton.  In addition, Mr. Gabelli is the general partner of MJG-IV, a
limited partnership owned by various family members of Mr. Gabelli, the holder
of 5.9% of the voting power of Teton.  Mr. Gabelli directly controls
insert% of the voting power of Teton through shares he owns
directly.





Teton
currently has authorized capital stock consisting of 1,200,000 shares of class A
common stock, par value $.001, and 800,000 shares of class B common stock, par
value $.001.  The shares of class A common stock are entitled to one
vote per share and the shares of class B common stock are entitled to ten votes
per share.  As of March 20, 2009 there are 887,443 shares of class A
common stock outstanding and 416,800 shares of class B common stock
outstanding.





On
January 22, 2009, Teton's Certificate of Incorporation was
amended to permit shareholders of Teton’s class B common stock to convert their
shares into Teton’s class A common stock at a ratio of 1 share of class B common
stock for 1 share of class A common stock.





Open-End
Funds:  Teton provides advisory services to the GAMCO Westwood
family of funds, consisting of six open-end funds, three of which are managed on
a day-to-day basis by Teton, and three of which are sub-advised by Westwood
Management Corp., a wholly-owned subsidiary of Westwood Holdings Group, Inc.
(NYSE: WHG).  Teton was the interim advisor to the B.B. Micro Cap
Growth Fund.  The assets of this fund were merged into the GAMCO
Westwood Mighty MitesSM Fund in
March of 2009.  At December 31, 2008, we had $449.8 million of assets
under management (“AUM”) in open-end funds, 2.1% above the $440.5 million on
December 31, 2007.







On
December 31, 2008, of the AUM in open-end funds having an overall rating from
Morningstar, Inc. ("Morningstar"), 98.5% were ranked "three stars" or better,
with 82.2% ranked "five stars" or "four stars" on an overall basis (i.e., derived from a weighted
average of the performance figures associated with their three-, five-, and
ten-year Morningstar Rating metrics).  There can be no assurance,
however, that these funds will be able to maintain such ratings or that past
performance will be indicative of future results.




At
December 31, 2008, approximately 19% of our AUM in open-end, equity funds had
been obtained through Gabelli & Company’s direct sales
relationships.  Gabelli & Company also sells our open-end funds
through Third-Party Distribution Programs, particularly No-Transaction Fee
(“NTF”) Programs, and has developed additional classes of shares for many of our
funds for sale through additional third-party distribution channels on a
commission basis.  At December 31, 2008, Third Party Distribution
Programs accounted for approximately 81% of all assets in open-end
funds.




4




The
following table lists the Funds, together with the December 31, 2008 Morningstar
overall rating and provides a description of the primary investment objective,
fund characteristics, fees, the date that the fund was initially offered to
investors, and the AUM in the funds as of December 31, 2008.




Net
      Assetsas
      ofDecember31,2008Fund
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (all(Morningstar
                                      
                                      
                                      
                                      
                                      
                                      Advisory
                                      
                                      
                                      12b-1
                                      
                                      Initial
                                      
                                      classes)Overall
                                      
                                      Primary
      Investment
                                      
                                      Fund
                                      
                                      Fees
                                      
                                      
                                      Fees
                                      
                                      Offer
                                      
                                      ($
      inRating)
      (1)
                                      
                                      Objective
                                      
                                      Characteristics
                                      
                                      (%)
                                      
                                      
                                      (%)
                                      
                                      Date
                                      
                                      millions)EQUITY
      INCOME:GAMCO
      Westwood
                                      
                                      Both
      capital
                                      
                                      Class
      AAA,
                                      
                                      .75
                                      
                                      
                                      .25
                                      
                                      10/01/91
                                      
                                      $
                                      143Balanced
      Fund
                                      
                                      appreciation
      and
                                      
                                      No-load,«««««
                                      
                                      current
      income using
                                      
                                      Open-end,portfolios
      containing
                                      
                                      Diversified,stocks,
      bonds, and
                                      
                                      Multi-class
      sharescash
      as appropriate in
                                      
                                      (2)light
      of currenteconomic
      and businessconditions.GAMCO
      Westwood
                                      
                                      High
      level of current
                                      
                                      Class
      AAA,
                                      
                                      1.00
                                      (3)
                                      
                                      .25
                                      
                                      09/30/97
                                      
                                      $
                                      6Income
      Fund
                                      
                                      income
      as well as
                                      
                                      No-load,«««
                                      
                                      long-term
      capital
                                      
                                      Open-end,appreciation
      by
                                      
                                      Diversified,investing
      primarily
                                      
                                      Multi-class
      sharesin
      income producing
                                      
                                      (2)equity
      and fixedincome
      securities.VALUE:GAMCO
      Westwood
                                      
                                      Capital
      appreciation
                                      
                                      Class
      AAA,
                                      
                                      1.00
                                      
                                      
                                      .25
                                      
                                      01/02/87
                                      
                                      $
                                      143Equity
      Fund
                                      
                                      through
      a diversified
                                      
                                      No-load,«««««
                                      
                                      portfolio
      of equity
                                      
                                      Open-end,securities
      using
                                      
                                      Diversified,bottom-up
                                      
                                      Multi-class
      sharesfundamental
      research
                                      
                                      (2)with
      a focus onidentifyingwell-seasonedcompanies.




5





Net
      Assetsas
      ofDecember31,2008Fund
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (all(Morningstar
                              
                              
                              
                              
                              
                              Advisory
                              
                              
                              12b-1
                              
                              Initial
                              
                              classes)Overall
                              
                              Primary
      Investment
                              
                              Fund
                              
                              Fees
                              
                              
                              Fees
                              
                              Offer
                              
                              ($
      inRating)
      (1)
                              
                              Objective
                              
                              Characteristics
                              
                              (%)
                              
                              
                              (%)
                              
                              Date
                              
                              millions)SMALL
      CAPVALUE:GAMCO
      Westwood
                              
                              Long-term
      capital
                              
                              Class
      AAA,
                              
                              1.00
                              (3)
                              
                              .25
                              
                              04/15/97
                              
                              $
                              7SmallCap
      Equity
                              
                              appreciation,
      investing
                              
                              No-load,Fund
                              
                              at
      least 80% of its
                              
                              Open-end,««
                              
                              assets
      in equity
                              
                              Diversified,securities
      of companies
                              
                              Multi-class
      shareswith
      market
                              
                              (2)capitalizations
      of $2.5billion
      or less at thetime
      of purchase.MICRO-CAP:GAMCO
      Westwood
                              
                              Long-term
      capital
                              
                              Class
      AAA,
                              
                              1.00
                              
                              
                              .25
                              
                              05/11/98
                              
                              $
                              70Mighty
      MitesSMFund
                              
                              appreciation
      by
                              
                              No-load,«««««
                              
                              investing
      primarily in
                              
                              Open-end,equity
      securities with
                              
                              Diversified,market
      capitalization
                              
                              Multi-class
      sharesof
      $300 million or less
                              
                              (2)at
      the time of purchase.B.B.
      Micro Cap
                              
                              Capital
      appreciation
                              
                              Class
      AAA,
                              
                              1.00
                              (3)
                              
                              .25
                              
                              3/31/97
                              
                              $
                              67Growth
      Fund
                              
                              by
      investing in
                              
                              No-load,«««
                              
                              common
      stocks of
                              
                              Open-end,companies
      with
                              
                              Diversifiedmarket
      capitalizationbetween
      $30 millionand
      $300 million at thetime
      of investment.










Net
      Assetsas
      ofDecember31,2008Fund
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (all(Morningstar
                              
                              
                              
                              
                              
                              Advisory
                              
                              
                              12b-1
                              
                              Initial
                              
                              classes)Overall
                              
                              Primary
      Investment
                              
                              Fund
                              
                              Fees
                              
                              
                              Fees
                              
                              Offer
                              
                              ($
      inRating)
      (1)
                              
                              Objective
                              
                              Characteristics
                              
                              (%)
                              
                              
                              (%)
                              
                              Date
                              
                              millions)FIXED
      INCOME:GAMCO
      Westwood
                              
                              Total
      return and
                              
                              Class
      AAA,
                              
                              0.60
                              (3)
                              
                              .25
                              
                              10/01/91
                              
                              $
                              14Intermediate
      Bond
                              
                              current
      income, while
                              
                              No-load,Fund
                              
                              limiting
      risk to
                              
                              Open-end,««««
                              
                              principal.  Pursues
                              
                              Diversified,higher
      yields than
                              
                              Multi-class
      sharesshorter
      maturity funds
                              
                              (2)and
      has more pricestability
      than generallyhigher
      yieldinglong-term
      funds.





(1)
            Morningstar
      RatingTM
      as of December 31, 2008 is provided if available for open-end funds only.
      Morningstar ratings may be available for certain closed-end
      funds.  Morningstar ratings are not an indication of absolute
      performance.  Current performance for some of the funds in 2008
      were negative.  Call 800-GABELLI for performance results through
      the most recent month end.  For each fund with at least a
      three-year history, Morningstar calculates a Morningstar RatingTM
      based on a Morningstar risk-adjusted return measure that accounts for
      variation in a fund’s monthly performance (including the effects of sales
      charges, loads and redemption fees) placing more emphasis on downward
      variations and rewarding consistent performance.  The top 10% of
      the funds in an investment category receive five stars, the next 22.5%
      receive four stars, the next 35% receive three stars, the next 22.5%
      receive two stars and the bottom 10% receive one star.  The
      Overall Morningstar Rating for a fund is derived from a weighted average
      of the performance figures associated with its three, five, and ten-year
      (if applicable) Morningstar Rating metrics.  Morningstar Ratings
      are shown for the respective class shown; other classes may have different
      performance characteristics.   There were 1,185 Large Value
      funds rated for three years, 963 funds for five years and 451 funds for
      ten years (GAMCO Westwood Equity Fund).   There were 341
      Small Value funds rated for three years, 269 funds for five years and 121
      funds for ten years (GAMCO Westwood Mighty MitesSM
      Fund).  There were 704 Small Growth funds rated for three years
      and 574 funds for five years and 291 funds for ten years (B.B. Micro Cap
      Growth Fund).  There were 962 Moderate Allocation funds rated
      for three years, 768 funds for five years and 448 funds for ten years
      (GAMCO Westwood Balanced Fund, GAMCO Westwood Income
      Fund).  There were 991 Intermediate-Term Bond funds rated for
      three years, 857 funds for five years and 458 funds for ten years (GAMCO
      Westwood Intermediate Bond Fund).   There were 561 Small
      Blend funds rated for three years and 449 funds for five years and 216
      funds for ten years (GAMCO Westwood SmallCap Equity Fund). (a) 2008
      Morningstar, Inc. All Rights reserved.  This information is (1)
      proprietary to Morningstar and/or its content providers (2) may not be
      copied or distributed; and (3) is not warranted to be accurate, complete
      or timely.  Neither Morningstar nor its content providers are
      responsible for any damages or losses arising from any use of this
      information.  Past performance is no guarantee of future
      results.





(2)
            These
      funds have multi-classes of shares available.  Multi-class
      shares include Class A shares which have a front-end sales charge, Class B
      shares which are subject to a back-end contingent deferred sales charge
      for up to 6 years and Class C which shares are subject to a 1%
      back-end contingent deferred sales charge for up to two
      years.  However, Class B shares are no longer offered for new
      purchases as of July 2004. Class I shares are available to institutional
      accounts.  Net assets include all share
  classes.





(3)
            Teton
      has agreements in place to waive its advisory fee or reimburse expenses of
      the Fund to maintain fund expenses at a specified level for Class AAA
      shares; Multi-class shares have separate limits as described in the Fund’s
      prospectus.  (GAMCO Westwood Income Fund – 1.50%; GAMCO Westwood
      SmallCap Equity Fund – 1.50%; GAMCO Westwood Intermediate Bond Fund –
      1.00%; B.B. Micro Cap Growth Fund – 1.80%.  Such agreements are
      renewable annually).




7




Shareholders
of the open-end Funds are allowed to exchange shares among the same class of
shares of the other open-end Funds as well as the Gabelli/GAMCO open-end funds
as economic and market conditions and investor needs change at no additional
cost.  However, as noted below, certain open-end Funds impose a 2%
redemption fee on shares redeemed in seven days or less after a purchase. We
periodically introduce new funds designed to complement and expand our
investment product offerings, respond to competitive developments in the
financial marketplace and meet the changing needs of investors.




We
provide investment advisory and management services pursuant to an investment
management agreement with each Fund. The investment management agreements with
the Funds generally provide that we are responsible for the overall investment
and administrative services, subject to the oversight of each Fund's Board of
Directors or Trustees and in accordance with each Fund's fundamental investment
objectives and policies. The investment management agreements permit us to enter
into separate agreements for administrative and accounting services on behalf of
the respective Funds.





Teton
provides the Funds with administrative services pursuant to the management
contracts.  Such services include, without limitation, supervision of
the calculation of net asset value, preparation of financial reports for
shareholders of the Funds, internal accounting, tax accounting and reporting,
regulatory filings and other services. Most of these administrative services are
provided through sub-contracts with unaffiliated third parties.  Teton
has contracted GAMCO to provide certain administration services on its
behalf.  Transfer agency and custodial services are provided directly
to the Funds by unaffiliated third parties.





Our Fund
investment management agreements may continue in effect from year to year only
if specifically approved at least annually by (i) the Fund's Board of Directors
or Trustees or (ii) the Fund's shareholders and, in either case, the vote of a
majority of the Fund's directors or trustees who are not parties to the
agreement or "interested persons" of any such party, within the meaning of the
Investment Company Act of 1940 as amended (the “Investment Company Act”). Each
Fund may terminate its investment management agreement at any time upon 60 days'
written notice by (i) a vote of the majority of the Board of Directors or
Trustees cast in person at a meeting called for the purpose of voting on such
termination or (ii) a vote at a meeting of shareholders of the lesser of either
67% of the voting shares represented in person or by proxy or 50% of the
outstanding voting shares of such Fund. Each investment management agreement
automatically terminates in the event of its assignment, as defined in the
Investment Company Act.  We may terminate an investment management
agreement without penalty on 60 days' written notice.





Assets
Under Management




The
following table sets forth total AUM by product type as of the dates shown and
their compound annual growth rates ("CAGR"):




Assets
Under Management


By
Product Type


(Dollars
in millions)





%
      Inc (Dec)2004
                                                    
                                                    
                                                    2005
                                                    
                                                    
                                                    2006
                                                    
                                                    
                                                    2007
                                                    
                                                    
                                                    2008
                                                    
                                                    
                                                    
                                                    2008
      / 2007
                                                    
                                                    CAGR
      (a)Equities
                                                    
                                                    $
                                                    414
                                                    
                                                    
                                                    $
                                                    405
                                                    
                                                    
                                                    $
                                                    401
                                                    
                                                    
                                                    $
                                                    429
                                                    
                                                    
                                                    $
                                                    436
                                                    
                                                    
                                                    
                                                    1.6
                                                    %
                                                    (1.4
                                                    %)Fixed
      income
                                                    
                                                    
                                                    11
                                                    
                                                    
                                                    
                                                    11
                                                    
                                                    
                                                    
                                                    10
                                                    
                                                    
                                                    
                                                    11
                                                    
                                                    
                                                    
                                                    14
                                                    
                                                    
                                                    
                                                    27.3
                                                    
                                                    4.9Total
      Assets Under Management
                                                    
                                                    $
                                                    425
                                                    
                                                    
                                                    $
                                                    416
                                                    
                                                    
                                                    $
                                                    411
                                                    
                                                    
                                                    $
                                                    440
                                                    
                                                    
                                                    $
                                                    450
                                                    
                                                    
                                                    
                                                    2.3
                                                    %
                                                    (1.2
                                                    %)


(a) Compound annual growth
rate.





8




Distribution
and Marketing





In an
effort to increase assets under management, the marketing team at Teton is
focused on major mutual fund industry distribution channels, among which are the
direct, advisory, the supermarket, retirement and institutional
channels.  In the direct channel, investors carry out transactions
directly with mutual fund companies, in many cases calling in orders through a
1-800 telephone number.  In all other mutual fund channels,
individuals use intermediaries to purchase funds on their behalf.  The
advisory channel consists of financial intermediaries which provide on going
investment advice and monitoring.  These include full-service
brokerage firms, banks, insurance companies and financial
planners.  Advisors are compensated through sales loads or
fees.  Through a service agreement with GAMCO Investors, Inc., Teton
utilizes the Gabelli & Company wholesaler and internal marketing force to
gather assets in these two channels.  In the fund supermarket
channels, which have no transaction fee “NTF” programs, Teton serves as a
business development and relationship manager.  Teton is similarly
targeting the defined contribution retirement channel and institutional, which
consists of corporations, endowments and foundations.  Teton believes
it is capable of serving all of these channels because its mutual funds have
multiple share classes.





Teton is
pursuing non mutual fund opportunities mainly in the small cap equity asset
class.  The marketing effort is focused on sub advisory and
traditional separate accounts.  The target market consists of
insurance companies, commercial banks and institutions that rely on consultant
due diligence and recommendations.  Teton seeks to build strategic
relationships with institutions and wealth management providers with whom the
Teton management team has developed long-term relationships.





Gabelli
& Company, a subsidiary of GAMCO, distributes the Westwood Funds pursuant to
distribution agreements with each fund.  Under the distribution
agreements, Gabelli & Company offers and sells the Westwood Funds’ shares on
a continuous basis and pays all of the costs of marketing and selling the
shares, including printing and mailing prospectuses and sales literature,
advertising and maintaining sales and customer service personnel and sales and
services fulfillment systems, and payments to the sponsors of Third-Party
Distribution Programs, financial intermediaries and Gabelli & Company sales
personnel.  Gabelli & Company receives fees for such services
pursuant to distribution plans adopted under provisions of Rule 12b-1 of the
Investment Company Act of 1940, as amended.





Under the
distribution agreements, the no-load Class AAA shares of the Westwood Funds pay
..25% per year on the average daily net assets of the fund to Gabelli &
Company and the Class A shares of the Westwood Funds pay .35% or .50% per year
on the average daily net assets of the fund. Class B and Class C shares have a
Rule 12b-1 distribution plan with a service and distribution fee totaling
1%.  If Gabelli & Company expends more than the distribution fees
received, it is reimbursed by Teton.  If Gabelli & Company expends
less than the distribution fees received, it will reimburse Teton for any
previously reimbursed distribution expenses.  For 2008, Gabelli &
Company paid Teton approximately $42,000, for 2007 Teton paid Gabelli &
Company approximately $12,000 and for 2006 Gabelli & Company paid Teton
approximately $123,000.





Most of
the Westwood Funds have traditionally been distributed by using a variety of
direct response marketing techniques, including telemarketing and advertising,
and as a result Teton and Gabelli & Company maintain direct relationships
with many of the no-load Westwood Fund shareholders. Beginning in late 1995,
Teton expanded its product distribution by offering several of the Westwood
Funds through Third-Party Distribution Programs, including No Transaction Fee,
or NTF, Programs. We believe that more than 25% of the assets under management
in the Westwood Funds are still attributable to Teton’s direct response
marketing efforts. Third-Party Distribution Programs have become an increasingly
important source of asset growth for Teton. Of the $449.8 million of assets
under management in the Westwood Funds as of December 31, 2008, approximately
$265.5 million, or 58.8%, were generated through NTF Programs.  In
addition, at December 31, 2008, approximately 89% of the NTF Program net assets
in the Westwood Funds are attributable to two NTF Programs.  The fee
paid to the NTF programs and in fee based accounts range from 0.25% to 0.40% of
the AUM held through these programs.  Gabelli & Company, as the
distributor of the Westwood Funds, pays the first 0.25% of any fees with Teton
paying any fee in excess of 0.25% subject to partial reimbursement by the Funds
under certain circumstances.  In 2008, 2007 and 2006, Teton paid
approximately $156,000, $185,000 and $139,000, respectively, for their share of
these NTF programs.  Remaining assets are held through full service
broker dealers in fee based accounts or through retail accounts.





Gabelli
& Company’s distribution agreements with the Westwood Funds may continue in
effect from year to year only if specifically approved at least annually by (i)
the Board of Trustees or (ii) the fund’s shareholders and, in either case, the
vote of a majority of the trustees who are not parties to the agreement or
“interested persons” of any such party, within the meaning of the Investment
Company Act. Each Westwood Fund may terminate its distribution agreement, or any
agreement thereunder, at any time upon 60 days’ written notice by (i) a vote of
the majority of the trustees cast in person at a meeting called for the purpose
of voting on such termination or (ii) a vote at a meeting of shareholders of the
lesser of either 67% of the voting shares represented in person or by proxy or
50% of the outstanding voting shares of such fund. Each distribution agreement
automatically terminates in the event of its assignment, as defined in the
Investment Company Act.  Gabelli & Company may terminate a
distribution agreement without penalty upon 60 days’ written
notice.




Investment
Management Agreements





Teton
provides investment advisory and management services pursuant to investment
management agreements with the Westwood Funds. The investment management
agreements with the Westwood Funds generally provide that Teton is responsible
for the overall investment and administrative services, subject to the oversight
of the Westwood Funds’ Board of Trustees (“Board of Trustees”) and in accordance
with each fund’s fundamental investment objectives and policies. The
administrative services include, without limitation, supervision of the
calculation of net asset value, preparation of financial reports for
shareholders of the Westwood Funds, internal accounting, tax accounting and
reporting, regulatory filings and other services. Most of these administrative
services are provided through sub-contracts with unaffiliated third parties.
Transfer agency and custodial services are provided directly to the Westwood
Funds by unaffiliated third parties.





