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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
☒
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021March 31, 2022
OR
☐
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  ___________________  to ________
___________
Commission file number 001-39419
BOWX ACQUISITION CORP.WEWORK INC.
(Exact Namename of Registrantregistrant as Specifiedspecified in Charter)
its charter)
Delaware
001-39419
85-1144904
(State or other jurisdiction of incorporation or organization)
85-1144904
(I.R.S. Employer Identification No.)
575 Lexington Avenue
New York, NY
(State or Other JurisdictionAddress of
Incorporation)
principal executive offices)
10022
(Commission
File Number)
(IRS Employer
Identification No.)
zip code)
2400 Sand Hill Rd., Suite 200
(646) 389-3922
Menlo Park, CA 94025Registrant's telephone number, including area code
(Address of Principal Executive Offices) (Zip Code)
(650)
352-4877
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Trading
Symbol(s)
Name of each exchange
on which registered
Units, each consisting of one share of Class A common stock, and
one-third
of one redeemable warrant
BOWXU
The Nasdaq Stock Market LLC
Class A common stock, par value $0.0001 per share
WE
BOWX
The NasdaqNew York Stock Market LLC
Exchange
Redeemable warrants, exercisable for shares of Class A common stock at an exercise price of $11.50 per share
WE WS
BOWXW
The NasdaqNew York Stock Market LLC
Exchange
Securities registered pursuant to section 12(g) of the Act:
None
Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),; and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒x    No  ☐
o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T
(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒.Yes  x   No  ☐o
Indicate by check mark whether the registrant is a large-acceleratedlarge accelerated filer, an accelerated filer, a
non-accelerated
filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large-accelerated“large accelerated filer,” “accelerated filer,”filer” and “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act. (Check one):
Large accelerated filer☐oAccelerated filer☐
o
Non-accelerated filer☒xSmaller reporting company☒x
Emerging growth company☒o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
o

Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).     Yes ☒☐   No  ☐x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of August
May 11,
, 2021, 48,300,000 2022, there were 705,395,444 shares of Class A common stock, par value $0.0001 per share, and 12,075,00019,938,089 shares of Class BC common stock, par value $0.0001 per share, were issued and outstanding, respectively.outstanding.


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BOWX ACQUISITION CORP.
WeWork Inc.
Quarterly Report on Form
FORM 10-Q
THREE MONTHS ENDED MARCH 31, 2022
Table of Contents
TABLE OF CONTENTS
Page
Page
Part I - Financial Information
3
Item 1.
Condensed Consolidated Financial Statements5
1
1
5
2
7
3
8
Unaudited 9
4
11
5
13
Item 2.
17
54
Item 3.
Quantitative and Qualitative Disclosures Aboutabout Market Risk
21
88
Item 4.
Controls and Procedures
22
PART II. OTHER INFORMATION
89
Item 1.
Legal Proceedings
23
Part II - Other Information
Item 1.
Legal Proceedings
90
Item 1A.
Risk Factors
91
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
23
91
Item 3.
Defaults Upon Senior Securities
91
Item 4.
Mine Safety Disclosures
91
Item 5.
Other Information
91
Item 6.
Exhibits
92
Exhibits
24
92


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Part I.
Cautionary Note Regarding Forward-Looking Statements
Certain statements made in this Quarterly Report on Form 10-Q (“Form 10-Q”) may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “pipeline,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Although WeWork believes the expectations reflected in any forward-looking statement are based on reasonable assumptions, it can give no assurance that its expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors.
Forward-looking statements in this Form 10-Q and in any document incorporated by reference in this Form 10-Q may include, for example, statements about:
•our financial and business performance;
•the impact of the COVID-19 pandemic;
•our projected financial information, anticipated growth rate, and market opportunity;
•our ability to execute our restructuring plan relating to our business and our operating model;

•our ability to maintain the listing of our Class A Common Stock and public warrants on the New York Stock Exchange (“NYSE”);
•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;
•our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business;
•the impact of the regulatory environment and complexities with compliance related to such environment;
•our ability to maintain an effective system of internal control over financial reporting;
•our ability to grow market share in our existing markets or any new markets we may enter;
•our public securities’ potential liquidity and trading;
•our ability to raise additional capital in the future;
•our ability to respond to changes in customer demand, geopolitical events or other disruptions, including the conflict in Ukraine, and general economic conditions;
•the health of the commercial real estate industry;
•risks associated with our real estate assets and increased competition in the commercial real estate industry;
3
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•our ability to manage our growth effectively;
•our ability to achieve and maintain profitability in the future;
•our ability to access sources of capital, including debt financing and securitization funding to finance our real estate inventories and other sources of capital to finance operations and growth;
•our ability to maintain and enhance our products and brand and to attract customers;
•our ability to manage, develop and refine our platform for managing and powering flexible work spaces and access to our customer base;
•the success of strategic relationships with third parties;
•the outcome of any known and unknown litigation and regulatory proceedings; and
•the anticipated benefits of our partnerships with third parties.
These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry as well as certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including those described in “Risk Factors,” and other cautionary statements included in this Form 10-Q and in our other filings with the Securities and Exchange Commission (the "SEC"), which you should consider and read carefully.
We operate in a very competitive and rapidly changing environment and have recently undergone significant changes at the executive and board levels and changes in our planned growth trajectory. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Form 10-Q, and our expected future levels of activity and performance, may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. As a result, you should not regard any of these forward-looking statements as a representation or warranty by us or any other person or place undue reliance on any such forward-looking statements.
Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
You should read this Form 10-Q and the documents that we reference in this Form 10-Q in their entirety and with the understanding that our actual future results may be materially different from our expectations. All of our forward-looking statements are qualified by the cautionary statements contained in this section and elsewhere in this Form 10-Q.
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
and Supplementary Data
BOWX ACQUISITION CORP.
WEWORK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31,December 31,
(Amounts in millions, except share and per share amounts)20222021
Assets
Current assets:
Cash and cash equivalents$519 $924 
Accounts receivable and accrued revenue, net of allowance of $46 as of March 31, 2022 and $63 as of December 31, 2021105 130 
Prepaid expenses(1)
182 180 
Other current assets(1)
313 238 
 Total current assets1,119 1,472 
Property and equipment, net5,192 5,374 
Lease right-of-use assets, net12,598 13,052 
Restricted cash11 11 
Equity method and other investments164 200 
Goodwill685 677 
Intangible assets, net67 57 
Other assets (including related party amounts of $545 as of March 31, 2022 and $596 as of December 31, 2021)(1)
850 913 
Total assets$20,686 $21,756 
Liabilities
Current liabilities:
Accounts payable and accrued expenses(1)
$563 $621 
Members’ service retainers435 421 
Deferred revenue(1)
123 120 
Current lease obligations(1)
912 893 
Other current liabilities(1)
88 78 
Total current liabilities2,121 2,133 
Long-term lease obligations(1)
17,323 17,926 
Unsecured notes payable (including amounts due to related parties of $1,650 as of March 31, 2022 and December 31, 2021)(1)
2,200 2,200 
Warrant liabilities, net13 16 
Long-term debt, net665 666 
Other liabilities224 228 
Total liabilities22,546 23,169 
Commitments and contingencies (Note 20)00
Redeemable noncontrolling interests15 36 





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WEWORK INC.
CONDENSED CONSOLIDATED BALANCE SHEETS – (CONTINUED)
(UNAUDITED)
March 31,December 31,
(Amounts in millions, except share and per share amounts)20222021
Equity
WeWork Inc. shareholders' equity (deficit):
Preferred stock; par value $0.0001; 100,000,000 shares authorized, zero issued and outstanding as of March 31, 2022 and December 31, 2021— — 
Common stock Class A; par value $0.0001; 1,500,000,000 shares authorized, 707,897,654 shares issued and 704,953,442 shares outstanding as of March 31, 2022, and 1,500,000,000 shares authorized, 705,016,923 shares issued and 702,072,711 shares outstanding as of December 31, 2021— — 
Common stock Class C; par value $0.0001; 25,041,666 shares authorized, 19,938,089 shares issued and outstanding as of March 31, 2022 and December 31, 2021— — 
Treasury stock, at cost; 2,944,212 shares held as of March 31, 2022 and December 31, 2021(29)(29)
Additional paid-in capital12,348 12,321 
Accumulated other comprehensive income (loss)8 (31)
Accumulated deficit(14,578)(14,143)
Total WeWork Inc. shareholders' deficit(2,251)(1,882)
Noncontrolling interests376 433 
Total equity(1,875)(1,449)
Total liabilities and equity$20,686 $21,756 
(1)See Note 21 for disclosure of related party amounts.
The accompanying notes are an integral part of these condensed consolidatedfinancial statements.

   
June 30, 2021
  
December 31, 2020
 
   
(Unaudited)
    
Assets:
   
Current assets:
   
Cash
  $506,334  $921,049 
Prepaid expenses
   322,498   372,412 
   
 
 
  
 
 
 
Total current assets
   828,832   1,293,461 
Investments held in Trust Account
   483,071,704   483,227,051 
   
 
 
  
 
 
 
Total assets
  
$
483,900,536
 
 
$
484,520,512
 
   
 
 
  
 
 
 
Liabilities and Stockholders’ Equity:
         
Current liabilities:
         
Accounts payable
  $65,468  $315 
Accrued expenses
   3,608,438   76,695 
Accrued income tax
   0     12,010 
Franchise tax payable
   47,709   122,242 
   
 
 
  
 
 
 
Total current liabilities
   3,721,615   211,262 
Deferred underwriting commissions in connection with the initial public offering
   16,905,000   16,905,000 
Warrant liabilities
   25,962,932   13,292,400 
   
 
 
  
 
 
 
Total liabilities
   46,589,547   30,408,662 
Commitments and Contingencies (Note 5)
    0   0
Class A common stock, $0.0001 par value; 87,500,000 shares authorized; 43,231,098 and 44,911,184 shares subject to possible redemption at $10.00 per share as of June 30, 2021 and December 31, 2020, respectively
   432,310,980   449,111,840 
 
Stockholders’ Equity:
         
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0ne issued and outstanding as of June 30, 2021 and December 31, 2020
   0—     0—   
Class A common stock, $0.0001 par value; 87,500,000 shares authorized; 5,068,902 and 3,388,816 shares issued and outstanding (excluding 43,231,098 and 44,911,184 shares subject to possible redemption) as of June 30, 2021 and December 31, 2020, respectively
   507   339 
 
Class B common stock, $0.0001 par value; 12,500,000 shares authorized; 12,075,000 shares issued and outstanding as of June 30, 2021 and December 31, 2020
   1,208   1,208 
Additional
paid-in
capital
   26,609,471   9,808,779 
Accumulated deficit
   (21,611,177)   (4,810,316) 
   
 
 
  
 
 
 
Total stockholders’ equity
   5,000,009   5,000,010 
   
 
 
  
 
 
 
Total Liabilities and Stockholders’ Equity
  
$
483,900,536
 
 
$
484,520,512
 
   
 
 
  
 
 
 
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WEWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
(Amounts in millions, except share and per share data)20222021
Revenue(1)
$765 $598 
Expenses:
Location operating expenses—cost of revenue (exclusive of depreciation and amortization of $158 and $175 for the three months ended March 31, 2022 and 2021, respectively, shown separately below)736 818 
Pre-opening location expenses47 35 
Selling, general and administrative expenses208 274 
Restructuring and other related costs(130)494 
Impairment expense91 299 
Depreciation and amortization171 184 
Total expenses(1)
1,123 2,104 
Loss from operations(358)(1,506)
Interest and other income (expense), net:
Income (loss) from equity method and other investments6 (31)
Interest expense (including related party expenses of $90 and $88 for the three months ended March 31, 2022 and 2021, respectively. See Note 14)(1)
(113)(105)
Interest income1 6 
Foreign currency gain (loss)(44)(71)
Gain (loss) from change in fair value of warrant liabilities (including related party financial instruments of none and $(352) for the three months ended March 31, 2022 and 2021, respectively. See Note 15)(1)
3 (352)
Total interest and other income (expense), net(147)(553)
Pre-tax loss(505)(2,059)
Income tax benefit (provision)1 (3)
Net loss(504)(2,062)
Net loss attributable to noncontrolling interests:
Redeemable noncontrolling interests — mezzanine21 30 
Noncontrolling interest — equity48 — 
Net loss attributable to WeWork Inc.$(435)$(2,032)
Net loss per share attributable to Class A and Class B common stockholders (see Note 19):
Basic$(0.57)$(14.34)
Diluted$(0.57)$(14.34)
Weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders, basic and diluted759,676,860 141,721,529 
(1)See Note 21 for disclosure of related party amounts.
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
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BOWX ACQUISITION CORP.
WEWORK INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
COMPREHENSIVE LOSS
   
For the Three Months Ended
June 30, 2021
  
For the Six Months Ended
June 30, 2021
  
For the Period from
May 19, 2020 (inception)
through June 30, 2020
 
Operating expenses
             
General and administrative expenses
  $1,818,150  $4,090,515  $401 
Franchise tax expense
   49,863   99,178   23,064 
   
 
 
  
 
 
  
 
 
 
Total operating expenses
   (1,868,013)   (4,189,693)   (23,465) 
Change in fair value of warrant liabilities
   (9,327,999)   (12,670,532)   0   
Net gain from investments held in Trust Account
   12,297   59,364   0   
   
 
 
  
 
 
  
 
 
 
Net loss
  $(11,183,715)  $(16,800,861)  $(23,465) 
   
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding of Class A common stock, basic and diluted
   48,300,000   48,300,000   0   
   
 
 
  
 
 
  
 
 
 
Basic and diluted net income per share, Class A common stock
  $0    $0    $0   
   
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding of Class B common stock, basic and diluted
   12,075,000   12,075,000   10,500,000 
   
 
 
  
 
 
  
 
 
 
Basic and diluted net loss per share, Class B common stock
  $(0.93)  $(1.39)  $(0.00) 
   
 
 
  
 
 
  
 
 
 
(UNAUDITED)
Three Months Ended
March 31,
(Amounts in millions)20222021
Net loss$(504)$(2,062)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of tax of none for the three months ended March 31, 2022 and 2021, respectively30 38 
Unrealized (loss) gain on available-for-sale securities, net of tax of $— and $— for the three months ended March 31, 2022 and 2021, respectively2 — 
Other comprehensive income (loss), net of tax32 38 
Comprehensive loss(472)(2,024)
Net (income) loss attributable to noncontrolling interests69 30 
Other comprehensive (income) loss attributable to noncontrolling interests7 25 
Comprehensive loss attributable to WeWork Inc.$(396)$(1,969)

The accompanying notes are an integral part of this unauditedthese condensed consolidated financial statements.


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BOWX ACQUISITION CORP.
WEWORK INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’CONVERTIBLE PREFERRED STOCK, NONCONTROLLING INTERESTS AND EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2022
For the Three and Six Months Ended June 30, 2021
(UNAUDITED)
   
Common Stock
          
Total

Stockholders’

Equity
 
   
Class A
   
Class B
   
Additional
Paid-In

Capital
   
Accumulated

Deficit
 
   
Shares
   
Amount
   
Shares
   
Amount
 
Balance - December 31, 2020
  
 
3,388,816
 
  
$
339
 
  
 
12,075,000
 
  
$
1,208
 
  
$
9,808,779
 
  
$
(4,810,316
) 
 
$
5,000,010
 
Common stock subject to possible redemption
   561,714    56    —      —      5,617,084    —     5,617,140 
Net loss
   —      —      —      —      —      (5,617,146)   (5,617,146) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance - March 31, 2021 (Unaudited)
  
 
3,950,530
 
  
 
395
 
  
 
12,075,000
 
  
 
1,208
 
  
 
15,425,863
 
  
 
(10,427,462
) 
 
 
5,000,004
 
Common stock subject to possible redemption
   1,118,372    112    —      —      11,183,608    —     11,183,720 
Net loss
   —      —      —      —      —      (11,183,715)   (11,183,715) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance - June 30, 2021 (Unaudited)
  
 
5,068,902
 
  
$
507
 
  
 
12,075,000
 
  
$
1,208
 
  
$
26,609,471
 
  
$
(21,611,177
) 
 
$
5,000,009
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
For the Period from May 19, 2020 (Inception) through June 30, 2020
   
Class B Common Stock
   
Additional
Paid-In
   
Accumulated
  
Total
Stockholders’
 
   
Shares (1)
   
Amount
   
Capital
   
Deficit
  
Equity
 
Balance - May 19, 2020 (inception)
   0     $0     $0     $0    $0   
Issuance of Class B common stock to initial stockholders
   12,075,000    1,208    23,792    —     25,000 
Net loss
   —      —      —      (23,465)   (23,465) 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balance - June 30, 2020 (unaudited)
  
 
12,075,000
 
  
$
1,208
 
  
$
23,792
 
  
$
(23,465
) 
 
$
1,535
 
(1)
This number included up to 1,575,000 shares
ConvertibleRedeemable
Preferred StockNoncontrolling
(Amounts in millions, except share amounts)SharesAmountInterests
Balance—December 31, 2021— $— $36 
Issuance of Class B common stock subject to forfeiture if the over-allotment option was not exercised in full or in party by the underwriter. On August 13, 2020, the u
n
derwriter fully exercised the over-allotment option; thus, these shares were no longer subject to forfeiture.noncontrolling interests		— — (2)
Net income (loss)— — (21)
Other comprehensive income (loss), net of tax— — 2 
Balance—March 31, 2022— $— $15 
WeWork Inc. Shareholders' Equity (Deficit)
Accumulated
Common StockCommon StockTreasury StockAdditionalOther
(Amounts in millions, except share amounts) Class AClass CPaid-InComprehensiveAccumulatedNoncontrolling
SharesAmountSharesAmountSharesAmountCapitalIncome (Loss)DeficitInterestsTotal
Balance—December 31, 2021705,016,923 $— 19,938,089 $— (2,944,212)$(29)$12,321 $(31)$(14,143)$433 $(1,449)
Stock-based compensation— — — — — — 13 — — — 13 
Exercise of stock options695,388 — — — — — 2 — — — 2 
Issuance of common stock in connection with Acquisition489,071 — — — — — 3 — — — 3 
Fair value of equity classified contingent consideration— — — — — — 1 — — — 1 
Transactions with principal shareholder— — — — — — 9 — — — 9 
Issuance of common stock for settlement of vested RSUs1,844,201 — — — — — — — — — — 
Shares withheld related to net share settlement(147,558)— — — — — (1)— — — (1)
Net income (loss)— — — — — — — — (435)(48)(483)
Other comprehensive income (loss), net of tax— — — — — — — 39 — (9)30 
Other(371)— — — — — — — — — — 
Balance—March 31, 2022707,897,654 $— 19,938,089 $— (2,944,212)$(29)$12,348 $8 $(14,578)$376 $(1,875)
The accompanying notes are an integral part of this unauditedthese condensed consolidated financial statements.
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BOWX ACQUISITION CORP.
WEWORK INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
CHANGES IN CONVERTIBLE PREFERRED STOCK, NONCONTROLLING INTERESTS AND EQUITY
   
For the Six Months Ended
June 30, 2021
  
For the Period from
May 19, 2020 (Inception)
through June 30, 2020
 
Cash Flows from Operating Activities:
   
Net loss
  $(16,800,861)  $(23,465) 
Adjustments to reconcile net loss to net cash used in operating activities:
         
General and administrative expenses paid by related party
   0—   381 
Change in fair value of warrant liabilities
   12,670,532   —   
Net gain from investments held in Trust Account
   (59,364)   0—   
Changes in operating assets and liabilities:
         
Prepaid expenses
   49,914   0—   
Accounts payable
   65,153   20 
Accrued expenses
   3,531,743   0— 
Accrued income tax
   (12,010)   0— 
Franchise tax payable
   (74,533)   23,064 
   
 
 
  
 
 
 
Net cash used in operating activities
   (629,426)   0—   
   
 
 
  
 
 
 
Cash Flows from Investing Activities
         
Interest released from Trust Account
   214,711   0—   
   
 
 
  
 
 
 
Net cash provided by investing activities
   214,711   0—   
   
 
 
  
 
 
 
Net decrease in cash
   (414,715)   0—   
Cash - beginning of the period
   921,049   0—   
   
 
 
  
 
 
 
Cash - end of the period
  $506,334  $0—   
   
 
 
  
 
 
 
Supplemental Cash Flow Information
         
Cash paid for income taxes
  $21,000  $0— 
   
 
 
  
 
 
 
Supplemental disclosure of noncash activities:
         
Offering costs paid by related party in exchange for issuance of Class B
common stock
  $0—  $25,000 
   
 
 
  
 
 
 
Offering costs included in accrued expenses
  $0—  $138,600 
   
 
 
  
 
 
 
Offering costs included in note payable
  $0—  $109,325 
   
 
 
  
 
 
 
Change in value of Class A common stock subject to possible redemption
  $(16,800,860)  $0—   
   
 
 
  
 
 
 
FOR THE THREE MONTHS ENDED MARCH 31, 2021
(UNAUDITED)
ConvertibleRedeemable
Preferred StockNoncontrolling
(Amounts in millions, except share amounts)SharesAmountInterests
Balance—December 31, 2020304,791,824 $7,666 $380 
Exercise of warrants107,312,099 713 — 
Net income (loss)— — (30)
Other comprehensive income (loss), net of tax— — (24)
Balance—March 31, 2021412,103,923 $8,379 $326 
WeWork Inc. Shareholders' Equity (Deficit)
Accumulated
Common StockCommon StockCommon StockAdditionalOther
(Amounts in millions, except share amounts) Class AClass BClass CPaid-InComprehensiveAccumulatedNoncontrolling
SharesAmountSharesAmountSharesAmountCapitalIncome (Loss)DeficitInterestsTotal
Balance—December 31, 202034,297,295 $— 106,894,492 $— 20,794,324 $— $2,188 $(159)$(9,703)$2 $(7,672)
Forfeiture of noncontrolling WeWork Partnerships Profits Interest Units in the WeWork Partnership and Common Stock Class C— — — — (105,151)— — — — — — 
Issuance of stock for services rendered— — — — — — (2)— — — (2)
Transfer from Class B to Class A106,894,492 — (106,894,492)— — — — — — — — 
Stock-based compensation— — — — — — 68 — — — 68 
Exercise of stock options775,323 — — — — — 1 — — — 1 
Transaction with principal shareholder— — — — — — 428 — — — 428 
Net income (loss)— — — — — — — — (2,032)— (2,032)
Other— — — — — — 1 63 (1)— 63 
Balance—March 31, 2021141,967,110 $— — $— 20,689,173 $— $2,684 $(96)$(11,736)$2 $(9,146)
T
heThe accompanying notes are an integral part of this unauditedthese condensed consolidated financial statements.
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WEWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Three Months Ended
March 31,
(Amounts in millions)20222021
Cash Flows from Operating Activities:
Net loss$(504)$(2,062)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization171 184 
Impairment expense91 299 
Non-cash transaction with principal shareholder— 428 
Stock-based compensation expense13 156 
Issuance of stock for services rendered, net of forfeitures— (2)
Non-cash interest expense53 53 
Provision for allowance for doubtful accounts(1)7 
(Income) loss from equity method and other investments(6)31 
Foreign currency (gain) loss44 71 
Change in fair value of financial instruments(3)352 
Changes in operating assets and liabilities:
Operating lease right-of-use assets347 290 
Current and long-term lease obligations(470)(244)
Accounts receivable and accrued revenue29 38 
Other assets(40)(62)
Accounts payable and accrued expenses(63)(66)
Deferred revenue3 (24)
Other liabilities(5)9 
Deferred income taxes3 1 
Net cash provided by (used in) operating activities(338)(541)
Cash Flows from Investing Activities:
Purchases of property, equipment and capitalized software(74)(129)
Change in security deposits with landlords(1)2 
Contributions to investments(5)(10)
Distributions from investments1 — 
Cash used for acquisitions, net of cash acquired(9)— 
Net cash provided by (used in) investing activities(88)(137)



