Item 4.02. Non-Reliance on Previously Issued Financial Statements
or a Related Audit Report or Completed Interim Review
On April 12, 2021, the staff
of the Securities and Exchange Commission (the “SEC Staff”) issued a statement entitled “Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the
“SEC Staff Statement”) in which the SEC Staff highlighted the potential accounting implication of certain terms
that are common in warrants issued in connection with the initial public offerings of SPACs such as 7GC & Co. Holdings Inc. (the “Company”).
Specifically, the SEC Staff
Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which
terms are similar to those contained in the warrant agreement (the “Warrant Agreement”), dated as of December
22, 2020, between the Company and Continental Stock Transfer & Trust Company, as warrant agent.
As a result of the SEC
Staff Statement, the Company reevaluated the accounting treatment of (i) the 11,500,000 redeemable warrants (the “Public
Warrants”) that were included in the units issued by the Company in its initial public offering (the
“IPO”) and (ii) the 7,350,000 privately issued warrants (together with the Public Warrants, the
“Warrants”) issued to the Company’s sponsor in a private placement that closed concurrently with the
closing of the IPO, and determined that the Warrants should be classified as derivative liabilities measured at fair value, with
changes in fair value each period reported in earnings. While the Company has not generated any operating revenues to date and will
not generate any operating revenues until after completion of its initial business combination, at the earliest, the change in fair
value of the Warrants is a non-cash charge and will be reflected in the Company’s statement of operations.
On May 26, 2021, after consultation
with the Company’s management and accounting advisors, the Audit Committee of the Company’s Board of Directors (the “Audit
Committee”) concluded that, in light of the SEC Staff Statement, it is appropriate to restate the Company’s previously
issued audited financial statements as of December 31, 2020 (balance sheets), and for the period from September 18, 2020 (inception)
through December 31, 2020 (statements of operations, statements of changes in stockholders’ equity (deficit), statements of cash
flows) (which were included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2020) (the “Non-Reliance
Period,” and the financial statements, the “Non-Reliance Financial Statements”).
Considering such
restatement, the Audit Committee concluded that the Non-Reliance Financial Statements should no longer be relied upon. The Company
will file an amendment to its Annual Report on Form 10-K for the period ended December 31, 2020 reflecting the reclassification of
the Warrants for the Non-Reliance Period contemporaneously with this Current Report on Form 8-K.
Going forward, unless the
Company amends the terms of the Warrant Agreement, the Company expects to continue to classify the Warrants as liabilities, which would
require the Company to incur the cost of measuring the fair value of the Warrant liabilities, which may have an adverse
effect on the Company’s results of operations.
The Company’s management
and the Audit Committee have discussed the matters disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with WithumSmith+Brown,
PC, the Company’s independent registered public accounting firm.