The
Westwood Funds’ investment management agreements may continue in effect from
year to year only if specifically approved at least annually by (i) the Board of
Trustees or (ii) the fund’s shareholders and, in either case, the vote of a
majority of the trustees who are not parties to the agreement or “interested
persons” of any such party, within the meaning of the Investment Company
Act.  Each Westwood Fund may terminate its investment management
agreement at any time upon 60 days’ written notice by (i) a vote of the majority
of the Board of Trustees cast in person at a meeting called for the purpose of
voting on such termination or (ii) a vote at a meeting of shareholders of the
lesser of either 67% of the voting shares represented in person or by proxy or
50% of the outstanding voting shares of such Westwood Fund. Each investment
management agreement automatically terminates in the event of its assignment, as
defined in the Investment Company Act.  Teton may terminate an
investment management agreement without penalty on 60 days’ written
notice.





Pursuant
to the terms of these investment management agreements, neither Teton nor its
officers, directors, employees, agents or controlling persons (“Teton
Persons”) are liable to the Westwood Funds for any act or omission or for any
loss sustained by the Westwood Funds in connection with the matters to which
the advisory agreement relates.  However, Teton Persons are
liable to the Westwood Funds under these agreements with respect to a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligation and duties under the agreement.  The investment management
agreements also set forth certain indemnification rights for Teton, its
employees, officers, directors and agents.





9




Subadvisory
Agreements





Teton
pays Westwood Management Corporation a sub-advisory fee of 35% of net revenues
for the Balanced, Equity and Intermediate Bond Funds.  “Net revenues”
are defined as management fees less twenty basis points for mutual fund
administration expenses (which are paid to GAMCO) and less expense
reimbursements to the funds for which it serves as a sub-advisor.  For
2008, 2007 and 2006, the sub-advisory fee paid to Westwood Management
Corporation by Teton amounted to approximately $767,000, $840,000 and $844,000,
respectively.  This agreement may be terminated by Westwood Management
Corporation on 60 days’ prior written notice and may be terminated by the
Westwood Funds or Teton on 60 days’ prior written notice, provided that
termination by the Westwood Funds must be approved by a majority of the Trustees
of the Westwood Funds or the holders of a “majority of the voting securities” of
the Funds.





Competition




We
compete with other investment management firms and mutual fund companies,
insurance companies, banks, brokerage firms and other financial institutions
that offer products that have similar features and investment objectives to
those offered by us.  Many of the investment management firms with
which we compete are subsidiaries of large diversified financial companies and
many others are much larger in terms of AUM and revenues and, accordingly, have
much larger sales organizations and marketing budgets.  Historically,
we have competed primarily on the basis of the long-term investment performance
of many of our investment products.





Regulation




Virtually
all aspects of our businesses are subject to various federal and state laws and
regulations.  These laws and regulations are primarily intended to
protect investment advisory clients and shareholders of registered investment
companies.  Under such laws and regulations, agencies that regulate
investment advisors and broker-dealers have broad administrative powers,
including the power to limit, restrict or prohibit such an advisor or
broker-dealer from carrying on its business in the event that it fails to comply
with such laws and regulations.  In such an event, the possible
sanctions that may be imposed include the suspension of individual employees,
limitations on engaging in certain lines of business for specified periods of
time, revocation of the investment advisor and other registrations, censures,
and fines.  We believe that we are in substantial compliance with all
material laws and regulations.





Our
business is subject to regulation at both the federal and state level by the SEC
and other regulatory bodies.  Teton is registered with the SEC under
the Investment Advisers Act of 1940, and the Funds are registered with the SEC
under the Investment Company Act of 1940.  The Investment Advisers Act
imposes numerous obligations on registered investment advisors including
fiduciary duties and disclosure obligations and record keeping, operational and
marketing requirements.  The Commission is authorized to institute
proceedings and impose sanctions for violations of the Investment Advisers Act,
ranging from censure to termination of an investment advisor's
registration.  The failure of the Company to comply with the
requirements of the SEC could have a material adverse effect on
us.  We believe that we are in substantial compliance with the
requirements of the regulations under the Investment Advisers Act.





We derive
a substantial majority of our revenues from investment advisory services through
our various investment management agreements.  Under the Investment
Advisers Act, our investment management agreements terminate automatically if
assigned without the client's consent.  Under the Investment Company
Act, advisory agreements with registered investment companies such as our Funds
terminate automatically upon assignment.  The term "assignment" is
broadly defined and includes direct as well as assignments that may be deemed to
occur, under certain circumstances, upon the transfer, directly or indirectly,
of a controlling interest in Teton.




Investments
by Teton on behalf of our Funds often represent a significant equity ownership
position in an issuer's class of stock.  This activity raises frequent
regulatory, legal, and disclosure issues regarding our aggregate beneficial
ownership level with respect to portfolio securities, including issues relating
to issuers' shareholder rights plans or “poison pills,” state gaming laws and
regulations, federal communications laws and regulations, public utility holding
company laws and regulations, federal proxy rules governing shareholder
communications and federal laws and regulations regarding the reporting of
beneficial ownership positions.  Our failure to comply with these
requirements could have a material adverse effect on us.




The USA
Patriot Act of 2001, contains anti-money laundering and financial transparency
laws and mandates the implementation of various new regulations applicable to
broker-dealers, mutual funds and other financial services companies, including
standards for verifying client identification at account opening, and
obligations to monitor client transactions and report suspicious
activities.  Anti-money laundering laws outside of the U.S. contain
some similar provisions.  Our failure to comply with these
requirements could have a material adverse effect on us.




We are
subject to the laws of non-U.S. jurisdictions and non-U.S. regulatory agencies
or bodies.  In particular, we are subject to requirements in numerous
jurisdictions regarding reporting of beneficial ownership positions in
securities issued by companies whose securities are publicly-traded in those
countries.




Regulatory
matters




The
investment management industry is likely to continue facing a high level of
regulatory scrutiny and become subject to additional rules designed to increase
disclosure, tighten controls and reduce potential conflicts of
interest.  In addition, the Commission has substantially increased its
use of focused inquiries in which it requests information from a number of fund
complexes regarding particular practices or provisions of the securities
laws.  We participate in some of these inquiries in the normal course
of our business.  Changes in laws, regulations and administrative
practices by regulatory authorities, and the associated compliance costs, have
increased our cost structure and could in the future have a material
impact.





See item
3 below.




Personnel




On
February 28, 2009, we had a full-time staff of 3 individuals, a portfolio
manager and CEO, a marketing and shareholder servicing professional and an
administrative person.  We also have four individuals that are
employees of both Teton and GAMCO who perform portfolio management
services.  Additionally, through our Administrative Agreement with
GAMCO, we are provided additional services including but not limited to senior
executive functions and strategic planning and general corporate management
services, including strategic planning, investment banking and financial
advisory services, supervision of certain tax and other regulatory matters;
Mutual fund administration services; Treasury services, including insurance and
risk management services and administration of benefits; Operational and general
administrative assistance including office space, office equipment,
administrative personnel, payroll, and procurement services as needed;
Accounting and related financial services, including Mr. Jeffrey M. Farber’s
service as Chief Financial Officer; Legal, regulatory and compliance advice; and
Human resources functions, including the retention of a Chief Compliance
Officer, sourcing of permanent and temporary employees as needed, recordkeeping,
performance reviews and terminations.




10





ITEM
1A: RISK FACTORS




Business
Risks




You
should carefully consider the risks described below and all of the other
information in this report in evaluating Teton.  Teton’s business,
financial condition, cash flows and/or results of operations could be materially
adversely affected by any of these risks.





This
report also contains forward-looking statements that involve risks and
uncertainties.  Teton’s actual results could differ materially from
those anticipated in these forward-looking statements as a result of a number of
factors, including the risks faced by Teton described below and elsewhere in
this report.





Risks
Related to the Business of Teton following the Spin-Off




We
may not achieve the benefits expected from our spin-off from GAMCO.





Teton was
spun-off from GAMCO on March 20, 2009.  We expect that, as a company
independent from GAMCO, we will be able to grow internally and through
acquisitions.  Nonetheless, we may not be able to achieve any of these
benefits.  Furthermore, by separating from GAMCO there is a risk that
we may be more susceptible to adverse events than we would have otherwise
experienced as a subsidiary of GAMCO.  As a subsidiary of GAMCO, we
enjoyed certain benefits, including economies of scope and scale in costs,
employees and business relationships.  These benefits may not be as
readily achievable as a smaller, stand-alone company.





Our
management team has not been fully determined.





Nicholas
F. Galluccio, our President and Chief Executive Officer, is currently our sole
executive officer.  Individuals fulfilling other executive officer
roles will be provided to us, following the spin-off, pursuant to the
Administrative Agreement between GAMCO and us.  In addition, the
individuals serving as portfolio managers for the Westwood Funds which are not
subadvised by Westwood Management Corporation will provide investment management
services as portfolio managers of Teton.  Several of these individuals
are dual employees of both GAMCO and Teton.  Accordingly, they will
not devote all of their time to Teton and may have a conflict regarding their
employment with GAMCO.  GAMCO will have the exclusive right to name
the individuals providing services under this agreement or to terminate those
individuals providing services under this agreement.  We expect to be
largely dependent on the individuals providing services pursuant to this
agreement until we can identify and retain qualified individuals to serve as
executive officers.  While the agreement is effective, the individuals
providing services under this agreement will have other responsibilities at
GAMCO.  These responsibilities can result in the inability of these
individuals to provide the attention to us that we think appropriate, or at
all.  In addition, GAMCO has the right to terminate this agreement on
30 days prior notice, and in any event this agreement terminates after two
years.  There can be no assurance that by such termination date we
will have identified or retained a sufficient number of individuals to serve as
management on terms acceptable to us, or at all.





Certain
of our directors and officers may have actual or potential conflicts of interest
because of their positions in GAMCO.





Bruce N.
Alpert and Douglas R. Jamieson serve as members of our board.  Messrs.
Alpert and Jamieson also serve as executive officers of GAMCO.  In
addition, most of our executive officers and employees will be provided pursuant
to the Administrative Agreement with GAMCO and will be officers or employees of
GAMCO.  These common directors could create, or appear to create,
potential conflicts of interest when our and GAMCO’s management and directors
face decisions that could have different implications for the two
companies.




Also,
some of our directors, executive officers, portfolio managers and employees own
shares of GAMCO common stock, options to purchase shares of GAMCO class A common
stock or other equity awards.  This ownership may create, or, may
create the appearance of, conflicts of interest.  Mario J. Gabelli is
deemed to control Teton by his ownership and control of GGCP, a
private company that Mr. Gabelli controls and his control as a general partner
of MJG IV Partnership, a partnership of certain of his family
members.  Mr. Gabelli is the controlling shareholder of both Teton and
GAMCO.




For
example, potential conflicts of interest could arise in connection with the
resolution of any dispute that may arise between GAMCO and Teton regarding the
terms of the agreements governing the separation and the relationship thereafter
between the companies.  The officers of GAMCO who serve as directors
or executive management of Teton may interpret these agreements to the benefit
of GAMCO that would adversely affect the business of Teton.




In
addition, GAMCO and Teton are both in the investment management business. 
The officers and executive officers of GAMCO who also serve as directors or
executive management of Teton may make decisions in their GAMCO capacity that
would adversely affect the business of Teton.




The
separation from GAMCO may adversely affect the level of our assets under
management.





Our
revenues are dependent on the amount of assets under our
management.  Many investors may have invested money in the Westwood
Funds in part because Teton was a subsidiary of GAMCO.  There can be
no assurance that we will be able to attract investors to the Westwood Funds at
the same rate as in prior years.  In addition, we can make no
assurance that current investors will not redeem their investments from the
Westwood Funds as a result of our changed relationship with
GAMCO.  The occurrence of either of these events could adversely
affect our business, results of operations and financial condition.





Concerns
about our prospects as a stand-alone company could affect our ability to attract
and retain employees or individuals whom we are attempting to recruit as
employees.





Our
employees or individuals whom we are attempting to recruit as employees may have
concerns about our prospects as a stand-alone company, including our ability to
maintain our independence and our inability to rely on GAMCO’s resources after
the spin-off. If we are not successful in assuring our employees or individuals
whom we are attempting to recruit as employees of our prospects as an
independent company, our employees or recruits may seek other employment, which
could materially adversely affect our business and our results of
operations.





We
may experience increased costs resulting from decreased purchasing power, which
could decrease our overall profitability.





Prior
to the spin-off, we were able to take advantage of GAMCO's size and
purchasing power in procuring goods, services and technology, such as management
information services, health insurance, pension and other employee benefits,
payroll administration, risk management, tax and other services. As a separate,
stand-alone entity, we may be unable to obtain similar goods, services and
technology at prices or on terms as favorable as those obtained prior to
the spin-off.





11




We
may have been able to receive better terms from unaffiliated third parties than
the terms provided in our agreements with GAMCO and Gabelli &
Company.





The
agreements related to our separation from GAMCO, including the Separation
Agreement, the Administrative Agreement, the sub-lease and the Service Mark and
Name License Agreement, were negotiated in the context of our separation from
GAMCO while we were still majority-owned by GAMCO.  Likewise, our
agreement with Gabelli & Company, a subsidiary of GAMCO, to distribute
shares of the Westwood Funds was entered into when we were still affiliated with
Gabelli & Company.  Accordingly, such agreements may not reflect
terms that would have been reached between unaffiliated parties.  The
terms of the agreements we negotiated in the context of our separation related
to, among other things, indemnities and other obligations between GAMCO and
us.  Had these agreements been negotiated with unaffiliated third
parties, they might have been more favorable to us.





In
connection with the spin-off, GAMCO will indemnify us for certain liabilities.
There can be no assurance that the indemnity will be sufficient to insure us
against the full amount of such liabilities, or that GAMCO’s ability to satisfy
its indemnification obligations will not be impaired in the future.




Pursuant
to the Separation Agreement between GAMCO and Teton, GAMCO has agreed to
indemnify us from certain liabilities. Third parties could seek to hold us
responsible for any of the liabilities that GAMCO has agreed to retain, and
there can be no assurance that the indemnity from GAMCO will be sufficient to
protect us against the full amount of such liabilities, or that GAMCO will be
able to fully satisfy its indemnification obligations. Moreover, even if we
ultimately succeed in recovering from GAMCO any amounts for which we are held
liable, we will be temporarily required to bear those losses until such
recovery. Each of these risks could adversely affect our business, results of
operations and financial condition.




Risks
Related to Our Common Stock




There
is currently no liquid market for our common stock.




Although
we expect that our class A common stock will be traded on the pink sheets,
currently no trading market exists for our class A or B common
stock.  Teton’s certificate of incorporation was amended to provide
for the right of class B shareholders to convert their class B shares into class
A shares.  Our class B common stock may currently only be sold in a
private transaction.  In addition, until our class A common stock is
traded on the pink sheets or another exchange, even if our class B shareholders
convert their class B shares into class A shares, their class A shares may only
be sold in a private transaction.




Even
if a market develops for our class A common stock, these shares will be subject
to more volatility and more limited liquidity than shares traded on national
exchanges.




We expect
that six months (180 days) following the spin-off our class A common stock will
trade on the pink sheets.  When fewer shares of a security are being
traded in the pink sheets, volatility of prices may increase and price movement
may outpace the ability to deliver accurate quote information.  Due to
expected low trading volumes in shares of our class A common stock, there may be
a lower likelihood of one’s orders for shares of our class A common stock being
executed, and current prices may differ significantly from the price one was
quoted at the time of one's order entry.




Electronic
processing of orders is not available for securities traded in the pink sheets
and high order volume and communication risks may prevent or delay the execution
of one's trading orders.  This lack of automated order processing may
affect the timeliness of order execution reporting and the availability of firm
quotes for shares of our class A common stock.  Heavy market volume
may lead to a delay in the processing of security orders for shares of our class
A common stock, due to the manual nature of these markets. Consequently, you may
not able to sell shares of our class A common stock at the optimum trading
prices.




In
addition, if the trading price of our class A common stock is less than $5.00
per share, our class A common stock will become subject to the SEC’s penny stock
rules. Before a broker-dealer can sell a penny stock, the penny stock rules
require the firm to first approve the customer for the transaction and receive
from the customer a written agreement to the transaction.  The firm
must furnish the customer a document describing the risks of investing in penny
stocks.  The broker-dealer must tell the customer the current market
quotation, if any, for the penny stock and the compensation the firm and its
broker will receive for the trade.  Finally, the firm must send
monthly account statements showing the market value of each penny stock held in
the customer's account.  These disclosure requirements tend to make it
more difficult for a broker-dealer to make a market in penny stocks, and could,
therefore, reduce the level of trading activity in a stock that is subject to
the penny stock rules.  Consequently, if our class A common stock
becomes subject to the penny stock rules, our shareholders may find it difficult
to sell their shares.




We
cannot predict the prices at which our class A common stock may
trade.




The
market price of our class A common stock may fluctuate significantly due to a
number of factors, some of which may be beyond our control,
including:




·
            our
      quarterly or annual earnings, or those of other companies in our
      industry;


·
            actual
      or anticipated reductions in our revenue, net earnings and cash flow
      resulting from actual or anticipated declines in assets under
      management;


·
            changes
      in accounting standards, policies, guidance, interpretations or
      principles;


·
            the
      failure of securities analysts to cover our company after the spin-off or
      changes in financial estimates by
analysts;


·
            changes
      in earnings estimates by securities analysts or our ability to meet those
      estimates;


·
            the
      operating and stock price performance of other comparable
      companies;


·
            overall
      market fluctuations; and


·
            general
      economic conditions.




In
particular, the realization of any of the risks described in these “Risk
Factors” could have a significant and adverse impact on the market price of our
class A common stock. In addition, the stock market in general has experienced
extreme price and volume volatility that has often been unrelated to the
operating performance of particular companies. This volatility has had a
significant impact on the market price of securities issued by many companies,
including companies in our industry. The changes can occur without regard to the
operating performance of these companies. The price of our class A common stock
could fluctuate based upon factors that have little or nothing to do with us,
and these fluctuations could materially reduce our stock price.




12




Risks
Related to Our Regulatory Environment




Changes
in laws or regulations or in governmental policies could limit the sources and
amounts of our revenues, increase our costs of doing business, decrease our
profitability and materially and adversely affect our business.




Our
business is subject to extensive regulation in the United States, primarily at
the federal level, including regulation by the SEC under the Investment Company
Act and the Investment Advisers Act of 1940 (“Investment Advisers Act”). We are
registered with the SEC as an investment adviser. The Westwood Funds are
registered with the SEC as investment companies under the Investment Company
Act. The Investment Advisers Act imposes numerous obligations on investment
advisers, including record-keeping, advertising and operating requirements,
disclosure obligations and prohibitions on fraudulent activities. The Investment
Company Act imposes similar obligations, as well as additional detailed
operational requirements, on registered investment companies and investment
advisers. Our failure to comply with applicable laws or regulations could result
in fines, censure, suspensions of personnel or other sanctions, including
revocation of its registration as an investment adviser. Industry regulations
are designed to protect investors in the Westwood Funds and other third parties
who deal with us and to ensure the integrity of the financial markets. They are
not designed to protect our shareholders. Changes in laws or regulations or in
governmental policies could limit the sources and amounts of our revenues,
increase our costs of doing business, decrease our profitability and materially
and adversely affect our business.




In
response to scandals in the financial services industry regarding late trading,
market timing and selective disclosure of portfolio information, various
legislative and regulatory proposals are pending in or before, or have been
adopted by, the U.S. Congress and the various regulatory agencies that supervise
our operations, including the SEC. These proposals, to the extent enacted or
adopted, could have a substantial impact on the regulation and operation of
registered funds and investment advisers and could adversely affect our assets
under management, revenues and net income. Additionally, the SEC, FINRA and
other regulators, as well as Congress, are investigating certain practices
within the mutual fund industry. These investigations could lead to further
legislative and regulatory proposals that, if enacted or adopted, could
adversely affect our business.




The
Westwood Funds’ business involves compliance with numerous investment, asset
valuation, distribution and tax requirements.  A failure to adhere to
or satisfy these requirements could result in losses that could be recovered by
the Westwood Funds from us in certain circumstances.  Although we have
installed procedures and utilize the services of experienced administrators,
accountants and lawyers to assist us in adhering to these guidelines and
satisfying these requirements, and maintain insurance to protect us in the case
of client losses, there can be no assurance that such precautions or insurance
will protect us from potential liabilities.




Risks
Related to the Business




To
the extent we are forced to compete on the basis of price, we may not be able to
maintain our current fee structure.