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WEWORK INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) – (CONTINUED)
Three Months Ended
March 31,
(Amounts in millions)20222021
Cash Flows from Financing Activities:
Principal payments for property and equipment acquired under finance leases(1)(1)
Proceeds from unsecured related party debt— 600 
Repayments of debt(1)(2)
Proceeds from exercise of stock options and warrants— 2 
Payments for contingent consideration and holdback of acquisition proceeds— (2)
Proceeds relating to contingent consideration and holdbacks of disposition proceeds— 12 
Additions to members’ service retainers99 89 
Refunds of members’ service retainers(75)(109)
Net cash provided by (used in) financing activities22 589 
Effects of exchange rate changes on cash, cash equivalents and restricted cash(1)(7)
Net increase (decrease) in cash, cash equivalents and restricted cash(405)(96)
Cash, cash equivalents and restricted cash—Beginning of period935 854 
Cash, cash equivalents and restricted cash—End of period$530 $758 
The accompanying notes are an integral part of these condensed consolidated financial statements.
12
BOWX ACQUISITION CORP.
Table of Contents
WEWORK INC.
NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 1—Description of Organization and
Business Operations
1. Organization and General
Business
WeWork Inc.'s core global business offering integrates space, community, services and technology in 765 locations, including 633 Consolidated Locations, around the world as of March 2022. The Company's membership offerings are designed to accommodate its members' distinct space needs. WeWork provides its members the optionality to choose from a dedicated desk, a private office or a fully customized floor with the flexibility to choose the type of membership that works for them on a monthly subscription basis, through a multi-year membership agreement or on a pay-as-you-go basis.
The Company’s operations are headquartered in New York.
WeWork Companies Inc. was founded in 2010. The We Company was incorporated under the laws of the state of Delaware in April 2019 as a direct wholly-owned subsidiary of WeWork Companies Inc. As a result of various legal entity reorganization transactions undertaken in July 2019, The We Company became the holding company of the Company's business, and the then-stockholders of WeWork Companies Inc. became the stockholders of The We Company. WeWork Companies Inc. is the predecessor of The We Company for financial reporting purposes. Effective October 14, 2020, The We Company changed its legal name to WeWork Inc. ("Legacy WeWork").
On October 20, 2021 (the “Closing Date”), the Company (which was formerly known as BowX Acquisition Corp. (the “Company”(“Legacy BowX”)) was incorporated as a Delaware corporation on May 19, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similarconsummated its previously announced business combination (“Business Combination”) with one or more operating businesses or entities that it has not yet selected. The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company has neither engaged in any operations nor generated revenue to date. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”).
As of June 30, 2021, the Company had not commenced any operations. All activity for the period from May 19, 2020 (inception) through June 30, 2021 had been related to the Company’s formation and the initial public offering (“Initial Public Offering”) described below, and since the offering, the search for a prospective Business Combination. The Company will not generate any operating revenue until after the completion of its initial Business Combination, at the earliest. The Company generates
non-operating
income in the form of interest income on investments held in the Trust Account (as defined below).
Sponsor and Financing
The Company’s sponsor is BowX Sponsor, LLC, a Delaware limited liability company of which Vivek Ranadivé, the Company’s Chairman of the Board and
Co-Chief
Executive Officer, and Murray Rode, the Company’s
Co-Chief
Executive Officer and Chief Financial Officer, are the managing members (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on August 4, 2020. On August 7, 2020, the Company consummated its Initial Public Offering of 42,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $420.0 million, and incurring offering costs of approximately $23.6 million, inclusive of $14.7 million in deferred underwriting commissions (Note 5). On August 10, 2020, the underwriter exercised the over-allotment option to purchase an additional of 6,300,000 Units at the Initial Public Offering price at $10.00 per Unit and the Company consummated the sale of such Units on August 13, 2020, generating additional gross proceeds of $63.0 million, and incurring additional offering costs of approximately $3.5 million, inclusive of approximately $2.2 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,933,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to certain of the Company’s initial stockholders and certain funds and accounts managed by subsidiaries of BlackRock, Inc (the “Private Placement Warrants Purchasers”), generating gross proceeds of $10.4 million (Note 4), and incurring offering costs of approximately $8,000. In connection with the consummation of the sale of additional Units pursuant to the underwriter’s over-allotment option on August 13, 2020, the Company sold an additional 840,000 Private Placement Warrants to the Private Placement Warrants Purchasers, generating additional gross proceeds of approximately $1.3 million.
Trust Account
Upon the closing of the Initial Public Offering and the Private Placement (including the exercise of the over-allotment option), $483.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and held as cash or invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meetingthat certain conditions under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
Pursuant to stock exchange listing rules, the Company must complete an initial Business Combination with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
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Table of Contents
BOWX ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest earned on the funds that may be released to the Company to pay taxes, none of the funds held in Trust Account will be released until the earliest of: (i) the completion of the Business Combination; (ii) the redemption of any of Public Shares to its holders (the “Public Stockholders”) properly tendered in connection with a stockholder vote to amend certain provisions of the Company’s amended and restated certificate of incorporation prior to an initial Business Combination and (iii) the redemption of 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below).
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward completing a Business Combination. Furthermore, there is no assurance that the Company will be able to successfully complete a Business Combination.
In connection with the proposed transaction with WeWork described below, the Company will seek stockholder approval of the Business Combination at a meeting called for such purpose in connection with which Public Stockholders may seek to redeem their Public Shares, regardless of whether they vote for or against the Business Combination or do not vote at all, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes. The Company will complete its Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less
than $5,000,001 either immediately prior to or upon consummation of the Company’s initial Business Combination. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination.
A
stockholder will have the right to redeem such holder’s Public Shares for an amount in cash equal to such holder’s pro rata share of the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest not previously released to the Company to pay its franchise and income taxes. As a result, such common stock has been recorded at redemption amount and classified as temporary equity, in accordance with the Financial Accounting Standard Board (“FASB”), Accounting Standard Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.” The amount in the Trust Account was initially $10.00 per Public Share.
The Company has 24 months from the closing of the Initial Public Offering, or August 7, 2022, to complete its initial Business Combination (the “Combination Period”). If the Company does not complete a Business Combination within this period of time (and stockholders do not approve an amendment to the amended and restated certificate of incorporation to extend this date), it will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at
a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The Company’s Sponsor and the other holders of the Founder Shares (as defined below), excluding funds and accounts managed by subsidiaries of BlackRock, Inc (the “initial stockholders”), have entered into agreements with the Company, pursuant to which they have waived their rights to participate in any redemption with respect to their Founder Shares in the event the Company does not complete a Business Combination within the required time period; provided, however, if the initial stockholders or any of the Company’s officers, directors or affiliates acquire Public Shares in or after the Initial Public Offering, they will be entitled to a pro rata share of the Trust Account upon the Company’s redemption or liquidation in the event the Company does not complete a Business Combination within the required time period. In the event of such distribution, it is possible that the per share value in the Trust Account will be less than the price per Unit sold in the Initial Public Offering.
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BOWX ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Proposed Business Combination
On March 25, 2021, the Company, BowX Merger Subsidiary Corp., a Delaware corporation (“Merger Sub”) and a direct, wholly owned subsidiary of the Company, and WeWork Inc., a Delaware corporation (“WeWork”), entered into an Agreement and Plan of Merger, dated as of March 25, 2021 (the “Merger Agreement”), pursuant to which,by and among other transactions, onLegacy BowX, a subsidiary of Legacy BowX, and Legacy WeWork. As contemplated by the terms and conditions set forth therein, Merger Sub is to mergeAgreement, (1) the subsidiary of Legacy BowX merged with and into Legacy WeWork, (the “First Merger”), with Legacy WeWork surviving the First Merger as a wholly owned subsidiary of the Company (WeWork, in its capacity as the surviving corporation of the First Merger, is sometimes referred to as the “Surviving Corporation”);Legacy BowX, and as promptly as practicable and as part of the same overall transaction as the First Merger, such Surviving Corporation will be(2) immediately thereafter, Legacy WeWork merged with and into BowX Merger Subsidiary II, LLC, a Delaware limited liability company (“Merger Sub II”) and a direct wholly ownedanother subsidiary of the Company (the “Second Merger” and, together with the First Merger, the “Mergers”Legacy BowX (such mergers and collectively with the other transactions described in the Merger Agreement, the “Business Combination”), with Merger Sub II being the surviving entity of the Second Merger (Merger Sub II, in its capacity as the surviving entity of the Second Merger, is sometimes referred to herein as the “Surviving Entity”). In connection with the Closing (as defined herein),closing of the Business Combination, Legacy BowX intends to changechanged its name to WeWork Inc. (such post-Closing entity, “New WeWork”).
, resulting in WeWork Inc. becoming a publicly traded company.
As a result ofUnless the context indicates otherwise, references in this Form 10-Q to (A) “WeWork”, “the Company,” “we,” “us” and upon“our” are to the Closing, among other things, all outstanding sharesbusiness of WeWork capital stock asInc., a Delaware corporation, and its consolidated subsidiaries following the closing of the First Merger (other than sharesBusiness Combination and to (B) “Legacy WeWork” are to WeWork Inc. and its consolidated subsidiaries prior to the closing of WeWork Class C common stock, treasury shares, the dissenting sharesBusiness Combination. “Legacy BowX” refers to BowX Acquisition Corp. prior to the Business Combination. See Note 3 for further discussion on the Business Combination.
The Company holds an indirect general partner interest and shares of WeWork capital stock reservedindirect limited partner interests in respect of WeWork awards) will be cancelled in exchange for the right to receive an aggregate of 655,300,000 shares of New WeWork Class A common stock (at a deemed value of $10.00 per share) representing a
pre-transaction
equity value of WeWork of approximately $7.9 billionThe We Company Management Holdings L.P. (the “Aggregate Merger Consideration”). An additional 80,000,000 shares of New WeWork Class A common stock will be purchased (at a price of $10.00 per share) at the Closing by certain third-party investors (collectively, the “PIPE Investors”), for a total aggregate purchase price of $800,000,000 (the “PIPE Investment”“WeWork Partnership”). The proceedsWeWork Partnership owns 100% of the PIPE Investment, togetherequity in WeWork Companies LLC. The Company, through the WeWork Partnership and WeWork Companies LLC, holds all the assets held by WeWork Companies Inc. prior to the July 2019 legal entity reorganization and is subject to all the liabilities to which WeWork Companies Inc. was subject prior to the 2019 legal entity reorganization.
All references to "SBG" are references to SoftBank Group Corp. or a controlled affiliate or subsidiary thereof, but, unless the context otherwise requires, such references do not include SVF Endurance (Cayman) Limited ("SVFE") or the SoftBank Vision Fund (AIV M1) L.P. ("SoftBank Vision Fund").
In October 2019, Legacy WeWork entered into an agreement with SBG and SoftBank Vision Fund for additional equity and debt financing, as well as a number of changes to Legacy WeWork's corporate governance, including changes to the amounts remaining invoting rights associated with certain series of Legacy WeWork's capital stock (as subsequently amended, the Company’s trust account will be retained by New WeWork following"Master Transaction Agreement"). The changes associated with this October 2019 agreement, and related agreements and amendments entered into subsequent to October 2019, as described throughout these financial statement notes, are collectively referred to as the Closing."SoftBank Transactions." SBG is a principal stockholder of the Company with representation on the Company's board of directors.
Liquidity and Capital Resources
13
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation — The accompanying unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of June 30, 2021, the Company had approximately $506,000 of cash in its operating account and approximately $2.9 million of working capital deficit.
Through June 30, 2021, the Company’s liquidity needs were satisfied through a payment of $25,000 from the Company’s Chairman and
Co-Chief
Executive Officer to cover for certain offering costs in exchange for the issuance of the Founder Shares, the loan under the Note of approximately $110,000 (see Note 4) to the Company to cover for offering costs in connectionaccordance with the Initial Public Offering. Subsequent to the consummation of the Initial Public Offering on August 7, 2020
, the liquidity needs have been satisfied through the remaining balance of the Note and advancement of funds of approximately $
45,000
from a related party, for total outstanding balance of Note and advances of approximately $
195,000
, and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The Company fully repaid the Note and advances on August 7, 2020. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s officers, directors and initial stockholders may, but are not obligated to, provide the Company Working Capital Loans (see Note 4). To date, there were no amounts outstanding under any Working Capital Loans.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
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Table of Contents
BOWX ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Management continues to evaluate the impact of the
COVID-19
pandemic and has concluded that the specific impact is not readily determinable as of the date of the unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2—Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity withgenerally accepted accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to thereporting. In accordance with such rules and regulations, ofcertain information and accompanying note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, although the
 SEC
. Accordingly, they do not include all of Company believes the disclosures included herein are adequate to make the information and footnotes required by GAAP.presented not misleading. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, which are considered necessary for the fair statementpresentation of the balancesfinancial position of the Company at March 31, 2022 and the results of operations for the interim periods presented. The operating results for the periods presented. Operating results for the three and six months ended June 30, 2021presented are not necessarily indicative of the results that may be expected throughfor the year ending December 31, 2021or for any future periods.
2022. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021, included in the Company’sWeWork Inc.'s Annual Report on Form 10K/A10-K for the year ended December 31, 2021 (the "2021 Form 10-K").
Other than the changes described below, no material changes have been made to the Company's significant accounting policies disclosed in Note 2, Summary of Significant Accounting Policies, in its 2021 Form 10-K filed withon March 17, 2021. Certain terms not otherwise defined in this Form 10-Q have the SECmeanings specified in the 2021 Form 10-K.
The Business Combination (as defined in Note 1) closed on May 12, 2021.
PrinciplesOctober 20, 2021, was accounted for as a reverse recapitalization under U.S. GAAP whereby Legacy BowX was determined to be the accounting acquiree, and Legacy WeWork, the accounting acquirer. This accounting treatment is equivalent to Legacy WeWork issuing common stock for the net assets of Consolidation
The condensed consolidated financial statementsLegacy BowX, accompanied by a recapitalization. As a result of the Company include its wholly-owned subsidiaryBusiness Combination, prior period share and per share amounts presented in connection with the planned merger. All inter-company accounts and transactions are eliminated in consolidation.
Emerging Growth Company
As an emerging growth company, the Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’saccompanying unaudited condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out ofand these related notes have been retroactively converted using the extended transition period difficult or impossible becauseExchange Ratio (as defined in Note 3).
The Company operates as a single operating segment. See Note 22 for further discussion on the Company's segment reporting.
The accompanying unaudited condensed consolidated financial statements include the accounts of the potential differencesCompany, its majority‑owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated in accounting standards used.consolidation..
The Company is required to consolidate entities deemed to be VIEs in which the Company is the primary beneficiary. The Company is considered to be the primary beneficiary of a VIE when the Company has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE.
JapanCo, LatamCo, WeCap Manager, and WeCap Holdings Partnership (each as defined in Note 9) are the Company's only consolidated VIEs as of March 31, 2022. See Note 9 for discussion of the consolidated VIE transactions during the three months ended March 31, 2022 and 2021. See Note 10 for discussion of the Company’s non-consolidated VIEs.
Use of Estimates
— The preparation of the unaudited condensed consolidated financial statements in conformityaccordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amountsamount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amountsamount of revenues and expenses during the reporting period.periods.
14
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Estimates inherent in the current financial reporting process inevitably involve assumptions about future events. Actual results could differ from those estimates.
Since December 2019, a novel strain of coronavirus, referred to as COVID-19, has spread to countries in which we operate. COVID-19 has become a pandemic. Authorities in jurisdictions where the Company's locations are located have at times issued stay-at-home orders, restrictions on certain activities such as travel and on the types of businesses that may continue to operate. As the pandemic has adversely affected and may continue to adversely affect the Company's revenues and expenditures, the extent and duration of these restrictions and overall macroeconomic impact of the pandemic will have an effect on estimates used in the preparation of financial statements. This includes the net operating income assumptions in the Company's long-lived asset impairment testing, the ultimate collectability of accounts receivable due to the effects of COVID-19 on the financial position of WeWork's members, the timing of capital expenditures and fair value measurement changes for assets and liabilities that the Company measures at fair value and its assessment of its ability to continue to meet their obligations as they come due.
CashThe Company's liquidity forecasts are based upon continued execution of its operational restructuring program and Cash Equivalents
also includes management's best estimate of the impact that the COVID-19 pandemic, including the Omicron or other variants, may continue to have on WeWork's business and its liquidity needs; however, the extent to which the Company's future results and liquidity needs are further affected by the continued impact of the COVID-19 pandemic will largely depend on the duration of closures, and delays in location openings, the success of ongoing vaccination efforts, the effect on demand for WeWork memberships, any permanent shifts in working from home, how quickly the Company can resume normal operations and the Company's ongoing lease negotiations with its landlords, among others. WeWork believes continued execution of its operational restructuring program and its current liquidity position will be sufficient to help it mitigate the continued near-term uncertainty associated with COVID-19, however its assessment assumes a continued recovery in its revenues and occupancy that began in the second half of 2021 with a gradual return toward pre-COVID levels. If the Company does not experience a recovery consistent with its projected timing, additional capital sources may be required, the timing and source of which are uncertain. There is no assurance the Company will be successful in securing the additional capital infusions if needed.
Reclassifications — Certain reclassifications have been made to prior years' financial information to conform to the current year presentation. This primarily includes the aggregation of Capitalized software of $10 million and $7 million during the three months ended March 31, 2022 and 2021, respectively, and Purchases of property and equipment into one financial statement line item, "Purchases of property, equipment and capitalized software" for all periods presented on the condensed consolidated statements of cash flows.
Income Taxes — The Company calculates its quarterly income tax provision pursuant to Accounting Standard Codification ("ASC") 740-270, Income Taxes — Interim Reporting, which provides that a Company cannot recognize a tax benefit in its annual effective tax rate for any jurisdiction with a pre-tax book loss and full valuation allowance (“excluded jurisdictions”). For the three months ended March 31, 2022 and 2021, the Company recorded an income tax benefit of $1 million and income tax provision of $3 million, respectively, resulting in effective tax rates of (0.20)% and 0.16%, respectively. As of March 31, 2022 the Company had net deferred income tax liabilities of $2 million and as of December 31, 2021, the Company had net deferred income tax assets of $1 million, which were included within other liabilities and other assets, respectively, on the accompanying condensed consolidated balance sheets.
The Company considers all short-term investments with an original maturity ofanalyzed its various tax positions and did not identify any material uncertain tax positions for the three months or less when purchased to be cash equivalents. There were no cash equivalents at June 30, 2021ended March 31, 2022 and December 31, 2020.2021.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("ASU") 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own
815
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BOWX ACQUISITION CORP.WEWORK INC.
NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Equity ("ASU 2020-06"). ASU 2020-06 adds a disclosure objective and certain disclosure requirements to increase transparency and decision-usefulness about a convertible instrument’s terms and features, by reducing the number of models used to account for convertible instruments, amending diluted earnings per share calculations for convertible instruments, and amending the requirements for a contract (or embedded derivative) that is potentially settled in an entity’s own shares to be classified in equity. The Company adopted ASU 2020-06 as of January 1, 2022, which did not have any impact on its condensed consolidated financial statements.
Concentration of Credit Risk
Financial instrumentsIn November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832)-Disclosures by Business Entities about Government Assistance ("ASU 2021-10"). ASU 2021-10 requires certain annual disclosures about transactions with a government that potentially subject the Company to concentration of credit risk consist of cash accounts inare accounted for by applying a financial institution which, at times, may exceed the Federal depository insurance coverage of $250,000, and investments held in Trust Account.grant or contribution accounting model by analogy. The Company has availed itself of certain limited government assistance provided during the COVID-19 pandemic (e.g., government grants). The Company adopted ASU 2021-10 as of January 1, 2022, which did not experienced losseshave any impact on these accountsits condensed consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, Business Combinations(Topic 805) -— Accounting for Contract Assets and management believesContract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. ASU 2021-08 is effective for public entities for fiscal years beginning after December 15, 2022, including applicable interim periods. The Company isadopted ASU 2021-08 as of January 1, 2022, which did not exposedhave a material impact on its condensed consolidated financial statements.
Note 3. Reverse Recapitalization and Related Transactions
On October 20, 2021, the transactions contemplated by the Merger Agreement closed and, among other things and upon the terms and subject to significant risks on such accounts. The Company’s investments held in the Trust Account is comprisedconditions of investments in U.S. Treasury securitiesthe Merger Agreement, the following occurred:
•At the closing, a wholly owned subsidiary of Legacy BowX merged with an original maturityinto Legacy WeWork, with Legacy WeWork the surviving corporation becoming a wholly owned subsidiary of 185 days or less or investments inLegacy BowX (the "Merger"). The surviving corporation was renamed New WeWork Inc.
•Immediately following the Merger, New WeWork Inc. merged (the "Second Merger") with and into BowX Merger Subsidiary II, LLC, a money market funds that comprise only U.S. treasury securities money market funds.
Investments Held inwholly owned subsidiary of Legacy BowX ("Merger Sub II"), with Merger Sub II being the Trust Account
The Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16)surviving entity of the Investment Company Act,Second Merger. The surviving entity was renamed WW Holdco LLC.
•Legacy BowX was renamed WeWork Inc.
At the closing of and in connection with the Business Combination, the following occurred:
•Subscription Agreements. Legacy BowX entered into subscription agreements with certain investors ("PIPE Investors") whereby it issued 80 million shares of common stock for an aggregate purchase price of $800 million, which closed substantially concurrently with the closing of the Business Combination. In addition, Legacy BowX entered into a maturitybackstop subscription agreement with DTZ Worldwide (the "Backstop Investor") whereby it would issue up to 15 million shares of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprisedCompany's Class A common stock for an aggregate purchase price of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presentedup to $150 million, depending on the balance sheets at fair value atlevel of public shareholder redemptions. Substantially concurrently with the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in net gain from investments held in Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Fair Value of Financial Instruments
The fair valueclosing of the Company’s assets and liabilities which qualify as financial instruments underBusiness Combination, the FASB ASC Topic 820, “Fair Value Measurements,” approximate the carrying amounts represented in the condensed balance sheets.
Fair Value Measurement
Fair value is defined as the price that would be receivedBackstop Investor subscribed for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might be categorized within different levels15 million shares of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Company's Class A common stock for an aggregate purchase price of $150 million.
Offering Costs Associated with Initial Public Offering
Offering costs consisted•Exchange of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were expensed as incurred, presented as
non-operating
expenses in the condensed statementsLegacy WeWork Stock. Each outstanding share of operations. Offering costs associated with theLegacy WeWork Class A common stock and Public Warrantsall series of Legacy WeWork preferred stock were charged to stockholders’ equity upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as
non-current
liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.exchanged for 0.82619
916
BOWX ACQUISITION CORP.WEWORK INC.
NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates allshares (the "Exchange Ratio") of its financial instruments, including issuedWeWork Inc. Class A common stock. Holders of Legacy WeWork Class C common stock received shares purchaseof WeWork Inc. Class C common stock determined by application of the Exchange Ratio. Outstanding options and warrants to determine if such instruments are derivativespurchase Legacy WeWork common stock and restricted stock units ("RSUs") were converted into the right to receive options or contain features that qualify as embedded derivatives, pursuantwarrants to ASC 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is
re-assessed
at the end of each reporting period.
The Company accounts for its warrants issued in connection with the Private Placement as derivative warrant liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s unaudited condensed consolidated statements of operations. The fair value of warrants issued by the Company in connection with the Private Placement has been estimated by reference to the Public Warrant trading prices at each measurement date after the units split. The determinationpurchase shares of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as
non-current
liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Class A Common Stock Subject to Possible Redemption
The Company accounts for itsCompany's Class A common stock subjector RSUs representing the right to possible redemption in accordance withreceive shares of the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares ofCompany's Class A common stock, as applicable, on the same terms and conditions that are in effect with respect to such options, warrants or RSUs on the day of the closing of the Business Combination, subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Sharesadjustments using the Exchange Ratio.
•First Warrants. The Company issued warrants to SoftBank affiliates to purchase 39,133,649 shares of conditionally redeemablethe Company's Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2021 and December 31, 2020, 43,231,098 and 44,911,184 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s unaudited condensed consolidated balance sheets.
Net Income (Loss) per Share of Common Stock
The Company’s unaudited condensed consolidated statements of operations include a presentation of income (loss)price per share of Class A$0.01 (the "First Warrants"). The First Warrants were issued as an inducement to obtain SoftBank and its affiliates’ support in effectuating the automatic conversion of Legacy WeWork preferred stock on a one-to-one basis to Legacy WeWork common stock subject to redemption in a manner similar to the
two-class
method of income (loss) per share. Net income per share of Class A common stock, basic and diluted, is calculated by dividing the investment income earnedstock. The First Warrants will expire on the Trust Account, nettenth anniversary of applicable franchise taxes, by the weighted average number of Class A common stock outstanding for the periods. Net loss per shares of Class B common stock, basic and diluted, is calculated by dividing the net loss, less income attributable to Class A common stock, by the weighted average number of Class B common stock outstanding for the periods.
The calculation of diluted net income (loss) per share of common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and Private Placement since the inclusion of such warrants would be anti-dilutive.
The following table reflects the calculation of basic and diluted net income (loss) per share of common stock:​​​​​​​​​​​​​​
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BOWX ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   
For the Three Months Ended
June 30, 2021
   
For the Six Months Ended
June 30, 2021
   
For the Period from
May 19, 2020 (Inception)
through June 30, 2020
 
Class A common stock
               
Numerator:
               
Net gain from investments held in Trust Account
  $12,297   $59,364   $0   
Less: Company’s portion available to be withdrawn to pay taxes
   (12,297)    (59,364)    0   
   
 
 
   
 
 
   
 
 
 
Net income attributable to Class A common stock
  $0     $0     $0   
Denominator:
               
Weighted average shares outstanding of Class A common stock , basic and diluted
   48,300,000    48,300,000    0   
   
 
 
   
 
 
   
 
 
 
Basic and diluted net income per share, Class A common stock
  $0     $0     $0   
   
 
 
   
 
 
   
 
 
 
Class B common stock
               
Numerator:
               
Net loss
  $(11,183,715)   $(16,800,861)   $(23,465) 
Less: Net income attributable to Class A common stock
   0      0      0   
   
 
 
   
 
 
   
 
 
 
Net loss attributable to Class B common stock
  $(11,183,715)   $(16,800,861)   $(23,465) 
Denominator:
               
Weighted average shares outstanding of Class B common stock, basic and diluted
   12,075,000    12,075,000    10,500,000 
   
 
 
   
 
 
   
 
 
 
Basic and diluted net loss per share, Class B common stock
  $(0.93)   $(1.39)   $(0.00) 
   
 
 
   
 
 
   
 
 
 
Income Taxes
The Company complies with the accounting and reporting requirements of Financial Accounting Standards Board Accounting Standard Codification, or FASB ASC, 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be
more-likely-than-not
to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
Recent Accounting Pronouncements
The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
Note 3—Initial Public Offering
Public Units
In August 2020, the Company sold 48,300,000 Units, including 6,300,000 over-allotment Units at $10.00 per Unit, generating gross proceeds of $483.0 million, and incurring offering costs of approximately $27.1 million, inclusive of $16.9 million in deferred underwriting commissions. Upon the closing of the InitialBusiness Combination and were recorded to additional paid-in capital in the consolidated balance sheet.
•Private and Public OfferingWarrants. Prior to the Business Combination, Legacy BowX issued 16,100,000 public warrants ("Public Warrants" or "Sponsor Warrants") and 7,173,333 private placement warrants ("Private Warrants"). Upon closing of the Business Combination, the Company assumed the Public Warrants and the Private Placement Warrants in the Private Placement (including the exerciseWarrants. Each of the over-allotment option), $483.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public OfferingWarrants and the Private Placement were placed in the Trust Account.
Each Unit consists of one of the Company’s shares of Class A common stock, $0.0001 par value, and
one-third
of one redeemable warrant (the “Public Warrants” and, collectively with the Private Placement Warrants the “Warrants”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share. The exercise price and number of shares of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation.
11
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BOWX ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 4—Related Party Transitions
Founder Shares
On May 26, 2020, the Company’s Chairman and
Co-Chief
Executive Officer paid for certain offering costs for an aggregate price of $25,000 in exchange for issuance of 10,062,500 shares of Class B common stock, par value $0.0001 per share (the “Founder Shares”). In July 2020, the Company’s Chairman and
Co-Chief
Executive Officer transferred certain Founder Shares to the Company’s directors and officers as well as to certain third parties. On August 4, 2020, the Company effected a stock dividend of 0.2 shares of Class B common stock for each share of Class B common stock outstanding, resulting in an aggregate of 12,075,000 Founder Shares outstanding. All shares and associated amounts have been retroactively restated to reflect the share dividend. Of the 12,075,000 Founder Shares, up to 1,575,000 Founder Shares are subject to forfeiture to the extent that the over-allotment option is not exercised in full by the underwriter so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriter fully exercised the over-allotment option on August 10, 2020 and the Company consummated the sale of such Units on August 13, 2020; thus, these 1,575,000 Founder Shares were no longer subject to forfeiture.
The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Private Placement Warrants Purchasers purchased an aggregate of 6,933,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrants, generating gross proceeds of $10.4 million in the Private Placement, and incurring offering costs of approximately $8,000. In connection with the sale of Units pursuant to the over-allotment option on August 13, 2020, the Company sold an additional 840,000 Private Placement Warrants to the Private Placement Warrants Purchasers, generating additional gross proceeds of approximately $1.3 million.
Each whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the sale of theadjustments. The Public Warrants and Private Placement Warrants was added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be
non-redeemable
for cash (subject to certain exceptions) andare exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees.
The Private Placement Warrants (and the Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable untilat any time commencing 30 days after the completion of the initial Business Combination, and terminating five years after the Business Combination.
•Legacy BowX Trust Account. The Company received gross cash consideration of $333 million as a result of the reverse recapitalization.
•Transaction Costs. The Company incurred $69 million of equity issuance costs, consisting of financial advisory, legal, share registration, and other professional fees, which are recorded to additional paid-in capital as a reduction of transaction proceeds.
The above transactions were accounted for as a reverse recapitalization under U.S. GAAP whereby Legacy BowX was determined to be the accounting acquiree and Legacy WeWork, the accounting acquirer. This accounting treatment is equivalent to Legacy WeWork issuing common stock for the net assets of Legacy BowX, accompanied by a recapitalization. The net assets of Legacy BowX are recorded at historical cost whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination are those of Legacy WeWork. As a result of the Business Combination completed on October 20, 2021, prior period share and per share amounts presented in the accompanying condensed consolidated financial statements and these related notes have been retroactively converted using the Exchange Ratio.
The number of shares of common stock issued immediately following the Business Combination was as follows:
17
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Number of Shares
Class AClass C
Legacy WeWork Stockholders559,124,587 19,938,089 
Legacy BowX Sponsor & Sponsor Persons9,075,000 — 
Legacy BowX Public Stockholders33,293,214 — 
PIPE Investors80,000,000 — 
Backstop Investor15,000,000 — 
Total696,492,801 19,938,089 
18
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)


Note 4. Supplemental Disclosure of Cash Flow Information
March 31,
(Amounts in millions)20222021
Cash and cash equivalents$519 $719 
Restricted cash11 39 
Cash, cash equivalents and restricted cash$530 $758 
Three Months Ended
March 31,
(Amounts in millions)20222021
Supplemental Cash Flow Disclosures:
Cash paid during the period for interest (net of capitalized interest of none during 2022 and 2021)$46 $42 
Cash received for operating lease incentives — tenant improvement allowances43 128 
Supplemental Disclosure of Non-cash Investing & Financing Activities:
Property and equipment included in accounts payable and accrued expenses101 125 
Conversion of related party liabilities to Preferred Stock— 712 
Additional ASC 842 Supplemental Disclosures
Three Months Ended
March 31,
(Amounts in millions)20222021
Cash paid for fixed operating lease costs included in the measurement of lease obligations in operating activities$541 $502 
Cash paid for interest relating to finance leases in operating activities1 1 
Cash paid for principal relating to finance leases in financing activities1 1 
Right-of-use assets obtained in exchange for operating lease obligations, net of modifications and terminations(352)(378)
19
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 5. Restructuring, Impairments and Gains on Sale
In September 2019, the Company initiated an operational restructuring program that included a change in executive leadership and plans for cost reductions that aim to improve the Company's operating performance. Since 2019, the Company has made significant progress toward its operational restructuring goals including divesting or winding down various non-core operations not directly related to its core space-as-a-service offering, significant reductions in costs associated with selling, general and administrative expenses, and improvements to its operating performance through efforts in right-sizing its real estate portfolio to better match supply with demand in certain markets. During the three months ended March 31, 2022, we terminated leases associated with a total of 13 previously opened locations and 2 pre-open locations compared to 21 previously opened locations and no pre-open locations terminated during the three months ended March 31, 2021, bringing the total terminations since the beginning of the restructuring to 227. Management is continuing to evaluate the Company's real estate portfolio in connection with its ongoing restructuring efforts and expects to exit additional leases.
In conjunction with the efforts to right-size its real estate portfolio, since 2019 the Company has also successfully amended over 450 leases for a combination of partial terminations to reduce its leased space, rent reductions, rent deferrals, offsets for tenant improvement allowances and other strategic changes. These amendments and full and partial lease terminations have resulted in an estimated reduction of approximately $9.5 billion in total future undiscounted fixed minimum lease cost payments that were scheduled to be paid over the life of the original executed lease agreements, including changes to the obligations of ChinaCo, which occurred during the period it was consolidated. Over 20 of these amendments were executed during the three months ended March 31, 2022, reducing the total future undiscounted fixed minimum lease cost payments by an estimated $0.6 billion.

