Table of Contents WEWORK COMPANIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2019 (UNAUDITED) contingent consideration payable in stock, and a loss of $1.0 million during the six months ended June 30, 2019 related to the remeasurement of the contingent consideration payable in cash, all included in growth and new market development expenses on the accompanying condensed consolidated statements of operations. The change in fair value of the contingent consideration was driven by changes in the Company’s projected obligation to issue additional ChinaCo Class A Ordinary Shares based on the anti-dilution provisions of the acquisition agreement, changes in the likelihood of achieving certain milestones, and an increase in the fair market value of the ChinaCo Class A Ordinary Shares and the Company’s Class A Common Stock during the period. During the year ended December 31, 2018, ChinaCo issued $44.0 million of additional Class A Ordinary Shares in connection with the anti- dilution protection related to the contingent consideration of this acquisition. As of December 31, 2018, there was $15.9 million in cash holdback, $10.5 million in contingent consideration payable in cash, and $129.8 million in contingent consideration payable in a combination of Class A Ordinary Shares of ChinaCo and Class A Common Stock of the Company included in other current liabilities on the accompanying condensed consolidated balance sheet. During the six months ended June 30, 2019, the Company settled $68.1 million of the contingent consideration payable in Class A Common Stock of the Company. As of June 30, 2019, there was $15.9 million in cash holdback and $18.0 million in contingent consideration payable in a combination of Class A Ordinary Shares of ChinaCo and Class A Common Stock of the Company included in other current liabilities on the accompanying condensed consolidated balance sheet. In March 2018, the Company completed the acquisition of 100% of the equity of Conductor, Inc. (“Conductor”) for a total consideration of $113.6 million. The total consideration included $15.8 million in cash and $97.8 million in Series AP-1 Preferred Stock. As of December 31, 2018, $0.2 million of cash and $10.0 million of the Series AP-1 Preferred Stock that were held back at closing remain included in other current liabilities and additional paid in capital, respectively on the condensed consolidated balance sheet. As of June 30, 2019, all holdbacks have been released and the Company received $0.2 million as a purchase price reduction, which was recorded as a measurement period adjustment to goodwill. Conductor was founded in 2006 and is a marketing services software company that provides search engine optimization and enterprise content marketing solutions. During 2018, the Company acquired 100% of the equity of three other companies, in various lines of business, for total consideration of $11.0 million. The total consideration included $7.9 million in cash and $3.1 million in Series AP-2 Preferred Stock. As of December 31, 2018 and June 30, 2019, the condensed consolidated balance sheets included other current liabilities of $0.2 million and other liabilities of $0.5 million related to cash consideration holdbacks. All 2019 and 2018 acquisitions, other than the real estate asset investments described in Note 7, were accounted for as business combinations and the total consideration was allocated to the identifiable assets acquired and liabilities assumed based on their fair values (using primarily Level 3 inputs) as of the closing date of each acquisition, with amounts exceeding the net fair value recognized as goodwill. The goodwill is non-tax deductible and primarily attributable to expected synergies from the integration of the operations of the acquired companies and WeWork. Preliminary purchase price allocations are finalized upon post-closing procedures. These business acquisitions were not material to our condensed consolidated financial statements, either individually or in the aggregate. Accordingly, proforma results of these business acquisitions have not been presented. During the six months ended June 30, 2018, the Company released acquisition holdbacks of $2.8 million of cash, $0.6 million of common equity and $22.7 million of preferred stock, representing 23,311 shares of Class A Common Stock, 23,249 shares of Series G Preferred Stock, and 331,514 shares of Series AP-1 Preferred Stock, relating to acquisitions following the satisfaction of requirements per the terms of the agreement. During the six months ended June 30, 2019, the Company released acquisition holdbacks of $0.5 million of cash, and $10.6 million of preferred stock and paid cash contingent consideration of $11.5 million relating to acquisitions following the satisfaction of requirements per the terms of the relevant acquisition agreements. During the six months ended June 30, 2018 and 2019, the Company incurred transaction costs relating to business combinations totaling $5.2 million and $6.9 million, respectively. F-100