The
investment management business is highly competitive and has relatively low
barriers to entry. To the extent we are forced to compete on the basis of price,
we may not be able to maintain our current fee structure. Although our
investment management fees vary from product to product, historically we have
competed primarily on the performance of our products and not on the level of
our investment management fees relative to those of our competitors. In recent
years, however, there has been a trend toward lower fees in the investment
management industry. In order to maintain our fee structure in a competitive
environment, we must be able to continue to provide clients with investment
returns and service that make investors willing to pay our fees. In addition,
the Board of Trustees of the Westwood Funds must make certain findings as to the
reasonableness of our fees. We cannot be assured that we will succeed in
providing investment returns and service that will allow us to maintain our
current fee structure. Fee reductions on existing or future new business could
have an adverse effect on our profit margins and results of
operations.





Substantially
all of our revenues are from contracts that may be terminated on short
notice.





Substantially
all of our revenues are derived from investment management
agreements.  Investment management agreements with the Westwood Funds
are terminable without penalty on 60 days' notice (subject to certain additional
procedural requirements in the case of termination by a Westwood Fund) and must
be specifically approved at least annually, as required by law.  Such
annual renewal requires, among other things, approval by the disinterested
members of the funds’ Board of Trustees.  Any failure to renew or
termination of these agreements or arrangements would have a material adverse
effect on us.




Investors
in the Westwood Funds can redeem their investments in these funds at any time
without prior notice, which could adversely affect our earnings.





Westwood
Funds’ investors may redeem their investments in those funds at any time without
prior notice. Investors may reduce the aggregate amount of assets under
management for any number of reasons, including investment performance, changes
in prevailing interest rates and financial market performance. In a declining
stock market, the pace of mutual fund redemptions could accelerate. Poor
performance relative to other asset management firms tends to result in
decreased purchases of mutual fund shares and increased redemptions of mutual
fund shares. The redemption of investments in mutual funds managed by us would
adversely affect our revenues, which are substantially dependent upon the assets
under management in the Westwood Funds. If redemptions of investments in the
Westwood Funds caused our revenues to decline, it could have a material adverse
effect on our earnings.





Certain
changes in control of us would automatically terminate our investment management
agreements with the Westwood Funds, unless the funds’ Board of Trustees and
shareholders vote to continue the agreements, and could prevent us for a
two-year period from increasing the investment advisory fees we are able to
charge the Westwood Funds.





Under the
Investment Company Act, an investment management agreement with a fund must
provide for its automatic termination in the event of its assignment. The fund’s
board and shareholders must vote to continue the agreement following its
assignment, the cost of which ordinarily would be borne by us or the Westwood
Funds.





Under the
Investment Advisers Act, a client’s investment management agreement may not be
“assigned” by the investment adviser without the client’s consent. An investment
management agreement is considered under both acts to be assigned to another
party when a controlling block of the adviser’s securities is transferred. In
our case, an assignment of our investment management agreements may occur if,
among other things, we sell or issue a certain number of additional common
shares in the future. We cannot be certain that the Westwood Funds will consent
to assignments of its investment management agreements or approve new agreements
with us if an assignment occurs. Under the Investment Company Act, if a fund’s
investment adviser engages in a transaction that results in the assignment of
its investment management agreement with the fund, the adviser may not impose an
“unfair burden” on that fund as a result of the transaction for a two-year
period after the transaction is completed. The term “unfair burden” has been
interpreted to include certain increases in investment advisory fees. This
restriction may discourage potential purchasers from acquiring a controlling
interest in us.





13




A
decline in the prices of securities would lead to a decline in our assets under
management, revenues and earnings.





Substantially
all of our revenues are determined by the amount of our assets under management.
Under our investment advisory contracts with the Westwood Funds, the investment
advisory fees we receive are typically based on the market value of assets under
management. Accordingly, a decline in the prices of securities generally may
cause our revenues and net income to decline by causing the value of our assets
under management to decrease, which would result in lower investment advisory
fees, or causing the Westwood Funds’ investors to withdraw funds in favor of
investments they perceive to offer greater opportunity or lower risk, which
would also result in lower fees. The securities markets are highly volatile, and
securities prices may increase or decrease for many reasons, including economic
and political events and acts of terrorism beyond our control. If a decline in
securities prices caused our revenues to decline, this could have a material
adverse effect on our earnings.





Catastrophic
and unpredictable events could have a material adverse effect on our
business.





A
terrorist attack, war, power failure, cyber-attack, natural disaster or other
catastrophic or unpredictable event could adversely affect our future revenues,
expenses and earnings by: interrupting our normal business operations;
sustaining employee casualties, including loss of our key executives; requiring
substantial expenditures and expenses to repair, replace and restore normal
business operations; and reducing investor confidence.





We have a
disaster recovery plan to address certain contingencies, but we cannot be
assured that this plan will be sufficient in responding to or ameliorating the
effects of all disaster scenarios. If our employees or vendors we rely upon for
support in a catastrophic event are unable to respond adequately or in a timely
manner, we may lose clients resulting in a decrease in assets under management
which may have a material adverse effect on revenues and net
income.





Control
by Mr. Gabelli of a majority of the combined voting power of our common stock
may give rise to conflicts of interests.





Mr.
Gabelli indirectly beneficially owns and controls a majority of our outstanding
common stock.  As long as Mr. Gabelli indirectly beneficially owns a
majority of the combined voting power of our common stock, he will have the
ability to elect all of the members of our board of directors and thereby
control our management and affairs, including determinations with respect to
acquisitions, dispositions, borrowings, issuances of common stock or other
securities, and the declaration and payment of dividends on the common
stock.  In addition, Mr. Gabelli will be able to determine the outcome
of matters submitted to a vote of shareholders for approval and will be able to
cause or prevent a change in control of us.  As a result of Mr.
Gabelli's control, none of our agreements with Mr. Gabelli and other companies
controlled by him have been arrived at through "arm's-length"
negotiations.  There can be no assurance that we would not have
received more favorable terms from an unaffiliated party.





We
depend on key personnel.





Our
future success depends to a substantial degree on our ability to retain and
attract qualified personnel to conduct our investment management
business.  The market for qualified portfolio managers is extremely
competitive and has grown more so in recent periods as the investment management
industry has experienced growth.  We anticipate that it will be
necessary for us to add portfolio managers and investment analysts as we further
diversify our investment products and strategies and operate on an independent
basis.  There can be no assurance, however, that we will be successful
in our efforts to recruit and retain the required personnel.  The loss
of key management professionals or the inability to recruit and retain
sufficient portfolio managers and marketing personnel could have a material
adverse effect on our business.





The
termination of our subadvisory agreement with Westwood Management Corporation
could adversely affect our business, results of operations and financial
condition.





Westwood
Management Corporation acts as subadvisor to three of the Westwood Funds
pursuant to a subadvisory agreement with us.  We believe that many
investors have invested money in these three funds because of solicitations by
certain individuals at Westwood Management Corporation.  If the subadvisory
agreement was terminated, there can be no assurance we will be able to attract
investors to invest in these funds at the same rate as those individuals at
Westwood Management Corporation would have, or at all or retain current
investors originally solicited by the individuals at Westwood Management
Corporation.  In addition, if the subadvisory agreement was terminated, we
can make no assurance that investors will not redeem their investment from these
funds as a result of such termination.  The occurrence of either of these
events could adversely affect our business, results of operations and financial
condition.




Potential
adverse effects on our performance prospects may arise from a decline in the
performance of the securities markets.





Our
results of operations are affected by many economic factors, including the
performance of the securities markets.  During the 1990s, unusually
favorable and sustained performance of the U.S. securities markets, and the U.S.
equity market, in particular, attracted substantial inflows of new investments
in these markets and has contributed to significant market appreciation which
has, in turn, led to an increase in our assets under management and
revenues.  At December 31, 2008, approximately 74% of our assets under
management were invested in equity securities.  More recently, the
securities markets in general have experienced significant
volatility.  Any decline in the securities markets, in general, and
the equity markets, in particular, could reduce our assets under management and
consequently reduce our revenues.  In addition, any such decline in
the equity markets, failure of these markets to sustain their prior levels of
growth, or continued short-term volatility in these markets could result in
investors withdrawing from the equity markets or decreasing their rate of
investment, either of which would be likely to adversely affect
us.  From time to time, a relatively high proportion of the assets we
manage may be concentrated in particular industry sectors.  A general
decline in the performance of securities in those industry sectors could have an
adverse effect on our assets under management and revenues.





Future
investment performance could reduce revenues and other income.





Success
in the investment management and mutual fund businesses is dependent on
investment performance as well as distribution and client
servicing.  Good performance generally stimulates sales of our
investment products and tends to keep withdrawals and redemptions low, which
generates higher management fees (which are based on the amount of assets under
management).  Conversely, relatively poor performance tends to result
in decreased sales, increased withdrawals and redemptions in the Westwood Funds,
with corresponding decreases in revenues to us.  Many analysts of the
mutual fund industry believe that investment performance is the most important
factor for the growth of open-end funds, such as the Westwood
Funds.  Failure of our investment products to perform well could,
therefore, have a material adverse effect on us.




14




We
rely on third-party distribution programs.





We have
since 1996 experienced significant growth in sales of the Westwood Funds through
Third-Party Distribution Programs, which are programs sponsored by third-party
intermediaries that offer their customers a variety of competing products and
administrative services.  Most of the sales growth from our
Third-Party Distribution Programs is from programs with no transaction fees
payable by the customer, which we refer to as NTF
Programs.  Approximately $265.5 million, or 58.8%, of our assets under
management in the Westwood Funds as of December 31, 2008 were obtained through
NTF Programs.  The cost of participating in Third-Party Distribution
Programs is higher than our direct distribution costs, and it is anticipated
that the cost of Third-Party Distribution Programs will increase in the
future.  Any increase would be likely to have an adverse effect on our
profit margins and results of operations.  In addition, there can be
no assurance that the Third-Party Distribution Programs will continue to
distribute the Westwood Funds.  At December 31, 2008, approximately
89% of the NTF Program net assets in the Westwood Funds are attributable to two
NTF Programs.  The decision by these Third-Party Distribution Programs
to discontinue distribution of the Westwood Funds, or a decision by Teton to
withdraw one or more of the Westwood Funds from the programs, could have an
adverse effect on our growth of assets under management.





Operational
risks may disrupt our business, result in regulatory action against us or limit
our growth.





We face
operational risk arising from errors made in the execution, confirmation or
settlement of transactions or from transactions not being properly recorded,
evaluated or accounted for.  Our business is highly dependent on its
ability to process, on a daily basis, transactions across markets in an
efficient and accurate manner. Consequently, we rely heavily on our financial,
accounting and other data processing systems. If any of these systems do not
operate properly or are disabled, we could suffer financial loss, a disruption
of our businesses, liability to clients, regulatory intervention or reputational
damage.





Dependence
on information systems.





We
operate in an industry that is highly dependent on its information systems and
technology.  Teton outsources a significant portion of our information
systems operations to third parties who are responsible for providing the
management, maintenance and updating of such systems.  There can be no
assurance, however, that our information systems and technology will continue to
be able to accommodate our growth or that the cost of maintaining such
outsourcing arrangements will not increase from its current
level.  Such a failure to accommodate growth, or an increase in costs
related to these information systems, could have a material adverse effect on
us.





We
face exposure to litigation within our business.





The
volume of litigation against financial services firms and the amount of damages
claimed has increased over the past several years.  The types of
claims that we may face are varied.  For example, we may face claims
against us for purchasing securities that are inconsistent with a client’s
investment objectives or guidelines, in connection with the operation of the
Westwood Funds or arising from an employment dispute.  The risk of
litigation is difficult to assess or quantify, and may occur years after the
activities or events at issue.  Even if we prevail in a legal action
brought against us, the costs alone of defending against the action could have a
material adverse effect on us.





Our
reputation is critical to our success.





Our
reputation is critical to maintaining and developing relationships with our
clients, the Westwood Fund shareholders and third-party
intermediaries.  In recent years, there have been a number of
well-publicized cases involving fraud, conflicts of interest or other misconduct
by individuals in the financial services industry.  Misconduct by our
staff, or even unsubstantiated allegations, could result not only in direct
financial harm but also harm to our reputation, causing injury to the value of
our brands and our ability to retain or attract assets under
management.  In addition, in certain circumstances, misconduct on the
part of our clients or other parties could damage our
reputation.  Harm to our reputation could have a material adverse
effect on us.





We
face strong competition from numerous and sometimes larger
companies.





We
compete with numerous investment management companies, stock brokerage and
investment banking firms, insurance companies, banks, savings and loan
associations and other financial institutions.  Continuing
consolidation in the financial services industry has created stronger
competitors with greater financial resources and broader distribution channels
than our own.  To the extent that existing or potential customers,
including securities dealers, decide to invest in or distribute the products of
our competitors, the sales of our products as well as our market share, revenues
and net income could decline.  Both GAMCO and Teton have as their
principal businesses asset management and derive most of their revenues through
that business and, as such, may compete with each
other.




15




ITEM
1B:  UNRESOLVED STAFF COMMENTS




None.








ITEM
2:  PROPERTIES




Teton
owns no properties.  Teton currently leases 1,642 square feet of
office space at 401 Theodore Fremd Avenue in Rye, New York in accordance with a
sub-lease with GAMCO.  We believe our office provides adequate capacity for
our current needs.








ITEM
3:  LEGAL PROCEEDINGS




None.







ITEM
4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




None.






PART
II




ITEM 5: MARKET FOR THE REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES




There is
currently no established public trading market for either the class A or class B
common shares.  The Company is in the process of establishing the
class A common stock on the Pink Sheets, and as such, no range of prices of
either class of stock is available.





As of
March 20, 2009, there were 11 class A common stockholders of record and 72 class
B common stockholders of record.




In 2007,
Teton paid dividends of $1.30 per share and $0.45 per share on January 4, 2007
and July 30, 2007 to all of its shareholders of record as of December 15, 2006
and July 23, 2007, respectively.




On July
15, 2008, Teton paid a dividend of $1.00 per share to all of its shareholders of
record as of July 1, 2008.





In
connection with the spin-off on March 20, 2009, and under the terms of Mr.
Nicholas F. Galluccio’s (“Mr. Galluccio”) employment and restricted stock grant
agreements, Teton has issued 260,849 class A shares of Teton restricted stock to
Mr. Galluccio.  These shares will cliff vest 30% at the end of three
years from the date of employment and the remaining 70% will cliff vest at the
end of five years from the date of employment.





There are
currently no securities remaining available for future issuance under equity
compensation plans other than those disclosed for Mr. Galluccio.





16




ITEM
6: SELECTED FINANCIAL DATA




General




The
selected historical financial data presented below has been derived in part
from, and should be read in conjunction with Management’s Discussion and
Analysis included in Item 7 and the audited Financial Statements of Teton
Advisors, Inc. and related notes included in Item 8 of this report.




For
      the Years Ended December 31,2008
                                                                                        
                                                                                        
                                                                                        2007
                                                                                        
                                                                                        
                                                                                        2006
                                                                                        
                                                                                        
                                                                                        2005
                                                                                        
                                                                                        
                                                                                        
                                                                                        2004Income Statement Data
      (unaudited)Revenues:Investment
      advisory fees
                                                                                        
                                                                                        
                                                                                        $
                                                                                        3,792,716
                                                                                        
                                                                                        
                                                                                        $
                                                                                        3,841,410
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        3,676,139
                                                                                        
                                                                                        
                                                                                        $
                                                                                        3,682,140
                                                                                        
                                                                                        
                                                                                        $
                                                                                        4,006,570Other
      income
                                                                                        
                                                                                        
                                                                                        
                                                                                        35,318
                                                                                        
                                                                                        
                                                                                        
                                                                                        114,315
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        230,806
                                                                                        
                                                                                        
                                                                                        
                                                                                        116,592
                                                                                        
                                                                                        
                                                                                        
                                                                                        46,774Total
      revenues
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,828,034
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,955,725
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,906,945
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,798,732
                                                                                        
                                                                                        
                                                                                        
                                                                                        4,053,344Expenses:Marketing
      and administrative fees
                                                                                        
                                                                                        
                                                                                        
                                                                                        830,802
                                                                                        
                                                                                        
                                                                                        
                                                                                        854,003
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        819,296
                                                                                        
                                                                                        
                                                                                        
                                                                                        819,697
                                                                                        
                                                                                        
                                                                                        
                                                                                        881,951Sub-advisory
      fees
                                                                                        
                                                                                        
                                                                                        
                                                                                        767,116
                                                                                        
                                                                                        
                                                                                        
                                                                                        840,065
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        843,628
                                                                                        
                                                                                        
                                                                                        
                                                                                        758,485
                                                                                        
                                                                                        
                                                                                        
                                                                                        890,949Distribution
      costs and expense reimbursements
                                                                                        
                                                                                        
                                                                                        
                                                                                        425,799
                                                                                        
                                                                                        
                                                                                        
                                                                                        366,882
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        130,368
                                                                                        
                                                                                        
                                                                                        
                                                                                        437,613
                                                                                        
                                                                                        
                                                                                        
                                                                                        219,933Compensation
                                                                                        
                                                                                        
                                                                                        
                                                                                        567,358
                                                                                        
                                                                                        
                                                                                        
                                                                                        278,772
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        307,332
                                                                                        
                                                                                        
                                                                                        
                                                                                        213,873
                                                                                        
                                                                                        
                                                                                        
                                                                                        320,115Management
      fees
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        -
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,479,227
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,486,979Other
      operating expenses
                                                                                        
                                                                                        
                                                                                        
                                                                                        402,618
                                                                                        
                                                                                        
                                                                                        
                                                                                        108,487
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        78,632
                                                                                        
                                                                                        
                                                                                        
                                                                                        92,467
                                                                                        
                                                                                        
                                                                                        
                                                                                        111,136Total
      expenses
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,993,693
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,448,209
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        2,179,256
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,801,362
                                                                                        
                                                                                        
                                                                                        
                                                                                        3,911,063Income/(loss)
      before income taxes
                                                                                        
                                                                                        
                                                                                        
                                                                                        834,341
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,507,516
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,727,689
                                                                                        
                                                                                        
                                                                                        
                                                                                        (2,630
                                                                                        )
                                                                                        
                                                                                        
                                                                                        142,281Income
      tax expense/(benefit)
                                                                                        
                                                                                        
                                                                                        
                                                                                        258,651
                                                                                        
                                                                                        
                                                                                        
                                                                                        520,802
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        596,688
                                                                                        
                                                                                        
                                                                                        
                                                                                        (1,394
                                                                                        )
                                                                                        
                                                                                        
                                                                                        43,437Net
      income/(loss)
                                                                                        
                                                                                        
                                                                                        $
                                                                                        575,690
                                                                                        
                                                                                        
                                                                                        $
                                                                                        986,714
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1,131,001
                                                                                        
                                                                                        
                                                                                        $
                                                                                        (1,236
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        98,844Weighted
      average shares outstanding:Basic
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,043,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,050,715
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394Diluted
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,043,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,050,715
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394Net
      income per share:Basic
                                                                                        
                                                                                        
                                                                                        $
                                                                                        0.55
                                                                                        
                                                                                        
                                                                                        $
                                                                                        0.94
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1.08
                                                                                        
                                                                                        
                                                                                        $
                                                                                        (0.00
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        0.09Diluted
                                                                                        
                                                                                        
                                                                                        $
                                                                                        0.55
                                                                                        
                                                                                        
                                                                                        $
                                                                                        0.94
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1.08
                                                                                        
                                                                                        
                                                                                        $
                                                                                        (0.00
                                                                                        )
                                                                                        
                                                                                        $
                                                                                        0.09Actual
      shares outstanding at December 31st
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,043,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,043,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394
                                                                                        
                                                                                        
                                                                                        
                                                                                        1,051,394Dividends
      declared
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1.00
                                                                                        
                                                                                        
                                                                                        $
                                                                                        0.45
                                                                                        
                                                                                        
                                                                                        
                                                                                        $
                                                                                        1.30
                                                                                        
                                                                                        
                                                                                        $
                                                                                        -
                                                                                        
                                                                                        
                                                                                        $
                                                                                        -




December
      31,2008
                                          
                                          
                                          2007
                                          
                                          
                                          2006
                                          
                                          
                                          2005
                                          
                                          
                                          2004Balance Sheet Data
      (unaudited)Total
      assets
                                          
                                          
                                          $
                                          1,328,960
                                          
                                          
                                          $
                                          2,066,336
                                          
                                          
                                          $
                                          2,972,229
                                          
                                          
                                          $
                                          4,844,592
                                          
                                          
                                          $
                                          5,624,825Total
      liabilities
                                          
                                          
                                          
                                          549,114
                                          
                                          
                                          
                                          818,786
                                          
                                          
                                          
                                          2,230,144
                                          
                                          
                                          
                                          3,866,697
                                          
                                          
                                          
                                          4,645,694Total
      stockholders’ equity
                                          
                                          
                                          $
                                          779,846
                                          
                                          
                                          $
                                          1,247,550
                                          
                                          
                                          $
                                          742,085
                                          
                                          
                                          $
                                          977,895
                                          
                                          
                                          $
                                          979,131




December
      31,2008
                                            
                                            
                                            2007
                                            
                                            
                                            2006
                                            
                                            
                                            2005
                                            
                                            
                                            2004Assets Under Management
      (unaudited)(at
      year end, in millions):Mutual
      Funds:Equities
                                            
                                            
                                            $
                                            436
                                            
                                            
                                            $
                                            429
                                            
                                            
                                            $
                                            401
                                            
                                            
                                            $
                                            405
                                            
                                            
                                            $
                                            414Fixed
      income
                                            
                                            
                                            
                                            14
                                            
                                            
                                            
                                            11
                                            
                                            
                                            
                                            10
                                            
                                            
                                            
                                            11
                                            
                                            
                                            
                                            11Total
                                            
                                            
                                            $
                                            450
                                            
                                            
                                            $
                                            440
                                            
                                            
                                            $
                                            411
                                            
                                            
                                            $
                                            416
                                            
                                            
                                            $
                                            425




17





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




The
following discussion should be read in conjunction with the Financial Statements
and the notes thereto included in Item 8 to this report.