The Company anticipates that during the remainder of 2022 there may be additional restructuring and related costs consisting primarily of lease termination charges, other exit costs and costs related to ceased use buildings and employee termination benefits, as the Company is still in the process of finalizing its operational restructuring plans.
Restructuring and other related costs totaled $(130) million and $494 million during the three months ended March 31, 2022 and 2021, respectively. The details of these net charges are as follows:
Three Months Ended
March 31,
(Amounts in millions)20222021
Employee terminations (1)
$2 $538 
Ceased use buildings16 24 
Gains on lease terminations, net(154)(84)
Other, net6 16 
Total$(130)$494 
(1)In connection with the Settlement Agreement, as described in Note 21, SBG purchased 24,901,342 shares of Class B Common Stock of the Company from We Holdings LLC, which is Mr. Neumann's affiliated investment vehicle, for a price per share of $23.23, representing an aggregate purchase price of approximately $578 million. The Company recorded $428 million of restructuring and other related costs in its condensed consolidated statements of operations for the three months ended March 31, 2021, which represents the excess between the amount paid from a principal shareholder of the Company to We Holding LLC and the fair value of the stock purchased. Also, in connection with the Settlement Agreement, the WeWork Partnerships Profits Interest Units held by Mr. Neumann in the WeWork Partnership became fully vested and were amended to have a catch-up base amount of $0. The per unit distribution thresholds for the WeWork Partnerships Profits Interest Units were also amended to initially be $10.00. In connection with the Settlement Agreement, WeWork Inc. received a third-party valuation of fair market value of the WeWork Partnerships Profits Interest Units, which confirmed that no upward adjustment was needed. As a result of this modification, the Company recorded $102 million of restructuring and other related costs in its condensed consolidated statements of operations for the three months ended March 31, 2021. See Note 9 for details on the conversion of WeWork Partnerships Profits Interests Units.
20
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
As of March 31, 2022 and December 31, 2021, net restructuring liabilities totaled approximately $31 million and $79 million, respectively, including $29 million and $76 million, respectively, in accounts payable and accrued expenses and, $5 million and $6 million, respectively, in other liabilities, net of $3 million and $3 million, respectively, in receivables from landlords in connection with lease terminations, included in other current assets in the condensed consolidated balance sheets. A reconciliation of the beginning and ending restructuring liability balances is as follows:
Three Months Ended
March 31,		Year Ended
December 31,
(Amounts in millions)20222021
Restructuring liability — Balance at beginning of period$79 $29 
Restructuring and other related costs expensed during the period(130)434 
Cash payments of restructuring liabilities, net(96)(424)
Non-cash impact — primarily asset and liability write-offs and stock-based compensation178 40 
Restructuring liability — Balance at end of period$31 $79 
In connection with the operational restructuring program and related changes in the Company's leasing plans and planned or completed disposition or wind down of certain non-core operations and projects, the Company has also recorded various other non-routine write-offs, impairments and gains on sale of goodwill, intangibles and various other long-lived assets.
During the three months ended March 31, 2022 and 2021, the Company also performed its quarterly impairment assessment for long-lived assets. As a result of macroeconomic events such as the COVID-19 pandemic and the ongoing conflict between Russia and Ukraine and the resulting declines in revenue and operating income experienced by certain locations as of March 31, 2022 and 2021, WeWork identified certain assets whose carrying value was now deemed to have been partially impaired. The Company evaluated its estimates and assumptions related to its locations’ future performance and performed a comprehensive review of its locations’ long-lived assets for impairment, including both property and equipment and operating lease right-of-use assets, at an individual location level. Key assumptions used in estimating the fair value of WeWork's location assets in connection with the Company's impairment analyses are revenue growth, lease costs, market rental rates, changes in local real estate markets in which we operate, inflation, and the overall economics of the real estate industry. The Company's assumptions account for the estimated impact of the COVID-19 pandemic and the ongoing conflict between Russia and Ukraine. During the three months ended March 31, 2022 and 2021, the Company recorded $35 million and $19 million, respectively, in impairments, primarily as a result of decreases in projected cash flows primarily attributable to the impact of COVID-19.
Non-routine gains and impairment charges totaled $91 million and $299 million during the three months ended March 31, 2022, and 2021, respectively, and are included on a net basis as impairment expense in the accompanying condensed consolidated statements of operations. The details of these net charges are as follows:
Three Months Ended
March 31,
(Amounts in millions)20222021
Impairment and write-off of long-lived assets associated with restructuring$56 $280 
Impairment expense, other35 19 
Total$91 $299 
21
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 6. Acquisitions
In March 2022, the Company acquired 100% of the equity of Common Desk Inc. ("Common Desk") for a total consideration of $21 million. Common Desk is a Dallas-based coworking operator with 23 locations in Texas and North Carolina.
At closing, the Company transferred to the owners of Common Desk $10 million in cash and $3 million fair value of 489,071 shares of its Class A common stock of the Company. The remaining consideration included a holdback of $3 million payable in cash and contingent consideration payable in 760,969 shares of Class A common stock with a fair value of $5 million at closing. As of March 31, 2022, the $3 million remaining cash consideration was included in other current liabilities. As of March 31, 2022, $4 million and $1 million of contingent consideration payable in Class A common stock were in included in other current liabilities and additional paid-in capital, respectively, on the accompanying condensed consolidated balance sheets. The Company determined the fair value of the contingent consideration based on the likelihood of reaching set milestones. Each period, the contingent consideration will be remeasured to fair market value through the condensed consolidated statements of operations. During the three months ended March 31, 2022, the Company recorded losses of $1 million, included in selling, general and administrative expenses on the accompanying condensed consolidated statements of operations.
The preliminary allocation of the total acquisition consideration during the three months ended March 31, 2022 is estimated as follows:
2022
(Amounts in millions)Acquisitions
Cash and cash equivalents$1 
Property and equipment2 
Goodwill6 
Finite-lived intangible assets12 
Lease right-of-use assets, net2 
Lease obligation, net(2)
Total consideration$21 
There were no acquisitions during the three months ended March 31, 2021.
During the three months ended March 31, 2022 and 2021, the Company incurred acquisition transaction costs of $0.04 million and none, respectively, included in selling, general and administrative expenses in its condensed consolidated statements of operations.
Note 7. Prepaid Expenses
Prepaid expenses consists of the following:
March 31,December 31,
(Amounts in millions)20222021
Prepaid member referral fees and deferred sales incentive compensation (Note 16)$54 $52 
Prepaid lease cost40 40 
Prepaid software25 21 
Other prepaid expenses63 67 
Total prepaid expenses$182 $180 
22
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 8. Other Current Assets
Other current assets consists of the following:
March 31,December 31,
(Amounts in millions)20222021
Net receivable for value added tax (“VAT”)$133 $124 
Deposits held by landlords48 41 
Assets held for sale43 — 
Straight-line revenue receivable33 31 
Disposition proceeds holdback amounts receivable5 5 
Deposits on property and equipment4 4 
Other current assets47 33 
Total other current assets$313 $238 
Note 9. Consolidated VIEs and Noncontrolling Interests
As of March 31, 2022 and December 31, 2021, JapanCo, LatamCo, WeCap Manager, and WeCap Holdings Partnership are the Company's only consolidated VIEs. The Company is considered to be the primary beneficiary as we have the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance and the right to receive benefits that could potentially be significant to the VIEs. As a result, these entities remain consolidated subsidiaries of the Company and the interests owned by the other investors and the net income or loss and comprehensive income or loss attributable to the other investors are reflected as redeemable noncontrolling interests and noncontrolling interests on WeWork's condensed consolidated balance sheets, statements of operations and statements of comprehensive loss, respectively.
The following table includes selected condensed consolidated financial information as of March 31, 2022 and December 31, 2021 of the Company's consolidated VIEs, as included in its condensed consolidated financial statements, in each case, after intercompany eliminations.
March 31, 2022December 31, 2021
(Amounts in millions)
SBG JVs(1)
Other VIEs(2)
SBG JVs(1)
Other VIEs(2)
Consolidated VIE balance sheets information:
Cash and cash equivalents$70 $9 $101 $8 
Property and equipment, net615 — 621 — 
Restricted cash7 — 10 — 
Total assets2,649 15 2,708 15 
Long-term debt, net4 — 6 — 
Total liabilities2,385 1 2,368 3 
Redeemable stock issued by VIEs80 — 80 — 
Total net assets(3)
184 14 260 12 
The following tables include selected condensed consolidated financial information for the three months ended March 31, 2022 and 2021 of the Company's consolidated VIEs, as included in its condensed consolidated financial statements, for the periods they were considered VIEs and in each case, after intercompany eliminations.
23
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Three Months Ended
March 31, 2022		Three Months Ended
March 31, 2021
(Amounts in millions)
SBG JVs(1)
Other VIEs(2)
SBG JVs(1)
Other VIEs(2)
Consolidated VIE statements of operations information:
Total Revenue$98 $3 $60 $4 
Net income (loss)$(71)$— $(27)$— 
Three Months Ended
March 31, 2022		Three Months Ended
March 31, 2021
(Amounts in millions)
SBG JVs(1)
Other VIEs(2)
SBG JVs(1)
Other VIEs(2)
Consolidated VIE statements of cash flows information:
Net cash provided by (used in) operating activities$(40)$(1)$(25)$— 
Net cash used in investing activities(7)— (7)— 
Net cash provided by (used in) financing activities6 1 1 — 
(1)The “SBG JVs” include JapanCo and LatamCo. as of and for the periods that each represented a consolidated VIE. The Company entered into the LatamCo agreement on September 1, 2021 and, as a result, LatamCo results and balances are not included above for the period prior to September 1, 2021. The consent of an affiliate of SoftBank Group Capital Limited is required for any dividends to be distributed by JapanCo and LatamCo. As a result, any net assets of JapanCo and LatamCo would be considered restricted net assets to the Company as of March 31, 2022. The net assets of the SBG JVs include preferred stock issued to affiliates of SBG and other investors with aggregate liquidation preferences totaling $580 million as of March 31, 2022 and December 31, 2021, of which $80 million of preferred stock is redeemable upon the occurrence of an event that is not solely within the control of the Company, as of March 31, 2022 and December 31, 2021. The initial issuance price of such redeemable and non-redeemable preferred stock equals the liquidation preference for each share issued. After reducing the net assets of the SBG JVs by the liquidation preference associated with such redeemable preferred stock, the remaining net assets of the SBG JVs is negative as of March 31, 2022 and December 31, 2021.
(2)For the three months ended March 31, 2022 and 2021, "Other VIEs" includes WeCap Manager and WeCap Holdings Partnership.
(3)Total net assets represents total assets less total liabilities and redeemable stock issued by VIEs after the total assets and total liabilities have both been reduced to remove amounts that eliminate in consolidation.
The assets of consolidated VIEs will be used first to settle obligations of the applicable VIE. Remaining assets may then be distributed to the VIEs' owners, including the Company, subject to the liquidation preferences of certain noncontrolling interest holders and any other preferential distribution provisions contained within the operating agreements of the relevant VIEs. Other than the restrictions relating to the Company’s SBG JVs a discussed in (1) above, third-party approval for the distribution of available net assets is not required for the Company’s Other VIEs as of March 31, 2022. See Note 20 for a discussion of additional restrictions on the net assets of WeWork Companies LLC.
WeWork Partnership
On October 21, 2021, Mr. Neumann converted 19,896,032 vested WeWork Partnership Profits Interest Units into WeWork Partnership Class A common units. On the date of the conversion notice, the distribution threshold of Mr. Neumann’s vested profits interest units was $10.38, and the catch-up base amount was $0.00 for a conversion fair value of $234 million. The Company recorded the conversion as a noncontrolling interest on its condensed consolidated balance sheets at the conversion fair value. On December 31, 2021, Mr. Neumann transferred all of his WeWork Partnership Class A Common Units to NAM WWC Holdings, LLC, which is Mr. Neumann’s affiliated investment vehicle. During the three months ended March 31, 2022, NAM WWC Holdings, LLC owned 2.73% of the WeWork Partnership, the Company allocated a loss of $11 million for the three months ended March 31, 2022, which was based on the relative ownership interests of Class A common unit holders in the WeWork Partnership in the Company’s condensed consolidated statements of operations.
24
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
JapanCo
During 2017, a consolidated subsidiary of the Company (“JapanCo”) entered into an agreement with an affiliate of SBG for the sale of a 50.0% membership interest in JapanCo for an aggregate contribution of $500 million which was funded over a period of time. As of December 31, 2018, JapanCo had received contributions totaling $300 million and during the year ended December 31, 2019, an additional $100 million was received. Pursuant to the terms of the agreement, an additional $100 million was required to be contributed and was received during the third quarter of 2020. In accordance with ASC 810, it was determined that the combined interest of the Company and its related party, the affiliate of SBG, are the primary beneficiary of JapanCo. The Company was also determined to be the related party that is most closely associated to JapanCo as the activities that most significantly impact JapanCo's economic performance are aligned with those of the Company. The noncontrolling interests are reflected in the equity section of the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021. As long as the investors remain shareholders of JapanCo, JapanCo will be the exclusive operator of the Company’s WeWork branded space-as-a-service businesses in Japan.
LatamCo
During September 2021, a consolidated subsidiary of the Company (“LatamCo”) entered into an agreement with an affiliate of SBG for the sale of 71.0% interest (with up to 49.9% voting power) in LatamCo for an aggregate contribution of $80 million which will be funded through equity and secured promissory notes. As of December 31, 2021, LatamCo received the total contributions totaling $80 million. It was determined that the combined interest of the Company and its related party, the affiliate of SBG, are the primary beneficiary of LatamCo. The Company was also determined to be the related party that is most closely associated to LatamCo as the activities that most significantly impact LatamCo's economic performance are aligned with those of the Company. Due to the sell-out rights discussed below, the portion of consolidated equity attributable to the outside investors’ interests in LatamCo are reflected as redeemable noncontrolling interest within the mezzanine section of the accompanying condensed consolidated balance sheets as of March 31, 2022. Upon formation of LatamCo, the Company contributed its businesses in Argentina, Mexico, Brazil, Colombia and Chile (collectively, the "Greater Latin American territory"), committed to fund $13 million, and remains as guarantor on certain lease obligations.
In February 2022, a fully owned subsidiary of the Company contributed its business in Costa Rica, transferring 100% interest to LatamCo, and granted LatamCo the exclusive right to operate the Company’s business in Costa Rica under the WeWork brand, in exchange for a waiver by SBG, an affiliate of SBLA, of its right to be reimbursed by the Company for $7 million of the remaining reimbursement obligation in connection with the SoftBank Transactions (as discussed in Note 21). Upon the contribution of its business in Costa Rica, Costa Rica is considered as part of the Greater Latin American territory.

Pursuant to the terms of the agreement, the Company may be liable up to $27 million, for cost related to the termination of certain leases within the first 12 months of the agreement. As of March 31, 2022 the Company had incurred $4 million of termination costs.
Pursuant to the terms of the agreement, an additional $60 million may be received by LatamCo from the exercise of SoftBank Latin America’s (“SBLA”) call options during the first and second year of operations. Further, SBLA maintains sell-out rights based on the performance of LatamCo, exercisable between September 1, 2025 and August 31, 2026, and the Company holds subsequent buy-out rights exercisable between September 1, 2027 and August 31, 2028. The stock associated with SBLA’s sell-out rights was initially recorded based on the fair value at the time of issuance. While SBLA’s ownership interest is not currently redeemable, based on management’s consideration of LatamCo’s expected future operating cash flows, it is not probable at March 31, 2022 that SBLA’s interest will become redeemable. The Company will accrete changes in the carrying value of the noncontrolling interest (redemption value) from the date that it becomes probable that the interest will become redeemable to the earliest redemption date, through an adjustment to additional paid-in capital.
25
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Provided that certain investors remain shareholders of LatamCo, LatamCo will be the exclusive operator of the Company’s businesses in the Greater Latin American territory.
WeCap Manager
WeWork Capital Advisors LLC (the "WeCap Manager") is a majority-owned subsidiary of the Company and its controlled affiliates. The WeCap Manager is also 20% owned by another investor and its affiliates (other than the WeCap Manager) (together with the Company, the “Sponsor Group”), a global alternative asset management firm with assets under management across its private equity and real estate platforms. The portion of consolidated equity attributable to the outside investor's interest in the WeCap Manager is reflected as a noncontrolling interest in the equity section of the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.
The WeCap Manager earns customary management fees, subject to provisions of the governing documents of the WeCap Manager relating to funding of losses incurred by the WeCap Manager. During the three months ended March 31, 2022 and 2021, the WeCap Manager recognized $3 million, and $4 million, respectively, in management fee income, which is classified as other revenue as a component of the Company's total revenue on the accompanying condensed consolidated statements of operations.
WeCap Holdings Partnership
WeCap Manager and the Sponsor Group (collectively, "WeCap Investment Group") also includes the Company's general partner interests in DSQ, WPI Fund and ARK Master Fund (each as defined in Note 10), which are held through a limited partnership (the "WeCap Holdings Partnership"). The Company consolidates the WeCap Holdings Partnership. Net carried interest distributions earned in respect of the WeCap Investment Group from its investments are distributable to the Company, indirectly through the WeCap Holdings Partnership, based on percentages that vary by the WeCap Investment Group vehicle and range from a 50% to 85% share to the Company of total net carried interest distributions received by the WeCap Holdings Partnership (after a profit participation allocation to certain personnel associated with the WeCap Manager). The portion of consolidated equity attributable to outside investor's interest in the WeCap Holdings Partnership is reflected as a noncontrolling interest in the equity section of the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.
Primarily because WeWork's investments through the WeCap Holdings Partnership in the underlying real estate acquisition vehicles generally represent a small percentage of the total capital invested by third parties, and the terms on which we have agreed to provide services and act as general partner are consistent with the market for similar arrangements, the underlying real estate acquisition vehicles managed by the WeCap Manager are generally not consolidated in the Company's financial statements (subject to certain exceptions)exceptions based on the specific facts of the particular vehicle).
The Company accounts for its share of the underlying real estate acquisition vehicles as unconsolidated investments under the equity method of accounting. See Note 10 for additional details regarding the holdings of WeCap Holdings Partnership.
Related Party Loans
26
On May 26,
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 10. Equity Method and Other Investments
The Company's investments consist of the following:
March 31, 2022December 31, 2021
(Amounts in millions, except percentages)CarryingCostPercentageCarrying
InvesteeInvestment TypeValueBasisOwnershipValue
WPI Fund(1)
Equity method investment$98 $53 8.0%$93 
Investments held by WeCap Holdings Partnership(2)
Equity method investments27 35 Various72 
IndiaCo(3)
Equity method investment33 105 27.5%34 
ChinaCo(4)
Equity method investment— 29 19.7%— 
Other(5)
Various6 6 Various1 
Total equity method and other investments$164 $228 $200 
(1)    In addition to the general partner interest in the WPI Fund held by WeCap Holdings Partnership described above, a wholly owned subsidiary of the WeCap Investment Group also owns an 8% limited partner interest in the WPI Fund.
(2)    As discussed in Note 9, the following investments are investments held by WeCap Holdings Partnership, which are accounted for by the WeCap Holdings Partnership as equity method investments:
•"DSQ" — a venture in which WeCap Holdings Partnership owns a 10% equity interest. DSQ owns a commercial real estate portfolio located in London, United Kingdom. The investment balance also included a note receivable with an outstanding balance of $43 million as of December 31, 2021 that accrues interest at a rate of 5.77% and matures in April 2028. In March 2022, WeCap Holdings Partnership approved the sale of the note receivable and recognized as assets held for sale included in other current assets as of March 31, 2022 in the accompanying in the condensed consolidated balance sheets.
•"WPI Fund" — a real estate investment fund in which WeCap Holdings Partnership holds the 0.5% general partner interest. The WPI Fund’s focus is acquiring, developing and managing office assets with current or expected vacancy suitable for WeWork occupancy, currently primarily focusing on opportunities in North America and Europe.
•"ARK Master Fund" — an investment fund in which WeCap Holdings Partnership holds the general partner and a limited partner interest totaling 2% of the fund's invested capital. ARK Master Fund invests in real estate and real estate-related investments that it expects could benefit from the Company’s occupancy or involvement or the involvement of the limited partners of the ARK Master Fund.
(3)    In June 2020, the Company entered into an agreement with WeWork India Management Private Limited (“IndiaCo”), an affiliate of Embassy Property Developments Private Limited (“Embassy”), to subscribe for new convertible debentures to be issued by IndiaCo in an aggregate principal amount of $100 million (the "2020 Debentures"). During June 2020, $85 million of the principal had been funded, with the remaining $15 million funded in April 2021. The 2020 Debentures earned interest at a coupon rate of 12.5% per annum for the 18-month period beginning in June 2020 which then was reduced to 0.001% per annum and have a maximum term of 10 years. The 2020 Debentures are convertible into equity at the Company’s Chairmanoption after 18 months from June 2020 or upon mutual agreement between the Company, IndiaCo, and Embassy. The Company's investment balance as of December 31, 2021, also includes an aggregate principal amount of approximately $6 million in other convertible debentures issued by IndiaCo that earn interest at a coupon rate of 0.001% per annum and have a maximum term of ten years. During the three months ended March 31, 2022 and 2021, the Company recorded a credit loss valuation allowance on its investments in IndiaCo totaling $1 million and $2 million, respectively, included in income (loss) from equity method and other investments. Prior to the funding in April 2021, the $15 million unfunded commitment associated with the 2020 Debentures (the "IndiaCo Forward Liability") was included in other current liabilities, relating to the fair value of the credit loss on the forward contract associated with the obligation with such credit loss included in income (loss) from equity method and other investments during the three months ended March 31, 2022 and 2021. During the three months ended March 31, 2022 and 2021, the Company recorded $2 million and $0.2 million, respectively, in unrealized gain (loss) on available-for-sale securities included in other comprehensive income, net of tax. During the three months ended March 31, 2022, the Company converted the 2020 Debentures and other convertible debentures into 12,397,510 and 3,375,000 common shares of IndiaCo, respectively, representing an ownership interest in IndiaCo of approximately 27.5%.
Co-ChiefIndiaCo constructs and operates workspace locations in India using WeWork’s branding, advice and sales model. Per the terms of an agreement the Company also receives a management fee from IndiaCo. The Company recorded $2 million and $2 million of management fee income from IndiaCo during the three months ended March 31, 2022 and 2021, respectively. Management fee income is included within service revenue as a component of total revenue in the accompanying condensed consolidated statements of operations.
Executive Officer
27
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
(4)    In October 2020, the Company deconsolidated ChinaCo and its retained 21.6% ordinary share equity method investment was recorded at a fair value of $26 million plus capitalized legal cost for a total initial cost basis and carrying value as of December 31, 2020 of $29 million. Pursuant to ASC 323-10-35-20, the Company discontinued applying the equity method on the ChinaCo investment when the carrying amount was reduced to zero in the first quarter of 2021. The Company will resume application of the equity method if, during the period the equity method was suspended, the Company's share of unrecognized net income exceeds the Company's share of unrecognized net losses. The Company's remaining interest was diluted down to 19.7% in connection with the Second Investment Closing on September 29, 2021. See Note 21 for details regarding various related party fees payable by ChinaCo to the Company subsequent to the ChinaCo Deconsolidation.
(5)    The Company holds various other investments as of March 31, 2022 and December 31, 2021. In February 2022, the Company purchased shares of Upflex Inc. ("Upflex") Series A Preferred Stock for a total purchase price of $5 million, representing approximately 6.10% ownership on a fully diluted basis. Upflex is a coworking aggregator and global flexible workplace startup.
As of March 31, 2022, the WPI Fund, DSQ, ARK Master Fund, IndiaCo, ChinaCo and certain other entities in which the Company has or WeCap Holdings Partnership have invested are unconsolidated VIEs. In all cases, neither the Company nor the WeCap Holdings Partnership is the primary beneficiary, as neither the Company nor the WeCap Holdings Partnership have both the power to direct the activities of the entity that most significantly impact the entity’s economic performance and exposure to benefits or losses that could potentially be significant to the VIE. None of the debt held by these investments is recourse to either the Company or the WeCap Holdings Partnership, except the $4 million in lease guarantees provided to landlords of ChinaCo by the Company as described in Note 21. The Company's maximum loss is limited to the amount of its net investment in these VIEs, the $4 million in ChinaCo lease guarantees and the unfunded commitments discussed below.
For the three months ended March 31, 2022 and 2021, the Company recorded approximately $6 million and $(31) million, respectively, for its share of gain (loss) related to its equity method and other investments included in income (loss) from equity method and other investments in the condensed consolidated statements of operations.
No allowance or unrealized gains or losses had been recorded as of March 31, 2022. As of December 31, 2021, the Company had recorded a credit loss valuation allowance on its available-for-sale debt securities totaling $63 million. As of December 31, 2021, the Company had recorded unrealized gain (loss) on its available-for-sale debt securities totaling $2 million, included as a component of accumulated other comprehensive income.
For the three months ended March 31, 2022 and 2021, the Company contributed a total of $5 million and $10 million, respectively, to its investments and received $1 million and none in distributions from its investments, respectively. As of March 31, 2022, the Company had a total of $33 million in unfunded capital commitments to its investments; however, if requested, in each case, the Company may elect to contribute additional amounts in the future.
28
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 11. Other Assets
Other non-current assets consists of the following:
March 31,December 31,
(Amounts in millions)20222021
Deferred financing costs, net:
Deferred financing costs, net — SoftBank Senior Unsecured Notes Warrant (1)
$355 $382 
Deferred financing costs, net — 2020 LC Facility Warrant and LC Warrant issued to SBG(1)
183 207 
Deferred financing costs, net — Other SoftBank Debt Financing Costs paid or payable to SBG (1)
7 7 
Deferred financing costs, net — Other SoftBank Debt Financing Costs paid or payable to third parties (1)
7 8 
Total deferred financing costs, net552 604 
Other assets
Security deposits with landlords226 237 
Straight-line revenue receivable39 40 
Other long-term prepaid expenses and other assets33 32 
Total other assets$850 $913 
(1) Amounts are net of accumulated amortization totaling $430 million and $377 million as of March 31, 2022 and December 31, 2021, respectively. See Note 14 for amortization incurred during the period.
SoftBank Debt Financing— In October 2019, in connection with the SoftBank Transactions, the Company entered into an agreement with SBG for additional financing (the "SoftBank Debt Financing"). The agreement included a commitment from SBG for the provision of (i)$1.1 billion in senior secured debt in the form of senior secured notes or a first lien term loan facility (the "SoftBank Senior Secured Notes"), (ii) $2.2 billion in 5.0% senior unsecured notes (the "SoftBank Senior Unsecured Notes") with associated warrants issued to SoftBank Group Corp. ("SoftBank Obligor") to purchase 71,541,399 shares of the Company’s Series H-3 Convertible Preferred Stock or Series H-4 Convertible Preferred Stock at an exercise price of $0.01 per share and (iii) credit support for a $1.75 billion letter of credit facility (the "2020 LC Facility") with associated warrants issued to SoftBank Obligor to purchase 35,770,699 shares of the Company’s Series H-3 Convertible Preferred Stock or Series H-4 Convertible Preferred Stock at an exercise price of $0.01 per share.
In December 2021, in connection with the LC Facility Extension, the Company issued to the SoftBank Obligor a warrant (the "LC Warrant") to purchase 11,923,567 shares of Class A common stock at a price per share equal to $0.01.
SoftBank Senior Secured Notes
In March 2021, the Company and StarBright WW LP, an affiliate of SoftBank ("the Note Purchaser") agreed to loanamend and restate the terms of the Senior Secured Notes (as amended and restated, the "A&R NPA") allowing the Company to borrow up to an aggregate principal amount of $150,000$550 million of senior secured debt in the form of new 7.5% senior secured notes.

In December 2021, the Company, WW Co-Obligor Inc., a wholly owned subsidiary of WeWork Companies LLC, and the Note Purchaser entered into an amendment to the A&R NPA pursuant to which the Note Purchaser agreed to extend its commitment to purchase up to an unsecured promissory note (the “Note”) to cover expenses related to the Initial Public Offering. This loan was payable without interest upon the completionaggregate principal amount of $500 million of the Initial Public Offering.Amended Senior Secured Notes that may be issued by the Company from February 12, 2023 to February 12, 2024. The Amended Senior Secured Notes will mature on February 12, 2024. The Company borrowed approximately $150,000 underhas the Note and received additional advances of approximately $45,000 advancement of funds from such officer, for a total outstanding loan of approximately $195,000. The Company fully repaid the Note and the advancesability to such officer on August 7, 2020.draw until February 12, 2024.

