Table of Contents WEWORK COMPANIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2019 (UNAUDITED) directors. As of June 30, 2019, the unrecognized stock-based compensation expense from outstanding options awarded to employees and non-employee directors was approximately $426.0 million, expected to be recognized over a weighted-average period of approximately 4.9 years. As of June 30, 2019, the unrecognized stock-based compensation expense from outstanding options awarded with performance-based vesting to employees and non-employee directors was approximately $793.0 million, which will be recognized only upon the satisfaction of the vesting conditions within ten years from the date of grant. For the six months ended June 30, 2018 and 2019, the Company recorded $0.7 million and $0.5 million of general and administrative expenses related to stock options awarded to non-employee contractors for services rendered, respectively. As of June 30, 2019, there was $0.3 million of total unrecognized expense related to stock options expected to be recognized over a weighted-average period of approximately 1.2 years. For the six months ended June 30, 2018 and 2019, the Company recorded $1.2 million and $0.8 million of growth and new market development expenses related to stock options awarded to non-employee contractors for services rendered, respectively. As of June 30, 2019, there was $6.5 million of total unrecognized expense related to stock options expected to be recognized over a weighted-average period of approximately 4.0 years. For the six months ended June 30, 2018 and 2019, $0.4 million and $0.6 million, respectively, of expense relating to stock options awarded to non-employees relating to goods received and services provided was capitalized and recorded as a component of property and equipment on the accompanying condensed consolidated balance sheets. As of June 30, 2019 there was $0.9 million of total unrecognized cost related to these stock options expected to be recognized over a weighted-average period of approximately 1.8 years. Early Exercise of Stock Options—The Company allows certain employees and directors to exercise stock options granted under the 2013 Plan and 2015 Plan prior to vesting. The shares received as a result of the early exercise of unvested stock options are subject to a repurchase right by the Company at the original exercise price for a period equal to the original vesting period. During 2014, certain individuals early exercised stock options prior to vesting; however, in lieu of the cash consideration required to exercise the stock options, these individuals each provided a 1.9% interest bearing recourse note, for an aggregate of $2.7 million and $1.1 million as of December 31, 2018 and June 30, 2019, respectively. As a result of the early exercises, the individuals received shares of restricted Class B Common Stock which will vest over a specified period of time (which period of time is consistent with the original vesting schedule of the stock options grant). The restricted Class B Common Stock is subject to repurchase at the original exercise price by the Company over the original vesting term. The recourse notes mature in November 2023 and are included as a component of equity. During 2019, an individual that is a principal stockholder, executive officer and director of the Company, early exercised stock options prior to vesting; however, in lieu of the cash consideration required to exercise the stock options, this individual was provided a $362.1 million interest bearing recourse note, that the Company has accounted for as in-substance non-recourse. The note bears an interest rate of 2.89%. As a result of the early exercise, the individual received shares of restricted Class B Common Stock which will vest over a specified period of time (which period of time is consistent with the original vesting schedule of the stock options grant). The restricted Class B Common Stock is subject to repurchase at the original exercise price by the Company over the original vesting term. The note matures in April 2029 and is included as a component of equity. The loan was settled in August 2019, see Note 25 for additional details. Restricted Stock—Grants of the Company’s restricted stock or restricted stock units consist primarily of time-based awards that are subject to the risk of forfeiture until vested by virtue of continued employment or service to the Company. Certain awards contain additional performance conditions for vesting described below. During 2015, certain executives of the Company were issued 440,864 shares of restricted Class A Common Stock and 500,000 shares of restricted Class B Common Stock in exchange for recourse promissory notes with principal F-118