Table of Contents WEWORK COMPANIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2019 (UNAUDITED) For the six months ended June 30, 2018, the Company recorded $1.2 million of general and administrative expenses associated with restricted stock issued to non-employee contractors for services rendered. There was no expense during the six months ended June 30, 2019 and no unrecognized expense related to restricted stock issued to non-employee contractors for services rendered as of June 30, 2019. 2019 Tender Offer—In January 2019, and in connection with the agreements for the 2019 Warrant, the Company entered into an agreement with SBWW Cayman where SBWW Cayman agreed to launch a tender offer to purchase up to $1 billion of the Company’s equity securities (including securities underlying vested options, exercisable warrants and convertible notes) from equity holders of the Company (the “2019 Tender Offer”). The tender offer was completed in April 2019 and as a result 4.9 million shares of both Class A and Class B Common Stock were acquired primarily from employees of the Company at a price per share of $54, which resulted in approximately $136.0 million of additional stock-based compensation expense during the six months ended June 30, 2019 and $0.5 million of capitalized stock-based compensation charges during the six months ended June 30, 2019. The additional stock-based compensation expense was recorded as the shares were purchased from employees at a price above the fair market value of the shares. Total Stock-Based Compensation Expense—The total stock-based compensation expense related to employees and non-employee directors are reported in the following financial statement line items: Six Months Ended June 30, (Amounts in thousands) 2018 2019 Stock-based compensation included in: Location operating expenses $ 6,420 $ 25,953 Other operating expenses 2,199 4,436 Sales and marketing 3,426 12,932 Growth and new market development 5,254 33,853 General and administrative expenses 10,546 111,161 Total stock-based compensation expense $ 27,845 $ 188,335 Stock-Based Awards to Non-Employees—From time to time, the Company issues common stock, restricted stock or stock options to acquire common stock to non-employee contractors for services rendered. The stock options and shares of common stock granted, vested, exercised, forfeited/canceled during the six months ended June 30, 2019 are included in the above tables together with the employee awards. Stock options granted in 2016 to non-employees included an option to purchase 500,000 shares of Class A Common Stock that will vest upon the achievement of certain member count and profitability-based targets that must be met during a four year vesting period and an option to purchase up to 120,000 shares of Class A Common Stock determined quarterly by a vesting schedule that evaluates the average price per usable square foot for accepted goods in comparison to a benchmark average price as set out in the option agreement. In February 2018, the non-employee with the option to purchase 500,000 shares of Class A Common Stock converted to an employee, and the vesting conditions of the option awards remained unchanged. Stock-based Awards Issued by Consolidated Variable Interest Entities—The tables above do not include any grants issued by the Company’s consolidated subsidiaries. ChinaCo In April 2017, the Company’s consolidated subsidiary, ChinaCo, granted a shareholder, in connection with services to be provided by a consultant affiliated with such shareholder, the right to subscribe to 10,000,000 of ChinaCo’s Class A F-120