Working Capital Loans29
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, the initial stockholders, officers and directors and their affiliates may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”). Up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans to date. To date, the Company had no borrowings under the Working Capital Loans.
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Table of Contents
BOWX ACQUISITION CORP.WEWORK INC.
NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
As of March 31, 2022 and December 31, 2021, no draw notices had been delivered pursuant to the senior secured note purchase agreement.
SoftBank Senior Unsecured Notes
To formalize SBG's October 2019 commitment to provide WeWork Companies LLC with up to $2.2 billion of unsecured debt, on December 27, 2019, WeWork Companies LLC, WW Co-Obligor Inc., a wholly owned subsidiary of WeWork Companies LLC and a co-obligor under the Senior Notes and the Note 5—CommitmentsPurchaser, entered into a master senior unsecured note purchase agreement (as amended from time to time and Contingencies
as supplemented by that certain waiver dated as of July 7, 2020, the “Master Note Purchase Agreement”).
Registration RightsAs of March 31, 2022, an aggregate principal amount of $2.2 billion of SoftBank Senior Unsecured Notes were issued to the Note Purchaser and none remained available for draw. The aggregate principal amount of $2.2 billion is reflected as unsecured notes payable on the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.
The initial stockholdersSoftBank Senior Unsecured Notes have a stated interest rate of 5.0%. However because the associated warrants obligate the Company to issue shares in the future, the implied interest rate upon closing was approximately 11.69%. The SoftBank Senior Unsecured Notes will mature in July 2025.
In December 2021, WeWork Companies LLC and holdersthe Note Purchaser amended and restated the indenture governing the SoftBank Senior Unsecured Notes to subdivide the notes into two series, one of which consisted of $550 million in aggregate principal amount of 5.00% Senior Notes due 2025 (the "Series II Unsecured Notes") and another consisted of the Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement. Theremaining $1.65 billion in aggregate principal amount of 5.00% Senior Notes due 2025 (the "Series I Unsecured Notes" and, together with the Series II Unsecured Notes, the "Senior Unsecured Notes"), in connection with the resale by the Note Purchaser (through certain initial stockholders and holderspurchasers) of the Private Placement Warrants will be entitledSeries II Unsecured Notes to make up to three demands, excluding short formqualified investors in a private offering exempt from registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filedAct of 1933, as amended. The Series I Unsecured Notes remain held by the Company. Note Purchaser.
SoftBank Debt Financing Costs due to SBG
In connection with the SoftBank Senior Unsecured Notes, the warrants issued to SoftBank Obligor in December 2019 to purchase 71,541,399 shares of the Company’s Series H-3 Convertible Preferred Stock or Series H-4 Convertible Preferred Stock at an exercise price of $0.01 per share (the "SoftBank Senior Unsecured Notes Warrant"), were valued at $569 million at issuance and capitalized as a deferred financing cost and included, net of accumulated amortization, as a component of other assets on the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021. This asset will be amortized into interest expense over the five year life of the SoftBank Senior Unsecured Notes.
In connection with the agreement by SoftBank Obligor to provide credit support for the 2020 LC Facility, the warrants issued to SoftBank Obligor in December 2019 to purchase 35,770,699 shares of the Company’s Series H-3 Convertible Preferred Stock or Series H-4 Convertible Preferred Stock at an exercise price of $0.01 per share (the "2020 LC Facility Warrant"), were valued at $284 million at issuance and capitalized as a deferred financing cost and included, net of accumulated amortization, as a component of other assets on the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021. This asset was initially amortized into interest expense from February 10, 2020 through February 10, 2023, and was extended through February 9, 2024 in connection with the LC Facility Extension.
The warrants issued to SoftBank Obligor in December 2021 to purchase 11,923,567 shares of Class A common stock at an exercise price equal to $0.01 per share, were issued in connection with the LC Facility Extension (the "LC Warrant"), were valued at $102 million at issuance and capitalized as a deferred financing cost and included, net of accumulated amortization, as a component of other assets on
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
the accompanying condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021. This asset will be amortized into interest expense from December 6, 2021 through February 9, 2024, the remaining life of the extended 2020 LC Facility.
The Company will bear thealso agreed to reimburse SBG for all fees and expenses incurred in connection with the filingSoftBank Transactions in an aggregate amount up to $50 million of any such registration statements.
which $36 million were paid as of December 31, 2021. During the three months ended March 31, 2022, SBG waived its right to be reimbursed for $7 million of the remaining obligation. As of March 31, 2022 and December 31, 2021, $8 million and $15 million, respectively, were included as a component of accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets. The Company allocated $20 million of the total costs as deferred financing costs included, net of accumulated amortization within other assets on the condensed consolidated balance sheets which will be amortized into interest expense over the life of the debt facility to which it was allocated.
Underwriting Agreement
SoftBank Debt Financing Costs due to Third Parties
As of March 31, 2022 and December 31, 2021, the Company had capitalized a total of $7 million and $8 million, respectively, in net debt issuance costs paid or payable to third parties associated with the SoftBank Debt Financing and related amendments which will be amortized over a three- to five-year period. Such costs were capitalized as deferred financing costs and included as a component of other assets, net of accumulated amortization, on the accompanying condensed consolidated balance sheets.
Pursuant
Note 12. Other Current Liabilities
Other current liabilities consists of the following:
March 31,December 31,
(Amounts in millions)20222021
Refunds payable to former members$35 $34 
Current portion of long-term debt (See Note 14)28 29 
Other current liabilities25 15 
Total other current liabilities$88 $78 
Note 13. Warrant Liabilities, net
Convertible related party liabilities, net consist of the following:
(Amounts in millions)March 31, 2022December 31, 2021
Private Warrant Liability:
Private Warrant Liability at issuance$18 $18 
(Gain) loss from change in fair value of warrant liabilities(5)(2)
Total Warrant liabilities, net$13 $16 
Private Warrants - Prior to the Underwriting Agreement,Business Combination, Legacy BowX issued 7,773,333 Sponsor Warrants (also referred to as described in Note 3, $0.35 per unit, or $16.9 million in"Private Warrants") and 16,100,000 public warrants (“Public Warrants”). Upon closing of the aggregate, including the over-allotment fees, will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event thatBusiness Combination, the Company completesassumed the Sponsor Warrants and Public Warrants. Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a Business Combination,price of $11.50 per share, subject to the terms of the underwriting agreement.
Note 6—Warrants
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade.adjustments. The Public Warrants will becomewarrants are exercisable on the later of (a)commencing 30 days after the completion of athe Business Combination and (b) 12 months fromwill expire five years after the closingcompletion of the InitialBusiness Combination or earlier upon redemption or liquidation.
The Sponsor Warrants are identical to the Public Offering; provided in each caseWarrants, except that (1) the Company has an effective registration statement under the Securities Act covering the issuance of theSponsor Warrants and shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their Public Warrants on a cashless basis under certain circumstances). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, the Company will use its reasonable best efforts to file, and within 60 business days following the initial Business Combination to have declared effective, a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the Warrants and to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the Warrants expire or are redeemed; provided that, if the Class A common stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, but it will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The Warrants will have an exercise price of $11.50 per share, subject to adjustment, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
In addition, if (x) the Company issues additional shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Company’s initial stockholders, officers, directors or their affiliates, without taking into account any Founder Shares held by them prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s shares of Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of each Warrant will be adjusted (to the nearest cent) such that the effective exercise price per full share will be equal to 115% of the higher of (i) the Market Value and (ii) the Newly Issued Price, and the $18.00
per-share
redemption trigger price described below will be adjusted (to the nearest cent) to be equal to
180
% of the higher of (i) the Market Value and (ii) the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants, except that (1) the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private PlacementSponsor Warrants will not be transferable,
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
assignable or salable until 30 days after the completion of a Business Combination,business combination, subject to certain limited exceptions, (2) the Private PlacementSponsor Warrants will be
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BOWX ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
non-redeemable
(subject (subject to certain exceptions) and exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees and (3) the initial purchasers and their permitted transferees will also have certain registration rights related to the private placement warrants (including the shares of Class A common stock issuable upon exercise of the Private Placement Warrants. If the Private PlacementSponsor Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private PlacementSponsor Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
OnceThe Private Warrants are recognized as derivative warrant liabilities in accordance with ASC 815. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting period. The fair value measurements of the Private Warrants become exercisable,were considered to be Level 2 fair value measurements in the fair value hierarchy as the Company may redeemutilizes the outstandingclosing price of the Public Warrants (exceptas a proxy for the fair value of the Private Placement Warrants):
Warrants. The Private Warrants were valued at $13 million as of March 31, 2022.
Note 14. Long-Term Debt, Net
Long-term debt, net consists of the following:
Maturity
Year		Interest
Rate		March 31,
2022		December 31,
2021
(Amounts in millions, except percentages)
Senior Notes:
Outstanding principal balance20257.875%$669 $669 
Less: Unamortized debt issuance costs(8)(9)
Total Senior Notes, net661 660 
Other Loans:
Outstanding principal balance2022 - 20242.5% - 3.3%32 35 
Less: Current portion of Other Loans (See Note 12)(28)(29)
Total non-current portion Other Loans, net4 6 
Total long-term debt, net$665 $666 
Interest Expense — The Company recorded the following interest expense in the condensed consolidated statements of operations:
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Three Months Ended March 31,
(Amounts in millions)20222021
Interest Expense on Long-Term Debt and SoftBank Debt Financing
Unsecured Notes Payable$28 $18 
2020 LC Facility and LC Debt Facility (Note 20)17 19 
Senior Notes13 13 
Other2 2
Total Interest Expense on Long-Term Debt60 52 
Deferred Financing Costs Amortization: (Note 11)
SoftBank Unsecured Deferred Financing Costs27 28 
SoftBank LC Deferred Financing Costs24 24 
Other Debt Financing Costs2 1 
Total Deferred Financing Costs Amortization53 53 
Total Interest Expense$113 $105 
Principal Maturities — Combined aggregate principal payments for current and long-term debt as of March 31, 2022 are as follows:
(Amounts in millions)Total
Remainder of 2022$21 
20239 
20242 
2025669 
2026— 
2027 and beyond— 
Total minimum payments$701 
Note 15. Fair Value Measurements
Recurring Fair Value Measurements
The Company’s assets and liabilities measured at fair value on a recurring basis consisted of the following:
March 31, 2022
(Amounts in millions)Level 1Level 2Level 3Total
Assets:
Cash equivalents — money market funds and time deposits$281 $— $— $281 
Total assets measured at fair value$281 $— $— $281 
Liabilities:
Warrant liabilities, net$— $13 $— $13 
Other current liabilities - contingent consideration relating to acquisitions payable in common stock— — 4 4 
Other current liabilities - contingent consideration relating to acquisitions payable in cash— — 3 3 
Total liabilities measured at fair value$— $13 $7 $20 
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
December 31, 2021
(Amounts in millions)Level 1Level 2Level 3Total
Assets:
Cash equivalents — money market funds and time deposits$611 $— $— $611 
Other investments — available-for-sale convertible notes— — 34 34 
Total assets measured at fair value$611 $— $34 $645 
Liabilities:
Warrant Liabilities, net$— $16 $— $16 
Total liabilities measured at fair value$— $16 $— $16 
The tables below provide a summary of the changes in wholeassets and notliabilities recorded at fair value and classified as Level 3:
Three Months Ended March 31,Year Ended
December 31,
(Amounts in millions)20222021
Assets:
Balance at beginning of period$34 $50 
Purchases— 15 
Credit loss valuation allowance included in income (loss) from equity method and other investments(1)(19)
Reclassification of forward contract liability to credit valuation allowance upon funding of commitment— (9)
Unrealized (loss) gain on available-for-sale securities included in other comprehensive income— (2)
Accrued interest income— 11 
Accrued interest collected(3)(11)
Foreign currency translation (losses) gain included in other comprehensive income3 (1)
Conversion of available-for-sale securities to equity method investment (Note 10)(33)— 
Balance at end of period$— $34 
Three Months Ended March 31, 2022
(Amounts in millions)Balance at Beginning of PeriodAdditionsSettlementsChange in Fair ValueBalance at End of Period
Liabilities:
Other current liabilities - contingent consideration relating to acquisitions payable in common stock$— $3 $— $1 $4 
Other current liabilities - contingent consideration relating to acquisitions payable in cash— 3 — — 3 
Total$— $6 $— $1 $7 
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Year Ended December 31, 2021
(Amounts in millions)Balance at Beginning of PeriodAdditionsSettlementsChange in Fair ValueReclassification to EquityBalance at End of Period
Liabilities:
IndiaCo Forward Contract Liability$8 $— $(9)$1 $— $— 
SoftBank Senior Unsecured Notes Warrant(1)
279 — (474)230 (35)— 
2020 LC Facility Warrant(2)
140 — (237)115 (18)— 
Total$427 $— $(720)$346 $(53)$— 
(1)During the year ended December 31, 2021, 71,541,399 shares of the Company’s Series H-3 Convertible Preferred Stock were issued in part;connection with the SoftBank Unsecured Notes Warrant and in exchange the Company received $1 million.
(2)During the year ended December 31, 2021, 35,770,699 shares of the Company’s Series H-3 Convertible Preferred Stock were issued in connection with the 2020 LC Facility Warrant and in exchange the Company received $0.4 million.

The total change in fair value are included in the condensed consolidated statements of operations are as follows:
Three Months Ended March 31,
(Amounts in millions)20222021
Selling, general and administrative expenses:
Level 3 liabilities$1 $— 
Income (loss) from equity method and other investments:
Level 3 liabilities$— $(1)
Gain (loss) from change in fair value of warrant liabilities:
Level 2 liabilities$3 $— 
Level 3 liabilities:
SoftBank Senior Unsecured Notes Warrant— (235)
2020 LC Facility Warrant— (117)
Total Level 3 liabilities— (352)
Total gain (loss) from change in fair value of warrant liabilities:$3 $(352)
The valuation techniques and significant unobservable inputs used in the recurring fair value measurements categorized within Level 3 of the fair value hierarchy are as follows:
March 31, 2022
Fair Value
(in millions)		Valuation TechniqueSignificant Unobservable InputsRange (Weighted Average)
Level 3 Liabilities:
Other current liabilities - contingent consideration relating to acquisitions$7 Probability weighted cash flowProbability adjustment100%
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
December 31, 2021
Fair Value
(in millions)		Valuation TechniqueSignificant Unobservable InputsRange (Weighted Average)
Level 3 Assets:
Other investments — available-for-sale convertible notes$34 Discounted cash flowPrice per share$2.22
Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s assets and liabilities may differ from values that would have been used had a ready market for the securities existed.
Nonrecurring Fair Value Measurements
Non-financial assets and liabilities measured at fair value in the condensed consolidated financial statements on a nonrecurring basis consist of certain investments, goodwill, intangibles and other long-lived assets on which impairment adjustments were required to be recorded during the period and assets and related liabilities held for sale which, if applicable, are measured at the lower of their carrying value or fair value less any costs to sell.
As of March 31, 2022, assets held for sale totaling $43 million are included in other current assets on the accompanying condensed consolidated balance sheets. As of December 31, 2021, there were no assets or related liabilities held for sale included on the accompanying condensed consolidated balance sheets. During the three months ended March 31, 2022 and 2021, no impairment charges were recorded related to assets and liabilities previously classified as held for sale.
The Company also recorded impairment charges and other write-offs of certain other long-lived assets, impairing such assets to a carrying value of zero, for impairment charges totaling $80 million and $231 million during the three months ended March 31, 2022 and 2021, respectively. During the three months ended March 31, 2022, the Company also recorded impairment charges totaling $11 million relating to right-of-use assets and property and equipment with an as adjusted remaining carrying value totaling $196 million as of March 31, 2022, valued based on Level 3 inputs representing market rent data for the market the right-of-use assets are located in.
Other Fair Value Disclosures
The estimated fair value of the Company’s accounts receivable, accounts payable, and accrued expenses approximate their carrying values due to their short maturity periods. As of March 31, 2022, the estimated fair value of the Company’s Senior Notes, excluding unamortized debt issuance costs, was approximately $608 million based on recent trading activity (Level 1). For the remainder of the Company's long-term debt, the carrying value approximated the fair value as of March 31, 2022.
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 16. Revenue Recognition
Disaggregation of Revenue
The following table provides disaggregated detail of the Company's revenue by major source for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
(Amounts in millions)20222021
ASC 606 membership and service revenue$522 $359 
ASC 842 rental and service revenue225 220 
Total membership and service revenue747 579 
Other revenue(1)
18 19 
Total revenue$765 $598 
(1)During the three months ended March 31, 2022 and 2021, the Company recognized cost of revenue in the amount of $13 million and $12 million, respectively, in connection with the Company's former Powered by We on-site office design, development and management solutions and costs of providing various other products and services not directly related to the Company’s core space-as-a-service offerings, included in selling, general and administrative expenses on the condensed consolidated statements of operations.
Upon the sale of the Company's 424 Fifth Property in March 2020, a wholly owned subsidiary of the Company entered into an escrow and construction agreement with the buyer for approximately $0.2 billion to finalize the core and shell infrastructure work of the property. These funds were held in escrow upon closing of the sale and are available to pay construction costs, contingencies and cost overruns. The $0.2 billion is expected to be earned by the Company over the period in which the development is completed. During the three months ended March 31, 2022 and 2021, the Company recognized approximately $13 million and none, respectively, in revenue related to this development agreement, included as a component of other revenues. At closing, WeWork Companies LLC provided the buyer a guaranty of completion for the core and shell construction work of the property and the Company is obligated for any overruns if the amounts in escrow are not sufficient to cover the required construction costs.
Contract Balances
The following table provides information about contract assets and deferred revenue from contracts with customers recognized in accordance with ASC 606:
March 31,December 31,
(Amounts in millions)20222021
Contract assets (included in accounts receivable and accrued revenue, net)$8 $28 
Contract assets (included in other current assets)$11 $10 
Contract assets (included in other assets)$15 $14 
Deferred revenue$(39)$(42)
Revenue recognized in accordance with ASC 606 during the three months ended March 31, 2022 and 2021 included in deferred revenue as of January 1 of the respective years was $19 million and $24 million, respectively.
Assets Recognized from the Costs to Obtain a Contract with a Customer
Prepaid member referral fees and deferred sales incentive compensation were included in the following financial statement line items on the accompanying condensed consolidated balance sheets:
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
March 31,December 31,
(Amounts in millions)20222021
Prepaid expenses$54 $52 
Other assets26 23 
The amortization of these costs is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.
Three Months Ended March 31,
(Amounts in millions)20222021
Amortization of capitalized costs to obtain a contract with a customer$21 $13 
Allowance for Credit Loss
The following table provides a summary of changes of the allowance for credit loss for the three months ended March 31, 2022 and the year ended December 31, 2021:
March 31,December 31,
(Amounts in millions)20222021
Balance at beginning of period$63 $108 
Provision charged to expense(1)15 
Write-offs(5)(43)
Changes for member collectability uncertainty(1)
(10)(16)
Effect of foreign currency exchange rate changes(1)(1)
Balance at end of period$46 $63 
(1)The Company is continuing to actively monitor its accounts receivable balances in response to COVID-19 and also ceased recording revenue on certain existing contracts where collectability is not probable. The Company determined collectability was not probable and did not recognize revenue totaling approximately $27 million on such contracts, net of recoveries since 2020, the beginning of the COVID-19 pandemic.
Remaining Performance Obligations
The aggregate amount of the transaction price allocated to the Company's remaining performance obligations that represent contracted customer revenues that have not yet been recognized as revenue as of March 31, 2022, that will be recognized as revenue in future periods over the life of the customer contracts in accordance with ASC 606 was approximately $1 billion. Over half of the remaining performance obligation as of March 31, 2022 is scheduled to be recognized as revenue within the next twelve months, with the remaining to be recognized over the remaining life of the customer contracts, the longest of which extends through 2034.
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WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Approximate future minimum lease cash flows to be received over the next five years and thereafter for non-cancelable membership agreements accounted for as leases in accordance with ASC 842 in effect at a priceMarch 31, 2022 are as follows:
(Amounts in millions)ASC 842 Revenue
2022$619 
2023539 
2024316 
2025167 
202673 
2027 and beyond77 
Total$1,791 
The combination of $0.01 per Warrant;the remaining performance obligation to be recognized as revenue under ASC 606 plus the remaining future minimum lease cash flows of the Company’s member contracts that qualify as leases is comparable to what the Company has historically referred to as “Committed Revenue Backlog”, which totaled approximately $3 billion as of both March 31, 2022 and December 31, 2021. The Company has excluded from these amounts contracts with variable consideration where revenue is recognized using the right to invoice practical expedient.
Note 17. Leasing Arrangements
The components of total real estate operating lease cost for leases recorded under ASC 842 are as follows:
Three Months Ended March 31, 2022
Reported in:
Selling,
LocationPre-openingGeneral andRestructuring
(Amounts in millions)Operating ExpensesLocation ExpensesAdministrative Expensesand Other Related CostsTotal
Lease cost contractually paid or payable for the period$624 $33 $5 $12 $674 
Non-cash GAAP straight-line lease cost30 16 — 4 50 
Amortization of lease incentives(70)(5)(1)(1)(77)
Total real estate operating lease cost$584 $44 $4 $15 $647 
Early termination fees and related (gain)/loss$— $— $— $(154)$(154)
Three Months Ended March 31, 2021
Reported in:
Selling,
LocationPre-openingGeneral andRestructuring
(Amounts in millions)Operating ExpensesLocation ExpensesAdministrative Expensesand Other Related CostsTotal
Lease cost contractually paid or payable for the period$699 $31 $10 $37 $777 
Non-cash GAAP straight-line lease cost34 5 — (2)37 
Amortization of lease incentives(75)(5)(1)(4)(85)
Total real estate operating lease cost$658 $31 $9 $31 $729 
Early termination fees and related (gain)/loss$— $— $— $(84)$(84)
39
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
The Company's total ASC 842 operating lease costs include both fixed and variable components as follows:
Three Months Ended March 31, 2022
Reported in:
Selling,
LocationPre-openingGeneral andRestructuring
(Amounts in millions)Operating ExpensesLocation ExpensesAdministrative Expensesand Other Related CostsTotal
Fixed real estate lease costs$482 $38 $4 $14 $538 
Fixed equipment and other lease costs— — — — — 
Total fixed lease costs$482 $38 $4 $14 $538 
Variable real estate lease costs$102 $6 $— $1 $109 
Variable equipment and other lease costs1 — — — 1 
Total variable lease costs$103 $6 $— $1 $110 
Three Months Ended March 31, 2021
Reported in:
Selling,
LocationPre-openingGeneral andRestructuring
(Amounts in millions)Operating ExpensesLocation ExpensesAdministrative Expensesand Other Related CostsTotal
Fixed real estate lease costs$542 $26 $8 $26 $602 
Fixed equipment and other lease costs— — — — — 
Total fixed lease costs$542 $26 $8 $26 $602 
Variable real estate lease costs$116 $5 $1 $5 $127 
Variable equipment and other lease costs(1)— — — (1)
Total variable lease costs$115 $5 $1 $5 $126 
The Company also has certain leases accounted for as finance leases. Total lease costs for finance leases are as follows:
Three Months Ended March 31,
(Amounts in millions)20222021
Depreciation and amortization$1 $1 
Interest expense1 1 
Total$2 $2 
40
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
The below table presents the lease related assets and liabilities recorded on the accompanying balance sheet as of March 31, 2022 and December 31, 2021, as recorded in accordance with ASC 842:
March 31,December 31,
(Amounts in millions)Balance Sheet Captions20222021
Assets:
Operating lease right-of-use assetsLease right-of-use assets, net$12,598 $13,052 
Finance lease right-of-use assets(1)
Property and equipment, net47 47 
Total leased assets$12,645 $13,099 
Liabilities:
Current liabilities
Operating lease liabilitiesCurrent lease obligations$907 $888 
Finance lease liabilitiesCurrent lease obligations5 5 
Total current liabilities912 893 
Non-current liabilities
Operating lease obligationsLong-term lease obligations17,286 17,888 
Finance lease obligationsLong-term lease obligations37 38 
Total non-current liabilities17,323 17,926 
Total lease obligations$18,235 $18,819 
(1)    Finance lease right-of-use assets are recorded net of accumulated amortization of $23 million and $22 million as of March 31, 2022 and December 31, 2021, respectively.

