Table of Contents WEWORK COMPANIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2019 (UNAUDITED) balances totaling $5.6 million and $5.8 million as of December 31, 2018 and June 30, 2019, respectively. These restricted shares vest primarily over a five year period. The recourse notes pay interest rates ranging from 1.6% to 1.8% and have maturities of approximately nine years and are recorded as a component of equity. In addition, during 2015 one of the officers also paid $0.7 million for another 90,000 shares of restricted Class B Common Stock, of which 45,000 shares vested immediately and the remainder vest ratably over the 13th month through the 36th month period from the date of acquisition or exercise. As of December 31, 2018, the full 90,000 shares were vested. During the year ended December 31, 2018, the Company also forgave $0.6 million of principal balance of the recourse promissory notes and recognized the forgiveness amount as a component of general and administrative expense during the fourth quarter of 2018. In June 2018, certain executives of the Company were issued 756,039 shares of restricted Class A Common Stock in exchange for recourse promissory notes with principal balances totaling $20.2 million as of December 31, 2018 and $19.8 million as of June 30, 2019. These restricted shares vest over a five year period and are subject to repurchase by the Company during the vesting period at the original issue price. The recourse notes pay interest rates ranging from 2.5% to 2.9% and have maturities of between seven to nine years and are recorded as a component of equity. The Company reflects restricted stock and restricted stock units as issued and outstanding shares of common stock when vested and when the Class A Common Stock or Class B Common Stock has been delivered to the individual. The following table summarizes the Company’s restricted stock and restricted stock unit activity for the six months ended June 30, 2019: Weighted Average Shares Grant Date Value Unvested, December 31, 2018 4,841,182 $ 23.42 (1) Granted 997,044 37.44 (2) Vested (345,968) 18.47 Forfeited/canceled (636,010) 28.79 (3) Unvested, June 30, 2019 4,856,248 $ 26.13 (1) Includes 428,860 restricted stock units granted during the six months ended June 30, 2019, which will vest over a five to seven-year employment service period or upon the satisfaction of specified performance conditions, only if and when an initial public offering or Acquisition (as defined in the 2015 Plan) occurs within seven to ten years of the date of grant and a restricted stock award of 454,546 shares of our Class A common stock granted to a non-employee director during the six months ended June 30, 2019, which will vest in equal monthly installments over seven years from the grant date but will be forfeited if the an initial public offering or Acquisition are not completed by the end of 2019. (2) Includes 80,922 restricted stock units which vested in the six months ended June 30, 2019, however the underlying common shares have not been issued to the individual. As of June 30, 2019, a total of 430,062 shares representing $9.2 million was included as a component of additional paid-in capital on the accompanying balance sheet relating to previously vested restricted stock units that have not been settled. (3) The unvested balance includes a total of (a) 1,491,462 restricted stock and restricted stock units that will vest over their remaining service period, (b) 2,910,240 restricted stock units granted, which will vest annually over a three to seven year employment service period, only if and when an initial public offering or Acquisition (as defined in the 2015 Plan) occurs within seven to ten years of the date of grant and (c) a restricted stock award for 454,546 shares of our Class A common stock granted to a non-employee director, which will vest in equal monthly installments over seven years from the grant date but will be forfeited if an initial public offering or Acquisition are not completed by the end of 2019. The fair value of restricted stock that vested during the six months ended June 30, 2019 was $14.5 million. For the six months ended June 30, 2018 and 2019, the Company recorded total stock-based compensation expense of $4.2 million and $6.6 million, respectively, related to restricted stock and restricted stock units awarded to employees and non-employee directors. As of June 30, 2019 there was $20.5 million of total unrecognized stock-based compensation expense related to unvested restricted stock and restricted stock units awarded to employees and non-employee directors expected to be recognized over a weighted-average period of approximately 2.9 years. As of June 30, 2019, the unrecognized stock-based compensation expense from restricted stock and restricted stock units with performance-based vesting to employees and non-employee directors was approximately $93.2 million, which will be recognized only upon the satisfaction of the vesting conditions within ten years from the date of grant. F-119