Introduction




Our
revenues are highly correlated to the level of assets under management (“AUM”)
and fees associated with our various investment products, rather than our own
corporate assets.  AUM, which are directly influenced by the level and
changes of the overall equity markets, can also fluctuate through acquisitions,
the creation of new products, 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.  It is our belief that
general stock market trends will have the greatest impact on our level
of AUM and hence, revenues.




Overview




Statements
of Income




Investment
advisory fees, which are based on the amount and composition of AUM in our Funds
represent our largest source of revenues.  In addition to the general
level and trends of the stock market, 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 facilitates the
ability to attract 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. Historically, we have depended primarily on
direct distribution of our products and services but since 1995 have
participated in Third-Party Distribution Programs, including NTF Programs. A
majority of our cash inflows to mutual fund products have come through these
channels since 1998.  The effects of this on our future financial
results cannot be determined at this time but could be material.




Advisory
fees from the open-end mutual funds are computed daily based on average net
assets.  These revenues are highly correlated to the stock market and
can vary in direct proportion to movements in the stock market and the level of
sales compared with redemptions, financial market conditions and the fee
structure for AUM. Revenues derived from the equity-oriented portfolios
generally have higher management fee rates than fixed income
portfolios.





Other
income primarily includes interest income earned from cash
equivalents.




Statements
of Financial Condition




We ended
the year with $760,350 in cash equivalents which were invested in The Gabelli
U.S. Treasury Money Market Fund, managed by a subsidiary of GAMCO.





Stockholders'
equity was $779,846 on December 31, 2008 compared to $1,247,550 on December 31,
2007. The decrease in stockholder’s equity from the end of 2007 was related to
the payment of dividends of $1,043,394 during 2008 partially offset by $575,690
of net income.




18




Assets Highlights
(unaudited)




The
following table sets forth total AUM by product type as of the dates shown and
their compound annual growth rates ("CAGR"):




Assets
Under Management


By
Product Type


(Dollars
in millions)





%
      Inc (Dec)2004
                                              
                                              
                                              2005
                                              
                                              
                                              2006
                                              
                                              
                                              2007
                                              
                                              
                                              2008
                                              
                                              
                                              
                                              2008
      / 2007
                                              
                                              CAGR
      (a)Equities
                                              
                                              $
                                              414
                                              
                                              
                                              $
                                              405
                                              
                                              
                                              $
                                              401
                                              
                                              
                                              $
                                              429
                                              
                                              
                                              $
                                              436
                                              
                                              
                                              
                                              1.6
                                              %
                                              (1.4%)Fixed
      income
                                              
                                              
                                              11
                                              
                                              
                                              
                                              11
                                              
                                              
                                              
                                              10
                                              
                                              
                                              
                                              11
                                              
                                              
                                              
                                              14
                                              
                                              
                                              
                                              27.3
                                              
                                              4.9Total
      Assets UnderManagement
                                              
                                              $
                                              425
                                              
                                              
                                              $
                                              416
                                              
                                              
                                              $
                                              411
                                              
                                              
                                              $
                                              440
                                              
                                              
                                              $
                                              450
                                              
                                              
                                              
                                              2.3
                                              %
                                              (1.2%)


(a) Compound annual growth
rate.




During
2008, the Board of Directors of the B.B. Micro Cap Growth Fund selected Teton as
its interim investment adviser.  At the time of selection the AUM in
the B.B. Micro Cap Growth Fund was approximately $75.4 million.  This
amount is not shown as an inflow in the tables below.





Net
inflows, excluding the assignment of the B.B. Micro Cap Growth Fund, in 2008
totaled approximately $57 million compared to net outflows of approximately $7
million and $63 million in 2007 and 2006, respectively.




Total net
inflows from equities products were approximately $59 million in 2008, and net
outflows from fixed income products were $2 million in 2008.




For the
three years ended December 31, 2008, 2007, and 2006 our net cash inflows or
outflows by product line were as follows (in millions):





(unaudited)
                                    
                                    
                                    2008
                                    
                                    
                                    2007
                                    
                                    
                                    2006Mutual
      FundsEquities
                                    
                                    
                                    $
                                    59
                                    
                                    
                                    $
                                    (8
                                    )
                                    
                                    $
                                    (61
                                    )Fixed
      income
                                    
                                    
                                    
                                    (2
                                    )
                                    
                                    
                                    1
                                    
                                    
                                    
                                    (2
                                    )Total
      Net Cash (Out) In Flows
                                    
                                    
                                    $
                                    57
                                    
                                    
                                    $
                                    (7
                                    )
                                    
                                    $
                                    (63
                                    )





For the
three years ended December 31, 2008, 2007, and 2006 our net appreciation
and depreciation by product line were as follows (in millions):





(unaudited)
                                    
                                    
                                    2008
                                    
                                    
                                    2007
                                    
                                    
                                    2006Mutual
      FundsEquities
                                    
                                    
                                    $
                                    (127
                                    )
                                    
                                    $
                                    36
                                    
                                    
                                    $
                                    57Fixed
      income
                                    
                                    
                                    
                                    5
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1Total
      Net Appreciation/(Depreciation)
                                    
                                    
                                    $
                                    (122
                                    )
                                    
                                    $
                                    36
                                    
                                    
                                    $
                                    58




19




Operating Results for the Year Ended
December 31, 2008 as Compared to the Year Ended December 31,
2007




Revenues


Total
revenues were $3,828,034 in 2008, $127,691 or 3.2% lower than the total revenues
of $3,955,725 in 2007.  The change in total revenues by revenue
component was as follows:




Increase
      (decrease)(unaudited)
                                
                                2008
                                
                                
                                2007
                                
                                
                                $
                                
                                
                                
                                %Investment
      advisory fees
                                
                                $
                                3,792,716
                                
                                
                                $
                                3,841,410
                                
                                
                                $
                                (48,694
                                )
                                
                                
                                (1.3
                                %)Other
      income
                                
                                
                                35,318
                                
                                
                                
                                114,315
                                
                                
                                
                                (78,997
                                )
                                
                                
                                (69.1
                                )Total
      revenues
                                
                                $
                                3,828,034
                                
                                
                                $
                                3,955,725
                                
                                
                                $
                                (127,691
                                )
                                
                                
                                (3.2
                                %)




Investment
Advisory Fees:  Investment advisory
fees, which comprised 99.1% of total revenues in 2008, are directly influenced
by the level and mix of AUM.  Teton earns advisory fees based on the
average AUM in the Funds.




Investment
advisory fees were $3,792,716 for the period ended December 31, 2008 compared to
$3,841,410 for the period ended December 31, 2007, a decrease of $48,694, or
1.3%.  This decrease is directly correlated to the decrease in average
AUM from $427.3 million in 2007 to $420.7 million in 2008, a decrease of $6.6
million, or 1.5%.




Our AUM
increased from $440.5 million at December 31, 2007 to $449.8 million at December
31, 2008.  This increase was primarily due to the addition of the
advisory contract for the B.B. Micro Cap Growth Fund, which had AUM of $75.4
million at the time of the appointment and gross inflows of $192.4 million,
offset slightly by gross outflows of $135.6 million and the decline in the
market value of the Funds of $122.9 million.




Our AUM
increased from $410.9 million at December 31, 2006 to $440.5 million at December
31, 2007.  This increase was primarily due to a 9.0%, or $37.0
million, increase in the market value of the Funds and gross contributions of
$108.0 million, offset slightly by gross withdrawals of $115.4
million.




Other
income:  Other income
includes interest income earned from cash equivalents that were invested in a
money market mutual fund managed by Gabelli Funds, LLC, a subsidiary of
GAMCO.  Other income for 2008 was $35,318, down from the $114,315 for
2007 due to lower average cash equivalent balances held in 2008 and lower
interest rates in 2008 versus 2007.




Expenses


Sub-advisory
Fees:  Teton has currently retained a sub-adviser for three of
the six Westwood funds.  Prior to July 1, 2007 Teton had also retained
the same sub-advisor on two additional Westwood funds.  Sub-advisory
fees, which are 35% of the net investment advisory revenues of the sub-advised
funds and are recognized as expenses as the related services are performed, were
$767,116 for 2008, down from $840,065 in the prior year period.  This
decrease was primarily due to the decrease of investment advisory revenue from
the three funds and the termination of the sub-advisory relationship for two of
the five funds effective July 1, 2007.





Administrative
Fees:Administrative expenses, which are charges from GAMCO and paid by Teton
for administration of the mutual fund activities performed by GAMCO on behalf of
Teton, were $830,802 for 2008, a 2.7% decrease from $854,003 in the prior year
period.  These expenses are tied directly to the level of AUM and
currently are approximately 22% of investment advisory revenues in
2008.




Compensation:Compensation costs, which
include both direct employees of Teton, portfolio manager compensation and the
salary and bonus allocated to Teton by GAMCO based upon the allocation
percentage of employee work performed that affects Teton, was $567,358 for 2008,
a 103.5% increase from $278,772 in the year ago period.  Fixed
compensation costs, which include both direct and allocated salary and bonus,
increased to approximately $372,106 for 2008 from $136,896 in the prior year
period due primarily to the hiring of three full time employees in anticipation
of the spin-off.  The remainder of the compensation expenses
represents variable portfolio manager compensation that fluctuates with net
investment advisory revenues, which is defined as advisory fees less certain
expenses.  For 2008, portfolio manager compensation was $195,252, an
increase of $53,376 from the $141,876 in the prior year period.  The
primary driver of this increase was an increase in average AUM, which generates
investment advisory fees, for the funds in which portfolio manager compensation
is based.   For 2008 the variable portfolio manager compensation
was approximately 5% of investment advisory revenues.




Distribution
costs and expense reimbursements: Distribution costs, which
are principally related to the sale of shares of open-end mutual funds, and
expense reimbursements were $425,799 for 2008, increasing $58,917 from $366,882
in the prior year period.




Distribution
costs are broken down into two categories, payments made to third party
distributors for Funds sold through them, including their no transaction fee
programs, and expenses either paid to or reimbursed from Gabelli & Company
for distribution of the Funds.  Expenses paid to third parties were
$156,451 during the 2008 period, a decrease of $28,317 from the prior year
amount of $184,768.  The arrangement between Teton and Gabelli &
Company is that Teton will reimburse Gabelli & Company for any distribution
costs in excess of Gabelli & Company’s distribution
revenues.  Conversely, if the distribution revenues of Gabelli &
Company exceed the costs, such excess is reimbursed to Teton.  For
2008 Gabelli & Company reimbursed Teton $42,345 while during the 2007 period
Teton paid Gabelli & Company $12,123, a decrease of $54,468.  This
decrease was due to lower expenses incurred by Gabelli & Company during the
2008 period as compared to the 2007 period.




Expense
reimbursements to the Funds were $311,694 for 2008, an increase of $141,703 from
the prior year period amount of $169,991.  The primary driver of this
increase has been lower AUM in the Funds with expense reimbursements during 2008
as compared to 2007, which in turn leads to the Fund being able to cover less of
the Fund expenses and Teton having to pay more to maintain the Fund’s expense
limitations.  For 2008, expense reimbursement represented
approximately 8% of investment advisory revenues, up from approximately 4% in
2007.




Other:  General and
administrative expenses, including those charged by GAMCO and incurred directly,
were $402,618 for 2008, an increase of $294,131 from the year ago amount of
$108,487.  This increase was primarily due to expenses related to the
spin-off which include the rental of office space in a building being leased by
GAMCO, legal expense relating to preparing, reviewing and filing documents,
accounting fees related to the preparation of SEC forms and amortization of the
intangible asset.





Income
Taxes


The
effective tax rate was 31.0% for the year ended December 31, 2008, versus 34.5%
for the year ended December 31, 2007.




Net
Income


Net
income for 2008 was $575,690 or $0.55 per fully diluted share versus $986,714 or
$0.94 per fully diluted share for 2007.





20




Operating
Results for the Year Ended December 31, 2007 as Compared to the Year Ended
December 31, 2006




Revenues


Total
revenues were $3,955,725 in the year ended December 31, 2007, slightly above
total revenues of $3,906,945 in the year ended December 31,
2006.  Total revenues by revenue component were as
follows:




Increase
      (decrease)(unaudited)
                              
                              
                              2007
                              
                              
                              2006
                              
                              
                              $
                              
                              
                              
                              %Investment
      advisory fees
                              
                              
                              $
                              3,841,410
                              
                              
                              $
                              3,676,139
                              
                              
                              $
                              165,271
                              
                              
                              
                              4.5
                              %Other
      income
                              
                              
                              
                              114,315
                              
                              
                              
                              230,806
                              
                              
                              
                              (116,491
                              )
                              
                              
                              (50.5
                              )Total
      revenues
                              
                              
                              $
                              3,955,725
                              
                              
                              $
                              3,906,945
                              
                              
                              $
                              48,780
                              
                              
                              
                              1.2
                              %




Investment
Advisory Fees:
Investment
advisory fees, which comprised 97.1% of total revenues in 2007, are driven by
the level and mix of AUM.   Teton earns advisory fees based on the
average AUM in the Funds.




Investment
advisory fees were $3,841,410 for 2007 compared to $3,676,139 for 2006, an
increase of $165,271, or 4.5%.  This increase is directly related to
the increase in average AUM to $427.3 million in 2007 compared to $409.6 million
in 2006, an increase of $17.7 million, or 4.3%.




Our AUM
increased from $410.9 million at December 31, 2006 to $440.5 million at December
31, 2007.  This increase was primarily due to a 9.0%, or $37.0
million, increase in the market value of the Funds and gross inflows of $108.0
million, offset slightly by gross outflows of $115.4 million.




Our AUM
decreased from $416.5 million at December 31, 2005 to $410.9 million at December
31, 2006.  This decrease was primarily due to gross withdrawals of
$136.7 million partially offset by gross contributions of $74.9 million and
$56.2 million, or 13.5%, in market performance increases in the
Funds.




Other
income: Other
income includes interest income earned from cash equivalents that were invested
in a money market mutual fund managed by Gabelli Funds, LLC, a subsidiary of
GAMCO.  Other income for the year ended December 31, 2007 was
$114,315, a decrease of approximately 50% from the $230,806 in the year ended
December 31, 2006, due to lower average cash equivalent balances in 2007 as
compared to 2006.




Expenses


Sub-advisory Fees:
Sub-advisory fees, which are 35% of the net investment advisory revenues of the
sub-advised funds and are recognized as expenses as the related services are
performed, were $840,065, in the year ended December 31, 2007, lower by $3,563
from the $843,628 for the year ended December 31, 2006.




Administrative
Fees:Administrative expenses, which are charges from GAMCO and paid by Teton
for administration and management of the mutual fund activities performed by
GAMCO on behalf of Teton, were $854,003, in the year ended December 31, 2007, a
4.2% increase from $819,296 in the year ended December 31,
2006.  These expenses are tied directly to the level of AUM and are
approximately 22% of investment advisory revenues in 2007.




Compensation:Compensation costs, which
include both portfolio manager compensation and the salary and bonus allocated
to Teton by GAMCO based upon the allocation percentage of employee work
performed that affects Teton, was $278,772 in the year ended December 31, 2007,
a 9.3% decrease from $307,332 in the year ended December 31,
2006.  Fixed compensation costs, which include allocated salary and
bonus, comprised approximately 50% of total compensation costs in both periods
and decreased to approximately $136,896 in 2007 from $147,641 in 2006 due
primarily to lower bonus expense in 2007 as compared to 2006.  The
remainder of the compensation expenses represents variable portfolio manager
compensation that fluctuates with net investment advisory revenues, which is
defined as advisory fees less certain expenses.  For 2007, portfolio
manager compensation was $141,876, a reduction of $17,815 from the $159,691 in
2006.  The primary driver of this decrease was an increase in expenses
being deducted from the gross investment advisory revenues during 2007 as
compared to 2006.  For both 2007 and 2006 the variable portfolio
manager compensation was approximately 4% of total investment advisory
revenues.





Distribution
costs and expense reimbursements: Distribution costs, which
are principally related to the sale of shares of open-end mutual funds, and
expense reimbursements were $366,882 in the year ended December 31, 2007, an
increase of $236,514 from $130,368 in the year ended December 31,
2006.




Distribution
costs are broken down into two categories, payments made to third party
distributors for Funds sold through them, including their no transaction fee
programs, and expenses either paid to or reimbursed from Gabelli & Company
for distribution of the Funds.  Expenses paid to third parties were
$184,768 during 2007, an increase of $46,157 from the prior year amount of
$138,611.  The arrangement between Teton and Gabelli & Company is
that Teton will reimburse Gabelli & Company for any distribution costs in
excess of Gabelli & Company’s distribution revenues.  Conversely,
if the distribution revenues of Gabelli & Company exceed the costs, such
excess is reimbursed to Teton.  For the 2007 period Teton paid Gabelli
& Company $12,123 while during the 2006 period Gabelli & Company
reimbursed Teton $123,311, an increase of $135,434.  This increase was
due to expenses incurred by Gabelli & Company increasing more than the
revenues received by Gabelli & Company during the 2007 period as compared to
the 2006 period.




Expense
reimbursements were $169,991 for 2007, an increase of $54,923 from the prior
year period amount of $115,068.  The primary driver of this increase
has been higher expense for the Funds during 2007 as compared to 2006, which are
then paid by Teton to the Fund to maintain the Fund’s expense
limitations.  For 2007 and 2006, expense reimbursement represented
approximately 4% and 3%, respectively, of investment advisory
revenues.




Other: General and administrative
expenses attributable to Teton by GAMCO were $108,487 in the year ended December
31, 2007, a 38.0% increase from $78,632 in the year ended December 31, 2006,
primarily from an increase in accounting fees of $34,581.




Income
Taxes


The
effective tax rate was 34.5% for both 2007 and 2006.




Net
Income


Net
income for 2007 was $986,714 or $0.94 per fully diluted share versus $1,131,001
or $1.08 per fully diluted share for 2006.




21




Liquidity
and Capital Resources


Teton’s
current liquidity and capital needs include the costs of compensation to our
employees and other operating expenses such as rent and the service agreement
with GAMCO.  Our principal assets consist of cash equivalents, a U.S.
Treasury money market mutual fund that is invested 100% in U.S. treasuries
managed by Gabelli Funds, LLC, a subsidiary of GAMCO.




Summary
cash flow data is as follows:




2008
                                            
                                            
                                            2007
                                            
                                            
                                            2006(unaudited)Cash
      flows (used in) provided by from:Operating
      activities
                                            
                                            $
                                            78,283
                                            
                                            
                                            $
                                            1,012,441
                                            
                                            
                                            $
                                            (1,939,486
                                            )Financing
      activities
                                            
                                            
                                            (1,043,394
                                            )
                                            
                                            
                                            (1,848,060
                                            )
                                            
                                            
                                            -(Decrease)
      increase in cash equivalents
                                            
                                            
                                            (965,111
                                            )
                                            
                                            
                                            (835,619
                                            )
                                            
                                            
                                            (1,939,486
                                            )Cash
      equivalents at beginning of year
                                            
                                            
                                            1,725,461
                                            
                                            
                                            
                                            2,561,080
                                            
                                            
                                            
                                            4,500,566Cash
      equivalents at end of year
                                            
                                            $
                                            760,350
                                            
                                            
                                            $
                                            1,725,461
                                            
                                            
                                            $
                                            2,561,080





Cash and
liquidity requirements have historically been met through Teton’s operating
activities.  Additionally, the Company’s financing activities
represent payments of dividends to shareholders of excess cash.  The
dividends were paid out after analysis by management and the board of directors
of the Company’s operating cash needs and were only paid out when it was
determined that there were sufficient resources to fund the dividend without
impinging on the Company’s operations.  The Company does not currently
have any debt.  During 2006, the primary reason for the negative
operating cash flow was the decision to repay amounts owed to affiliates that
had accumulated over earlier periods.  During 2008, the Company has
adopted a policy of paying down any affiliate payable balances on a monthly
basis.  At December 31, 2008, we had cash equivalents of $760,350, a
decrease of $965,111 from the prior year-end.





Net cash
provided by operating activities was $78,283 for 2008, principally resulting
from net income of $575,690 offset in part by the decrease in payables to
affiliates of $441,512.  Net cash provided by operating activities was
$1,012,441 for 2007, principally from net income of $986,714 and an increase in
payable to affiliates of $142,114, partially offset by a decrease in
distribution costs payable of $224,072.




Net cash
used in financing activities was $1,043,394 for 2008, from the payment of $1.00
per share in dividends to the Company’s shareholders.  Net cash used
in financing activities was $1,848,060 for 2007, principally from the payment of
$1.75 per share in dividends to the Company’s shareholders.