41
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
The weighted average remaining lease term and weighted average discount rate for operating and finance leases as of March 31, 2022 and December 31, 2021 were as follows:
March 31, 2022December 31, 2021
OperatingFinanceOperatingFinance
Weighted average remaining lease term (in years)129129
Weighted average discount rate percentage8.8 %7.5 %8.7 %7.5 %
The Company's aggregate annual lease obligations relating to non-cancelable finance and operating leases in possession as of March 31, 2022 as presented in accordance with ASC 842:
FinanceOperating
(Amounts in millions)LeasesLeasesTotal
Remainder of 2022$7 $1,863 $1,870 
20239 2,421 2,430 
20247 2,481 2,488 
20256 2,503 2,509 
20267 2,529 2,536 
2027 and beyond26 18,799 18,825 
Total undiscounted fixed minimum lease cost payments62 30,596 30,658 
Less: Amount representing lease incentive receivables(1)
— (358)(358)
Less: Amount representing interest(20)(12,045)(12,065)
Present value of future lease payments42 18,193 18,235 
Less: Current portion of lease obligation(5)(907)(912)
Total long-term lease obligation$37 $17,286 $17,323 
(1)Lease incentive receivables primarily represent amounts expected to be received by the Company relating to payments for leasehold improvements that are reimbursable pursuant to lease provisions with relevant landlords and receivables for broker commissions earned for negotiating certain of the Company’s leases.
The future undiscounted fixed minimum lease cost payments for the leases presented above exclude approximately an additional $825 million relating to executed non-cancelable leases that the Company has not yet taken possession of as of March 31, 2022.
42
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 18. Stock-Based Compensation
Stock‑Based Compensation Expense - The stock-based compensation expense related to employees and non-employee directors recognized for the following instruments and transactions are as follows:
upon
Three Months Ended March 31,
(Amounts in millions)20222021
Service-based restricted stock units$8 $1 
Service-based vesting stock options3 4 
Service, performance and market-based vesting restricted stock units(1)
2 — 
Service, performance and market-based vesting stock options(1)
— 1 
WeWork Partnerships Profits Interest Units— 102 
2021 Tender Offer— 48 
Total$13 $156 
(1)Includes a minimumreversal of
30 days
’ prior written notice $2 million of redemption;stock compensation expense previously recorded for unvested options that were forfeited during the three months ended March 31, 2022.
The stock-based compensation expense related to employees and non-employee directors are reported in the following financial statement line items:
Three Months Ended March 31,
(Amounts in millions)20222021
Stock-based compensation included in:
Location operating expenses$2 $9 
Selling, general and administrative expenses11 45 
Restructuring and other related costs— 102 
Total stock-based compensation expense$13 $156 
The stock-based compensation expense related to non-employee contractors for services rendered are reported in selling, general and administrative expenses and include the following instruments and transactions:
Three Months Ended March 31,
(Amounts in millions)20222021
Service-based vesting stock options(1)
$— $(2)
Total$— $(2)
(1)The $2 million recovery recognized during the three months ended March 31, 2021 was related to expense previously taken for unvested options that were forfeited. For the three months ended March 31, 2022 and 2021, none and $0.1 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 condensed consolidated balance sheets.
Note 19. Net Loss Per Share
if,We compute net loss per share of Class A common stock and only if,Class B common stock under the last reported sale pricetwo-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock equalsand Class B common stock are substantially identical, other than voting rights. The shares of Class C common stock are deemed to be a non-economic interest. Shares of Class C common stock are, however, considered dilutive shares of Class A common stock, because such shares can be exchanged into shares of Class A common stock. If the shares of Class C common stock correspond to WeWork Partnership Class A common units, the shares of Class C common stock (together with the corresponding WeWork Partnership Class A common units) can be exchanged for (at the Company's election) shares of Class A common stock on a one-for-
43
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
one basis, or exceeds $18.00 per share (as adjusted forcash of an equivalent value. If the shares of Class C common stock splits, stock dividends, reorganizations, recapitalizationscorrespond to WeWork Partnerships Profits Interests Units and the like)value of the WeWork Partnership has increased above the applicable aggregate distribution threshold of the Units, the shares of Class C common stock (together with the corresponding WeWork Partnerships Profits Interests Units) can be exchanged for any 20 trading days within(at the Company's election) a
30-trading
day period commencing once the Warrants become exercisable and ending on the third trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders.
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
Commencing ninety days after the Warrants become exercisable, the Company may redeem the outstanding Warrants:
in whole and not in part;
at $0.10 per Warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their Warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock to be determined by reference to an agreed table based on the redemption date and the “fair market value”value of the Company’s Class A common stock;
if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $10.00 pera share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the Warrant holders;
if, and only if, the Private Placement Warrants are also concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above; and
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock (or a security other thanon the exchange date to the applicable per-unit distribution threshold, or cash of an equivalent value. Accordingly, only the Class A common stock into which theand Class AB common stock has been converted or exchanged forshare in the eventCompany's net losses.
On February 26, 2021, in connection with the Company is not the surviving companySettlement Agreement (as defined in the initial Business Combination) issuable upon exerciseNote 21), all of the Warrants and a current prospectus relating thereto available throughout the
30-day
period after written notice of redemption is given.
The “fair market value” of the Class A common stock for this purpose shall mean the average last reported sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Warrants.
In no event will the Company be required to net cash settle any Warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Warrants will not receive any of such funds with respect to their Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such Warrants. Accordingly, the Warrants may expire worthless.
The Public Warrants are accounted for as equity and the Private Placement warrants are accounted for as liabilities on the balance sheet.
14
Table of Contents
BOWX ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6—Stockholders’ Equity
Preferred stock
—The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. As of June 30, 2021 and December 31, 2020, there are
no
shares of preferred stock issued or outstanding.
Class
 A Common Stock
—The Company is authorized to issue 87,500,000 shares of Class A common stock with a par shares value of $0.0001 per share. At June 30, 2021 and December 31, 2020, there were 48,300,000 shares of Class A common stock issued or outstanding. Of the outstanding shares of Class A common stock, 43,231,098 and 44,911,184 were subject to possible redemption at June 30, 2021 and December 31, 2020, respectively, and therefore classified outside of permanent equity.
Class
 B Common Stock
—The Company is authorized to issue 12,500,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of the Company’s Class B common stock are entitled to one vote for each share. On August 4, 2020, the Company effected a stock dividend of 0.2 shares of Class B common stock for each share of Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the share dividend including up to 1,575,000 which were subject to forfeiture to the Company to the extent that the underwriter’s over-allotment option is not exercised in full or in part, so that the shares of Class B common stock will represent 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. Accordingly, as of June 30, 2021 and December 31, 2020, 12,075,000 shares of Class B common stock wer
e
 issued and outstanding.
The shares of Class B common stock will automatically convertconverted into shares of Class A common stock and the shares of Class C common stock of the Company now have one vote per share, instead of three (the "Class B Conversion").
Prior to the Business Combination, the Company's participating securities included Series A, B, C, D-1, D-2, E, F, G, G-1, H-1, H-3 and Acquisition Preferred Stock, as the holders of these series of preferred stock were entitled to receive a noncumulative dividend on a pari passu basis in the event that a dividend was paid on common stock, as well as holders of certain vested RSUs that had a non-forfeitable right to dividends in the event that a dividend was paid on common stock. The holders of WeWork's Junior Preferred Stock were not entitled to receive dividends and were not included as participating securities. The holders of Series A, B, C, D-1, D-2, E, F, G, G-1, H-1, H-3 and Acquisition Preferred Stock, as well as the holders of certain vested RSUs with a non-forfeitable right to dividends, did not have a contractual obligation to share in its losses. As such, the Company's net losses for the three months ended March 31, 2021, were not allocated to these participating securities. In connection with the Business Combination, all series of Legacy WeWork convertible preferred stock were converted to the Company’s Class A common stock at the Exchange Ratio, on a one-for-one basis with Legacy WeWork’s Class A common stock, and included in the basic net loss per share calculation on a prospective basis.
Basic net loss per share is computed by dividing net loss attributable to WeWork Inc. attributable to its Class A common and Class B common stockholders by the weighted-average number of shares of its Class A common stock and Class B common stock outstanding during the period. As of March 31, 2022, the warrants held by SoftBank and SoftBank affiliates are exercisable at any time for nominal consideration, therefore, the shares issuable upon the exercise of the initialwarrants are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders. Accordingly, the calculation of weighted-average common shares outstanding includes 56,029,265 shares issuable upon exercise of the warrants for the three months ended March 31, 2022.
On October 20, 2021, as a result of the Company's Business Combination, or earlier atprior period share and per share amounts presented have been retroactively converted in accordance with ASC 805. For each comparative period before the option of the holder, on a
one-for-one
basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as described herein). In the case that additional sharesBusiness Combination Legacy WeWork's historical weighted average number of Class A common stock and Class B common stock outstanding has been multiplied by the Exchange Ratio.
For the computation of diluted net loss per share, net loss per share attributable to common stockholders for basic net loss per share is adjusted by the effect of dilutive securities, including awards under the Company's equity compensation plans. Diluted net loss per share attributable to common stockholders is computed by dividing the resulting net loss attributable to WeWork Inc. attributable to its Class A common and Class B common stockholders by the weighted-average number of fully diluted common shares outstanding. In the three months ended March 31, 2022 and 2021, the Company's potential dilutive shares were not included in the computation of diluted net loss per share as the effect of including these shares in the computation would have been anti-dilutive.
The numerators and denominators of the basic and diluted net loss per share computations for WeWork's common stock are calculated as follows for the three months ended March 31, 2022 and 2021:
44
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Three Months Ended March 31,
(Amounts in millions, except share and per share data)20222021
Numerator:
Net loss attributed to WeWork Inc.$(435)$(2,032)
Net loss attributable to Class A and Class B Common Stockholders(1) - basic
$(435)$(2,032)
Net loss attributable to Class A and Class B Common Stockholders(1) - diluted
$(435)$(2,032)
Denominator:
Basic shares:
Weighted-average shares - Basic759,676,860 141,721,529 
Diluted shares:
Weighted-average shares - Diluted759,676,860 141,721,529 
Net loss per share attributable to Class A and Class B Common Stockholders:
Basic$(0.57)$(14.34)
Diluted$(0.57)$(14.34)
(1)The three months ended March 31, 2022 are comprised of only Class A common stock as noted above.
The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive, or equity-linked securities,issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period. These amounts represent the number of instruments outstanding at the end of each respective year.
Three Months Ended March 31,
20222021
Warrants23,877,787 5,268,762 
Partnership Units19,896,032 — 
RSUs18,580,989 10,134,360 
Stock options17,301,513 38,518,393 
WeWork Partnerships Profits Interest Units42,057 20,689,174 
Convertible Preferred Stock Series A, B, C, D-1, D-2, E, F, G, G-1, H-1, H-3 and Acquisition— 412,102,685 
Convertible Preferred Stock Series Junior— 1,239 
Convertible notes— 648,809 
Note 20. Commitments and Contingencies
Credit Agreement — In November 2015, the Company amended and restated its existing credit facility (the "2019 Credit Facility") to provide up to $650 million in revolving loans and letters of credit, subject to certain financial and other covenants. At various points during 2016 through 2019, the Company executed amendments to the credit agreement governing the 2019 Credit Facility which amended certain of the financial and other covenants. In November 2017 and as later amended, the Company entered into a new letter of credit facility (the "2019 LC Facility") pursuant to the letter of credit reimbursement agreement that provided an additional $500 million in availability of standby letters of credit. In May 2019, the Company entered into an additional letter of credit reimbursement agreement that provided for an additional $200 million in availability of standby letters of credit.
In conjunction with the availability of the 2020 LC Facility (described below), the 2019 Credit Facility and the 2019 LC Facility were terminated in February 2020 and $5 million of deferred financing costs were expensed and included in loss on extinguishment of debt on the consolidated statements of operations for the year ended December 31, 2020. As of March 31, 2022 and December 31, 2021, $6 million and $6 million, respectively, in letters of credit remain outstanding under the 2019 LC Facility and 2019 Credit Facility that are secured by new letters of credit issued under the 2020 LC Facility.
45
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
The Company has also entered into various other letter of credit arrangements, the purpose of which is to guarantee payment under certain leases entered into by JapanCo and other fully owned subsidiaries. There was $8 million and $8 million of standby letters of credit outstanding under these other arrangements that are secured by $8 million and $11 million of restricted cash at March 31, 2022 and December 31, 2021, respectively.
2020 LC Facility and Company/SBG Reimbursement Agreement — On December 27, 2019, WeWork Companies LLC entered into the Company Credit Agreement (as amended by the First Amendment, dated as of February 10, 2020, the Second Amendment to the Credit Agreement and First Amendment to the Security Agreement, dated as of April 1, 2020, and the Third Amendment to the Credit Agreement, dated as of December 6, 2021), among WeWork Companies LLC, as co-obligor, the SoftBank Obligor, as co-obligor, Goldman Sachs International Bank, as administrative agent, and the issuing creditors and letter of credit participants party thereto. The Company Credit Agreement provides for a $1.75 billion senior secured letter of credit reimbursement facility (the "2020 LC Facility"), which was made available on February 10, 2020, for the support of WeWork Companies LLC's or deemed issuedits subsidiaries' obligations. As amended, the 2020 LC Facility terminates on February 10, 2024 and reduces to $1.25 billion beginning on February 10, 2023. As of March 31, 2022, $1.2 billion of standby letters of credit were outstanding, of which none were drawn under the 2020 LC Facility, and $6 million has been utilized to secure letters of credit that remain outstanding under the 2019 Credit Facility and the 2019 LC Facility, which were terminated in 2020. As of March 31, 2022, there was $0.6 billion in remaining letter of credit availability under the 2020 LC Facility.
The 2020 LC Facility is guaranteed by substantially all of the domestic wholly-owned subsidiaries of WeWork Companies LLC (collectively, the “Guarantors”) and is secured by substantially all the assets of WeWork Companies LLC and the Guarantors, in each case, subject to customary exceptions. The Company Credit Agreement and related documentation contain customary reimbursement provisions, representations, warranties, events of default and affirmative covenants (including with respect to cash management) for letter of credit facilities of this type. The negative covenants applicable to WeWork Companies LLC and its Restricted Subsidiaries (as defined in the Company Credit Agreement) are limited to restrictions on liens (subject to exceptions substantially consistent with the Company's 7.875% Senior Notes due 2025), changes in line of business and disposition of all or substantially all of the assets of WeWork Companies LLC.
In connection with the 2020 LC Facility, WeWork Companies LLC also entered into a reimbursement agreement, dated February 10, 2020 (as amended, the "Company/SBG Reimbursement Agreement"), with the SoftBank Obligor pursuant to which (i) the SoftBank Obligor agreed to pay substantially all of the fees and expenses payable in connection with the Company Credit Agreement, (ii) the Company agreed to reimburse SoftBank Obligor for certain of such fees and expenses (including fronting fees up to an amount of 0.125% on the undrawn and unexpired amount of the letters of credit, plus any fronting fees in excess of 0.415% on the undrawn and unexpired amount of the letters of credit) as well as to pay the SoftBank Obligor a fee of 5.475% on the amount of all outstanding letters of credit and (iii) the Guarantors agreed to guarantee the obligations of WeWork Companies LLC under the Company/SBG Reimbursement Agreement. During the three months ended March 31, 2022 and 2021, the Company recognized $17 million and $19 million, respectively, in interest expense in connection with amounts issuedpayable to SBG pursuant to the Company/SBG Reimbursement Agreement.
As the Company is also obligated to issue shares to SBG in the Initial Public Offeringfuture pursuant to the 2020 LC Facility Warrant, with such warrant valued at issuance at $284 million (as discussed in Note 11), the implied interest rate for the Company on the 2020 LC Facility at issuance, assuming the full commitment is drawn, is approximately 12.47%. In December 2021, the Company/SBG Reimbursement Agreement was amended following the entry into the Amended Credit Support Letter (as defined below) to, among other things, change the fees payable by WeWork Companies LLC to SBG to (i) 2.875% of the face amount of letters of credit issued under the 2020 LC Facility (drawn and undrawn), payable quarterly in arrears, plus (ii) the amount of any issuance fees payable on the drawn amounts under the 2020 LC Facility.
46
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
On May 10, 2022, WeWork Companies LLC, as co-obligor (the “WeWork Obligor”), the SoftBank Obligor, as co-obligor, Goldman Sachs International Bank, as existing administrative agent and senior tranche administrative agent, Kroll Agency and Trust Services Ltd., as junior tranche administrative agent, and the issuing creditors and letter of credit participants party thereto entered into the Fourth Amendment to the Credit Agreement (the "Fourth Amendment to the Credit Agreement") pursuant to which the existing 2020 LC Facility was amended and subdivided into a $1.25 billion senior letter of credit tranche (the "Senior LC Tranche"), which decreases to $1.05 billion in February 2023, and a $350 million junior letter of credit tranche (the "Junior LC Tranche"). The letter of credit under the Junior LC Tranche was issued and drawn for the benefit of the WeWork Obligor in full upon effectiveness of the Fourth Amendment to the Credit Agreement. The termination date of the Junior LC Tranche is November 30, 2023 and the termination date of the Senior LC Tranche is February 9, 2024. The letters of credit issuable under the Senior LC Tranche have substantially similar terms as the existing 2020 LC Facility. The reimbursement obligations under the Junior LC Tranche bear interest at the ABR (as defined in the Fourth Amendment to the Credit Agreement) plus 5.50% or the Term SOFR Rate (as defined in the Fourth Amendment to the Credit Agreement), with a floor of 0.75%, plus 6.50%, at the WeWork Obligor’s option. The reimbursement obligations under the Junior LC Tranche are voluntarily repayable at any time, subject to a prepayment fee such that the minimum return to the letter of credit participants under the Junior LC Tranche on the Junior LC Tranche reimbursement obligations is an amount equal to the sum of 6.50% (the Applicable Margin of the Junior LC Tranche reimbursement obligations) and 2.00% of the total principal amount of the Junior LC Tranche reimbursement obligations, as set forth in the Fourth Amendment to the Credit Agreement. Obligations of the WeWork Obligor and its restricted subsidiaries under the Junior LC Tranche are subordinated in right of payment to the obligations under the Senior LC Tranche to the extent of the value of the collateral securing such obligations. In connection with the Fourth Amendment to the Credit Agreement, the Company/SBG Reimbursement Agreement was amended to clarify that the payment obligations in connection with fees and expenses related to the closingFourth Amendment to the Credit Agreement are the responsibility of the initial Business Combination (includingCompany and not SBG.
LC Debt Facility - In May 2021, the Company entered into a loan agreement with a third party to raise up to $350 million of cash secured by one or more letters of credit issued pursuant to the 2020 LC Facility (the “LC Debt Facility”). The third party has the ability to issue a specifiedseries of discount notes to investors of varying short term (one- to six- month) maturities and made a matching discount loan to the Company. The Company will pay the 5.475% issuance fee on the letter of credit, the 0.125% fronting fee on the letter of credit and the interest on the discount note which will be set each note issuance. In September 2021, the Company repaid the initial LC Debt Facility and accrued interest totaling $350 million and entered into a new LC Debt Facility. In October 2021, the Company repaid the second LC Debt Facility and accrued interest totaling $350 million. As of March 31, 2022 and December 31, 2021, there were no borrowings outstanding under the LC Debt Facility.
As of both March 31, 2022 and December 31, 2021, the Company had capitalized a total of $0.5 million in debt issuance costs, as the nonrefundable engagement fee, which will be amortized until February 10, 2023. Such costs were capitalized as deferred financing costs and included as a component of other assets, net of accumulated amortization totaling $0.3 million and $0.2 million as of March 31, 2022 and December 31, 2021, respectively, on the accompanying condensed consolidated balance sheet. During the three months ended March 31, 2022 and 2021, the Company recorded $0.1 million and none, respectively, of interest expense relating to the amortization of these costs.
Construction Commitments — In the ordinary course of its business, the Company enters into certain agreements to purchase construction and related contracting services related to the build-outs of the Company’s operating locations that are enforceable and legally binding, and that specify all significant terms and the approximate timing of the purchase transaction. The Company’s purchase orders are based on current needs and are fulfilled by the vendors as needed in accordance with the Company’s construction schedule. As of March 31, 2022 and December 31, 2021, the Company had issued approximately $55 million and $59 million, respectively, in such outstanding construction commitments.
47
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Legal Matters — The Company has in the past been, is currently and expects to continue in the future issuance)to be a party to or involved in pre-litigation disputes, individual actions, putative class actions or other collective actions, U.S. and foreign government regulatory inquiries and investigations and various other legal proceedings arising in the normal course of its business, including with members, employees, landlords and other commercial partners, securityholders, third-party license holders, competitors, government agencies and regulatory agencies, among others.
The Company reviews its litigation-related reserves regularly and, in accordance with GAAP, sets reserves where a loss is probable and estimable. The Company adjusts these reserves as appropriate; however, due to the unpredictable nature and timing of litigation, the ultimate loss associated with a given matter could significantly exceed the litigation reserve currently set by the Company. Given the information it has as of today, management believes that none of these matters will have a material effect on the consolidated financial position, results of operations or cash flows of the Company.
As of March 31, 2022, the Company is also party to several litigation matters and regulatory matters not in the ordinary course of business. These matters are described below. Management intends to vigorously defend these cases and cooperate with regulators in these matters; however, there is a reasonable possibility that the Company could be unsuccessful in defending these claims and could incur losses. It is not currently possible to estimate a range of reasonably possible loss above the aggregated reserves.
Carter v. Neumann, et al. (Superior Court for the State of California, County of San Francisco, No. CGC-19-580474, filed January 10, 2020, replacing Natalie Sojka as plaintiff in the putative class action Ms. Sojka filed on November 4, 2019)
Won v. Neumann, et al. (Superior Court for the State of California, County of San Francisco, No. CGC-19-581021, filed November 25, 2019)
NaN separate purported class and derivative complaints have been filed by three Company shareholders (two in Carter and one in Won) against the Company, certain current and former directors, SBG, Adam Neumann and Masayoshi Son. Both complaints were filed in California state court and allege, among other things, that defendants breached fiduciary duties and/or aided and abetted breaches of fiduciary duties in connection with certain transactions. The complaints seek injunctive relief and damages. In both actions, the Company filed motions to compel arbitration and stay the actions, or to enforce the Company’s Delaware forum selection bylaw and dismiss or stay the actions. On August 31, 2020, the trial court granted the motions to compel arbitration (as to one of the plaintiffs in Carter and the plaintiff in Won) and the motion to enforce the forum selection bylaw (as to the second plaintiff in Carter). On October 30, 2020, the first Carter plaintiff and the Won plaintiff filed petitions for writs of mandate seeking to overturn the court's orders compelling arbitration. On December 3, 2020, the California Court of Appeal denied those petitions. Also on October 30, 2020, the second plaintiff in Carter appealed the trial court’s decision enforcing the forum selection bylaw. On November 16, 2021, the California Court of Appeal affirmed the trial court's decision enforcing the forum selection bylaw. On December 23, 2021, the second Carter plaintiff filed a petition to review the Court of Appeal's decision in the California Supreme Court. On March 9, 2022, the California Supreme Court denied this petition. The Company is litigating the first Carter plaintiff's and the Won plaintiff's claims in private arbitrations.
Catalyst Investors III, L.P. v. The We Company et. al (Supreme Court of the State of New York, County of New York, Index No. 654377/2020, filed September 21, 2020)
Three former investors in Conductor, Inc. filed a complaint against the Company, its former Chief Executive Officer, Adam Neumann, and its former Chief Financial Officer, Arthur Minson, alleging that the defendants made or participated in making misrepresentations that induced the plaintiffs to agree to the Company’s acquisition of Conductor, Inc. in March 2018. The plaintiffs assert causes of action for common law fraud/fraudulent inducement, unjust enrichment, and negligent misrepresentation under New York law. The plaintiffs seek unspecified compensatory and punitive damages, as well as other relief. On December 4, 2020, the Company filed a motion to dismiss the complaint. In a May 26, 2021 order, the
48
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
court granted the motion to dismiss as to the unjust enrichment and negligent misrepresentation claims and denied the motion to dismiss as to the fraud based claims.
Regulatory Matters
Since October 2019, the Company has been responding to subpoenas and document requests issued by certain federal and state authorities investigating the Company’s disclosures to investors and employees regarding the Company’s valuation and financial condition, and certain related party transactions. On November 26, 2019, the U.S. Securities and Exchange Commission issued a subpoena seeking documents and information concerning these topics, and has interviewed witnesses, in connection with a non-public investigation styled In the Matter of The We Company (HO-13870). On January 29, 2020, the United States Attorney’s Office for the Southern District of New York issued a voluntary document request concerning these topics and has interviewed witnesses. On October 11, 2019, the New York State Attorney General’s Office issued a document request concerning these topics and has examined witnesses. On February 12, 2020, the California Attorney General’s Office issued a subpoena concerning these topics. The Company is cooperating with all of these investigations.
Asset Retirement Obligations — As of March 31, 2022 and December 31, 2021, the Company had asset retirement obligations of $214 million and $220 million, respectively. The current portion of asset retirement obligations are included within other current liabilities and the non-current portion are included within other liabilities on the accompanying condensed consolidated balance sheets. Asset retirement obligations include the following activity during the three months ended March 31, 2022 and the year ended December 31, 2021:
Three Months Ended
March 31,		Year Ended
December 31,
(Amounts in millions)20222021
Balance at beginning of period$220 $206 
Liabilities incurred in the current period2 10 
Liabilities settled in the current period(6)(19)
Accretion of liability4 17 
Revisions in estimated cash flows— 20 
Effect of foreign currency exchange rate changes(6)(14)
Balance at end of period214 220 
Less: Current portion of asset retirement obligations(1)(1)
Total non-current portion of asset retirement obligations$213 $219 
49
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 21. Other Related Party Transactions
Related party amounts are reported in the following financial statement line items:
March 31,December 31,
(Amounts in millions)20222021
Assets
Current assets:
Accounts receivable and accrued revenue$2 $— 
Prepaid expenses1 1 
Other current assets— 2 
 Total current assets3 3 
Other assets545 596 
Total assets$548 $599 
Liabilities
Current liabilities:
Accounts payable and accrued expenses$87 $94 
Deferred revenue6 5 
Current lease obligations18 18 
Total current liabilities111 117 
Long-term lease obligations482 525 
Unsecured Notes1,650 1,650 
Total liabilities$2,243 $2,292 
Three Months Ended March 31,
(Amounts in millions)20222021
Revenue$16 $49 
Expenses:
Total expenses19 23 
Interest expense90 88 
Gain (loss) from change in fair value of warrant liabilities— (352)
Sound Ventures
In June 2021, the Company sold its 5.7% interest in Sound Ventures II, LLC to a SoftBank affiliate, SB Fast Holdings (Cayman) Limited ("Buyer"), for total consideration of $6 million. The Buyer also assumed the Company's remaining capital commitments of $2 million. In connection with the sale, an amendment was made to the original profit sharing arrangement ("PSA") resulting from the sale of the Creator Fund to Softbank in 2020. The PSA was updated to reflect the additional capital commitment to Sound Ventures of $8 million (equal to the $6 million purchase price and contributed capital already funded and $2 million in unfunded commitments assumed by the Buyer). As such, the Company will be entitled to 20% of profits on the sale of underlying portfolio investments in the Creator Fund over $102 million.
International Joint Ventures and Strategic Partnerships
50
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
During the three months ended March 31, 2022, the Company converted the 2020 Debentures and other convertible debentures (as discussed and defined in Note 10) into 12,397,510 and 3,375,000 common shares of IndiaCo, respectively, representing an ownership interest in IndiaCo of approximately 27.5%. The carrying value of the Company's ownership interest is in IndiaCo is accounted for as an equity method investment and considered a related party upon conversion. IndiaCo constructs and operates workspace locations in India using WeWork’s branding, advice and sales model. Per the terms of an agreement the Company will also receive a management fee from IndiaCo. The Company recorded $2 million and $2 million of management fee income from IndiaCo during the three months ended March 31, 2022.
Subsequent to the ChinaCo Deconsolidation, the Company is entitled to certain transition services fees equal to $2 million for transition services provided from October 2, 2020 through December 31, 2020 and the lesser of $1 million per month or the actual costs of services provided for the following three month period.
The Company is also entitled to an annual management fee of 4% of net revenues beginning on the later of 2022 or the first fiscal year following the Initial Investment Closing in which EBIT of ChinaCo is positive (the "ChinaCo Management Fee"). The Company is also entitled to an additional $1 million in fees in connection with data migration and application integration services that were performed over a six month period beginning on October 2, 2020. These data migration and application integration fees are only payable on the first date the ChinaCo Management Fee becomes payable, and is recognized in Accounts receivable and accrued revenue on the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021.
Subsequent to the ChinaCo Deconsolidation, the Company has also continued to provide a guarantee to certain landlords of ChinaCo, guaranteeing total lease obligations up to $4 million as of March 31, 2022. The Company is entitled to a fee totaling approximately $0.1 million per year for providing such guarantees, until such guarantees are extinguished.
During the three months ended March 31, 2022 and 2021, the Company recorded $0.02 million and $1 million, respectively, of total fee income for services provided to ChinaCo, included within service revenue as a component of total revenue in the accompanying condensed consolidated statements of operations. All amounts earned from ChinaCo prior to the ChinaCo Deconsolidation are eliminated in consolidation.
Tender Offer and Settlement Agreement
On April 7, 2020, the Special Committee, acting in the name of the Company, filed a complaint in the Court of Chancery of the State of Delaware against SBG and SoftBank Vision Fund asserting claims in relation to SBG’s withdrawal of the 2020 Tender Offer. Separately, on May 4, 2020, Mr. Neumann filed a complaint captioned Neumann, et al. v. SoftBank Group Corp., et al., C.A. No. 2020-0329-AGB, also asserting claims in relation to SBG's withdrawal of the 2020 Tender Offer. On February 25, 2021, all parties entered into a settlement agreement (the “Settlement Agreement”), the ratioterms of which, when completed, would resolve the litigation. On April 15, 2021, the parties filed a stipulation of dismissal dismissing with prejudice the claims brought by the Company, and dismissing the action in its entirety. The Settlement Agreement provides for, among other things, the following:
•The launch of a new tender offer. Pursuant to the Settlement Agreement, SVF II completed a tender offer and acquired $922 million of the Company's equity securities (including certain equity awards, exercisable warrants and convertible notes) from eligible equity holders of the Company, at a price of $23.23 per share (the “2021 Tender Offer”). Mr. Neumann, his affiliate We Holdings LLC, and certain of their related parties separately sold shares to SBG and its affiliates as describe below; therefore they were excluded from the 2021 Tender Offer and did not tender shares. As a result of the 2021 Tender Offer, which closed in April 2021, the Company recorded $48 million of total expenses in its condensed consolidated statements of operations for the three months ended March 31, 2021.
51
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
•Certain governance changes. The transactions contemplated by the Settlement Agreement also included the elimination of the Company’s multi-class voting structure. As a result of the Amended and Restated Certificate of Incorporation of the Company and the transactions contemplated by the Settlement Agreement, on February 26, 2021, all of the outstanding shares of Class B common stock shall convertof the Company automatically converted into shares of Class A common stock will be adjusted (unlessand the holdersshares of a majorityClass C Common stock of the then-outstandingCompany now have 1 vote per share, instead of 3 (the “Class B Conversion”). The Amended and Restated Certificate of Incorporation provides that if, following the Class B Conversion, new shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, includingare issued pursuant to a(i) the exercise of options to purchase shares of Class B common stock outstanding as of the date of the Class B Conversion, (ii) securities convertible into shares of Class B common stock outstanding as of the date of the Class B Conversion, and (iii) other circumstances which are specified future issuance) so thatin the numberAmended and Restated Certificate of Incorporation, such new shares will be automatically converted into shares of Class A common stock issuable upon conversion of allimmediately following the time such new shares of Class B common stock willare issued.
•Mr. Neumann settlement payment. In connection with the Settlement Agreement, SBG and its affiliates paid Mr. Neumann an amount equal to $106 million. No expense was recorded in the aggregate, on an
as-converted
basis, 20%Company's condensed consolidated statements of operations as it does not benefit the sumCompany.
•Mr. Neumann sale of stock to SBG. In connection with the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus allSettlement Agreement, SBG and its affiliates purchased 24,901,342 shares of Class AB common stock and equity-linked securities issued or deemed issued in connection with our initial Business Combination (excluding any shares or equity-linked securities issued or issuable to any seller in the initial Business Combination).
Note 7—Fair Value Measurements
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 by level within the fair value hierarchy:
   
Fair Value Measured as of June 30, 2021
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets
                    
Investments held in Trust Account—U.S. Treasury Securities
  $483,071,704   $—     $—     $483,071,704 
Liabilities:
                    
Warrant liabilities
  $—     $25,962,932   $—     $25,962,932 
   
Fair Value Measured as of December 31, 2020
 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets
                    
Investments held in Trust Account—U.S. Treasury Securities
  $483,227,051   $—     $—     $483,227,051 
Liabilities:
                    
Warrant liabilities
  $—     $13,292,400   $—     $13,292,400 
Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period. There were no transfers between levels for the three and six months ended June 30, 2021.
Company from We Holdings LLC, which is Mr. Neumann's affiliated investment vehicle, at a price per share of $23.23, representing an aggregate purchase price of $578 million. The Company utilizesrecorded a $428 million expense which represents the excess between the amount paid from a principal shareholder of the Company to We Holdings LLC and the fair value of the Public Warrants at December 31, 2020stock purchased. The Company recognized the expense in restructuring and June 30, 2021 to estimate the fair value of the warrants, with changes in fair value recognizedother related costs in the unaudited condensed consolidated statements of operations. Foroperations for the three and six months ended June 30,March 31, 2021, with a corresponding increase in additional paid-in capital, representing a deemed capital contribution by SBG in its condensed consolidated balance sheets. Refer to Note 5 for more information.
•Mr. Neumann proxy changes. In connection with the Settlement Agreement, Mr. Neumann’s proxy and future right to designate directors to WeWork's board of directors were eliminated. The Amended and Restated Stockholders’ Agreement eliminated all proxies by Mr. Neumann in favor of WeWork's board of directors, eliminated Mr. Neumann’s right to observe meetings of our board of directors and removed Mr. Neumann’s future rights to designate directors to our board of directors (which would have been available to Mr. Neumann upon elimination of his financial obligations with and to SBG). Mr. Neumann's right to observe meetings of WeWork's board of directors was replaced by a new agreement, which provides that beginning on February 26, 2022, Mr. Neumann may designate himself or a representative to serve as an observer entitled to attend all meetings of WeWork's board of directors and certain committees thereof in a non-voting capacity. In the event that Mr. Neumann designates himself, SBG has the right following consultation with Mr. Neumann, to designate another individual to attend such meetings, and such individual shall be subject to SoftBank's approval, which shall not be unreasonably withheld. Pursuant to this agreement, Mr. Neumann's right will terminate on the date on which Mr. Neumann ceases to beneficially own equity securities representing at least 1,720,950 shares of WeWork Class A common stock (on an as-converted basis and as adjusted for stock splits, dividends and the like).
•SBG proxy agreement. On February 26, 2021, we entered into a proxy agreement with SVF II which will allow SBG and its affiliates to continue to voluntarily limit the combined voting power of SBG and SVFE to less than 49.90%. Pursuant to the proxy agreement, with respect to any shares of the Company’s stock representing shares owned by SVF II that, when taken together with the voting power of all other shares of the Company’s capital stock held by SBG and its affiliates (including SVFE) represent voting power of the Company recognized a charge to the statementsin excess of operations resulting from an increase in the fair value of liabilities of approximately $9.4 million and $12.7 million presented as change in fair value of derivative warrant liabilities.
49.90%, such
1552
BOWX ACQUISITION CORP.WEWORK INC.
NOTES TO UNAUDITEDTHE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
The changeshares held by SBG will be voted in the fair valuesame proportion as shares of the derivative warrant liabilitiesCompany’s capital stock not owned by SBG or SVFE.
•WeWork Partnerships Profits Interest Units amendments. In February 2021, in connection with the Settlement Agreement, the WeWork Partnerships Profits Interest Units held by Mr. Neumann in the WeWork Partnership became fully vested and were amended to have a catch-up base amount of $0. The per unit distribution thresholds for the WeWork Partnerships Profits Interest Units were also amended to initially be $10.00. The distribution threshold was adjusted downward based on closing date pricing of the Business Combination. As a result of this modification, the Company recorded $102 million of restructuring and other related costs in its condensed consolidated statement of operations for the three and six months ended June 30,March 31, 2021. Subsequent to the Business Combination, Mr. Neumann converted 19,896,032 vested WeWork Partnership Profits Interest Units into WeWork Partnership Class A common units. Refer to Note 9 for more information on the conversion to WeWork Partnership Class A common units.
Real Estate Transactions
The Company has several operating lease agreements for space in buildings owned by an entity in which the Company has an equity method investment through WeCap Investment Group. The Company has also entered into three separate operating lease agreements and one finance lease agreement for space in buildings that are partially owned by Mr. Neumann. Another shareholder of the Company is also a partial owner of the building in which the Company holds the finance lease. As of March 31, 2022, the Company has terminated all operating lease agreements in buildings that are partially owned by Mr. Neumann.
In February 2022, the remaining operating lease agreement in a building that is partially owned by Mr. Neumann was formally terminated upon receiving the necessary ordinary course approvals. The negotiations for the termination occurred in the ordinary course and on arms' length terms. The terms of termination included the tenant entity’s release of $0.6 million in unpaid tenant improvement allowances that had been held in escrow in exchange for the forgiveness of certain tenant responsibilities under the lease and the landlord entity’s forgiveness of the remaining rent amounts then owed. As of December 31, 2021, is summarizedthe unpaid tenant improvement allowance was fully reserved in the Company's condensed consolidated balance sheet.
The lease activity for the three months ended March 31, 2022 and 2021 for these leases are as follows:
Three Months Ended March 31,
(Amounts in millions)20222021
Mr. Neumann
Operating Lease Agreements:
Lease cost expense$1 $3 
Contractual obligation1 3 
Finance Lease Agreement:
Contractual obligation1 1 
WeCap Investment Group
Operating Lease Agreements:
Lease cost expense$17 $13 
Contractual obligation12 16 
Tenant incentives received5 1 
The Company's aggregate undiscounted fixed minimum lease cost payments and tenant lease incentive receivables as of March 31, 2022 are as follows:
53
Warrant liabilities at December 31, 2020
  $13,292,400 
Change in fair value of warrant liabilibites
   3,342,533 
   
 
 
 
Warrant liabilities at March 31, 2021
   16,634,933 
Change in fair value of warrant liabilibites
   9,327,999 
Warrant liabilities at June 30, 2021
  $25,962,932 
   
 
 
 
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Future Minimum Lease Cost(1)
Tenant Lease Receivable
(Amounts in millions)
Mr. Neumann
Finance lease agreement$12 $— 
WeCap Investment Group(2)
Operating lease agreements909 8 
(1)The future minimum lease cost payments under these leases are inclusive of escalation clauses and exclusive of contingent rent payments.
(2)The future undiscounted fixed minimum lease cost payments for the leases presented above exclude an additional $107 million relating to executed non-cancelable leases that the Company has not yet taken possession of as of March 31, 2022.
Membership and Service Agreements
During the three months ended March 31, 2022 and 2021, the Company earned additional revenue for the sale of memberships and various other services provided and recognized expenses from related parties as follows:
Three Months Ended March 31,
(Amounts in millions)20222021
Revenue:
SBG(1)
$11 $42 
Other related parties(2)
3 4 
Expenses:
SBG(1)
$1 $7 
(1)SBG is a principal stockholder with representation on the Company's board of directors. SBG and its affiliates utilized WeWork space and services resulting in revenue. Additionally, the Company also agreed to reimburse SBG for all fees and expenses incurred in connection with the SoftBank Transactions in an aggregate amount up to $50 million. In February 2022, in connection with the Company's contribution of its business in Costa Rica to LatamCo (as discussed in Note 9), SBG waived its right to be reimbursed by the Company for $7 million of these obligations. During the three months ended March 31, 2022 and year ended December 31, 2021, the Company made no additional payments on these obligations to SBG. As of March 31, 2022 and December 31, 2021, accounts payable and accrued expenses included $8 million and $15 million, respectively, payable to SBG related primarily to these reimbursement obligations.
(2)These related parties have significant influence over the Company through representation on the Company's board of directors or are vendors in which the Company has an equity method investment or other related party relationship.
Note 22. Segment Disclosures and Concentration
Operating segments are defined as components of an entity that engages in business activities from which it may earn revenues and incur expenses and has discrete financial information that is reviewed by the entity's chief operating decision maker ("CODM") to make decisions about how to allocate resources and assess performance. The Company operates in 1 operating segment as the Chief Executive Officer, who is our CODM, reviews financial information, assesses the performance of the Company and makes decisions about allocating resources on a consolidated basis.
54
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
The Company’s revenues and total property and equipment, by country, are as follows:
Three Months Ended March 31,
(Amounts in millions)20222021
Revenue:
United States$339 $257 
United Kingdom118 79 
Japan50 60 
Other foreign countries(1)
258 202 
Total revenue$765 $598 
March 31,December 31,
(Amounts in millions)20222021
Property and equipment:
United States$3,977 $4,036 
United Kingdom857 877 
Japan460 487 
Other foreign countries(1)
2,052 2,025 
Total property and equipment$7,346 $7,425 
(1)No other individual countries exceed 10% of our revenues or property and equipment.

Our concentration in specific cities magnifies the risk to us of localized economic conditions in those cities or the surrounding regions. The majority of the Company's revenue is earned from locations in densely populated cities and as a result may be more susceptible to economic impacts as a result of COVID-19.
The majority of our revenue is earned from locations in the United States and United Kingdom. During the three months ended March 31, 2022 and 2021, approximately 45% and 43%, respectively, of our revenue was earned in the United States and approximately 15% and 13%, respectively, of our revenue was earned in the United Kingdom. The majority of our 2022 revenue from locations in the United States was generated from locations in greater New York City, San Francisco, and Boston markets. In the United Kingdom, 87% of 2022 revenues and 88% of our property and equipment are related to WeWork locations in the greater London area. In the United States, the Company generally uses metropolitan statistical areas (as defined by the United States Census Bureau) to define its greater metropolitan markets. The nearest equivalent is used internationally.
During the three months ended March 31, 2022 and 2021, the Company had no single member that accounted for greater than 10% of the Company's total revenue.
Although the Company deposits its cash with multiple high credit quality financial institutions, its deposits, at times, may exceed federally insured limits. The Company believes no significant concentration risk exists with respect to its cash and cash equivalents.
55
WEWORK INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)
Note 8—23. Subsequent Events
Management has evaluated subsequent events to determine if events or transactions occurring from June 30, 2021 through the date the unauditedThese condensed consolidated financial statements were issued. Based upon this review,include a discussion of material events, if any, which have occurred subsequent to March 31, 2022 (referred to as subsequent events) through the Company did not identify any subsequent event that would have required adjustment or disclosure inissuance of the condensed consolidated financial statements.
16
TableIn April 2022, JapanCo received additional pro rata contributions from a new affiliate of Contents
Item 2. Management’s DiscussionSBG and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “BowX Acquisition Corp.,” “BowX,” “our,” “us” or “we” refer to BowX Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed consolidated financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other U.S. Securities and Exchange Commission (“SEC”) filings.
Overview
We are a blank check company incorporated as a Delaware corporation on May 19, 2020. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We are not limited to a particular industry or sector for purposes of consummating a Business Combination. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
Our sponsor is BowX Sponsor, LLC, a Delaware limited liability company of which Vivek Ranadivé, the Company’s Chairman and
Co-Chief
Executive Officer, and Murray Rode, our
Co-Chief
Executive Officer and Chief Financial Officer, are the managing members (the “Sponsor”). The registration statement for the initial public offering (the “Initial Public Offering”) was declared effective on August 4, 2020. On August 7, 2020, we consummated our Initial Public Offering of 42,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $420.0 million, and incurring offering costs of approximately $23.7 million, inclusive of $14.7 million in deferred underwriting commissions. On August 10, 2020, the underwriter exercised the over-allotment option to purchase an additional of 6,300,000 Units at the Initial Public Offering price at $10.00 per Unit and we consummated the sale of such Units on August 13, 2020, generating additional gross proceeds of $63.0 million, and incurring additional offering costs of approximately $3.5 million, inclusive of approximately $2.2 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 6,933,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to certain of the initial stockholders and certain funds and accounts managed by subsidiaries of BlackRock, Inc (the “Private Placement Warrants Purchasers”), generating gross proceeds of $10.4 million, and incurring offering costs of approximately $8,000. In connection with the consummation of the sale of additional Units pursuant to the underwriter’s over-allotment option on August 13, 2020, we sold an additional 840,000 Private Placement Warrants to the Private Placement Warrants Purchasers, generating additional gross proceeds of approximately $1.3 million.
Upon the closing of the Initial Public Offering and the Private Placement(including the exercise of the over-allotment) $483.0 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and held as cash or invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting certain conditions under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
We only have 24 months from the closing of the Initial Public Offering, or August 7, 2022, to complete our initial Business Combination (the “Combination Period”). If we do not complete a Business Combination within this period of time (and stockholders do not approve an amendment to the amended and restated certificate of incorporation to extend this date), we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public
17
Table of Contents
Shares, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account includingits existing membership interest earned on the funds held in the Trust Account and not previously released to us to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our Sponsor and the other holders of the Founder Shares (as defined below), excluding funds and accounts managed by subsidiaries of BlackRock, Inc (the “initial stockholders”), have entered into agreements with us, pursuant to which they have waived their rights to participate in any redemption with respect to their Founder Shares in the event we do not complete$65 million, including 50% from a Business Combination within the required time period; provided, however, if the initial stockholders or any of our officers, directors or affiliates acquire Public Shares in or after the Initial Public Offering, they will be entitled to a pro rata share of the Trust Account upon our redemption or liquidation in the event we do not complete a Business Combination within the required time period. In the event of such distribution, it is possible that the per share value in the Trust Account will be less than the Initial Public Offering price per Unit in the Initial Public Offering.
Proposed Business Combination
On March 25, 2021, we, BowX Merger Subsidiary Corp., a Delaware corporation (“Merger Sub”) and a direct, wholly owned subsidiary of the Company, of which, $24 million was used to reimburse the Company for outstanding fees, and 50% from affiliates of SBG. Subsequent to the initial funding, the previous affiliate of SBG transferred its membership interests to another affiliate of SBG. The Company remains a 50% interest holder and the affiliates of SBG remain collectively a 50% interest holder. Additionally, a buy-out right of the Company to purchase all of JapanCo membership interests in the event of a default by affiliates of SBG to provide their initial contributions was removed from the agreement, as the contributions were made.
In May 2022, the Company entered into the Fourth Amendment to the Credit Agreement, pursuant to which the existing 2020 LC Facility was amended and subdivided into a $1.25 billion Senior LC Tranche and a $350 million Junior LC Tranche. Upon the effectiveness of the Fourth Amendment to the Credit Agreement, the letter of credit under the Junior LC Tranche was issued and drawn in full for the benefit of the Company. See Note 20 for details on the Fourth Amendment to the Credit Agreement.
******
56
WEWORK INC.
SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
MARCH 31, 2022
(UNAUDITED)




As a result of various legal reorganization transactions undertaken in July 2019 as discussed in Note 1 to the condensed consolidating financial statements, The We Company became the holding company of our business, and the then-stockholders of WeWork Companies Inc. (our predecessor for financial reporting purposes) became the stockholders of The We Company. Effective October 14, 2020, The We Company changed its legal name to WeWork Inc., a Delaware corporation (“WeWork” ("Legacy WeWork").
On October 20, 2021 (the “Closing Date”), entered into anthe Company (which was formerly known as BowX Acquisition Corp. (“Legacy BowX”)) consummated its previously announced business combination pursuant to that certain Agreement and Plan of Merger, dated as of March 25, 2021 (the “Merger Agreement”), pursuant to which,by and among other transactions, onLegacy BowX, a subsidiary of Legacy BowX, and Legacy WeWork. As contemplated by the terms and conditions set forth therein, Merger Sub is to mergeAgreement, (1) the subsidiary of Legacy BowX merged with and into Legacy WeWork, (the “First Merger”), with Legacy WeWork surviving the First Merger as a wholly owned subsidiary of us (WeWork, in its capacity as the surviving corporation of the First Merger, is sometimes referred to as the “Surviving Corporation”);Legacy BowX, and as promptly as practicable and as part of the same overall transaction as the First Merger, such Surviving Corporation will be(2) immediately thereafter, Legacy WeWork merged with and into BowX Merger Subsidiary II, LLC, a Delaware limited liability company (“Merger Sub II”) and a direct wholly ownedanother subsidiary of us (the “Second Merger” and, together with the First Merger, the “Mergers”Legacy BowX (such mergers and collectively with the other transactions described in the Merger Agreement, the “Business Combination”), with Merger Sub II being the surviving entity of the Second Merger (Merger Sub II, in its capacity as the surviving entity of the Second Merger, is sometimes referred to herein as the “Surviving Entity”). In connection with the Closing (as defined herein),closing of the Business Combination, Legacy BowX intends to changechanged its name to WeWork Inc. (such post-Closing
The Company holds an indirect general partner interest and indirect limited partner interests in The We Company Management Holdings L.P. (the “WeWork Partnership”). The WeWork Partnership owns 100% of the equity in WeWork Companies LLC. The Company, through the WeWork Partnership and WeWork Companies LLC, holds all the assets held by WeWork Companies Inc. prior to the July 2019 legal entity “New WeWork”reorganization and is subject to all the liabilities to which WeWork Companies Inc. was subject prior to the 2019 legal entity reorganization.
The following condensed consolidating financial statements present the results of operations, financial position and cash flows of (i) WeWork Companies LLC and its consolidated subsidiaries, (ii) WeWork Inc. as a standalone legal entity, (iii) "Other Subsidiaries", other than WeWork Companies LLC and its consolidated subsidiaries, which are direct or indirect owners of WeWork Companies LLC, including but not limited to the WeWork Partnership, presented on a combined basis and (iv) the eliminations necessary to arrive at the information for WeWork Inc on a consolidated basis.
The legal entity reorganization was accounted for as a transfer among entities under common control and the assets and liabilities transferred are recorded based on historical cost and the condensed consolidating financial statements including periods prior to the reorganization are presented as if the transfer occurred at the beginning of the periods presented. Investments in consolidated subsidiaries are presented under the equity method of accounting.
WeWork Inc and the Other Subsidiaries are holding companies that conduct substantially all of their business operations through WeWork Companies LLC. As of March 31, 2022, based on the covenants and other restrictions of the Company Credit Agreement and the Senior Notes, WeWork Companies LLC is restricted in its ability to transfer funds by loans, advances or dividends to WeWork Inc. and as a result, all of the net assets of WeWork Companies LLC are considered restricted net assets of WeWork Inc.

57
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2022
(UNAUDITED)
(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Assets
Current assets:
Cash and cash equivalents$515 $1 $3 $— $519 
Accounts receivable and accrued revenue, net105 — — — 105 
Prepaid expenses180 — 2 — 182 
Other current assets313 — — — 313 
Total current assets1,113 1 5 — 1,119 
Investments in and advances to/(from) consolidated subsidiaries(18)(2,232)(2,037)4,287 — 
Property and equipment, net5,192 — — — 5,192 
Lease right-of-use assets, net12,598 — — — 12,598 
Restricted cash11 — — — 11 
Equity method and other investments164 — — — 164 
Goodwill685 — — — 685 
Intangible assets, net67 — — — 67 
Other assets850 — — — 850 
Total assets$20,662 $(2,231)$(2,032)$4,287 $20,686 
Liabilities
Current liabilities:
Accounts payable and accrued expenses$551 $4 $8 $— $563 
Members’ service retainers435 — — — 435 
Deferred revenue123 — — — 123 
Current lease obligations912 — — — 912 
Other current liabilities85 3 — — 88 
Total current liabilities2,106 7 8 — 2,121 
Long-term lease obligations17,323 — — — 17,323 
Unsecured notes payable2,200 — — — 2,200 
Warrant Liabilities, net— 13 — — 13 
Long-term debt, net665 — — — 665 
Other liabilities224 — — — 224 
Total liabilities22,518 20 8 — 22,546 
Convertible preferred stock— — — — — 
Redeemable noncontrolling interests15 — — — 15 
Equity
Total WeWork Inc. shareholders' equity (deficit)(2,037)(2,251)(2,250)4,287 (2,251)
Noncontrolling interests166 — 210 — 376 
Total equity (deficit)(1,871)(2,251)(2,040)4,287 (1,875)
Total liabilities and equity$20,662 $(2,231)$(2,032)$4,287 $20,686 


58
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2021
(UNAUDITED)
(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Assets
Current assets:
Cash and cash equivalents$628 $46 $250 $— $924 
Accounts receivable and accrued revenue, net130 — — — 130 
Prepaid expenses180 — — —��180 
Other current assets238 — — — 238 
Total current assets1,176 46 250 — 1,472 
Investments in and advances to/(from) consolidated subsidiaries31 (1,911)(1,896)3,776 — 
Property and equipment, net5,374 — — — 5,374 
Lease right-of-use assets, net13,052 — — — 13,052 
Restricted cash11 — — — 11 
Equity method and other investments200 — — — 200 
Goodwill677 — — — 677 
Intangible assets, net57 — — — 57 
Other assets913 — — — 913 
Total assets$21,491 $(1,865)$(1,646)$3,776 $21,756 
Liabilities
Current liabilities:
Accounts payable and accrued expenses$606 $1 $14 $— $621 
Members’ service retainers421 — — — 421 
Deferred revenue120 — — — 120 
Current lease obligations893 — — — 893 
Other current liabilities78 — — — 78 
Total current liabilities2,118 1 14 — 2,133 
Long-term lease obligations17,926 — — — 17,926 
Unsecured notes payable2,200 — — — 2,200 
Warrant Liabilities, net— 16 — — 16 
Long-term debt, net666 — — — 666 
Other liabilities228 — — — 228 
Total liabilities23,138 17 14 — 23,169 
Convertible preferred stock— — — — — 
Redeemable noncontrolling interests36 — — — 36 
Equity
Total WeWork Inc. shareholders' equity (deficit)(1,896)(1,882)(1,880)3,776 (1,882)
Noncontrolling interests213 — 220 — 433 
Total equity (deficit)(1,683)(1,882)(1,660)3,776 (1,449)
Total liabilities and equity$21,491 $(1,865)$(1,646)$3,776 $21,756 


59
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2022
(UNAUDITED)

(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Revenue$765 $— $— $— $765 
Expenses:
Location operating expenses736 — — — 736 
Pre-opening location expenses47 — — — 47 
Selling, general and administrative expenses208 — — — 208 
Restructuring and other related costs(130)— — — (130)
Impairment expense91 — — — 91 
Depreciation and amortization171 — — — 171 
Total expenses1,123 — — — 1,123 
Loss from operations(358)— — — (358)
Interest and other income (expense), net:
Equity income (loss) from consolidated subsidiaries— (438)(453)891 — 
Income (loss) from equity method and other investments6 — — — 6 
Interest expense(113)— — — (113)
Interest income1 — — — 1 
Foreign currency gain (loss)(44)— — — (44)
Gain from change in fair value of warrant liabilities— 3 — — 3 
Total interest and other income (expense), net(150)(435)(453)891 (147)
Pre-tax loss(508)(435)(453)891 (505)
Income tax benefit (provision)(3)— 4 — 1 
Net loss(511)(435)(449)891 (504)
Net loss attributable to noncontrolling interests:
Redeemable noncontrolling interests — mezzanine21 — — — 21 
Noncontrolling interest — equity37 — 11 — 48 
Net loss attributable to Legacy WeWork$(453)$(435)$(438)$891 $(435)


60
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2021
(UNAUDITED)
(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Revenue$598 $— $— $— $598 
Expenses:
Location operating expenses818 — — — 818 
Pre-opening location expenses35 — — — 35 
Selling, general and administrative expenses274 — — — 274 
Restructuring and other related costs494 — — — 494 
Impairment expense299 — — — 299 
Depreciation and amortization184 — — — 184 
Total expenses2,104 — — — 2,104 
Loss from operations(1,506)— — — (1,506)
Interest and other income (expense), net:
Equity income (loss) from consolidated subsidiaries— (1,680)(1,680)3,360 — 
Income (loss) from equity method and other investments(31)— — — (31)
Interest expense(105)— — — (105)
Interest income6 — — — 6 
Foreign currency gain (loss)(71)— — — (71)
Gain from change in fair value of warrant liabilities— (352)— — (352)
Loss on extinguishment of debt— — — — — 
Total interest and other income (expense), net(201)(2,032)(1,680)3,360 (553)
Pre-tax loss(1,707)(2,032)(1,680)3,360 (2,059)
Income tax benefit (provision)(3)— — — (3)
Net loss(1,710)(2,032)(1,680)3,360 (2,062)
Net loss attributable to noncontrolling interests:
Redeemable noncontrolling interests — mezzanine30 — — — 30 
Noncontrolling interest — equity— — — — — 
Net loss attributable to Legacy WeWork$(1,680)$(2,032)$(1,680)$3,360 $(2,032)
61
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2022
(UNAUDITED)


(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Cash Flows from Operating Activities:
Net loss$(511)$(435)$(449)$891 $(504)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization171 — — — 171 
Impairment expense91 — — — 91 
Stock-based compensation expense13 — — — 13 
Non-cash interest expense53 — — — 53 
Provision for allowance for doubtful accounts(1)— — — (1)
Equity income (loss) from consolidated subsidiaries— 438 453 (891)— 
(Income) loss from equity method and other investments(6)— — — (6)
Foreign currency (gain) loss44 — — — 44 
Change in fair value of financial instruments— (3)— — (3)
Changes in operating assets and liabilities:
Operating lease right-of-use assets347 — — — 347 
Current and long-term lease obligations(470)— — — (470)
Accounts receivable and accrued revenue29 — — — 29 
Other assets(40)— — — (40)
Accounts payable and accrued expenses(66)3 — — (63)
Deferred revenue3 — — — 3 
Other liabilities(8)3 — — (5)
Deferred income taxes3 — — — 3 
Advances to/from consolidated subsidiaries301 (50)(251)— — 
Net cash provided by (used in) operating activities(47)(44)(247)— (338)
Cash Flows from Investing Activities:
Purchases of property and equipment and capitalized software(74)— — — (74)
Change in security deposits with landlords(1)— — — (1)
Contributions to investments(5)— — — (5)
Distributions from investments1 — — — 1 
Cash used for acquisitions, net of cash acquired(9)— — — (9)
Net cash provided by (used in) investing activities(88)— — — (88)
62
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2022
(UNAUDITED)


(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Cash Flows from Financing Activities:
Principal payments for property and equipment acquired under finance leases(1)— — — (1)
Repayments of debt(1)— — — (1)
Additions to members’ service retainers99 — — — 99 
Refunds of members’ service retainers(75)— — — (75)
Net cash provided by (used in) financing activities22 — — — 22 
Effects of exchange rate changes on cash, cash equivalents and restricted cash(1)— — — (1)
Net increase (decrease) in cash, cash equivalents and restricted cash(114)(44)(247)— (405)
Cash, cash equivalents and restricted cash—Beginning of period640 45 250 — 935 
Cash, cash equivalents and restricted cash—End of period$526 $1 $3 $— $530 



63
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2021
(UNAUDITED)
(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Cash Flows from Operating Activities:
Net loss$(1,710)$(2,032)$(1,680)$3,360 $(2,062)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization184 — — — 184 
Impairment expense299 — — — 299 
Non-cash transaction with principal shareholder428 — — — 428 
Stock-based compensation expense156 — — — 156 
Issuance of stock for services rendered(2)— — — (2)
Non-cash interest expense53 — — — 53 
Provision for allowance for doubtful accounts7 — — — 7 
Equity income (loss) from consolidated subsidiaries— 1,680 1,680 (3,360)— 
(Income) loss from equity method and other investments31 — — — 31 
Foreign currency (gain) loss71 — — — 71 
Change in fair value of financial instruments— 352 — 352 
Changes in operating assets and liabilities:
Operating lease right-of-use assets290 — — — 290 
Current and long-term lease obligations(244)— — — (244)
Accounts receivable and accrued revenue38 — — — 38 
Other assets(62)— — — (62)
Accounts payable and accrued expenses(85)19 — — (66)
Deferred revenue(24)— — — (24)
Other liabilities(78)87 — — 9 
Deferred income taxes1 — — — 1 
Advances to/from consolidated subsidiaries106 (106)— — — 
Net cash provided by (used in) operating activities(541)— — — (541)
Cash Flows from Investing Activities:
Purchases of property and equipment and capitalized software(129)— — — (129)
Change in security deposits with landlords2 — — — 2 
Contributions to investments(10)— — — (10)
Net cash provided by (used in) investing activities(137)— — — (137)
64
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2021
(UNAUDITED)
(Amounts in millions)WeWork Companies LLC & Subsidiaries (Consolidated)WeWork Inc. (Standalone)Other Subsidiaries (Combined)EliminationsWeWork Inc. Consolidated
Cash Flows from Financing Activities:
Principal payments for property and equipment acquired under finance leases(1)— — — (1)
Proceeds from unsecured related party debt600 — — — 600 
Repayments of debt(2)— — — (2)
Proceeds from exercise of stock options and warrants1 1 — — 2 
Payments for contingent consideration and holdback of acquisition proceeds(2)— — — (2)
Proceeds relating to contingent consideration and holdbacks of disposition proceeds12 12 
Additions to members’ service retainers89 — — — 89 
Refunds of members’ service retainers(109)— — — (109)
Net cash provided by (used in) financing activities588 1 — — 589 
Effects of exchange rate changes on cash, cash equivalents and restricted cash(7)— — — (7)
Net increase (decrease) in cash, cash equivalents and restricted cash(97)1 — — (96)
Cash, cash equivalents and restricted cash—Beginning of period854 — — — 854 
Cash, cash equivalents and restricted cash—End of period$757 $1 $— $— $758 