Market
Risk




Equity
Price Risk





The
Company earns substantially all of its revenue as advisory fees from our Mutual
Fund assets.  Such fees represent a percentage of assets under
management and the majority of these assets are in equity
investments.  Accordingly, since revenues are proportionate to the
value of those investments, a substantial increase or decrease in equity markets
overall will have a corresponding effect on the Company's revenues.


Interest
Rate Risk




Our
exposure to interest rate risk results, principally, from reinvestment risk
associated with our investment of excess cash in the Gabelli U.S. Treasury Money
Market Fund, which invests 100% in U.S. treasury bills.  This
investment is primarily short term in nature, and the fair value of this
investment generally approximates market value.  The Company does not
have any other investments aside from its investment in the Gabelli U.S.
Treasury Money Market Fund.




Commitments
and Contingencies




We are
obligated to make future payments under various contracts such as operating
lease agreements.  The following table sets forth our significant
contractual cash obligations as of December 31, 2008:




(unaudited)
                                                  
                                                  Total
                                                  
                                                  
                                                  2009
                                                  
                                                  
                                                  2010
                                                  
                                                  
                                                  2011
                                                  
                                                  
                                                  2012
                                                  
                                                  
                                                  
                                                  2013
                                                  
                                                  
                                                  ThereafterContractual
      Obligations:Non-cancelable
      operatinglease
      obligation
                                                  
                                                  $
                                                  289,948
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  22,304
                                                  
                                                  
                                                  $
                                                  -Total
                                                  
                                                  $
                                                  289,948
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  66,911
                                                  
                                                  
                                                  $
                                                  22,304
                                                  
                                                  
                                                  $
                                                  -




Off-Balance
Sheet Arrangements




Gabelli
& Company, a subsidiary of GAMCO, distributes the Westwood Funds pursuant to
distribution agreements with each fund.  Under the distribution
agreements, Teton reimburses Gabelli & Company for any expenses incurred by
Gabelli & Company for acting as a distributor of the Westwood Funds that
exceed the 12b-1 fees earned by Gabelli & Company.  These payments
can then be recovered from Gabelli & Company to the extent that they were
previously paid to Gabelli & Company.  At December 31, 2008 and
December 31, 2007, the amounts receivable from Gabelli & Company were
$260,360 and $302,705, respectively.




22




Critical
Accounting Policies




The
preparation of the financial statements included in this document requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying footnotes.  Estimates and
assumptions about future events and their effects cannot be perceived with
certainty.  Estimates may change as new events occur, as more
experience is acquired, as additional information becomes available and as
Teton’s operating environment changes.  Actual results could differ
from estimates.




Teton
believes the following are the most critical accounting policies used in the
preparation of Teton’s financial statements as well as the significant judgments
and uncertainties affecting the application of these policies.




Revenue
Recognition




The
responsibility of estimating fair value of the net assets in the Funds used to
calculate the investment advisory fees is subject to pricing and fair value
procedures approved by the Board of Trustees of the Funds.  An
unaffiliated third party administrator determines the daily fair value of fund
assets using independent pricing services.  When the independent
pricing service cannot provide a valuation for a particular security, the
advisor will provide the fair value in accordance with the Fund’s fair value
procedures.  At December 31, 2008, the percentage of net assets fair
valued by the advisor was less than 1% of net assets of the
Funds.  Investment advisory fees are computed daily, by the
unaffiliated third party administrator for the Funds, based on average net
assets and amounts receivable are included in investment advisory fees
receivable in the statement of financial condition. These fees are recognized as
earned in the period in which the service is provided and paid in the month
after they are earned.  Teton has agreements with three of the Funds
to reimburse expenses in order to maintain Fund expenses at a certain
level.  Payments to the Funds under these agreements are recorded on a
gross basis, as expenses in the statements of income as expense reimbursements,
and do not change the revenue recognition policy for these Funds.





Distribution
Costs





The
Company incurs certain promotion and distribution costs, which are expensed as
incurred, principally related to the sale of shares of open-end mutual
funds.





Sub-advisory
fees





Sub-advisory
fees are based on predetermined percentages of net revenues (after certain
expenses) of the individual funds and are recognized as expenses as the related
services are performed.  The sub-advisory fees are paid in the month
following when they are earned.




Income
Taxes




Income
tax expense is based on pre-tax financial accounting income, including
adjustments made for the recognition or derecognition related to uncertain tax
positions.  The recognition or derecognition of income tax expense related
to uncertain tax positions is determined under the guidance as prescribed by
FASB Interpretation No. 48 “Accounting For Uncertainty in Income Taxes” (“FIN
48”).  Deferred tax assets and liabilities are recognized for the future
tax attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. 
Deferred tax assets and liabilities are measured using enacted tax rates
expected to be recovered or concluded.  The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in earnings in the period
that includes the enactment date.




Stock
Based Compensation





Upon
completion of the spin-off on March 20, 2009, Teton issued to Mr. Galluccio an
amount of class A restricted stock equal to 20% of our outstanding common stock
(inclusive of the restricted stock issuance) on the date of the
spin-off.  Such award will be for 260,849 RSAs.  Teton will
apply Statement 123 (R) “Share-Based Payment” (“Statement 123 (R)”) upon
issuance of the restricted stock.  Teton will expense the restricted
stock award over the vesting period of the award, 30% at the end of three years
from date of employment, which is July 18, 2008, and 70% at the end of 5 years
from date of employment.





The fair
value of the award will be determined based on the value of the shares on the
date of the grant upon spin-off.  The Company will calculate a value
for the shares to be spun-off to its shareholders using a market comparable
approach.  This value will be used to determine the value of the RSAs
that are being granted to Mr. Galluccio.





Currently,
we have estimated the fair value based on a comparison with recent values for
transactions involving investment advisory assignments.  More
specifically, we looked at the price paid in March of 2008 to acquire an
investment advisory contract.  The Company believes that this is the
most comparable basis for fair value given the similarity of such contracts to
the current business of Teton.  Teton has investment advisory
contracts with the funds that it manages.  In large part, the
portfolio management expertise resides in GAMCO or in the subadvisory
relationships.  The value of Teton resides in the advisory contract,
making it highly analogous to the March 2008 transaction.  We believe
that this is a more accurate measure of fair value than a discounted cash flow
model would produce.  The Company’s year-end assets under management
were applied to the 80 basis point rate at which a recent transaction was
executed.  This value was further adjusted by the relative level of
advisory fee rates between the Company and the market
transaction.  The average advisory fee at Teton is 90 basis point
versus a fee of 94 basis points for the market
transaction.  Consequently, the assets under management of Teton
(approximately $375 million) were applied to the 80 basis point market
level.  Such product was multiplied by the ratio of fees under the
contract (90/94).  The fair value of the RSA grant will be calculated
as 20% of the total given the percentage interest of the award.  We
considered using publicly traded asset managers for fair value
multiples.  However, we found those businesses to be non-comparable
relative to Teton at the current time given the breadth, depth, or resources of
the publicly traded asset managers.  If these companies were used as
comparables for fair value without substantial adjustment, the fair value and
the value of the RSA grant would have been higher.  Consequently, the
Company believes that the fair value used is appropriate.





Based on
the estimated fair value, the RSAs will be expensed over the time periods as
follows on a pro forma basis (unaudited):





2009
                                                
                                                
                                                2010
                                                
                                                
                                                2011
                                                
                                                
                                                2012
                                                
                                                
                                                2013
                                                
                                                
                                                Total1st
      Quarter
                                                
                                                $
                                                34,410
                                                
                                                
                                                $
                                                34,410
                                                
                                                
                                                $
                                                34,410
                                                
                                                
                                                $
                                                20,073
                                                
                                                
                                                $
                                                20,073
                                                
                                                
                                                $2nd
      Quarter
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                20,073
                                                
                                                
                                                
                                                20,0733rd
      Quarter
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                20,073
                                                
                                                
                                                
                                                20,0734th
      Quarter
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                34,410
                                                
                                                
                                                
                                                20,073
                                                
                                                
                                                
                                                20,073Full
      Year
                                                
                                                $
                                                137,640
                                                
                                                
                                                $
                                                137,640
                                                
                                                
                                                $
                                                137,640
                                                
                                                
                                                $
                                                80,292
                                                
                                                
                                                $
                                                80,292
                                                
                                                
                                                $
                                                573,504




23




The
following tables illustrates what the statement of income and financial
condition would be on a pro forma basis if the RSAs had been issued at January
1, 2007:





Statement
      of Income (unaudited)For
      the Twelve Months EndedActual
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  Pro
      FormaDecember
      31,
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  December
      31,2007
                                                                                                  
                                                                                                  
                                                                                                  Adjustments
                                                                                                  
                                                                                                  
                                                                                                  2007RevenuesInvestment
      advisory fees
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  3,841,410
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  3,841,410Other
      income
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  114,315
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  114,315Total
      revenues
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,955,725
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,955,725ExpensesMarketing
      and administrative fees
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  854,003
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  854,003Sub-advisory
      fees
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  840,065
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  840,065Distribution
      costs and expense reimbursements
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  366,882
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  366,882Compensation
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  278,772
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  137,640
                                                                                                  (1)
                                                                                                  
                                                                                                  
                                                                                                  416,412Other
      operating expenses
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  108,487
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  108,487Total
      expenses
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  2,448,209
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  137,640
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  2,585,849Income
      before income taxes
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,507,516
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (137,640
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  1,369,876Income
      taxes
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  520,802
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (47,551
                                                                                                  )
      (2)
                                                                                                  
                                                                                                  
                                                                                                  473,251Net
      income
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  986,714
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  (90,089
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  896,625Net
      income per share:Basic
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.94
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.85Diluted
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.94
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.83Weighted
      average shares outstanding:Basic
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,050,715
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,050,715Diluted
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,050,715
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  31,302
                                                                                                  (3)
                                                                                                  
                                                                                                  
                                                                                                  1,082,017





Footnotes:




(1)
            Compensation
      expense for the twelve months ended December 31, 2007 as if the 20% RSA
      grant was made on January 1, 2007.




(2)
            Income
      tax benefit associated with the adjustment
  above.




(3)
            Additional
      diluted shares for the twelve months ended December 31, 2007 associated
      with the post spin grant of 260,849 RSAs assuming that it occurred on
      January 1, 2007.  The additional diluted shares are calculated
      using the treasury stock method and reflect the vesting characteristics of
      30% at the end of three years and 70% at the end of five
      years.  The pro forma diluted EPS calculation reflects the
      application of the treasury stock method by adding to the share
      computation all of the granted shares but reducing the share computation
      by considering unrecognized future compensation cost (relating to this
      grant) as proceeds available for stock repurchase on a weighted average
      basis.




24




Statement
      of Income (unaudited)For
      the Twelve Months EndedActual
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  Pro
      FormaDecember
      31,
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  December
      31,2008
                                                                                                  
                                                                                                  
                                                                                                  Adjustments
                                                                                                  
                                                                                                  
                                                                                                  2008RevenuesInvestment
      advisory fees
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  3,792,716
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  3,792,716Other
      income
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  35,318
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  35,318Total
      revenues
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,828,034
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,828,034ExpensesMarketing
      and administrative fees
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  830,802
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  830,802Sub-advisory
      fees
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  767,116
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  767,116Distribution
      costs and expense reimbursements
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  425,799
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  425,799Compensation
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  567,358
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  137,640
                                                                                                  (1)
                                                                                                  
                                                                                                  
                                                                                                  704,998Other
      operating expenses
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  402,618
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  402,618Total
      expenses
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  2,993,693
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  137,640
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  3,131,333Income
      before income taxes
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  834,341
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (137,640
                                                                                                  )
                                                                                                  
                                                                                                  
                                                                                                  696,701Income
      taxes
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  258,651
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  (47,362
                                                                                                  )
      (2)
                                                                                                  
                                                                                                  
                                                                                                  211,289Net
      income
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  575,690
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  (90,278
                                                                                                  )
                                                                                                  
                                                                                                  $
                                                                                                  485,412Net
      income per share:Basic
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.55
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.47Diluted
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.55
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  $
                                                                                                  0.43Weighted
      average shares outstanding:Basic
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,043,394
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  -
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,043,394Diluted
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  1,043,394
                                                                                                  
                                                                                                  
                                                                                                  
                                                                                                  93,906
                                                                                                  (3)
                                                                                                  
                                                                                                  
                                                                                                  1,137,300





Footnotes:




(1)
            Compensation
      expense for the twelve months ended December 31, 2008 as if the 20% RSA
      grant was made on January 1, 2007.




(2)
            Income
      tax benefit associated with the adjustment
  above.




(3)
            Additional
      diluted shares for the twelve months ended December 31, 2008 associated
      with the post spin grant of 260,849 RSAs assuming that it occurred on
      January 1, 2007.  The additional diluted shares are calculated
      using the treasury stock method and reflect the vesting characteristics of
      30% at the end of three years and 70% at the end of five
      years.  The pro forma diluted EPS calculation reflects the
      application of the treasury stock method by adding to the share
      computation all of the granted shares but reducing the share computation
      by considering unrecognized future compensation cost (relating to this
      grant) as proceeds available for stock repurchase on a weighted average
      basis.




25




Statement
      of Financial Condition (unaudited)Actual
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  Pro
      FormaDecember
      31, 2008
                                                                                                                  
                                                                                                                  Adjustments
                                                                                                                  
                                                                                                                  December
      31, 2008ASSETSCash
      equivalents
                                                                                                                  
                                                                                                                  $
                                                                                                                  760,350
                                                                                                                  
                                                                                                                  $
                                                                                                                  -
                                                                                                                  
                                                                                                                  $
                                                                                                                  760,350Investment
      advisory fees receivable
                                                                                                                  
                                                                                                                  
                                                                                                                  316,985
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  316,985Deferred
      tax asset
                                                                                                                  
                                                                                                                  
                                                                                                                  33,890
                                                                                                                  
                                                                                                                  
                                                                                                                  94,913
                                                                                                                  (1)
                                                                                                                  
                                                                                                                  128,803Income
      tax receivable
                                                                                                                  
                                                                                                                  
                                                                                                                  17,906
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  17,906Receivable
      from affiliates
                                                                                                                  
                                                                                                                  
                                                                                                                  4,592
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  4,592Identifiable
      intangible asset
                                                                                                                  
                                                                                                                  
                                                                                                                  146,400
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  146,400Other
      assets (net of accumulated depreciation of $1,028)
                                                                                                                  
                                                                                                                  
                                                                                                                  48,837
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  48,837Total
      assets
                                                                                                                  
                                                                                                                  $
                                                                                                                  1,328,960
                                                                                                                  
                                                                                                                  
                                                                                                                  94,913
                                                                                                                  
                                                                                                                  $
                                                                                                                  1,423,873LIABILITIES
      AND STOCKHOLDERS' EQUITYPayable
      to affiliates
                                                                                                                  
                                                                                                                  $
                                                                                                                  227,855
                                                                                                                  
                                                                                                                  $
                                                                                                                  -
                                                                                                                  
                                                                                                                  $
                                                                                                                  227,855Distribution
      costs payable
                                                                                                                  
                                                                                                                  
                                                                                                                  35,186
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  35,186Professional
      fees payable
                                                                                                                  
                                                                                                                  
                                                                                                                  282,626
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  282,626Accrued
      expenses and other liabilities
                                                                                                                  
                                                                                                                  
                                                                                                                  3,447
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  3,447Total
      liabilities
                                                                                                                  
                                                                                                                  
                                                                                                                  549,114
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  549,114Stockholders'
      equity:Class
      A Common Stock, $.001 par value; 1,200,000 sharesauthorized;
      259,394 shares issued and outstanding
                                                                                                                  
                                                                                                                  
                                                                                                                  259
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  259Class
      B Common Stock, $.001 par value; 800,000 sharesauthorized;
      784,000 shares issued and outstanding
                                                                                                                  
                                                                                                                  
                                                                                                                  792
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  792Additional
      paid-in capital
                                                                                                                  
                                                                                                                  
                                                                                                                  296,911
                                                                                                                  
                                                                                                                  
                                                                                                                  275,279
                                                                                                                  (2)
                                                                                                                  
                                                                                                                  572,190Treasury
      stock, class B, at cost (8,000 shares)
                                                                                                                  
                                                                                                                  
                                                                                                                  (8,120
                                                                                                                  )
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  (8,120
                                                                                                                  )Retained
      Earnings
                                                                                                                  
                                                                                                                  
                                                                                                                  490,004
                                                                                                                  
                                                                                                                  
                                                                                                                  (180,366
                                                                                                                  )
      (3)
                                                                                                                  
                                                                                                                  309,638Total
      stockholders' equity
                                                                                                                  
                                                                                                                  
                                                                                                                  779,846
                                                                                                                  
                                                                                                                  
                                                                                                                  94,913
                                                                                                                  
                                                                                                                  
                                                                                                                  874,759Total
      liabilities and stockholders' equity
                                                                                                                  
                                                                                                                  $
                                                                                                                  1,328,960
                                                                                                                  
                                                                                                                  $
                                                                                                                  94,913
                                                                                                                  
                                                                                                                  $
                                                                                                                  1,423,873





Footnotes:




(1)
            Income
      tax benefit associated with the compensation expense for the full years
      2007 and 2008 as if the 20% RSA grant were made on January 1,
      2007.




(2)
            $275,279
      addition to equity as a result of the equity award as if the RSA grant had
      been made on January 1, 2007.




(3)
            Net
      loss of $180,366 as a result of the pro forma adjustments on the statement
      of income for the full years 2007 and
2008.




Changes
in accounting policy




Teton has
adopted FASB Statement No. 157, “Fair Value Measurements” (“Statement
157”).  Statement 157 provides guidance for using fair value to
measure assets and liabilities.  Statement 157 provides guidance to
companies about the extent of which to measure assets and liabilities at fair
value, the information used to measure fair value, and the effect of fair value
measurements on earnings. Statement 157 applies whenever other standards require
(or permit) assets or liabilities to be measured at fair value. Statement 157
does not expand the use of fair value in any new
circumstances.  Statement 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and for interim
periods within those fiscal years.  The Company adopted Statement 157
on January 1, 2008.  Although the impact of adopting Statement 157 is
immaterial to the Company’s financial statements, Statement 157 required
additional disclosures within the footnotes to the financial
statements.




Recent
Accounting Developments




In April
2008, the FASB issued FASB Statement No. 142-3, "Determination of the
Useful Life of Intangible Assets" ("Statement 142-3") which amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
"Goodwill and Other Intangible Assets".Statement 142-3
is effective for financial statements issued for fiscal years beginning
after December 15, 2008 and interim periods within those fiscal years. Early
adoption is prohibited.  The Company plans to adopt this statement on
January 1, 2009.  Statement 142-3 is applicable to the Company;
however, the effect of its adoption is not expected to be material.





Seasonality
and Inflation




We do not
believe our operations are subject to significant seasonal fluctuations. We do
not believe inflation will significantly affect our compensation costs, as they
are substantially variable in nature. However, the rate of inflation may affect
our expenses such as information technology and occupancy costs. To the extent
inflation results in rising interest rates and has other effects upon the
securities markets, it may adversely affect our financial position and results
of operations by reducing our AUM, revenues or otherwise.







ITEM
7A:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Reference
is made to the information contained under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Market
Risk."




26




ITEM
8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





The
financial statements required by this Item are included herein, commencing on
Page F-1 of this report.




TETON
ADVISORS, INC.


INDEX
TO FINANCIAL STATEMENTS




PageReport
      of Independent Registered Public Accounting Firm
                            F-2Financial
      Statements:Statements
      of Income for the years ended December 31, 2008,
      2007 and 2006
                            F-3Statements
      of Financial Condition at December 31, 2008 and 2007
                            F-4Statements
      of Stockholders' Equity for the years ended December 31, 2008, 2007
      and 2006
                            F-5Statements
      of Cash Flows for the years ended December 31, 2008, 2007 and
      2006
                            F-6Notes
      to Financial Statements
                            F-7




All
schedules for which provision is made in the applicable accounting regulations
of the Securities and Exchange Commission that are not required under the
related instructions or are inapplicable have been omitted.




F-1





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






The Board
of Directors and Stockholders


Teton
Advisors, Inc.




We have
audited the accompanying statements of financial condition of Teton Advisors,
Inc. (“Teton”) as of December 31, 2008 and 2007, and the related statements of
income, stockholders’ equity, and cash flows for each of the three years in the
period ended December 31, 2008.  These financial statements are the
responsibility of Teton’s management.  Our responsibility is to
express an opinion on these financial statements based on our
audits.




We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  We were
not engaged to perform an audit of the Company’s internal control over financial
reporting.  Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits provide
a reasonable basis for our opinion.




In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Teton Advisors, Inc. at December
31, 2008 and 2007, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2008, in conformity with
U.S. generally accepted accounting principles.








ERNST
& YOUNG LLP




New York,
New York


March 31,
2009










TETON
ADVISORS, INC.


STATEMENTS
OF INCOME







Year
      ended December 31,2008
                                                  
                                                  
                                                  2007
                                                  
                                                  
                                                  2006RevenuesInvestment
      advisory fees
                                                  
                                                  
                                                  $
                                                  3,792,716
                                                  
                                                  
                                                  $
                                                  3,841,410
                                                  
                                                  
                                                  $
                                                  3,676,139Other
      income
                                                  
                                                  
                                                  
                                                  35,318
                                                  
                                                  
                                                  
                                                  114,315
                                                  
                                                  
                                                  
                                                  230,806Total
      revenues
                                                  
                                                  
                                                  
                                                  3,828,034
                                                  
                                                  
                                                  
                                                  3,955,725
                                                  
                                                  
                                                  
                                                  3,906,945ExpensesMarketing
      and administrative fees
                                                  
                                                  
                                                  
                                                  830,802
                                                  
                                                  
                                                  
                                                  854,003
                                                  
                                                  
                                                  
                                                  819,296Sub-advisory
      fees
                                                  
                                                  
                                                  
                                                  767,116
                                                  
                                                  
                                                  
                                                  840,065
                                                  
                                                  
                                                  
                                                  843,628Distribution
      costs and expense reimbursements
                                                  
                                                  
                                                  
                                                  425,799
                                                  
                                                  
                                                  
                                                  366,882
                                                  
                                                  
                                                  
                                                  130,368Compensation
                                                  
                                                  
                                                  
                                                  567,358
                                                  
                                                  
                                                  
                                                  278,772
                                                  
                                                  
                                                  
                                                  307,332Other
      operating expenses
                                                  
                                                  
                                                  
                                                  402,618
                                                  
                                                  
                                                  
                                                  108,487
                                                  
                                                  
                                                  
                                                  78,632Total
      expenses
                                                  
                                                  
                                                  
                                                  2,993,693
                                                  
                                                  
                                                  
                                                  2,448,209
                                                  
                                                  
                                                  
                                                  2,179,256Income
      before income taxes
                                                  
                                                  
                                                  
                                                  834,341
                                                  
                                                  
                                                  
                                                  1,507,516
                                                  
                                                  
                                                  
                                                  1,727,689Income
      taxes
                                                  
                                                  
                                                  
                                                  258,651
                                                  
                                                  
                                                  
                                                  520,802
                                                  
                                                  
                                                  
                                                  596,688Net
      income
                                                  
                                                  
                                                  $
                                                  575,690
                                                  
                                                  
                                                  $
                                                  986,714
                                                  
                                                  
                                                  $
                                                  1,131,001Net
      income per share:Basic
                                                  
                                                  
                                                  $
                                                  0.55
                                                  
                                                  
                                                  $
                                                  0.94
                                                  
                                                  
                                                  $
                                                  1.08Diluted
                                                  
                                                  
                                                  $
                                                  0.55
                                                  
                                                  
                                                  $
                                                  0.94
                                                  
                                                  
                                                  $
                                                  1.08Weighted
      average shares outstanding:Basic
                                                  
                                                  
                                                  
                                                  1,043,394
                                                  
                                                  
                                                  
                                                  1,050,715
                                                  
                                                  
                                                  
                                                  1,051,394Diluted
                                                  
                                                  
                                                  
                                                  1,043,394
                                                  
                                                  
                                                  
                                                  1,050,715
                                                  
                                                  
                                                  
                                                  1,051,394Dividends
      declared
                                                  
                                                  
                                                  $
                                                  1.00
                                                  
                                                  
                                                  $
                                                  0.45
                                                  
                                                  
                                                  $
                                                  1.30




See accompanying
notes.





F-3




TETON
ADVISORS, INC.


STATEMENTS
OF FINANCIAL CONDITION








December
      31,2008
                                          
                                          
                                          2007ASSETSCash
      equivalents
                                          
                                          $
                                          760,350
                                          
                                          
                                          $
                                          1,725,461Investment
      advisory fees receivable
                                          
                                          
                                          316,985
                                          
                                          
                                          
                                          321,249Deferred
      tax asset
                                          
                                          
                                          33,890
                                          
                                          
                                          
                                          -Income
      tax receivable
                                          
                                          
                                          17,906
                                          
                                          
                                          
                                          -Receivable
      from affiliates
                                          
                                          
                                          4,592
                                          
                                          
                                          
                                          -Identifiable
      intangible asset
                                          
                                          
                                          146,400
                                          
                                          
                                          
                                          -Other
      assets (net of accumulated depreciation of $1,028 and $0,
      respectively)
                                          
                                          
                                          48,837
                                          
                                          
                                          
                                          19,626Total
      assets
                                          
                                          $
                                          1,328,960
                                          
                                          
                                          $
                                          2,066,336LIABILITIES
      AND STOCKHOLDERS' EQUITYPayable
      to affiliates
                                          
                                          $
                                          227,855
                                          
                                          
                                          $
                                          669,367Income
      taxes payable
                                          
                                          
                                          -
                                          
                                          
                                          
                                          13,629Compensation
      payable
                                          
                                          
                                          -
                                          
                                          
                                          
                                          36,681Distribution
      costs payable
                                          
                                          
                                          35,186
                                          
                                          
                                          
                                          48,317Professional
      fees payable
                                          
                                          
                                          282,626
                                          
                                          
                                          
                                          40,688Accrued
      expenses and other liabilities
                                          
                                          
                                          3,447
                                          
                                          
                                          
                                          10,104Total
      liabilities
                                          
                                          
                                          549,114
                                          
                                          
                                          
                                          818,786Stockholders'
      equity:Class
      A Common Stock, $.001 par value; 1,200,000 sharesauthorized;
      259,394 shares issued and outstanding
                                          
                                          
                                          259
                                          
                                          
                                          
                                          259Class
      B Common Stock, $.001 par value; 800,000 sharesauthorized;
      784,000 shares issued and outstanding
                                          
                                          
                                          792
                                          
                                          
                                          
                                          792Additional
      paid-in capital
                                          
                                          
                                          296,911
                                          
                                          
                                          
                                          296,911Treasury
      stock, class B, at cost (8,000 shares)
                                          
                                          
                                          (8,120
                                          )
                                          
                                          
                                          (8,120
                                          )Retained
      earnings
                                          
                                          
                                          490,004
                                          
                                          
                                          
                                          957,708Total
      stockholders' equity
                                          
                                          
                                          779,846
                                          
                                          
                                          
                                          1,247,550Total
      liabilities and stockholders' equity
                                          
                                          $
                                          1,328,960
                                          
                                          
                                          $
                                          2,066,336


See accompanying
notes.









TETON
ADVISORS, INC.


STATEMENTS
OF STOCKHOLDERS' EQUITY







Common
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Common
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  AdditionalStock
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Stock
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Paid
      in
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Treasury
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  RetainedClass
      A
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Class
      B
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Capital
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Stock
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Earnings
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  TotalBalance
      at December 31, 2005
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  259
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  792
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  296,911
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  679,933
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  977,895Net
      income
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  1,131,001
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  1,131,001Dividends
      declared
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (1,366,811
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (1,366,811
                                                                                                                                  )Balance
      at December 31, 2006
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  259
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  792
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  296,911
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  444,123
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  742,085Net
      income
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  986,714
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  986,714Dividends
      declared and paid
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (473,129
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (473,129
                                                                                                                                  )Stock
      buyback
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (8,120
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (8,120
                                                                                                                                  )Balance
      at December 31, 2007
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  259
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  792
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  296,911
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  (8,120
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  957,708
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  1,247,550Net
      income
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  575,690
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  575,690Dividends
      declared and paid
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  -
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (1,043,394
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  (1,043,394
                                                                                                                                  )Balance
      at December 31, 2008
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  259
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  792
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  296,911
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  (8,120
                                                                                                                                  )
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  490,004
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  779,846


See
accompanying notes.









TETON
ADVISORS, INC.


STATEMENTS
OF CASH FLOWS





Year
      ended December 31,2008
                                                                                              
                                                                                              2007
                                                                                              
                                                                                              
                                                                                              2006Operating
      activitiesNet
      income
                                                                                              $
                                                                                              575,690
                                                                                              
                                                                                              $
                                                                                              986,714
                                                                                              
                                                                                              
                                                                                              $
                                                                                              1,131,001Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Depreciation
                                                                                              
                                                                                              1,028
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -Deferred
      income tax
                                                                                              
                                                                                              (33,890
                                                                                              )
                                                                                              
                                                                                              13,648
                                                                                              
                                                                                              
                                                                                              
                                                                                              (11,607
                                                                                              )Acquisition
      of identifiable intangible asset
                                                                                              
                                                                                              (183,000
                                                                                              )
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -Amortization
      of identifiable intangible asset
                                                                                              
                                                                                              36,600
                                                                                              
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -(Increase)
      decrease in operating assets:Investment
      advisory fees receivable
                                                                                              
                                                                                              4,264
                                                                                              
                                                                                              
                                                                                              (20,229
                                                                                              )
                                                                                              
                                                                                              
                                                                                              6,368Income
      tax receivable
                                                                                              
                                                                                              (17,906
                                                                                              )
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              
                                                                                              -Receivable
      from affiliates
                                                                                              
                                                                                              (4,592
                                                                                              )
                                                                                              
                                                                                              40,582
                                                                                              
                                                                                              
                                                                                              
                                                                                              (36,893
                                                                                              )Other assets
                                                                                              
                                                                                              (30,239
                                                                                              )
                                                                                              
                                                                                              20,248
                                                                                              
                                                                                              
                                                                                              
                                                                                              (8,967
                                                                                              )Increase
      (decrease) in operating liabilities:Payable
      to affiliates
                                                                                              
                                                                                              (441,512
                                                                                              )
                                                                                              
                                                                                              142,114
                                                                                              
                                                                                              
                                                                                              
                                                                                              (3,102,034
                                                                                              )Income
      taxes payable
                                                                                              
                                                                                              (13,629
                                                                                              )
                                                                                              
                                                                                              29,654
                                                                                              
                                                                                              
                                                                                              
                                                                                              (21,705
                                                                                              )Compensation
      payable
                                                                                              
                                                                                              (36,681
                                                                                              )
                                                                                              
                                                                                              (6,892
                                                                                              )
                                                                                              
                                                                                              
                                                                                              43,573Distribution
      costs payable
                                                                                              
                                                                                              (13,131
                                                                                              )
                                                                                              
                                                                                              (224,072
                                                                                              )
                                                                                              
                                                                                              
                                                                                              78,824Professional
      fees payable
                                                                                              
                                                                                              241,938
                                                                                              
                                                                                              
                                                                                              22,188
                                                                                              
                                                                                              
                                                                                              
                                                                                              (83,556
                                                                                              )Accrued
      expenses and other liabilities
                                                                                              
                                                                                              (6,657
                                                                                              )
                                                                                              
                                                                                              8,486
                                                                                              
                                                                                              
                                                                                              
                                                                                              65,510Total
      adjustments
                                                                                              
                                                                                              (497,407
                                                                                              )
                                                                                              
                                                                                              25,727
                                                                                              
                                                                                              
                                                                                              
                                                                                              (3,070,487
                                                                                              )Net
      cash provided by (used in) operating activities
                                                                                              
                                                                                              78,283
                                                                                              
                                                                                              
                                                                                              1,012,441
                                                                                              
                                                                                              
                                                                                              
                                                                                              (1,939,486
                                                                                              )Financing
      activitiesDividends
      paid
                                                                                              
                                                                                              (1,043,394
                                                                                              )
                                                                                              
                                                                                              (1,839,940
                                                                                              )
                                                                                              
                                                                                              
                                                                                              -Stock
      buyback
                                                                                              
                                                                                              -
                                                                                              
                                                                                              
                                                                                              (8,120
                                                                                              )
                                                                                              
                                                                                              
                                                                                              -Net
      cash used in financing activities
                                                                                              
                                                                                              (1,043,394
                                                                                              )
                                                                                              
                                                                                              (1,848,060
                                                                                              )
                                                                                              
                                                                                              
                                                                                              -Net
      decrease in cash and cash equivalents
                                                                                              
                                                                                              (965,111
                                                                                              )
                                                                                              
                                                                                              (835,619
                                                                                              )
                                                                                              
                                                                                              
                                                                                              (1,939,486
                                                                                              )Cash
      equivalents at beginning of year
                                                                                              
                                                                                              1,725,461
                                                                                              
                                                                                              
                                                                                              2,561,080
                                                                                              
                                                                                              
                                                                                              
                                                                                              4,500,566Cash
      equivalents at end of year
                                                                                              $
                                                                                              760,350
                                                                                              
                                                                                              $
                                                                                              1,725,461
                                                                                              
                                                                                              
                                                                                              $
                                                                                              2,561,080Supplemental
      disclosures of cash flow information:Cash
      paid for income taxes
                                                                                              $
                                                                                              379,151
                                                                                              
                                                                                              $
                                                                                              477,500
                                                                                              
                                                                                              
                                                                                              $
                                                                                              599,167




See accompanying
notes.









A.  Significant
Accounting Policies




Basis
of Presentation




Teton
Advisors, Inc. (“Teton” or the “Company”) was formed in Texas as Teton Advisers
LLC in December 1994.  On March 2, 1998, Teton Advisers LLC was
renamed Gabelli Advisors LLC and, on the same date, merged into Gabelli
Advisers, Inc., a Delaware corporation.  On January 25, 2008, Gabelli
Advisers, Inc. was renamed Teton Advisors, Inc.  Prior to the March
20, 2009 spin-off, the Company was a 42%-owned subsidiary of GAMCO Investors,
Inc. (“GAMCO”).  The Company serves as the investment advisor of the
GAMCO Westwood Funds (“Funds”, individually “Fund”).  The Company’s
capital structure consists of 1,200,000 shares authorized of Class A common
stock with one vote per share and 800,000 shares authorized of Class B common
stock with ten votes per share.  At the date of incorporation, 200,000
shares of the Class A shares were issued to Westwood Management Corporation
(“WMC”) and 800,000 shares of Class B shares were issued to GAMCO and its
affiliates.  In addition, certain shareholders exercised warrants to
purchase 59,394 shares of the Class A common stock for $5 per share on December
31, 2001.




Use
of Estimates




The
preparation of the financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes.  Actual results could differ from those
estimates.





Nature
of Operations




Teton is
a registered investment adviser under the Investment Advisers Act of
1940.  Refer to Revenue Recognition section within Note A for
additional discussion of Teton’s business.  The Company receives the
majority of its revenues from advisory contracts with the seven Funds for which
it serves as the Investment Adviser.  The contracts are subject to
renewal annually by (i) the Board of Trustees or (ii) the fund’s shareholders
and, in either case, the vote of a majority of the trustees who are not parties
to the agreement or “interested persons” of any such party, within the meaning
of the Investment Company Act of 1940.  The fees for serving as
Investment Adviser range from 0.60% to 1.00% of the average daily assets under
management.  The fees are calculated daily and paid to the Company on
a monthly basis.  Each Fund may terminate its investment management
agreement at any time upon 60 days’ written notice by (i) a vote of the majority
of the Board of Trustees cast in person at a meeting called for the purpose of
voting on such termination or (ii) a vote at a meeting of shareholders of the
lesser of either 67% of the voting shares represented in person or by proxy or
50% of the outstanding voting shares of such Fund. Each investment management
agreement automatically terminates in the event of its assignment, as defined in
the Investment Company Act.  The Company may terminate an investment
management agreement without penalty on 60 days’ written notice.  The
Company’s principal market is in the United States.




Cash
Equivalents




Cash
equivalents consist of affiliated money market mutual funds which are highly
liquid.




Revenue
Recognition




The
Company’s revenues are derived primarily from investment advisory
fees.




Investment
advisory fees are directly influenced by the level and mix of assets under
management (“AUM”) as fees are derived from a contractually-determined
percentage of AUM for the seven Funds.  Advisory fees from the
open-end mutual funds are computed daily based on average net assets, accrued
monthly as earned and amounts receivable are included in investment advisory
fees receivable in the statements of financial condition.  The Company
derives approximately 99% of its total revenues from investment advisory
fees.  These revenues vary depending upon the level of sales compared
with redemptions, financial market conditions and the fee structure for
AUM.  Revenues derived from the equity-oriented portfolios generally
have higher management fee rates than fixed income portfolios.




Additionally,
Teton also has interest income from investments in U.S. treasury money market
mutual funds, which is accrued as earned and included in other income in the
statements of income.





Distribution
Costs





The
Company incurs certain promotion and distribution costs, which are expensed as
incurred, principally related to the sale of shares of open-end mutual funds and
are included in distribution costs payable in the statements of financial
condition.


Sub-advisory
fees





Sub-advisory
fees are based on predetermined percentages of net revenues (after certain
expenses) of the individual funds and are recognized as expenses as the related
services are performed.  The sub-advisory fees are paid in the month
following when they are earned and are included in payable to affiliates on the
statements of financial condition.





Depreciation




Fixed
assets, with net book value of$13,906 and $0 at
December 31, 2008 and 2007, respectively, which are included in other
assets, are recorded at cost and depreciated using the straight-line method over
their estimated useful lives.





Income
Taxes




Income
tax expense is based on pre-tax financial accounting income, including
adjustments made for the recognition or derecognition related to uncertain tax
positions in accordance with Financial Accounting Standards Board (“FASB”)
Statement No. 109, “Accounting for Income Taxes” ("Statement 109").  The
recognition or derecognition of income tax expense related to uncertain tax
positions is determined under the guidance as prescribed by FASB Interpretation
No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  The
Company adopted this interpretation on January 1, 2007.  There was no
impact from the adoption of this interpretation.  Deferred tax assets
and liabilities are recognized for the future tax attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.  Deferred tax assets and
liabilities are measured using enacted tax rates expected to be recovered or
concluded.  The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in earnings in the period that includes the enactment
date.




Fair
Values of Financial Instruments




The
carrying amount of all assets and liabilities in the statements of financial
condition that qualify as financial instruments approximates their fair
values.




F-7




Earnings
Per Share




Net
income per share is computed in accordance with FASB Statement No. 128,
“Earnings Per Share”.  Basic net income per common share is calculated
by dividing net income applicable to stockholders by the weighted average number
of shares of common stock outstanding during the year.




Diluted
net income per share, in addition to the weighted average number of shares
determined for basic net income per share, would also include common stock
equivalents which would arise from vesting of restricted stock awards or other
equity based awards using the treasury stock method.  For the years
ended December 31, 2008, 2007 and 2006, the Company does not have any restricted
stock awards outstanding.





Concentration
of Credit Risk




Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of cash equivalents held.  The Company
maintains cash equivalents in the Gabelli U.S. Treasury Money Market Fund, which
invests fully in instruments issued by the U.S. government.  The
concentration of credit risk with respect to advisory fees receivable is
generally limited due to the short payment terms extended to clients by the
Company.





Business
Segments




The
Company operates predominantly in one business segment, the investment advisory
and asset management business.





Reclassifications





Certain
prior period amounts reflect reclassifications to conform with the current
year’s presentations.




Changes
in accounting policy




The
Company has adopted FASB Statement No. 157, “Fair Value Measurements”
(“Statement 157”).  Statement 157 provides guidance for using fair
value to measure assets and liabilities.  Statement 157 provides
guidance to companies about the extent of which to measure assets and
liabilities at fair value, the information used to measure fair value, and the
effect of fair value measurements on earnings.  Statement 157 applies
whenever other standards require (or permit) assets or liabilities to be
measured at fair value.  Statement 157 does not expand the use of fair
value in any new circumstances.  Statement 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007
and for interim periods within those fiscal years. The Company adopted Statement
157 on January 1, 2008.  Although the impact of adopting Statement 157
is immaterial to the Company’s financial statements, Statement 157 required
additional disclosures within the footnotes to the financial
statements.  Refer also to Note B.





B.  Fair
Value




In
September 2006, the FASB issued Statement 157, which defines fair
value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements.  All of the instruments within cash
equivalents are measured at fair value.




The
Company’s assets and liabilities recorded at fair value have been categorized
based upon a fair value hierarchy in accordance with
Statement 157.  The levels of the fair value hierarchy and their
applicability to the Company are described below:





-
            Level
      1 inputs utilize quoted prices (unadjusted) in active markets for
      identical assets or liabilities.-
            Level
      2 inputs utilize inputs other than quoted prices included in Level 1 that
      are observable for the asset or liability, either directly or indirectly.
      Level 2 inputs include quoted prices for similar assets and liabilities in
      active markets and inputs other than quoted prices that are observable for
      the asset or liability, such as interest rates and yield curves that are
      observable at commonly-quoted intervals.-
            Level
      3 inputs are unobservable inputs for the asset or liability, and include
      situations where there is little, if any, market activity for the asset or
      liability.





In
certain cases, the inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, per
Statement 157, the level in the fair value hierarchy within which the fair value
measurement in its entirety falls has been determined based on the lowest level
input that is significant to the fair value measurement in its
entirety. The Company’s assessment of the significance of a particular
input to the fair value measurement in its entirety requires judgment and
considers factors specific to the asset or liability.




The
availability of observable inputs can vary from product to product and is
affected by a wide variety of factors, including, for example, the type of
product, whether the product is new and not yet established in the marketplace,
and other characteristics particular to the transaction. To the extent that
valuation is based on models or inputs that are less observable or unobservable
in the market, the determination of fair value requires more judgment.
Accordingly, the degree of judgment exercised by the Company in determining fair
value is greatest for instruments categorized as Level 3.




Many of
our securities have bid and ask prices that can be observed in the marketplace.
Bid prices reflect the highest price that the Company and others are willing to
pay for an asset. Ask prices represent the lowest price that the Company and
others are willing to accept for an asset.