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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
WeWork is the leading global flexible workspace provider, serving a membership base of businesses large and small through our network of 765 locations, including 633 Consolidated Locations (as defined in the section entitled "Key Performance Indicators"), around the world as of March 2022. With our global footprint, we have worked to establish ourselves as the preeminent brand within the space-as-a-service category by combining best-in-class locations and design with member-first hospitality and exceptional community experiences. Since new management was instituted in 2020, we immediately began to execute a strategic plan to transform our business. With a more efficient operating model and cost conscious mindset, moving forward we expect to pursue profitable growth and focus on the digitization of our real estate in order to enhance our product offerings, and expand and diversify our membership base, while continuously meeting the growing demand for flexibility.
In the wake of the 2008 global financial crisis, WeWork opened its first location in lower Manhattan in 2010 to provide entrepreneurs and small businesses with flexible, affordable and community-centered office space. The initial vision was to create environments where people and companies could come together to "do what they love." Our value proposition proved to be highly attractive to a range of users, which soon evolved to encompass a growing set of medium- and large-scale businesses, including our Enterprise Members (as defined in the section entitled "Key Performance Indicators").
For nearly a decade, WeWork embarked on a high-growth path towards global expansion. Within four years, the Company grew to 23 locations across eight cities and opened its first international locations in the United Kingdom and Israel. In 2019, WeWork filed a registration statement in connection with a proposed initial public offering which was later withdrawn. Following the withdrawal of the registration statement, SBG provided WeWork with additional access to capital to support our day-to-day operations and other capital needs. Subsequently, the board of directors of WeWork directed a change in leadership.
We rebuilt our leadership team beginning with the appointment of Sandeep Mathrani as Chief Executive Officer in February 2020. With a new leadership team comprised of seasoned professionals in the public and private sectors, WeWork immediately began to execute a strategic plan to transform our business. That plan included robust expense management efforts, the exit of non-core businesses and material real estate portfolio optimization. On October 20, 2021, Legacy BowX consummated its going-public business combination with Legacy WeWork. In connection with the closing of the Business Combination, Legacy BowX changed its name to WeWork Inc. and the Company's stock began trading on the NYSE under the ticker symbol "WE".
WeWork’s core business offering provides flexibility across space, time and cost. Whether users are looking for a dedicated desk, a private office or a fully customized floor, our members have the flexibility to choose the amount of space they need and scale with us as their businesses grow. Members also have the optionality to choose the type of membership that works for them, with a range of flexible offerings that provide access to space on a monthly subscription basis, through a multi-year membership agreement or on a pay-as-you-go basis. Additionally, a WeWork membership provides members with portability of cost, giving our members the flexibility to move part or all of an existing commitment to a new market, region or country.
Membership agreements provide our members with access to space along with certain baseline amenities and services, such as private phone booths, internet, high-speed business printers and copiers, mail and packaging handling, front desk services, 24/7 building access, unique common areas and daily enhanced cleaning for no additional cost.
Beyond the amenities offered, we believe that our community team is what sets us apart from other space providers in the industry. With a member-first mindset, our community teams provide an exceptional level
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of hospitality by not only overseeing onsite operations and supporting day-to-day needs, but also focusing on cultivating meaningful relationships with and between our members to deliver a premium experience.
By providing all of the overhead services required to find and operate office space, WeWork significantly reduces the complexity and cost of leasing real estate to a simplified membership model.
Key Performance Indicators
To evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions, we rely on our financial results prepared in accordance GAAP, non-GAAP measures and the following key performance indicators.
For certain key performance indicators the amounts we present are based on whether the indicator relates to a location for which the revenues and expenses of the location are consolidated within our results of operations ("Consolidated Locations") or whether the indicator relates to a location for which the revenues and expenses are not consolidated within our results of operations, but for which we are entitled to a management fee for our advisory services ("Unconsolidated Locations").
On October 2, 2020, the Company deconsolidated ChinaCo, a previously consolidated subsidiary of the Company that operated our locations in the Greater China region. On June 1, 2021, we closed a franchise agreement with Ampa and transferred the building operations and obligations of our Israel locations to Ampa. Subsequent to the date of these respective transactions our ChinaCo and Israel locations are included in our Unconsolidated Locations. For amounts relating to periods prior to October 2, 2020, and June 1, 2021, ChinaCo and Israel locations, respectively, remain reflected as Consolidated Locations and as a result, periods may not be comparable. There is no impact to the combined Consolidated Locations and Unconsolidated Locations ("Total Locations" or "Systemwide Locations") indicators as a result of the ChinaCo Deconsolidation or Israel franchise agreement. As of March 31, 2022, our locations in India, the Greater China region and Israel are our only Unconsolidated Locations.
Unless otherwise noted, we present our key performance indicators as an aggregation of Consolidated Locations and Unconsolidated Locations. As presented in this Form 10-Q, certain amounts, percentages and other figures have been subject to rounding adjustments. Accordingly, figures shown as totals, dollars or percentage amounts of changes may not represent the arithmetic summation or calculation of the figures that precede them. Any totals of key performance indicators presented as of a period end reflect the count as of the first day of the last month in the period. First-of-the-month counts are used because the economics of those counts generally impact the results for that monthly period, and most move-ins and openings occur on the first day of the month.
Workstation Capacity
Workstation capacity represents the estimated number of workstations available at total open locations.
Workstation capacity is a key indicator of our scale and our capacity to sell memberships across our network of locations. Our future sales and marketing expenses and capital expenditures will be a function of our efforts to increase workstation capacity. The cost at which we build out our workstations affects our capital expenditures, and the cost at which we acquire memberships and fill our workstations affects our sales and marketing expenses. As of March 2022, we had total workstation capacity of 916 thousand, down 5% from 963 thousand as of March 2021, with the decrease as a direct result of the Company's continued operational restructuring efforts to exit leases throughout 2021 and the three months ended March 31, 2022.
Workstation capacity is presented in this Form 10-Q rounded to the nearest thousand. Workstation capacity is based on management’s best estimates of capacity at a location based on our inventory management system and sales layouts and is not meant to represent the actual count of workstations at our locations.
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Memberships
Memberships are the cumulative number of WeWork memberships, WeWork All Access memberships, and WeMemberships (the latter of which are certain predecessor products). WeWork memberships provide access to a workstation and represent the number of memberships from our various product offerings, including our standard dedicated desks, private offices and customized floors. WeWork All Access memberships are monthly memberships providing an individual with access to participating WeWork locations. WeMemberships are legacy products that provide member user login access to the WeWork member network online or through the mobile application as well as access to service offerings and the right to reserve space on an à la carte basis, among other benefits. Each WeWork membership, WeWork All Access membership and other virtual memberships is considered to be one membership.
The number of memberships is a key indicator of the adoption of our global membership network, the scale and reach of our network and our ability to fill our locations with members. Memberships also represent monetization opportunities from our current and future service offerings. Memberships are presented in this Form 10-Q rounded to the nearest thousand. Memberships can differ from the number of individuals using workspace at our locations for a number of reasons, including members utilizing workspace for fewer individuals than the space was designed to accommodate.
As of March 2022, we had 681 thousand total memberships, which is an increase of 39% from 490 thousand memberships as of March 2021. This increase in total memberships included a 267% increase in WeWork All Access and Other Legacy Memberships from 15 thousand as of March 2021 to 55 thousand as of March 2022.
Physical Occupancy Rate
Physical occupancy rates are calculated by dividing WeWork memberships by workstation capacity in a location. Physical occupancy rates are a way of measuring how full our workspaces are. As of March 2022, our physical occupancy rate was 68%, compared to 49% as of March 2021. The increase in physical occupancy rate was due to both a 33% increase in physical memberships as members continue returning to the office and a 5% decrease in workstation capacity due to our continued operational restructuring efforts.
Enterprise Physical Membership Percentage
Enterprise memberships represent memberships attributable to Enterprise Members, which we define as organizations with 500 or more full-time employees. Enterprise Members are strategically important for our business as they typically sign membership agreements with longer-term commitments and for multiple solutions, which enhances our revenue visibility.
Enterprise physical membership percentage represents the percentage of our memberships attributable to these organizations. There is no minimum number of workstations that an organization needs to reserve in order to be considered an Enterprise Member. For example, an organization with 700 full-time employees that pays for 50 of its employees to occupy workstations at our locations would be considered one Enterprise Member with 50 memberships. As of March 2022, 46% of our Consolidated Locations physical memberships were attributable to Enterprise Members, down from 52% as of March 2021. For the three months ended March 31, 2022, enterprise memberships accounted for 45% of membership and service revenue compared to 51% for the three months ended March 31, 2021.
Non-GAAP Financial Measures
To evaluate the performance of our business, we rely on both our results of operations prepared in accordance with GAAP as well as certain non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow. These non-GAAP measures, as discussed further below, are not defined or calculated under principles, standards or rules that comprise GAAP. Accordingly, the non-GAAP financial measures we use and refer to should not be viewed as a substitute for financial measures calculated in accordance
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with GAAP and we encourage you not to rely on any single financial measure to evaluate our business, financial condition or results of operations. These non-GAAP financial measures are supplemental measures that we believe provide management and our investors with a more detailed understanding of our performance. Our definitions of Adjusted EBITDA and Free Cash Flow described below are specific to our business and you should not assume that they are comparable to similarly titled financial measures that may be presented by other companies.
Adjusted EBITDA
We supplement our GAAP financial results by evaluating Adjusted EBITDA, which is a non-GAAP measure. We define "Adjusted EBITDA" as net loss before income tax (benefit) provision, interest and other (income) expenses, net, depreciation and amortization, restructuring and other related costs, impairment (gain on sale) of goodwill, intangibles and other assets, stock-based compensation expense, stock-based payments for services rendered by consultants, change in fair value of contingent consideration liabilities, legal, tax and regulatory reserves or settlements, legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company’s 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions, as defined in Note 1 of the Notes to the Condensed Consolidated Financial Statements included in this Form 10-Q, net of any insurance or other recoveries, and expense related to mergers, acquisitions, divestitures and capital raising activities.
A reconciliation of net loss, the most comparable GAAP measure, to Adjusted EBITDA is set forth below:
Three Months Ended
March 31,
(Amounts in millions)20222021
Net loss$(504)$(2,062)
Income tax (benefit) provision(a)
(1)3 
Interest and other (income) expenses, net(a)
147 553 
Depreciation and amortization(a)
171 184 
Restructuring and other related costs(a)
(130)494 
Impairment expense(a)
91 299 
Stock-based compensation expense(b)
13 54 
Other, net(c)
1 29 
Adjusted EBITDA$(212)$(446)
(a)As presented on our condensed consolidated statements of operations.
(b)Represents the non-cash expense of our equity compensation arrangements for employees, directors, and consultants.
(c)Other, net includes stock-based payments for services rendered by consultants, change in fair value of contingent consideration liabilities, legal, tax and regulatory reserves or settlements, legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company’s 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions, as defined in Note 1 of the notes to the condensed consolidated financial statements included in this Form 10-Q, net of any insurance or other recoveries, and expense related to mergers, acquisitions, divestitures and capital raising activities, all as included in selling, general and administrative expenses on the condensed consolidated statements of operations.
When used in conjunction with GAAP financial measures, we believe that Adjusted EBITDA is a useful supplemental measure of operating performance because it facilitates comparisons of historical performance by excluding non-cash items such as stock-based payments, fair market value adjustments and impairment charges and other amounts not directly attributable to our primary operations, such as the impact of restructuring costs, acquisitions, disposals, non-routine investigations, litigation and settlements. Depreciation and amortization relate primarily to the depreciation of our leasehold improvements, equipment and furniture. These capital expenditures are incurred and capitalized subsequent to the commencement of our leases and are depreciated over the lesser of the useful life of the asset or the term of the lease. The initial capital expenditures are assessed by management as an investing activity, and the related depreciation and amortization are non-cash charges that are not considered in management’s assessment of the daily operating performance of our locations. As a result, the impact of
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depreciation and amortization is excluded from our calculation of Adjusted EBITDA. Restructuring and other related costs relate primarily to the decision to slow growth and terminate leases and are therefore not ordinary course costs directly attributable to the daily operation of our locations. In addition, while the legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company’s 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions are cash expenses, these are not expected to be recurring after the matters are resolved and they do not represent expenses necessary for our business operations.
Adjusted EBITDA is also a key metric used internally by our management to evaluate performance and develop internal budgets and forecasts.
Adjusted EBITDA has limitations as an analytical tool, should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP and does not provide a complete understanding of our operating results as a whole. Some of these limitations are:
•it does not reflect changes in, or cash requirements for, our working capital needs;
•it does not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt;
•it does not reflect our tax expense or the cash requirements to pay our taxes;
•it does not reflect historical capital expenditures or future requirements for capital expenditures or contractual commitments;
•although stock-based compensation expenses are non-cash charges, we rely on equity compensation to compensate and incentivize employees, directors and certain consultants, and we may continue to do so in the future; and
•although depreciation, amortization and impairments are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and this non-GAAP measure does not reflect any cash requirements for such replacements.
Free Cash Flow
Because of the limitations of Adjusted EBITDA, as noted above, we also supplement our GAAP results by evaluating Free Cash Flow, a non-GAAP measure. We define "Free Cash Flow" as net cash provided by (used in) operating activities less purchases of property, equipment and capitalized software, each as presented in the Company's condensed consolidated statements of cash flows and calculated in accordance with GAAP.
The prior years' financial information has been reclassified to conform to the current year presentation for the aggregation of Capitalized software of $10 million and $7 million during the three months ended March 31, 2022 and 2021, respectively, and Purchases of property and equipment into one financial statement line item, "Purchases of property, equipment and capitalized software"    
A reconciliation of net cash provided by (used in) operating activities, the most comparable GAAP measure, to Free Cash Flow is set forth below:
Three Months Ended
March 31,
(Amounts in millions)20222021
Net cash provided by (used in) operating activities (a)
$(338)$(541)
Less: Purchases of property, equipment and capitalized software (a)
(74)(129)
Free Cash Flow$(412)$(670)
(a)     As presented on our condensed consolidated statements of cash flows.
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Free Cash Flow is both a performance measure and a liquidity measure that we believe provides useful information to management and investors about the amount of cash generated by or used in the business. Free Cash Flow is also a key metric used internally by our management to develop internal budgets, forecasts and performance targets.
Free Cash Flow has limitations as an analytical tool, should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP and does not provide a complete understanding of our results and liquidity as a whole. Some of these limitations are:
•it only includes cash outflows for purchases of property, equipment and capitalized software and not for other investing cash flow activity or financing cash flow activity;
•it is subject to variation between periods as a result of changes in working capital and changes in timing of receipts and disbursements;
•although non-cash GAAP straight-line lease costs are non-cash adjustments, these charges generally reflect amounts we will be required to pay our landlords in cash over the lifetime of our leases; and
•although stock-based compensation expenses are non-cash charges, we rely on equity compensation to compensate and incentivize employees, directors and certain consultants, and we may continue to do so in the future.
Key Factors Affecting the Comparability of Our Results
Restructuring and Impairments
In September 2019, we commenced an operational restructuring program to improve our financial position and refocus on our core space-as-a-service business, establishing an expected path to profitable growth.
During the three months ended March 31, 2021, we were successful in achieving a 49% reduction totaling $259 million in total costs associated with selling, general and administrative expenses as compared to the three months ended March 31, 2020. During the three months ended March 31, 2022, we achieved an additional 24% reduction totaling $66 million compared to the three months ended March 31, 2021. During the three months ended March 31, 2022, we terminated leases associated with a total of 13 previously opened locations and 2 pre-open locations compared to 21 previously opened locations and no pre-open locations terminated during the three months ended March 31, 2021, bringing the total terminations since the beginning of the restructuring to 227.
In conjunction with the efforts to right-size our real estate portfolio, the Company has also successfully amended over 450 leases for a combination of partial terminations to reduce our leased space, rent reductions, rent deferrals, offsets for tenant improvement allowances and other strategic changes. These amendments and full and partial lease terminations have resulted in an estimated reduction of approximately $9.5 billion in total future undiscounted fixed minimum lease cost payments that were scheduled to be paid over the life of the original executed lease agreements, including changes to the obligations of ChinaCo which occurred during the period it was consolidated.
Management is continuing to evaluate our real estate portfolio in connection with our ongoing restructuring efforts and expects to exit additional leases over the remainder of the restructuring period. The Company anticipates that during the remainder of 2022 there may be additional restructuring and related costs consisting primarily of lease termination charges, other exit costs and costs related to ceased use buildings and employee termination benefits, as the Company is still in the process of finalizing its operational restructuring plans.
As of March 31, 2022, we believe that the positive changes we have made and our focused business plan with enhanced cost discipline will set the stage for our future success as we continue to increase our
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membership offerings and expand our footprint strategically through flexible and capital light growth alternatives.
As the Company continues to execute on its operational restructuring program and experiences the benefits of our efforts to create a leaner, more efficient organization, results may be less comparable period over period.
See Note 5 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for additional information regarding our restructuring and impairment activity.
Growth Strategy Changes
As we enter into more management agreements and/or participating leases, our net loss, net cash provided by (used in) operating activities, Adjusted EBITDA and Free Cash Flow may be negatively impacted as we share some of our margin with landlords or other partners in exchange for them funding the capital expenditures at a particular location. Under a participating lease, the landlord typically pays or reimburses us for the full build-out of the space and we generally do not pay a specified annual rent, but rather rent is determined based on revenues or profits from the space. Similarly, in a management agreement, the partner may fund all capital expenditures to build out the space to our design specifications and maintains full responsibility for the space, while we function as the manager and receive an agreed upon management fee. In contrast to standard lease arrangements where we receive the full benefit of the future margin from a given location, under these alternative arrangements, we share portions of this future margin with the landlord or other partner. The percentage of open locations subject to such alternative arrangements was approximately 25% and 24% as of March 2022 and 2021, respectively.
In March 2022, WeWork closed the acquisition of Common Desk, a Dallas-based coworking operator with 23 locations in Texas and North Carolina, that operates a majority of its locations under asset-light management agreements with landlords.
COVID-19 and Impact on our Business
In late 2019, an outbreak of COVID-19 had emerged and by March 11, 2020, the World Health Organization declared COVID-19 a pandemic. Since that time, COVID-19 has resulted in various governments imposing numerous restrictions, including travel bans, quarantines, stay-at-home orders, social distancing requirements and mandatory closure of “non-essential” businesses.
We continue to face a period of uncertainty as a result of the ongoing impact of the COVID-19 pandemic on our business and expect there may continue to be a material impact on demand for our space-as-a-service offering in the short-term.
The Company had been, and may continue to be, adversely impacted by member churn, non-payment (or delayed payment) from members or members seeking payment concessions or deferrals or cancellations as a result of the COVID-19 pandemic. Although new sales volumes improved during the second half of 2021, the Company continued to experience reduced new sales volumes at our locations during the first quarter of 2022, which negatively affected, and may continue to negatively affect, the Company's results of operations. We also continue to engage with our members as it relates to COVID-19 related payment deferral programs. Additionally, in order to retain our members, we may offer additional discounts or deferrals that may continue to negatively impact our net loss, net cash provided by (used in) operating activities, Adjusted EBITDA and Free Cash Flow. Average revenue per Consolidated Physical Member for the three months ended March 31, 2022 and 2021 declined 9% and 6%, respectively, as compared to the three months ended March 31, 2020 prior to impact of COVID-19. The Company is continuing to actively monitor its accounts receivable balances in response to the COVID-19 pandemic and also ceased recording revenue on certain existing contracts where collectability is not probable. During the three months ended March 31, 2022, there were no significant additions or recoveries on such contracts.
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In the wake of the onset of the COVID-19 pandemic, we accelerated our efforts to digitize our real estate offering through the launch of the WeWork All Access and WeWork On Demand products. WeWork All Access is a monthly subscription-based model that provides members with access to book space at any participating WeWork location within their home country. Through WeWork All Access, members can book dedicated desks, conference rooms and private offices right from their phones – enabling users to choose when, where and how they work. WeWork On Demand provides users pay-as-you-go access to book individual workspace or conference rooms at nearby WeWork locations, giving members the flexibility to book individual workspace by the hour or conference rooms by the day on the WeWork On Demand mobile app.
While the total effects of the COVID-19 pandemic on the economy and our business are uncertain, our senior management team is proactively monitoring its impact on a daily basis and will continue to adjust our operations as necessary.
We also believe our liquidity position will be sufficient to help us mitigate the near-term uncertainty associated with COVID-19. As of March 31, 2022, we had over $1.1 billion of cash and unfunded cash commitments, which includes $519 million of cash and cash equivalents on our condensed consolidated balance sheet, as well as access to an additional $550 million in undrawn senior secured debt commitments. In addition to the Company's cash and unfunded cash commitments as of March 31, 2022, there was $0.6 billion in remaining letter of credit availability under the 2020 LC Facility (see the section entitled "—Liquidity and Capital Resources" for additional information on our liquidity position and undrawn debt availability).
While we cannot reasonably estimate the impact of COVID-19 on our future financial condition and results of operations, we do anticipate that it will likely have a continued negative impact in the near-term. Throughout 2021 and during the three months ended March 31, 2022, we observed indicators of recovery with an increase of Systemwide Memberships to 681 thousand as of March 2022 from 490 thousand as of December 2020. However, the extent to which the COVID-19 pandemic could continue to impact our business depends on future developments, including those that are highly uncertain, cannot be predicted and are outside our control, including new information which may quickly emerge regarding the severity of the virus, the spread and impact of new variants, the scope of the pandemic and the actions to contain the virus or treat its impact, vaccination efforts, as well as actions the Company is taking including the duration of our location closures, delays in new openings, our ongoing negotiations with landlords and how quickly we can resume normal operations, among others.
Components of Results of Operations
We assess the performance of our locations differently based on whether the revenues and expenses of the location are consolidated within our results of operations, which we refer to as Consolidated Locations, or whether the revenues and expenses of the location are not consolidated within our results of operations but we are entitled to a management fee for our services, such as locations (“IndiaCo locations”, "ChinaCo locations" and "Israel locations," and, collectively, Unconsolidated Locations) operated by WeWork India Services Private Limited, TBP and Ampa, respectively. The term “locations” includes only Consolidated Locations when used in the sections entitled “—Components of Results of Operations" and "—Comparison of the three months ended March 31, 2022 and 2021” but includes both Consolidated Locations and Unconsolidated Locations when used elsewhere in this Form 10-Q.
Revenue
Revenue includes membership and service revenue as well as other revenue as described below.
Membership revenue represents membership fees, net of discounts, from sales of WeWork memberships, WeWork All Access Memberships, WeWork On Demand and WeMemberships. We derive a significant majority of our revenue from recurring membership fees. The price of each membership varies based on the type of workplace solution selected by the member, the geographic location of the space occupied, and any monthly allowances for business services, such as conference room reservations and printing or
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copying allotments, that are included in the base membership fee. All memberships include access to our community through the WeWork app. Membership revenue is recognized monthly, on a ratable basis, over the life of the agreement, as access to space is provided.
Service revenue primarily includes additional billings to members for ancillary business services in excess of the monthly allowances mentioned above. Services offered to members include access to conference rooms, printing, photocopies, initial set-up fees, phone and IT services, parking fees and other services.
Service revenue also includes commissions we earn from third-party service providers. We offer access to a variety of business and other services to our members, often at exclusive rates, and receive a percentage of the sale when one of our members purchases a service from a third party. These services range from business services to lifestyle perks. Service revenue also includes any management fee income for services provided to IndiaCo locations, ChinaCo locations, and Israel locations (subsequent to the franchise agreement on June 1, 2021). Service revenue is recognized on a monthly basis as the services are provided.
Other revenue primarily includes our former Powered by We design and development services in which we offered on-site office management that provides integrated design, construction and space management services. Also included in other revenue is other management and advisory fees earned.
Design and development services performed are recognized as revenue over time based on a percentage of contract costs incurred to date compared to the total estimated contract cost. The Company identifies only the specific costs incurred that contribute to the Company’s progress in satisfying the performance obligation. Contracts are generally segmented between types of services, such as consulting contracts, design and construction contracts, and operate contracts. Revenues related to each respective type of contract are recognized as or when the respective performance obligations are satisfied. When total cost estimates for these types of arrangements exceed revenues in a fixed-price arrangement, the estimated losses are recognized immediately.
Income generated from sponsorships and ticket sales from WeWork branded events are recognized upon the occurrence of the event. Other revenues are generally recognized over time, on a monthly basis, as the services are performed.
Location Operating Expenses
Location operating expenses include the day-to-day costs of operating an open location and exclude pre-opening costs, depreciation and amortization and general sales and marketing, which are separately recorded.
Lease Cost
Our most significant location operating expense is lease cost. Lease cost is recognized on a straight-line basis over the life of the lease term in accordance with GAAP based on the following three key components:
•Lease cost contractually paid or payable represents cash payments due for base and contingent rent, common area maintenance amounts and real estate taxes payable under the Company’s lease agreements, recorded on an accrual basis of accounting, regardless of the timing of when such amounts were actually paid.
•Amortization of lease incentives represents the amortization of amounts received or receivable for tenant improvement allowances and broker commissions (collectively, “lease incentives”), amortized on a straight-line basis over the terms of our leases.
•Non-cash GAAP straight-line lease cost represents the adjustment required under GAAP to recognize the impact of "free rent" periods and lease cost escalation clauses on a straight-line
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basis over the term of the lease. Non-cash GAAP straight-line lease cost also includes the amortization of capitalized initial direct costs associated with obtaining a lease.
Other Location Operating Expenses
Other location operating expenses typically include utilities, ongoing repairs and maintenance, cleaning expenses, office expenses, security expenses, credit card processing fees and food and beverage costs. Location operating expenses also include personnel and related costs for the teams managing our community operations, including member relations, new member sales and member retention and facilities management.
Pre-Opening Location Expenses
Pre-opening location expenses include all expenses incurred while a location is not open for members. The primary components of pre-opening location expenses are lease cost expense, including our share of tenancy costs (including real estate and related taxes and common area maintenance charges), utilities, cleaning, personnel and related expenses and other costs incurred prior to generating revenue. Personnel expenses are included in pre-opening location expenses as we staff our locations prior to their opening to help ensure a smooth opening and a successful member move-in experience. Pre-opening location expenses also consist of expenses incurred during the period in which a workspace location has been closed for member operations and all members have been relocated to a new workspace location, prior to management's decision to enter negotiations to terminate a lease.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses consist primarily of personnel and stock-based compensation expenses related to our corporate employees, technology, consulting, legal and other professional services expenses, and costs for our corporate offices, such as costs associated with our billings, collections, purchasing and accounts payable functions. Also included in SG&A expenses are general sales and marketing efforts, including advertising costs, member referral fees, and costs associated with strategic marketing events, and various other costs we incur to manage and support our business.
SG&A expenses also include cost of goods sold in connection with our former Powered by We on-site office design, development and management solutions.
Also included are corporate design, development, warehousing, logistics and real estate costs and expenses incurred researching and pursuing new markets, solutions and services, and other expenses related to the Company's growth and global expansion incurred during periods when the Company was focused on expansion. These costs include non-capitalized personnel and related expenses for our development, design, product, research, real estate, growth talent acquisition, mergers and acquisitions, legal, technology research and development teams and related professional fees and other expenses incurred such as growth related recruiting fees, employee relocation costs, due diligence, integration costs, transaction costs, contingent consideration fair value adjustments relating to acquisitions, write-off of previously capitalized costs for which the Company is no longer moving forward with the lease or project and other routine asset impairments and write-offs.
We expect that overall SG&A expenses will decrease as a percentage of revenue over time as we continue to execute on our operational restructuring plans aimed to enhance our operating efficiency and leverage the historical investments in people and technology that we have made to support the growth of our global community. With the impact of the COVID-19 pandemic on our mature locations expected to continue during the remainder of 2022, future sales and marketing costs may be required to help as we continue to restabilize our mature locations.
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Restructuring and Other Related Costs and Impairment Expense
See the section entitled "—Key Factors Affecting Comparability of Our Results—Restructuring and Impairments" above for details surrounding the components of these financial statement line items.
Depreciation and Amortization Expense
Depreciation and amortization primarily relates to the depreciation expense recorded on our property and equipment, the most significant component of which are the leasehold improvements made to our real estate portfolio.
Interest and Other Income (Expense)
Interest and other income (expense) is comprised of interest income, interest expense, loss on extinguishment of debt, earnings from equity method and other investments, foreign currency gain (loss), and gain (loss) from change in fair value of related party financial instruments.
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Condensed Consolidated Results of Operations
The following table sets forth the Company’s condensed consolidated results of operations and other key metrics for the three months ended March 31, 2022 and 2021:
(Amounts in millions)Three Months Ended
March 31,
20222021
Condensed consolidated statements of operations information:
Revenue:
Condensed Consolidated Locations membership and service revenue$744 $575 
Unconsolidated Locations management fee revenue3 4 
Other revenue18 19 
Total revenue765 598 
Expenses:
Location operating expenses—cost of revenue (1)
736 818 
Pre-opening location expenses47 35 
Selling, general and administrative expenses(2)
208 274 
Restructuring and other related costs(130)494 
Impairment expense91 299 
Depreciation and amortization171 184 
Total expenses1,123 2,104 
Loss from operations(358)(1,506)
Interest and other income (expense), net(147)(553)
Pre-tax loss(505)(2,059)
Income tax benefit (provision)1 (3)
Net loss(504)(2,062)
Noncontrolling interests69 30 
Net loss attributable to WeWork Inc.$(435)$(2,032)
(1)Exclusive of depreciation and amortization shown separately on the depreciation and amortization line in the amount of $158 million and $175 million for the three months ended March 31, 2022 and 2021, respectively.
(2)Includes cost of revenue in the amount of $13 million and $12 million during the three months ended March 31, 2022 and 2021, respectively.








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March(1)
2022
2021(3)
Other key performance indicators (in thousands, except for revenue in millions and percentages):
Consolidated Locations
Membership and Services Revenue$744 $575 
Workstation Capacity746 804 
Physical Memberships501 378 
All Access and Other Legacy Memberships55 15 
Memberships(2)
555 393 
Physical Occupancy Rate67 %47 %
Enterprise Physical Membership Percentage46 %52 %
Unconsolidated Locations
Membership and Services Revenue(4)
$132 $90 
Workstation Capacity170 160 
Physical Memberships125 97 
Memberships125 97 
Physical Occupancy Rate74 %61 %
Systemwide Locations
Membership and Services Revenue(5)
$876 $665 
Workstation Capacity916 963 
Physical Memberships626 475 
All Access and Other Legacy Memberships55 15 
Memberships(2)
681 490 
Physical Occupancy Rate68 %49 %
(1)All key performance indicators are presented as of March 2022 and 2021 except for membership and services revenue, which are presented for the years ended March 31, 2022 and 2021.
(2)Consolidated Locations and Total Locations Memberships include WeMemberships of 3 thousand and 5 thousand as of March 2022 and 2021, respectively. WeMemberships are legacy products that provide member user login access to the WeWork member network online or through the mobile application as well as access to service offerings and the right to reserve space on an à la carte basis, among other benefits.
(3)On June 1, 2021, we closed a franchise agreement with Ampa and transferred the building operations and obligations of our Israel locations to Ampa. Beginning on June 1, 2021, our Israel locations are no longer Consolidated Locations and are classified as Unconsolidated Locations. Included in Consolidated Locations indicators above as of March 2021 are 12 thousand workstation capacities and 8 thousand memberships at Israel locations. Consolidated Locations membership and services revenue include Israel results prior to June 1, 2021.
(4)Unconsolidated membership and service revenue represents the results of Unconsolidated Locations that typically generate ongoing management fees for the Company at a rate of 2.75-4.00%.
(5)Systemwide Location membership and service revenue represents the results of all locations regardless of ownership.
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Condensed Consolidated Results of Operations as a Percentage of Revenue
The following table sets forth our condensed consolidated statements of operations information as a percentage of revenue for the three months ended March 31, 2022 and 2021:    
Three Months Ended
March 31,
20222021
Revenue100 %100 %
Expenses:
Location operating expenses—cost of revenue(1)
96 %137 %
Pre-opening location expenses6 %6 %
Selling, general and administrative expenses(1)
27 %46 %
Restructuring and other related costs(17)%83 %
Impairment expense12 %50 %
Depreciation and amortization22 %31 %
Total operating expenses147 %352 %
Loss from operations(47)%(252)%
Interest and other income (expense), net(19)%(92)%
Pre-tax loss(66)%(344)%
Income tax benefit (provision)— %(1)%
Net loss(66)%(345)%
Noncontrolling interests9 %5 %
Net loss attributable to WeWork Inc.(57)%(340)%
(1)Exclusive of depreciation and amortization shown separately on the depreciation and amortization line.
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Comparison of the three months ended March 31, 2022 and 2021
Revenue
Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in million, except percentages)20222021$%
Membership and service revenue$747 $579 $168 29 %
Other revenue18 19 (1)(5)%
Total revenue$765 $598 $167 28 %
Total revenue increased $167 million primarily driven by membership and service revenue, which increased $168 million to $747 million for the three months ended March 31, 2022, from $579 million for the three months ended March 31, 2021. The increase in membership and service revenue was primarily driven by a 32% increase in physical memberships to approximately 501 thousand physical memberships as of March 2022 from approximately 378 thousand physical memberships as of March 2021. Throughout 2021 and into 2022, we continued to offer COVID-19 related discounts help retain our members and, although those existing members and new members are returning to offices, these discounts have caused the average revenue per physical member to decrease by approximately 3% for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This caused the average physical memberships to increase at a greater rate than the increase in physical membership revenue. In response to the COVID-19 pandemic affecting physical memberships and physical revenues, we continue to focus our efforts on digitizing our real estate offering through WeWork All Access and WeWork On Demand, which has resulted in an increase of All Access memberships from approximately 15 thousand as of March 2021 to 55 thousand as of March 2022. The increase in All Access memberships also resulted in an increase of All Access and On Demand revenue from $9 million during the three months ended March 31, 2021 to $36 million during the three months ended March 31, 2022.
Additionally, there was a 5% decrease in other revenue to $18 million for the three months ended March 31, 2022, from $19 million for the three months ended March 31, 2021. Included in the $18 million of other revenue during the three months ended March 31, 2022 is approximately $13 million related to the 424 Fifth Property development agreement anticipated for completion during the three months ended June 30, 2022. See Note 16 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for additional information on the development agreement.
Location Operating Expenses
Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Location operating expenses$736 $818 $(82)(10)%
Location operating expenses decreased $82 million due primarily to continued lease terminations and a decline in real estate operating lease costs primarily as a result of COVID-19 and related cost cutting strategies. As a percentage of total revenue, location operating expenses for the three months ended March 31, 2022 decreased by 41 percentage points to 96% compared to 137% for the three months ended March 31, 2021. The decrease in location operating expenses as a percentage of total revenue is a attributed to both our continued cost cutting strategies compounded by a period over period increase in revenue discussed above.
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The Company terminated leases associated with a total of 13 previously open locations during the three months ended March 31, 2022 and 98 previously open locations during the year ended December 31, 2021. The location decreases were partially offset by the opening of 8 locations during the three months ended March 31, 2022 and 30 locations during the year ended December 31, 2021. During the three months ended March 31, 2022, the Company also successfully amended over 20 leases for a combination of partial terminations to reduce our leased space, rent reductions, rent deferrals, offsets for tenant improvement allowances and other strategic changes.
Our most significant location operating expense is real estate operating lease cost, which includes the following components and changes:
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Lease cost contractually paid or payable$624 $699 $(75)(11)%
Non-cash GAAP straight-line lease cost30 34 (4)(12)%
Amortization of lease incentives(70)(75)5 (7)%
Total real estate operating lease cost$584 $658 $(74)(11)%