Cash
equivalents-Cash equivalents are valued using quoted market prices. Valuation
adjustments are not necessary.  Accordingly, cash equivalents are
categorized in Level 1 of the fair value hierarchy.




The
following table presents information about the Company’s assets by major
categories measured at fair value on a recurring basis as of December 31, 2008
and indicates the fair value hierarchy of the valuation techniques utilized by
the Company to determine such fair value:




Assets
Measured at Fair Value on a Recurring Basis as of December 31, 2008




Quoted
      Prices in
                                                                                      
                                                                                      
                                                                                      Significant
                                                                                      
                                                                                      
                                                                                      SignificantActive
      Markets for
                                                                                      
                                                                                      
                                                                                      Other
      Observable
                                                                                      
                                                                                      
                                                                                      Unobservable
      Inputs
                                                                                      
                                                                                      
                                                                                      Balance
      as ofAssets
                                                                                      
                                                                                      Identical
      Assets (Level 1)
                                                                                      
                                                                                      
                                                                                      Inputs
      (Level 2)
                                                                                      
                                                                                      
                                                                                      (Level
      3)
                                                                                      
                                                                                      
                                                                                      December
      31, 2008Cash
      equivalents
                                                                                      
                                                                                      $
                                                                                      760,350
                                                                                      
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      
                                                                                      $
                                                                                      760,350Total
      financial instruments owned
                                                                                      
                                                                                      $
                                                                                      760,350
                                                                                      
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      
                                                                                      $
                                                                                      760,350





F-8




C.  Income
Taxes




The
Company accounts for income taxes as prescribed by Statement 109 and FIN
48.  Under Statement 109, deferred income taxes reflect the net
effects of temporary differences between the carrying amounts of assets and
liabilities for financial accounting purposes and the amounts used for income
tax purposes.




The
provision for (benefit from) income taxes for the years ended December 31, 2008,
2007 and 2006 consisted of the following:




2008
                            
                            
                            2007
                            
                            
                            2006Federal:Current
                            
                            $
                            286,788
                            
                            
                            $
                            494,476
                            
                            
                            $
                            593,966Deferred
                            
                            
                            (33,271
                            )
                            
                            
                            13,307
                            
                            
                            
                            (11,316
                            )State
      and local:Current
                            
                            
                            5,753
                            
                            
                            
                            12,678
                            
                            
                            
                            14,328Deferred
                            
                            
                            (619
                            )
                            
                            
                            341
                            
                            
                            
                            (290
                            )$
                            258,651
                            
                            
                            $
                            520,802
                            
                            
                            $
                            596,688




Our
effective tax rate for each of the years ended December 31, 2008, 2007 and 2006
was 31.0%, 34.5% and 34.5%, respectively.  A reconciliation of the
Federal statutory income tax rate to the effective tax rate is set forth
below:




2008
                                
                                
                                2007
                                
                                
                                2006Statutory
      Federal income tax rate
                                
                                
                                34.0
                                %
                                
                                
                                34.0
                                %
                                
                                
                                34.0
                                %State
      income tax, net of Federal benefit
                                
                                
                                0.4
                                
                                
                                
                                0.5
                                
                                
                                
                                0.5Other
                                
                                
                                (3.4
                                )
                                
                                
                                -
                                
                                
                                
                                -Effective
      income tax rate
                                
                                
                                31.0
                                %
                                
                                
                                34.5
                                %
                                
                                
                                34.5
                                %





Significant
components of our deferred tax assets and liabilities are as
follows:




2008
                                    
                                    
                                    2007Deferred
      tax assets:Capitalized
      expenditures for spin-off
                                    
                                    $
                                    (36,474
                                    )
                                    
                                    $
                                    -Total
      deferred tax assets
                                    
                                    
                                    (36,474
                                    )Deferred
      tax liabilities:Fixed
      assets
                                    
                                    
                                    2,584
                                    
                                    
                                    
                                    -Total
      deferred tax liabilities
                                    
                                    
                                    2,584
                                    
                                    
                                    
                                    -Net
      deferred tax liabilities (assets)
                                    
                                    $
                                    (33,890
                                    )
                                    
                                    $
                                    -





The
Company’s Federal, State and Local income tax returns are subject to future
audit for all years after 2004.




D.  Stockholders'
Equity





Teton has
two classes of common stock: class A and class B.




Voting
Rights




The
holders of class A common stock and class B common stock have identical rights
except that (i) holders of class A common stock are entitled to one vote per
share, while holders of class B common stock are entitled to ten votes per share
on all matters to be voted on by shareholders in general, and (ii) holders of
class A common stock are not eligible to vote on matters relating exclusively to
class B common stock and vice versa.





Dividends




During
2008, the Company declared and paid dividends of $1.00 per share to class A and
class B shareholders totaling $1,043,394.  During 2007, the Company
declared dividends of $0.45 per share to class A and class B shareholders
totaling $473,129, and paid dividends of $1.75 per share to class A and class B
shareholders totaling $1,839,940.  During
2006, the Company declared dividends of $1.30 per share to class A and class B
shareholders totaling $1,366,811.





Stock
repurchase





During
2007, the Company repurchased 8,000 shares of class A common stock for
$8,120.  There were no repurchases made during 2008 or
2006.





F-9




E.  Commitments




The
Company rents office space under a sub-lease with GAMCO which expires at April
2013.  GAMCO has the right to terminate this sub-lease on December 31,
2011, provided that GAMCO gives no less than six months notice to
Teton.  Future minimum lease commitments under this operating lease as
of December 31, 2008 are as follows:




2009
                    
                    $
                    66,9112010
                    
                    
                    66,9112011
                    
                    
                    66,9112012
                    
                    
                    66,9112013
                    
                    
                    22,304Thereafter
                    
                    
                    -$
                    289,948




Occupancy
expense amounted to $33,456 in 2008.  The Company did not incur
occupancy costs prior to 2008.


F.  Related
Party Transactions




The
following is a summary of certain related party transactions.





GAMCO
owned approximately 11.9% of Teton’s class A shares and approximately 52.1% of
Teton’s class B shares as of December 31, 2008.





GGCP,
Inc. (“GGCP”) owned approximately 95% of the combined voting power of the
outstanding common stock of GAMCO and approximately 72% of the equity interest
of GAMCO.  Mr. Mario J. Gabelli (“Mr. Gabelli”) owned approximately
75% of the shares of GGCP.  Cascade Investments, L.L.C., Frederick J.
Mancheski and Royce & Associates owned approximately 23.1%, 25.0% and 7.7%
of GAMCO’s class A shares.  The ownership percentages set forth in
this paragraph are accurate as of December 31, 2008.





MJG IV
Partnership owned approximately 8.2% of Teton’s class A shares and approximately
35.6% of Teton’s class B shares.  Mr. Gabelli is the general partner
of MJG IV Partnership and the limited partners of MJG IV Partnership are family
members of Mr. Gabelli.  The ownership percentages set forth in this
paragraph is accurate as of December 31, 2008.





As of
December 31, 2008, Westwood Management Corporation owned approximately 77.1% of
Teton’s class A shares.  Westwood Holdings Group owns 100% of Westwood
Management Corporation.





GAMCO
owns 15.8% of Westwood Holdings Group Inc. as of December 31, 2008.





In 2007,
the Company repurchased 8,000 shares of class A common stock from a former
employee of GAMCO.





GAMCO has
historically performed many corporate functions for Teton.  In
connection with the spin-off which occurred on March 20, 2009, Teton has entered
into certain other agreements with GAMCO to define Teton’s ongoing relationship
with GAMCO after the spin-off.  These other agreements define
responsibility for obligations arising before and after the spin-off date,
including obligations relating to Teton’s employees, certain transitional
services, and taxes.  Refer also to Note H.





Teton
invests all of its cash equivalents in a money market mutual fund managed by
Gabelli Funds, LLC (“Gabelli Funds”).  Gabelli Funds is owned 100% by
GAMCO.  At December 31, 2008 and 2007, Teton had $760,350 and
$1,725,461, respectively, in this money market fund and earned $35,318, $114,315
and $230,806 for the years ended December 31, 2008, 2007 and 2006,
respectively.





Gabelli
& Company, Inc. (“Gabelli & Company”), a subsidiary of GAMCO, serves as
the principal distributor for the Funds. As distributor, Gabelli & Company
incurs certain promotional and distribution costs, which are expensed as
incurred, related to the sale of Fund shares.  Gabelli & Company
receives reimbursements from the Company in connection with these distribution
activities to the extent such costs exceed distribution fees received from the
mutual funds managed by the Company.  Such amounts are repaid to the
Company if distribution fees are in excess of distribution expenses of the
Funds.  In
connection with its role as principal distributor, the Company received from
Gabelli & Company $42,345 of previously paid reimbursed distribution
expenses in 2008, reimbursed Gabelli & Company distribution expenses of
$12,123 in 2007 and received from Gabelli & Company $123,311 of previously
paid reimbursed distribution expense in 2006.  As of December
31, 2008 and 2007, there was $260,360 and $302,705, respectively, contingently
payable to the Company from Gabelli & Company, representing the net
accumulated reimbursements paid by the Company to Gabelli & Company since
the inception of each of the Funds calculated on an individual Fund
basis.  Gabelli & Company is owned 100% by Gabelli Securities,
Inc., which in turn is owned 92% by GAMCO as of December 31, 2008.





Teton
paid GAMCO administration fees based on the average net assets of the Funds,
amounting to $830,802, $854,003 and $819,296 for the years ended December 31,
2008, 2007 and 2006, respectively.





The
Company serves as the investment adviser for the Funds and earns advisory fees
based on predetermined percentages of the net average assets of the
Funds.  Advisory fees earned from the Funds were $3,792,716,
$3,841,410 and $3,676,139 for the years ended December 31, 2008, 2007 and 2006,
respectively.  Advisory fees receivable from the Funds were $316,985
and $321,249 at December 31, 2008 and 2007, respectively.




The
Company has receivables from the Funds of $25,353 and $18,320, which are
included in other assets in the statements of financial condition, at December
31, 2008 and 2007, respectively, relating to reimbursement of shareholder
servicing costs associated with No Transaction Fee (“NTF”)
programs.





Teton is
charged or incurs certain overhead expenses that are also paid by other
affiliates.  These overhead expenses are allocated to the Company by
GAMCO, if general and administrative related, and by Gabelli & Company, if
payroll or expense reimbursement related, as the expenses are incurred, based
upon methodologies periodically reviewed by the management of the Company and
the affiliates for reasonableness.  During 2008, 2007 and 2006, GAMCO
allocated $1,386,270, $1,147,258 and $1,040,979, respectively, and Gabelli &
Company allocated $525,012, $290,895 and $184,021, respectively.  The
methodologies of the allocation are based on usage of shared services, whether
personnel, administrative or other.  Each service is analyzed by
management as to the users of the service and is allocated in proportion to that
usage at the cost of the particular service.  The Company, as a
subsidiary of GAMCO prior to the spin-off, benefited from certain synergies in
respect to the Company’s expenses.  After the spin-off, when the
Company is no longer a subsidiary of GAMCO, the expenses of the Company could be
higher.





F-10




Teton’s
receivables and payables to affiliates at December 31, 2008 and 2007 are
non-interest bearing and are receivable and payable on demand.  At
December 31, 2008 and 2007, the amount payable to GAMCO was $173,068 and
$283,448, respectively, and the amount payable to Westwood Management
Corporation was $54,787 and $139,048, respectively.  The amount
receivable from Gabelli & Company at December 31, 2008 was $4,592 and the
amount payable to Gabelli & Company at December 31, 2007 was
$246,871.




G.  Quarterly
Financial Information (Unaudited)




Quarterly
financial information for the years ended December 31, 2008 and 2007 is
presented below.






20081st
                                    
                                    
                                    
                                    2nd
                                    
                                    
                                    
                                    3rd
                                    
                                    
                                    
                                    4th
                                    
                                    
                                    
                                    Full
      YearRevenues
                                    
                                    $
                                    960,518
                                    
                                    
                                    $
                                    1,015,229
                                    
                                    
                                    $
                                    977,526
                                    
                                    
                                    $
                                    874,761
                                    
                                    
                                    $
                                    3,828,034Income
      before taxes
                                    
                                    
                                    352,584
                                    
                                    
                                    
                                    325,375
                                    
                                    
                                    
                                    117,040
                                    
                                    
                                    
                                    39,342
                                    
                                    
                                    
                                    834,341Net
      income
                                    
                                    
                                    230,766
                                    
                                    
                                    
                                    212,901
                                    
                                    
                                    
                                    76,596
                                    
                                    
                                    
                                    55,427
                                    
                                    
                                    
                                    575,690Net
      income per share:Basic
                                    
                                    
                                    0.22
                                    
                                    
                                    
                                    0.20
                                    
                                    
                                    
                                    0.07
                                    
                                    
                                    
                                    0.06
                                    
                                    
                                    
                                    0.55Diluted
                                    
                                    $
                                    0.22
                                    
                                    
                                    $
                                    0.20
                                    
                                    
                                    $
                                    0.07
                                    
                                    
                                    $
                                    0.06
                                    
                                    
                                    $
                                    0.55




20071st
                                    
                                    
                                    
                                    2nd
                                    
                                    
                                    
                                    3rd
                                    
                                    
                                    
                                    4th
                                    
                                    
                                    
                                    Full
      YearRevenues
                                    
                                    $
                                    928,732
                                    
                                    
                                    $
                                    983,308
                                    
                                    
                                    $
                                    1,008,329
                                    
                                    
                                    $
                                    1,035,356
                                    
                                    
                                    $
                                    3,955,725Income
      before taxes
                                    
                                    
                                    374,887
                                    
                                    
                                    
                                    342,891
                                    
                                    
                                    
                                    447,774
                                    
                                    
                                    
                                    341,964
                                    
                                    
                                    
                                    1,507,516Net
      income
                                    
                                    
                                    248,331
                                    
                                    
                                    
                                    227,680
                                    
                                    
                                    
                                    297,321
                                    
                                    
                                    
                                    213,382
                                    
                                    
                                    
                                    986,714Net
      income per share:Basic
                                    
                                    
                                    0.24
                                    
                                    
                                    
                                    0.22
                                    
                                    
                                    
                                    0.28
                                    
                                    
                                    
                                    0.20
                                    
                                    
                                    
                                    0.94Diluted
                                    
                                    $
                                    0.24
                                    
                                    
                                    $
                                    0.22
                                    
                                    
                                    $
                                    0.28
                                    
                                    
                                    $
                                    0.20
                                    
                                    
                                    $
                                    0.94





H.
Identifiable Intangible Asset




In
accordance with FAS 142 “Accounting for Goodwill and Other Intangible Assets,”
the Company assesses the recoverability of intangible assets at least annually,
or more often should events warrant, using a present value cash flow
method.  At a Board Meeting on November 11, 2008, the Board of
Trustees of the B.B. Micro Cap Growth Fund assigned, on an interim basis for 150
days, the advisory contract to Teton as the investment adviser, effective with
the close of business on November 28, 2008.  Although there was no
additional payment for the assignment of the advisory contract, the Company has
incurred costs of $183,000 relating to legal and accounting work performed
relating to the arrangement and to obtain shareholder approval for the merger
with an existing fund managed by Teton.  As a result of becoming the
adviser to the B.B. Micro Cap Growth Fund, the Company recorded an
identifiable intangible asset of $183,000.  The Company will amortize
the acquisition costs over the estimated life of the contract.  In
accordance with this policy, the Company amortized $36,600 of the identifiable
intangible asset during 2008 and has an identifiable intangible asset on the
statement of financial condition of $146,400 at December 31, 2008.


I.
Other Matters




The
Company has entered into arrangements with various 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.  Utilizing the methodology in the FASB issued Interpretation
No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others”, the Company’s estimate
of the value of such agreements is de minimis, and therefore an accrual has not
been made in the financial statements.




J.  Subsequent
Events




On
February 25, 2009, GAMCO announced the completion of the previously disclosed
plan to distribute shares in Teton to GAMCO’s shareholders.  Each
shareholder of GAMCO on the record date for this transaction, March 10, 2009,
will receive 14.930 shares of Teton for each 1,000 shares of GAMCO which the
shareholder owns on the record date. The distribution date is March 20,
2009.





Prior to
the spin-off, on February 19, 2009, the Company entered into three agreements
(separation and distribution agreement, transitional administrative and
management services agreement and a service mark and name license agreement)
with GAMCO prior to and concurrently with the spin-off to govern the terms of
the spin-off and to define the ongoing relationship following the spin-off,
allocating responsibility for obligations arising before and after the spin-off,
including obligations with respect to liabilities relating to GAMCO’s business
and to Teton’s business and obligations with respect to our employees and
certain transition services.  The Company entered into these
agreements with GAMCO while still a majority-owned subsidiary of GAMCO, and
certain terms of these agreements are not necessarily the same as could have
been negotiated between independent parties.





On March
20, 2009, in connection with the spin-off of Teton from GAMCO and under the
terms of Mr. Nicholas F. Galluccio’s (“Mr. Galluccio”) employment agreement,
Teton issued 260,849 restricted stock awards (“RSAs”) to Mr. Galluccio with a
value of $573,504.  The RSAs will cliff vest 30% at the end of three
years from the date of employment, July 18, 2008, and the remaining 70% will
cliff vest at the end of five years from the date of employment.









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




None.








ITEM
9A (T):  CONTROLS AND PROCEDURES




(a)
Evaluation of Disclosure Controls and Procedures




The
Company maintains a system of disclosure controls and procedures (as defined in
the Securities Exchange Act of 1934, as amended, or the Exchange
Act).  The Company’s Chief Executive Officer and Chief Financial
Officer, after evaluating the effectiveness of the Company’s disclosure controls
and procedures as of the end of the period covered by this report, have
concluded that the Company’s disclosure controls and procedures are effective to
provide reasonable assurance that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure and are effective to
provide reasonable assurance that such information is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms.




(b)
Management’s Report on Internal Control Over Financial Reporting





This
annual report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of the
Company’s independent registered public accounting firm due to a transition
period established by rules of the Securities and Exchange Commission for newly
public companies.





There was
no change in our internal control over financial reporting that occurred during
the fourth quarter of 2008 that has materially affected, or is reasonably likely
to materially affect, our internal control over financial
reporting.







ITEM
9B:  OTHER INFORMATION




None.





II-1





PART
III




ITEM
10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE




The
following table sets forth information regarding our executive
officers:




Name
                                
                                Age
                                
                                TitleNicholas
      F. Galluccio
                                
                                58
                                
                                President
      and Chief Executive OfficerJeffrey
      M. Farber
                                
                                44
                                
                                Chief
      Financial
Officer





Nicholas F.
Galluccio, age 58, has served as President and Chief Executive Officer
since July 1, 2008 and as a director of Teton since October 16,
2008.  Mr. Galluccio was formerly with Trust Company of the West from
1982 through June 30, 2008, where he served as the Group Managing Director, U.S.
Equities and Senior Portfolio Manager for the TCW Small Cap Value Added Funds
and TCW Mid Cap Value Opportunities Funds.  Mr. Galluccio was a
security analyst with Lehman Brothers Kuhn Loeb, from 1980 to 1982, following
the semiconductor industry.  From 1978 to 1980, Mr. Galluccio was a
staff writer at Forbes Magazine.  Mr. Galluccio holds an M.B.A. from
Columbia Business School and an M.A. from Columbia University and a B.A. from
University of Hartford.  He is on the board of regents at University
of Hartford and is on the Board of Trustees at St. Luke’s School in New Canaan,
Connecticut.




Jeffrey M.
Farber, age 44, has served as our Chief Financial Officer since October
16, 2008.  Mr. Farber joined GAMCO in July 2008 as Executive Vice
President – Finance/Corporate Development and Chief Financial
Officer.  Prior to joining GAMCO, Mr. Farber was with The Bear Stearns
Companies Inc. where he served as the Senior Vice President – Finance since
February 2007, Controller since January 2004 and was a Managing Director since
May 2000.  Prior to that Mr. Farber was a partner with Deloitte &
Touche LLP, where he worked for fourteen years.  Mr. Farber is a
Certified Public Accountant.




The
following table sets forth information regarding the members of our board of
directors.




Name
                              
                              AgeBruce
      N. Alpert
                              
                              57Alfred
      W. Fiore*
                              
                              70Nicholas
      F. Galluccio*
                              
                              58Douglas
      R. Jamieson
                              
                              54Edward
      T. Tokar*
                              
                              61


* Elected
to the Board on October 16, 2008.




Bruce N.
Alpert, age 57, has served as Chairman of the Board since July 2008 and
as a member of the Board of Directors since 1998.  Mr. Alpert has
served as Executive Vice President and Chief Operating Officer of Gabelli Funds,
LLC and its predecessor since June 1988. Mr. Alpert is an officer of all of the
Gabelli/GAMCO Funds. Mr. Alpert was President and a director of Teton Advisors,
Inc. from 1994 through June 2008 and is President and a director of Gabelli
Fixed Income, Inc. From 1986 until June 1988, he worked at the InterCapital
Division of Dean Witter as Vice President and Treasurer of the mutual funds
sponsored by Dean Witter. From 1983 through 1986, he worked at Smith Barney
Harris Upham & Co. as Vice President in the Financial Services Division and
as Vice President and Treasurer of the mutual funds sponsored by Smith Barney.
Mr. Alpert also was an Audit Manager and Specialist at Price Waterhouse in the
Investment Company Industry Services Group for three years at which he served
from 1975 through 1983. Mr. Alpert is a Certified Public
Accountant.




Alfred W.
Fiore, age 70, has served as a director since October 16,
2008.  Mr. Fiore is a retired partner of KPMG, LLP and is currently a
senior compensation consultant with The Ross Companies.  In addition,
Mr. Fiore is currently serving as or has been a director and/or officer of the
following organizations: Dresdner RCM Investment Funds, Inc., Dresdner RCM
Global Funds, Inc., Southeast Frozen Foods, LLP, Intelecom Solutions, Inc.,
Overture Asset Managers, LLP, LICT Corporation, Greenwich Country Club and the
USO of Metropolitan New York.




Douglas R.
Jamieson, age 54, has served as a director since 1998.  Mr.
Jamieson has served as President and Chief Operating Officer of GAMCO since
August 2004. He has served as President or Chief Operating Officer of GAMCO
Asset Management Inc. (a wholly-owned subsidiary of GAMCO) since 1986 and as a
director of GAMCO Asset Management Inc. since 1991. Mr. Jamieson also serves as
President and a director of Gabelli Securities, Inc. and a director of GAMCO
Asset Management (UK) Ltd. Mr. Jamieson also serves as a director of several
Investment Partnerships that are managed by Gabelli Securities, Inc. Mr.
Jamieson was an investment analyst with Gabelli & Company, Inc. from 1981 to
1986. He has been a director of GGCP, Inc. since December 2005.




Edward T.
Tokar, age 61, has served as a director since October 16,
2008.  Mr. Tokar has served as Senior Managing Director of Investments
for Beacon Trust Company since 2004.  Prior to joining Beacon Trust
Company, Mr. Tokar served as Chief Executive Officer of Allied Capital
Management, LLC and as Vice President-Investments (Corporate Officer) of
Honeywell International, Inc. where he was employed since 1977.  He
served as a Director, Trustee or Advisory Board member for a number of leading
U.S. and international investment organizations, including currently serving on
The Gabelli Dividend & Income Trust and The Gabelli Global Deal
Fund.  He was awarded a B.S. degree with High Honors from the
University of Maryland, and received an M.B.A. degree from the College of
William and Mary and is a Certified Public Accountant.




Committees
of the Board




The board
does not currently have any committees, such as audit, compensation or
governance committees.  The Board is currently handling those issues
itself and will consider whether to establish any committees in the
future.




II-2




Compensation
of Directors




As of
October 16, 2008, non-employee directors are entitled to an annual cash payment
of $5,000 per year, payable in quarterly installments.  Members of our
board who are also our employees, such as Mr. Galluccio, are not entitled to any
compensation for their services as board members.  No directors
received compensation for his or her services as a member of our board in
2007.  With respect to 2008, each of our non-executive directors
earned a pro rata share of $5,000.




The
following table provides compensation information for 2008 for each
non-executive officer member of our Board of Directors.




Director
Compensation Table for 2008





Fees
      Earned OrPaid
      In Cash
                                              
                                              
                                              TotalName
                                              
                                              
                                              ($)
                                              
                                              
                                              ($)Alfred
      W. Fiore
                                              
                                              $
                                              1,046
                                              
                                              $
                                              1,046Edward
      T. Tokar
                                              
                                              $
                                              1,046
                                              
                                              $
                                              1,046




Meetings
of the Board of Directors




In 2008,
the Board met two times.  All of the directors attended both
meetings.




Section
16(a) Beneficial Ownership Reporting Compliance




Section
16(a) of the Exchange Act requires the Company's executive officers, directors
and persons who own more than 10% of a registered class of the Company's equity
securities to file reports of their ownership thereof and changes in that
ownership with the SEC.  Executive officers, directors and greater
than 10% stockholders are required by SEC regulations to furnish the Company
with copies of all such reports they file.





There
were no Form 3, 4 or 5 filings in 2008 as the Company was not a public company
until 2009.





Code
of Ethics





Until March 20, 2009, the date of the
spin-off, the executive officers of Teton, as a subsidiary of GAMCO, were
subject to GAMCO’s Code of Business Conduct and Code of
Conduct.  GAMCO’s Code of Business Conduct applies to all of GAMCO’s
officers, directors, full-time and part-time employees and GAMCO’s Code of
Conduct also sets forth additional requirements for GAMCO’s principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions (together, the “Codes of
Conduct”).  GAMCO’s Codes of Conduct are posted on GAMCO’s website
(www.gabelli.com).  GAMCO’s Codes of Conduct
are available in print free of charge to anyone who requests a
copy.  Interested parties may address a written request for a printed
copy of the Codes of Conduct to: Secretary, GAMCO Investors, Inc., One Corporate
Center, Rye, New York 10580-1422.  As a stand alone entity on the
spin-off Teton has not adopted a code of ethics (“code of conduct”) as
defined under Item 406 of Regulation SK that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions because companies whose
equity securities are listed for trading on the OTC Bulletin Board are not
currently required to implement such a code.  As a registered
investment adviser to registered investment companies, we have adopted a code of
ethics that complies with Rule 204A-1 under the Investment Advisers
Act of 1940 and Rule 17j-1 under the Investment Company Act of
1940.


II-3





ITEM
11: EXECUTIVE COMPENSATION





Compensation
Discussion and Analysis





This
Compensation Discussion and Analysis describes the Company’s compensation policy
for our named executive officers with respect to fiscal 2008.




The
investment management and securities industries are highly competitive, and
experienced professionals have significant career mobility.  Teton
believes that the ability to attract, retain and provide appropriate incentives
for the highest quality professional personnel is important for maintaining its
competitive position in the investment management and securities industries, as
well as for providing for the long-term success of Teton.




Because
Teton’s compensation arrangements involve variable incentive-based fees, the
$1.0 million deductibility limit of Section 162(m) is generally not expected to
apply to the payments.




The
following table summarizes the compensation of our named executive officers
during 2008 (unaudited):





Salary
                                                  
                                                  
                                                  Bonus
                                                  
                                                  
                                                  TotalName
      and Principal Position
                                                  Year
                                                  
                                                  
                                                  ($)
                                                  
                                                  
                                                  ($)
                                                  
                                                  
                                                  ($)Nicholas
      F. Galluccio
                                                  2008
                                                  
                                                  
                                                  125,000
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  125,000President
      and Chief Executive Officer (1)Jeffrey
      M. Farber
                                                  2008
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  -Chief
      Financial Officer (2)Bruce
      N. Alpert
                                                  2008
                                                  
                                                  
                                                  11,250
                                                  
                                                  
                                                  3,750
                                                  
                                                  
                                                  15,000President
      (3) (5)
                                                  2007
                                                  
                                                  
                                                  11,250
                                                  
                                                  
                                                  11,250
                                                  
                                                  
                                                  22,500James
      E. McKee (4) (5)
                                                  2008
                                                  
                                                  
                                                  208
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  208Secretary
                                                  2007
                                                  
                                                  
                                                  3,000
                                                  
                                                  
                                                  3,000
                                                  
                                                  
                                                  6,000





(1)
            Mr.
      Galluccio was named President and Chief Executive Officer on July 1,
      2008.(2)
            Mr.
      Farber was named Chief Financial Officer on October 16,
    2008.(3)
            Mr.
      Alpert resigned as President on July 1, 2008.(4)
            Mr.
      McKee resigned as Secretary on January 24, 2008.(5)
            The
      compensation for Messrs. Alpert and McKee set forth in this table
      represents an allocation of their overall compensation attributable to
      their work with respect to Teton.  Messrs. Alpert and McKee are
      employed by other GAMCO entities and receive allocations from those
      entities as well.





There
were no equity awards outstanding as of December 31, 2008.  As part of
Mr. Galluccio’s employment contract he received a grant of 260,849 restricted
stock awards on March 20, 2009, the date of the Teton spin-off from
GAMCO.  The awards will vest 30% at the end of three years from the
beginning of his employment and 70% at the end of five years from the beginning
of his employment.  One of the goals of our compensation decisions is
to align the interest of our chief executive officer with those of our
shareholders.  We believe that providing this grant of restricted
shares to Mr. Galluccio effectively focuses his efforts on delivering long-term
value to our shareholders.





Employment
Agreement




On July
18, 2008, Teton entered into an employment agreement with Mr. Galluccio,
pursuant to which Teton is obligated to pay Mr. Galluccio an annual draw and
certain incentive compensation.  Mr. Galluccio is entitled to receive
an annual draw of $250,000, which is payable in monthly
installments.  His annual draw is offset by any incentive compensation
payable to Mr. Galluccio.  As compensation for performing portfolio
management of any of the Westwood Funds, Mr. Galluccio is entitled to receive
incentive compensation equal to 20% of “net revenues,” as defined in the
agreement, of such funds.  In addition, as compensation for
introducing sales of share classes of the Westwood Funds that carry 12b-1 fees,
Mr. Galluccio is entitled to receive 40% of the 12b-1 fees typically paid to
distributors of such funds for such accounts.  In addition, Teton
issued to Mr. Galluccio an amount of class A restricted stock equal to 20% of
our outstanding common stock, inclusive of the restricted stock issuance, on the
date of the spin-off.  Thirty percent of these shares will vest on the
third anniversary of the date of employment and the balance on the fifth
anniversary of the date of employment, provided that the restricted stock vest
immediately prior to the consummation of a change of control and a portion is
subject to acceleration in the event of termination without cause.




The term
of the employment agreement is five years.  In the event Teton
terminates Mr. Galluccio’s employment prior to the expiration of the five year
term without cause, other than due to disability or death, Mr. Galluccio would
be entitled to receive the monthly installments of his annual draw until the
five year anniversary of the agreement and he would be entitled to receive
incentive compensation until his termination date.  If the termination
occurred prior to the third anniversary of the agreement, 20% of the restricted
shares Mr. Galluccio is entitled to receive pursuant to the employment agreement
will immediately vest.  If the termination occurred subsequent to the
third anniversary of the agreement, 20% of the unvested portion of the
restricted shares Mr. Galluccio is entitled to receive pursuant to the
employment agreement will immediately vest.




II-4





ITEM 12: SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS




There
were 1,304,243 shares of our common stock outstanding on March 20,
2009.  The following table sets forth, as of March 20, 2009, certain
information with respect to beneficial ownership by: (i) all persons known to us
who beneficially own more than 5% of any class of our common stock as of such
date; and (ii) our executive officers and directors of our common stock as of
such date.





Title
      of
                                                                                  
                                                                                  Shares
                                                                                  
                                                                                  Percent
      ofName
      of Beneficial Owner (1)
                                                                                  
                                                                                  Class
                                                                                  
                                                                                  Owned
                                                                                  
                                                                                  Class
      (%)5%
      or Greater ShareholdersMario
      J. Gabelli
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -
                                                                                  %Class
      B
                                                                                  
                                                                                  302,669
                                                                                  
                                                                                  72.6Westwood
      Management Corporation
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  200,000
                                                                                  
                                                                                  22.5Class
      B
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -MJG
      IV Limited Partnership
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  300,352
                                                                                  
                                                                                  33.8Class
      B
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Bruce
      N. Alpert
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  60,242
                                                                                  
                                                                                  6.8Class
      B
                                                                                  
                                                                                  419
                                                                                  
                                                                                  *Nicholas
      F. Galluccio (2)
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  260,849
                                                                                  
                                                                                  29.4Class
      B
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Frederick
      J. Mancheski (3)
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Class
      B
                                                                                  
                                                                                  26,993
                                                                                  
                                                                                  6.5Directors
      and Executive OfficersDouglas
      R. Jamieson
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  606
                                                                                  
                                                                                  *Class
      B
                                                                                  
                                                                                  8,331
                                                                                  
                                                                                  2.0Jeffrey
      M. Farber
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Class
      B
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Alfred
      W. Fiore
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Class
      B
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Edward
      T. Tokar
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -Class
      B
                                                                                  
                                                                                  -
                                                                                  
                                                                                  -All
      Directors and Officersas
      a Group (6 persons)
                                                                                  
                                                                                  Class
      A
                                                                                  
                                                                                  321,697
                                                                                  
                                                                                  36.2Class
      B
                                                                                  
                                                                                  8,750
                                                                                  
                                                                                  2.1
                                                                                  %


_______________________________





(*)
              Represents
      beneficial ownership of less than 1%.(1)
              The
      address of each beneficial owner of more than 5% of the Class A Stock or
      Class B Stock is as follows: Mario J. Gabelli, One Corporate Center, Rye,
      NY 10580; Westwood Management Corporation, 200 Crescent Court, Suite 1200,
      Dallas, TX 75201; MJG IV Limited Partnership, One Corporate Center, Rye,
      NY 10580; Bruce N. Alpert, One Corporate Center, Rye, NY 10580; Nicholas
      F. Galluccio, One Corporate Center, Rye, NY 10580; and Frederick J.
      Mancheski, 1600 Vegas Valley Drive, Las Vegas, NV
89109.(2)
              Pursuant
      to the terms of the employment agreement between Teton and Mr. Galluccio,
      Teton issued Mr. Galluccio 260,849 shares of class A restricted stock in
      the Company equal to 20% of Teton’s outstanding common stock as of the
      date of the spin off.(3)
              As
      reported in a Schedule 13D that was filed with the Commission on March 30,
      2009.





Voting
Rights




The
holders of class A common stock and class B common stock have identical rights
except that (i) holders of class A common stock are entitled to one vote per
share, while holders of class B common stock are entitled to ten votes per share
on all matters to be voted on by shareholders in general, and (ii) holders of
class A common stock are not eligible to vote on matters relating exclusively to
class B common stock and vice versa.





Conversion





The
holder of any shares of class B common stock may, at such holder’s option, elect
to convert all or any portion of the shares of class B common stock held by such
person into a number of fully paid and nonassessable shares of class A common
stock at a conversion rate of one share of class A common stock for each share
of class B common stock.




II-5




ITEM
13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE




The
Company entered into three agreements (separation and distribution agreement,
transitional administrative and management services agreement and a service mark
and name license agreement) with GAMCO prior to and concurrently with the
spin-off to govern the terms of the spin-off and to define our ongoing
relationship following the spin-off, allocating responsibility for obligations
arising before and after the spin-off, including obligations with respect to
liabilities relating to GAMCO’s business and to Teton’s business and obligations
with respect to our employees and certain transition services.  These
agreements are more fully described in the section titled, Arrangements Between
GAMCO And Teton After The Spin-Off, of Exhibit 99.1 to the February 24, 2009
Form 10-12G/A filing made by Teton with the Securities and Exchange
Commission.





As of
July 1, 2008, the Company entered into a sub-lease with GAMCO of 1,642 square
feet in a building leased by GAMCO.  Teton pays rent to GAMCO at the
rate of $28 per square foot plus $3 per square foot for electricity, subject to
adjustment for increases in taxes and other operating expenses.  The
total amount paid in 2008 to GAMCO for rent and other expenses under this lease
were $33,456.





See Note
F of the notes to the financial statements contained herein.








ITEM
14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES





Audit
Fees




The
aggregate fees billed by Ernst & Young, LLP (“EY”), an independent
registered public accounting firm, for professional services rendered for the
audit of the Company's financial statements and review of the Company’s Form 10
filing for the year ended December 31, 2008 are estimated at
$109,900.  The aggregate fees billed by EY for professional services
rendered for the audit of the Company's financial statements for the year ended
December 31, 2007 were $69,000.




Audit Related
Fees




The
Company did not engage EY to provide professional services to the Company
regarding audit related fees during the fiscal years ended December 31, 2008 and
2007.




Tax Fees




During
the fiscal years ended December 31, 2008 and 2007, there were no fees billed by
EY for tax related services.




All Other
Fees




There
were no other fees billed by E&Y for services rendered to the Company during
the fiscal years ended December 31, 2008 and 2007.




For the
years ended December 31, 2008 and 2007, the Company, as a subsidiary of GAMCO,
was subject to GAMCO’s Board of Directors rules and policies.  As
such, the Audit Committee of GAMCO has sole authority to pre-approve all audit
and non-audit services provided by the independent registered public accounting
firm in accordance with GAMCO’s Audit and Non-Audit Services Pre-Approval Policy
and will not engage the independent registered public accounting firm to perform
non-audit services prohibited by law or regulation.  This authority
may be delegated to a member of the GAMCO Audit Committee.  The
decisions of any GAMCO Audit Committee member to whom pre-approval authority is
delegated must be presented to GAMCO’s full Audit Committee at its next
scheduled meeting.  All of the services described under Audit Fees for
2008 and 2007 were pre-approved in accordance with GAMCO’s policy.




II-6





PART
IV




Item
15:  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES




(a)  List of documents
filed as part of this Report:




(1)
Financial Statements and Independent Registered Public Accounting Firm’s Report
included herein:





See Index
on page F-1




(2)
Financial Statement Schedules





Financial
statement schedules are omitted as not required or not applicable or because
the information is included in the Financial Statements or
notes thereto.





(3) Exhibits
Index:




Exhibit


Number                                                         Description of
Exhibit




3.1
              
              Amended
      and Restated Certificate of Incorporation of Teton Advisors, Inc. (the
      “Company”).  (Incorporated by reference to Exhibit 3.1 to
      Amendment No. 4 to the Company’s Registration Statement on Form 10-12G
      (File No. 000-53527) filed with the Securities and Exchange Commission on
      February 24, 2009).3.2
              
              Amended
      Bylaws of the Company.  (Incorporated by reference to Exhibit
      3.2 to Amendment No. 4 to the Company’s Registration Statement on Form
      10-12G (File No. 000-53527) filed with the Securities and Exchange
      Commission on February 24,
2009).




4.1
              
              Specimen
      of class B common stock Certificate. (Incorporated by reference to
      Exhibit 4.1 to Amendment No. 4 to the Company’s Registration Statement on
      Form 10-12G (File No. 000-53527) filed with the Securities and Exchange
      Commission on February 24,
2009).




10.1
              
              Service
      Mark and Name License Agreement, dated February 20, 2009, by and among
      GAMCO Investors, Inc. and the Company. (Incorporated by reference to
      Exhibit 10.1 to Amendment No. 4 to the Company’s Registration Statement on
      Form 10-12G (File No. 000-53527) filed with the Securities and Exchange
      Commission on February 24,
2009).





10.2
              
              Transitional
      Administrative and Management Services Agreement, dated February 20, 2009,
      between GAMCO Investors, Inc. and the Company. (Incorporated by reference
      to Exhibit 10.2 to Amendment No. 4 to the Company’s Registration Statement
      on Form 10-12G (File No. 000-53527) filed with the Securities and Exchange
      Commission on February 24,
2009).





10.3
              
              Separation
      and Distribution Agreement, dated February 20, 2009, between GAMCO
      Investors, Inc. and the Company.   (Incorporated by
      reference to Exhibit 10.3 to Amendment No. 4 to the Company’s Registration
      Statement on Form 10-12G (File No. 000-53527) filed with the Securities
      and Exchange Commission on February 24,
2009).





10.4
                
                Employment
      Agreement, dated July 18, 2008, between Nicholas F. Galluccio and the
      Company.10.5
                
                Restricted
      Stock Award Agreement, dated March 20, 2009, between Nicholas F. Galluccio
      and the Company.24.1
                
                Powers
      of Attorney (included on page II-9 of this
Report).31.1
                
                Certification
      of CEO pursuant to Rule 13a-14(a).31.2
                
                Certification
      of 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 CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes- Oxley Act of
2002.







SIGNATURE




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




TETON
ADVISORS, INC.





By:
                  /s/ Jeffrey M.
  FarberName:
                  Jeffrey
      M. FarberTitle:
                  Chief
      Financial Officer(Principal
      Financial and Accounting Officer)Date:
                  March
      31, 2009




II-7




POWER
OF ATTORNEY




Each
person whose signature appears below hereby constitutes and appoints Jeffrey M.
Farber and Christopher J. Michailoff and each of them, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him in his name, place and stead, in any and all capacities, to sign any and
all amendments to this report and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.




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




Signature
                                        
                                        Title
                                        
                                        Date/s/
      Bruce N. Alpert
                                        
                                        Chairman
      of the Board
                                        
                                        March
      31, 2009Bruce
      N. Alpert
                                        
                                        and
      Director/s/
      Jeffrey M. Farber
                                        
                                        Chief
      Financial Officer
                                        
                                        March
      31, 2009Jeffrey
      M. Farber
                                        
                                        (Principal
      Financial andAccounting
      Officer)/s/
      Nicholas F. Galluccio
                                        
                                        Chief
      Executive Officer
                                        
                                        March
      31, 2009Nicholas
      F. Galluccio
                                        
                                        (Principal
      Executive Officer)and
      Director/s/
      Alfred W. Fiore
                                        
                                        Director
                                        
                                        March
      31, 2009Alfred
      W. Fiore/s/
      Douglas R. Jamieson
                                        
                                        Director
                                        
                                        March
      31, 2009Douglas
      R. Jamieson/s/
      Edward T. Tokar
                                        
                                        Director
                                        
                                        March
      31, 2009Edward
      T. Tokar