The following table includes the components of real estate operating lease cost included in location operating expenses as a percentage of membership revenue:
Three Months Ended
March 31,
20222021Change %
Lease cost contractually paid or payable88 %124 %(36)%
Non-cash GAAP straight-line lease cost4 %6 %(2)%
Amortization of lease incentives(10)%(13)%3 %
Total real estate operating lease cost82 %117 %(35)%
The $75 million decrease in lease cost contractually paid or payable was generally due to continued lease terminations throughout the year ended December 31, 2021 and during three months ended March 31, 2022.
The $4 million decrease in non-cash GAAP straight-line lease cost was driven by continued lease terminations during the three months ended March 31, 2022 and throughout the year ended December 31, 2021, decreases in lease cost escalations and the end of free rent periods. The decrease in non-cash GAAP straight-line lease cost is also attributed to the decrease in our weighted average remaining lease term. The impact of straight-lining lease cost typically increases straight-line lease cost adjustments in the first half of the life of a lease, when lease cost recorded in accordance with GAAP exceeds cash payments made, and then decreases lease cost in the second half of the life of the lease, when lease cost is less than the cash payments required. The impact of straight-lining of lease cost nets to zero over the life of a lease.
The $5 million decrease in amortization of lease incentives benefit was primarily due to locations that incurred amortization of lease incentive benefits during the three months ended March 31, 2021 no longer incurring amortization during the three months ended March 31, 2022 due to lease terminations discussed above.
The remaining net decrease in all other location operating expenses consisted of decreases related to bad debt expense, stock-based compensation, telecommunication and other taxes. These decreases were offset by an increase in consumables, utilities and other various operating costs during the three
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months ended March 31, 2022, driven by an increase in physical occupancy from 47% as of March 2021 to 67% as of March 2022.
Pre-Opening Location Expenses
Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Pre-opening location expenses$47 $35 $12 34 %
Pre-opening location expenses increased $12 million to $47 million primarily as a result of the Company's efforts in right-sizing our real estate portfolio to better match supply with demand in certain markets. In connection with these right-sizing efforts certain workspace locations have been closed for member operations and all members have been relocated to a new workspace location, prior to management's decision to enter negotiations to terminate a lease.
Our most significant pre-opening location expense is real estate operating lease cost for the period before a location is open for member operations, which includes the following components and changes:
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Lease cost contractually paid or payable$33 $31 $2 6 %
Non-cash GAAP straight-line lease cost16 5 11 220 %
Amortization of lease incentives(5)(5)— — %
Total pre-opening location real estate operating lease cost$44 $31 $13 42 %
Selling, General and Administrative Expenses
Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Selling, general and administrative expenses$208 $274 $(66)(24)%
SG&A expenses decreased $66 million to $208 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. As a percentage of total revenue, SG&A expenses decreased by 19 percentage points to 27% for the three months ended March 31, 2022, compared to 46% for the three months ended March 31, 2021, driven primarily by our continued focus on our goal of creating a leaner, more efficient organization. During the three months ended March 31, 2022, there was a decrease of $34 million of stock-based compensation compared to the three months ended March 31, 2021. There was an additional decrease of $30 million due to legal, tax and regulatory reserves or settlements, and legal costs incurred by the Company in connection with regulatory investigations and litigation regarding the Company’s 2019 withdrawn initial public offering and the related execution of the SoftBank Transactions.
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Restructuring and other related costs and Impairment expense
Comparison of the three months endedMarch 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Restructuring and other related costs$(130)$494 $(624)(126)%
Impairment expense$91 $299 $(208)(70)%
Restructuring and other related costs decreased $624 million to $(130) million for the three months ended March 31, 2022, primarily due to a $536 million decrease in employee termination costs, including the following transactions:
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Excess value paid from a principal shareholder to We Holding LLC and the fair value of stock purchased in connection with the Settlement Agreement (Note 5 and Note 21)$— $428 $(428)N/M
Modification of WeWork Partnership Profits Interest Units in connection with the Settlement Agreement (Note 5 and Note 21)— 102 (102)N/M
Other employee termination costs2 8 (6)(75)%
Total employee termination costs$2 $538 $(536)(100)%
N/M = Not meaningful
The decrease in restructuring and other related costs was also due to a $70 million increase to gains on terminated leases associated with a total of 13 previously open locations during the three months ended March 31, 2022 compared to 21 during the three months ended March 31, 2021. There was also a $8 million decrease in costs related to ceased use buildings and a $10 million decrease in legal and other exit costs. Management is continuing to evaluate our real estate portfolio in connection with the Company's ongoing restructuring efforts and may exit additional leases throughout 2022.
In connection with the operational restructuring program and related changes in the Company's leasing plans and the impacts on our operations from certain macroeconomic events such as COVID-19 and the conflict between Russia and Ukraine, the Company has also recorded impairment expenses on our long-lived assets. Impairment expense decreased $208 million to $91 million for the three months ended March 31, 2022 and included the following components in year:
Three Months Ended
March 31,		Change
(Amounts in millions)20222021$%
Impairment and write-off of long-lived assets associated with restructuring$56 $280 $(224)(80)%
Impairment expense, other35 19 16 84 %
Total$91 $299 $(208)(70)%
For additional information on restructuring costs and impairments, see Note 5 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q and "—Key Factors Affecting Comparability of Our Results—Restructuring and Impairments" above.
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Depreciation and Amortization Expense
Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Depreciation and amortization expense$171 $184 $(13)(7)%
Depreciation and amortization expense decreased $13 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily driven by a decrease in depreciable assets as a result of the decrease in the number of our Consolidated Locations and workstation capacity and impairment expenses incurred throughout 2021 and into 2022.
Interest and Other Income (Expense), Net
Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Income (loss) from equity method investments$6 $(31)$37 (119)%
Interest expense(113)(105)(8)8 %
Interest income1 6 (5)(83)%
Foreign currency (loss)(44)(71)27 (38)%
Gain (loss) on change in fair value of warrant liabilities3 (352)355 (101)%
Interest and other income (expense), net$(147)$(553)$406 (73)%
Interest and other income (expense), net decreased $406 million to $(147) million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The decrease was primarily driven by a $355 million increase on net gain due to the change in fair value of warrant liabilities due to a $352 million loss on the SoftBank Senior Unsecured Notes Warrant and 2020 LC Facility Warrant during the three months ended March 31, 2021. During the three months ended March 31, 2022, the Private Warrants were the only warrant liabilities outstanding, with an initial fair value at issuance of $18 million. The warrant liabilities are remeasured each reporting date to fair value through their exercise dates, with such adjustments driven by changes in the Company's stock price. See Note 15 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for further details on the Private Warrants.
The income (loss) from equity method investments increased $37 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This increase was primarily due to a loss of $29 million related to equity method investment related to ChinaCo during the three months ended March 31, 2021, with no comparable loss during the three months ended March 31, 2022. See Note 10 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for further details on equity method and other investments.
Foreign currency losses decreased by $27 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily driven by decrease in the foreign currency denominated intercompany transactions that are of a long-term investment nature as a result of our prior international expansion and currency fluctuations against the dollar. The $44 million foreign currency loss during the three months ended March 31, 2022 was primarily impacted by fluctuations in
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the U.S. dollar-British Pound, U.S. dollar-Euro, U.S. dollar-Japanese Yen, U.S. dollar-South Korean Won and U.S. dollar-Russian Ruble exchange rates.
Interest expense increased by $8 million primarily due to a $10 million increase in interest expense due to the increased principal balance of the SoftBank Senior Unsecured Notes.
Income Tax Benefit (Provision)
Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Income tax benefit (provision)$1 $(3)$4 (133)%
There was a $4 million net decrease in the tax provision for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, which was primarily due to lower withholding taxes paid. This was partially offset by adjustments to the valuation allowance recorded during the three months ended March 31, 2022.
Our effective income tax rate during the three months ended March 31, 2022 and 2021 was lower than the U.S. federal statutory rate primarily due to the effect of certain non-deductible permanent differences, the effect of our operating in jurisdictions with various statutory tax rates, and valuation allowances.
Net Loss Attributable to Noncontrolling Interests
During 2017 through 2022, various consolidated subsidiaries issued equity to other parties in exchange for cash as more fully described in Note 9 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. As we have the power to direct the activities of these entities that most significantly impact their economic performance and the right to receive benefits that could potentially be significant to these entities, they remain our consolidated subsidiaries, and the interests owned by the other investors and the net income or loss and comprehensive income or loss attributable to the other investors are reflected as noncontrolling interests on our condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss, respectively.
The increase in the net loss attributable to noncontrolling interests from the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, of $39 million is primarily due to the issuance of noncontrolling interests of LatamCo in September 2021. Included within the three months ended March 31, 2022, were net losses incurred by JapanCo and LatamCo, while during the three months ended March 31, 2021, only JapanCo losses were attributable to noncontrolling interests.
In October 2021, Mr. Neumann converted 19,896,032 vested WeWork Partnership Profits Interest Units into WeWork Partnership Class A common units. As a result of the 2.73% ownership of the WeWork Partnership during the three months ended March 31, 2022, the Company allocated a loss of $11 million through the noncontrolling interest, as compared to none for the three months ended March 31, 2021.
See Note 10 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for discussion of the Company’s non-consolidated VIEs.
Net Loss Attributable to WeWork Inc.
As a result of the factors described above, we recorded a net loss attributable to WeWork Inc. of $(0.4) billion for the three months ended March 31, 2022 compared to $(2.0) billion for the three months ended March 31, 2021.
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Quarterly Results of Operations
The following table sets forth certain unaudited financial and uponoperating information for the Closing, among other things,quarterly periods presented and certain non-GAAP financial measures. The quarterly information includes all outstanding sharesadjustments (consisting of WeWork capital stocknormal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the First Merger (other than sharesinformation presented. This information should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q.
Three Months Ended
(Amounts in millions)March 31,
2022		December 31,
2021		September 30,
2021		June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		March 31,
2020
Revenue:
Consolidated Locations membership and service revenue$744 $694 $625 $564 $575 $609 $733 $825 $961 
Unconsolidated Locations management fee revenue and cost reimbursement revenue3 2 2 1 4 3 1 1 — 
Other revenue18 22 34 28 19 54 77 56 96 
Total revenue765 718 661 593 598 666 811 882 1,057 
Expenses:
Location operating expenses—cost of revenue (1)
736 733 752 780 818 814 924 881 923 
Pre-opening location expenses47 42 40 43 35 46 61 78 88 
Selling, general and administrative expenses (1)
208 278 234 227 274 292 386 393 533 
Restructuring and other related costs(130)(48)16 (28)494 52 19 81 56 
Impairment expense91 241 88 242 299 546 254 280 275 
Depreciation and amortization171 174 171 180 184 191 198 196 194 
Total expenses1,123 1,420 1,301 1,444 2,104 1,941 1,842 1,909 2,069 
Loss from operations(358)(702)(640)(851)(1,506)(1,275)(1,031)(1,027)(1,012)
Interest and other income (expense), net(147)(103)(206)(68)(553)105 38 (76)465 
Pre-tax loss(505)(805)(846)(919)(2,059)(1,170)(993)(1,103)(547)
Income taxes benefit (provision)1 2 2 (4)(3)2 (6)(7)(9)
Net loss(504)(803)(844)(923)(2,062)(1,168)(999)(1,110)(556)
Net loss attributable to noncontrolling interests69 88 42 34 30 28 58 246 372 
Net loss attributable to WeWork Inc.$(435)$(715)$(802)$(889)$(2,032)$(1,140)$(941)$(864)$(184)
Adjusted EBITDA (2)
$(212)$(283)$(356)$(449)$(446)$(472)$(527)$(436)$(449)
Net cash provided by (used in) operating activities$(338)$(373)$(380)$(618)$(541)$(439)$(249)$(355)$186 
Less: Purchases of property, equipment and capitalized software(74)(105)(61)(42)(129)(192)(274)(323)(675)
Free Cash Flow$(412)$(478)$(441)$(660)$(670)$(631)$(523)$(678)$(489)
(1) Exclusive of WeWork Class C common stock, treasury shares,depreciation and amortization shown separately on the dissenting sharesdepreciation and sharesamortization line.
(2) A reconciliation of WeWork capital stock reservednet loss, the most comparable GAAP measure, to Adjusted EBITDA is set forth below:


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Three Months Ended
(Amounts in millions)March 31,
2022		December 31,
2021		September 30,
2021		June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		March 31,
2020
Net loss$(504)$(803)$(844)$(923)$(2,062)$(1,168)$(999)$(1,110)$(556)
Income tax (benefit) provision(1)(2)(2)4 3 (2)6 7 9 
Interest and other (income) expense147 103 206 68 553 (105)(38)76 (465)
Depreciation and amortization171 174 171 180 184 191 198 196 194 
Restructuring and other related costs(130)(48)16 (28)494 52 19 81 56 
Impairment expense91 241 88 242 299 546 254 280 275 
Stock-based compensation expense13 48 4 4 54 7 9 12 23 
Other, net1 4 5 4 29 7 24 22 15 
Adjusted EBITDA$(212)$(283)$(356)$(449)$(446)$(472)$(527)$(436)$(449)

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(Other key performance indicators (in thousands, except for revenue in millions and percentages)):March 31,
2022		December 31,
2021		September 30,
2021		June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		March 31,
2020
Other key performance indicators:
Consolidated Locations (a)
Membership and service revenues$744 $694 $625 $564 $575 $609 $733 $825 $961 
Workstation Capacity746 746 766 770 804 865 962 936 916 
Physical Memberships501 469 432 386 378 387 480 543 610 
All Access and Other Legacy Memberships55 45 32 20 15 13 34 35 42 
Memberships555 514 464 406 393 401 514 578 653 
Physical Occupancy Rate67 %63 %56 %50 %47 %45 %50 %58 %67 %
Enterprise Physical Membership Percentage46 %47 %49 %52 %52 %52 %52 %46 %43 %
Unconsolidated Locations (a)
Membership and service revenues(b)
$132 $133 $119 $101 $90 $86 $20 $24 $26 
Workstation Capacity170 166 165 168 160 166 57 58 57 
Physical Memberships125 121 114 110 97 89 27 34 40 
Memberships126 121 114 111 97 89 27 34 40 
Physical Occupancy Rate74 %73 %69 %66 %61 %54 %47 %59 %70 %
Systemwide Locations
Membership and service revenues (c)
$876 $827 $744 $665 $665 $695 $753 $849 $987 
Workstation Capacity916 912 932 937 963 1,030 1,020 994 973 
Physical Memberships626 590 546 496 475 476 507 577 650 
All Access and Other Legacy Memberships55 46 32 20 15 13 34 35 42 
Memberships681 635 578 517 490 490 542 612 693 
Physical Occupancy Rate68 %65 %59 %53 %49 %46 %50 %58 %67 %
(a) Effective October 2, 2020, the Company deconsolidated ChinaCo and as a result, beginning with the fourth quarter of 2020, the workstation capacity, memberships, and occupancy percentages for Consolidated Locations excludes the impact of ChinaCo locations, and they are included in respectUnconsolidated Locations, with no impact on Total Locations. Prior to October 2, 2020, ChinaCo was still consolidated and therefore the key performance indicators for ChinaCo are included in Consolidated Locations. Key performance indicators for ChinaCo locations were as follows:
(Amounts in thousands, except percentages)March 31,
2022		December 31,
2021		September 30,
2021		June 30,
2021		March 31,
2021		December 31,
2020		September 30,
2020		June 30,
2020		March 31,
2020
Workstation capacity92 94 94 96 100 107 115 115 116 
Memberships67 71 72 71 67 63 60 65 61 
Physical Occupancy Rate72 %76 %76 %74 %67 %59 %52 %57 %53 %
(b) Unconsolidated membership and service revenues represents the results of WeWork awards) will be cancelled in exchangeUnconsolidated Locations that typically generate ongoing management fees for the right to receive an aggregateCompany at a rate of 655,300,000 shares2.75-4.00%.
(c) Systemwide Location membership and service revenues represents the results of New WeWork Class A common stock (at a deemed valueall locations regardless of $10.00 per share) representing aownership.
pre-transaction
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equity value
Table of WeWork of approximately $7.9 billion (the “Aggregate Merger Consideration”). An additional 80,000,000 shares of New WeWork Class A common stock will be purchased (at a price of $10.00 per share) at the Closing by certain third-party investors (collectively, the “PIPE Investors”), for a total aggregate purchase price of $800,000,000 (the “PIPE Investment”). The proceeds of the PIPE Investment, together with the amounts remaining in our trust account.Contents
Refer to the preliminary proxy statement/consent solicitation statement/prospectus, included in the Registration Statements on Form
S-4
and
S-4/A
filed with the SEC on May 14, 2021, June 29, 2021 and July 21, 2021, for additional information.
Liquidity and Capital Resources
We currently expect that our principal sources of funds to meet our short-term and long-term liquidity requirements for working capital, expenses, capital expenditures, lease security, other investments and repurchases or repayments of outstanding indebtedness and other liabilities will include:
•Cash on hand, including $519 million of cash and cash equivalents as of March 31, 2022, including $79 million held by our consolidated VIEs that will be used first to settle obligations of the VIEs and are also subject to the restrictions discussed below;
•The ability to draw up to $550 million in A&R Senior Secured Notes (defined below). On the Closing Date, WeWork Companies LLC, WW Co-Obligor, Inc. and the Note Purchaser entered into the A&R NPA, which replaces the Master Senior Secured Notes Purchase Agreement relating to the SoftBank Senior Secured Notes; and
•The 2020 LC Facility which became available in February 2020 to provide $1.75 billion in letters of credit that may be used as lease security for the Company's leases in lieu of providing cash security deposits and for general corporate purposes and other obligations of WeWork Companies LLC or its business. As of March 31, 2022, there was $0.6 billion in remaining letter of credit availability under the 2020 LC Facility. On May 10, 2022, the Company entered into the Fourth Amendment to the Credit Agreement (defined below), pursuant to which the existing 2020 LC Facility was amended and subdivided into a $1.25 billion Senior LC Tranche and a $350 million Junior LC Tranche (both as defined below). Upon the effectiveness of the Fourth Amendment to the Credit Agreement, the letter of credit under the Junior LC Tranche was issued and drawn in full for the benefit of the Company.
The Company's strategic plan used for evaluating liquidity includes limited future growth initiatives, such as signing new leases. The actual timing at which we may achieve profitability and positive cash flow from operations depends on a variety of factors, including the occupancy of our locations, the rates we are able to charge, the success of our cost efficiency efforts, economic and competitive conditions in the markets where we operate, general macroeconomic conditions, the pace at which we choose to grow and our ability to add new members and new products and services to our platform. Alternate long-term growth plans may require raising additional capital. The Company regularly evaluates market conditions, to enhance its capital structure and diversify its investor base, and from time to time may refinance, redeem, repurchase or otherwise modify existing debt or issue equity or equity-linked securities.
The duration and scope of the COVID-19 pandemic has been unpredictable and has resulted in a slower than expected timing of recovery in our business. Management has continued to closely monitor the impact COVID-19 developments, such as COVID-19 cases continuing to be high in certain markets where we operate; while some governments are no longer imposing mask mandates, they may do so in the future and companies and individuals may continue to defer returning back to the office until a future time. Further, management has observed pricing challenges in the marketplace due to an excess supply of commercial real estate available to our customers as a result of companies of all sizes deferring their return back to offices, as well as businesses now considering remote and hybrid office space strategies. As a result of these recent developments, our current short-term liquidity forecast assumes that the pandemic will continue to negatively impact cash flow used in operating activities for the near term, but to a lesser extent based on improving customer demand that began in the second half of 2021. The Company believes that the recovery from the pandemic, which is now underway, combined with its available financing options, will provide liquidity sufficient to meet near-term requirements.
The Company's liquidity forecasts are based upon continued execution of its operational restructuring program and also includes management's best estimate of the impact that the COVID-19 pandemic, including the Omicron or other variants, may continue to have on WeWork's business and its liquidity needs; however, the extent to which the Company's future results and liquidity needs are further affected by the continued impact of the COVID-19 pandemic will largely depend on the duration of closures, and
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delays in location openings, the success of ongoing vaccination efforts, the effect on demand for WeWork memberships, any permanent shifts in working from home, how quickly the Company can resume normal operations and the Company's ongoing lease negotiations with its landlords, among others. WeWork believes continued execution of its operational restructuring program and its current liquidity position will be sufficient to help it mitigate the continued near-term uncertainty associated with COVID-19, however its assessment assumes a continued recovery in its revenues and occupancy that began in the second half of 2021 with a gradual return toward pre-COVID levels. If the Company does not experience a recovery consistent with its projected timing, additional capital sources may be required, the timing and source of which are uncertain. There is no assurance the Company will be successful in securing the additional capital infusions if needed. See the section entitled "Key Factors Affecting the Comparability of Our Results—COVID-19 and Impact on our Business" above for further details on the impact of COVID-19 on our business and our efforts to mitigate its effects. The ultimate impact of COVID-19 on our business is dependent on the duration of closures and delays and the larger macroeconomic impact of the virus depends on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic and the actions to contain the virus or mitigate its impact, among others.
During the three months ended March 31, 2022, our primary source of cash was from membership receipts. Our primary uses of cash included fixed operating lease cost and capital expenditures associated with the design and build-out of our spaces. We have also incurred costs related to our operational restructuring including lease termination fees, legal fees and other exit costs. Cash payments of restructuring liabilities totaled $96 million during the three months ended March 31, 2022. Pre-opening location expenses, SG&A expenses and cash payments made for acquisitions and investments have also historically included large discretionary uses of cash which can and have been scaled back to the extent needed based on our future cash needs. We also may elect to repurchase amounts of our outstanding debt, including the SoftBank Senior Unsecured Notes, for cash, through open market repurchases or privately negotiated transactions with certain of our debt holders, although there is no assurance we will do so.
As of June 30, 2021,March 31, 2022, our consolidated VIEs held the following, in each case after intercompany eliminations:
March 31, 2022
(Amounts in millions)
SBG JVs(1)
Other VIEs(2)
Cash and cash equivalents$70 $9 
Restricted cash7 — 
Total assets2,649 15 
Total liabilities2,385 1 
Redeemable stock issued by VIEs80 — 
Total net assets (3)
184 14 
(1)The “SBG JVs” as of March 31, 2022 include only JapanCo and LatamCo. As of March 31, 2022, JapanCo and LatamCo were prohibited from declaring dividends (including to us) without approval of an affiliate of SoftBank Group Capital Limited. As a result, any net assets of JapanCo and LatamCo would be considered restricted net assets to the Company as of March 31, 2022. SBG JVs include preferred stock issued to affiliates of SBG and other investors with aggregate liquidation preferences totaling $580 million as of March 31, 2022, of which $80 million is redeemable upon the occurrence of an event that is not solely within our control. The initial issuance price of such redeemable and non-redeemable preferred stock equals the liquidation preference for each share issued as of March 31, 2022. After reducing the net assets of the SBG JVs by the liquidation preference associated with such redeemable and non-redeemable preferred stock, the remaining net assets of the SBG JVs is negative as of March 31, 2022.
(2)"Other VIEs” includes the WeCap Manager and WeCap Holdings Partnership.
(3)Total net assets represents total assets less total liabilities and redeemable stock issued by VIEs after the total assets and total liabilities have both been reduced to remove amounts that eliminate in consolidation.
Based on the terms of the arrangements as of March 31, 2022, the assets of our consolidated VIEs will be used first to settle obligations of the VIEs. Remaining assets may then be distributed to the VIEs'
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owners, including us, subject to the liquidation preferences of certain noncontrolling interest holders and any other preferential distribution provisions contained within the operating agreements of the relevant VIEs. Other than the restrictions relating to our SBG JVs discussed in note (1) to the table above, third-party approval for the distribution of available net assets is not required for any of our consolidated VIEs as of March 31, 2022. See the section entitled "—Senior Notes"below for a discussion on additional restrictions on the net assets of WeWork Companies LLC.
As of March 31, 2022, creditors of our consolidated VIEs do not have recourse against the general credit of the Company except with respect to certain lease guarantees we have provided to landlords of our consolidated VIEs, which guarantees totaled $12 million as of March 31, 2022. In addition, as of March 31, 2022, the Company also continues to guarantee $4 million of lease obligations of ChinaCo.
We believe our sources of liquidity described above and in more detail below will be sufficient to meet our obligations as of March 31, 2022 over the next 12 months from the date of this Form 10-Q.
We do not expect distributions from our consolidated VIEs or unconsolidated investments to be a significant source of liquidity and our assessment of our ability to meet our capital requirements over the next 12 months does not assume that we will receive distributions from those entities.
We may raise additional capital or incur additional indebtedness to continue to fund our operations and/or to refinance our existing indebtedness and to pay any related accrued interest, premiums and fees. Our future financing requirements and the future financing requirements of our consolidated VIEs will depend on many factors, including the number of new locations to be opened, our net member retention rate, the impacts of the COVID-19 pandemic, the timing and extent of spending to support the development of our platform, the expansion of our sales and marketing activities and potential investments in, or acquisitions of, businesses or technologies. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. In addition, the incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that restrict our operations.
Sources of Liquidity
As of March 31, 2022, we had approximately $506,000$27 million of principal debt maturing within the next 12 months and our total debt consisted of the following:
Maturity
Year		Interest
Rate		Outstanding Principal Balance
(Amounts in millions, except percentages)
Senior Unsecured notes20255.00%$2,200 
Senior Notes20257.875%669 
Other Loans2022 - 20242.5% - 3.3%32 
Total debt, excluding deferred financing costs$2,901 
For further information on our debt, please see Note 14 of the notes to the Condensed Consolidated Financial Statements included in cashPart I, Item 1 of this Form 10-Q.
SoftBank Senior Unsecured Notes
On December 27, 2019, WeWork Companies LLC, WW Co-Obligor Inc., a wholly owned subsidiary of WeWork Companies LLC and working capital deficita co-obligor under our Senior Notes (defined below), and the Note Purchaser, entered into the Master Note Purchase Agreement (as amended from time to time and as supplemented by that certain waiver dated July 7, 2020).
Pursuant to the terms of approximately $2.9 million.the Master Note Purchase Agreement, WeWork Companies LLC may deliver from time to time to the Note Purchaser draw notices and accordingly sell to the Note Purchaser SoftBank Senior Unsecured Notes up to an aggregate original principal amount of $2.2 billion. A draw notice
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Through June 30, 2021 ourpursuant to the Master Note Purchase Agreement may be delivered only if WeWork Companies LLC’s net liquidity needs were satisfied through a paymentis, or prior to the applicable closing is reasonably expected to be, less than $750 million, and the amount under each draw shall not be greater than the lesser of $25,000(a) $250 million and (b) the remaining commitment (defined as the original principal amount of $2.2 billion less notes issued) and shall not be greater than an amount sufficient to cause, or reasonably expected to cause, the net liquidity of WeWork Companies LLC to be equal to $750 million after giving effect to receipt of proceeds from the Company’s Chairman and
Co-Chief
Executive Officer to cover for certain offering costs in exchange for the issuance of the Founder Shares,applicable SoftBank Senior Unsecured Notes.
As of March 31, 2022, an aggregate principal amount of $2.2 billion of SoftBank Senior Unsecured Notes were issued to the Note Purchaser and none remained available for draw.
Following the delivery of a draw notice, the Note Purchaser may notify WeWork Companies LLC that it intends to engage an investment bank or investment banks to offer and sell the applicable SoftBank Senior Unsecured Notes or any portion thereof to third-party investors in a private placement. Solely with respect to the first $200 million in draws, the Note Purchaser waived this syndication right.
On December 16, 2021, WeWork Companies LLC and the loan underNote Purchaser amended and restated the Noteindenture governing the SoftBank Senior Unsecured Notes to subdivide the notes into two series, one of approximately $150,000 to us to cover for offering costswhich consisted of $550 million in aggregate principal amount of 5.00% Senior Notes due 2025 (the "Series II Unsecured Notes") and another consisted of the remaining $1.65 billion in aggregate principal amount of 5.00% Senior Notes due 2025 (the "Series I Unsecured Notes" and, together with the Series II Unsecured Notes, the "Senior Unsecured Notes"), in connection with the Initial Public Offering. Subsequentresale by the Note Purchaser (through certain initial purchasers) of the Series II Unsecured Notes to qualified investors in a private offering exempt from registration under the Securities Act of 1933, as amended. The Series I Unsecured Notes remain held by the Note Purchaser.
The SoftBank Senior Unsecured Notes have a stated interest rate of 5.0%. However, because the associated warrants obligate the Company to issue shares in the future, the implied interest rate upon closing was approximately 11.69%. The SoftBank Senior Unsecured Notes will mature in July 2025.
SoftBank Senior Secured Notes
In August 2020, the Company and WW Co-Obligor Inc. entered into a Master Senior Secured Notes Note Purchase Agreement (the "Master Senior Secured Notes Note Purchase Agreement") for up to an aggregate principal amount of $1.1 billion of senior secured debt in the form of 12.5% senior secured notes (the "SoftBank Senior Secured Notes"). The Master Senior Secured Notes Note Purchase Agreement allows the Company to borrow once every 30 days up to the consummationmaximum remaining capacity with minimum draws of $50 million with a maturity date 4 years from the first draw. The Company had the ability to draw for 6 months starting from the date of the Initial Public OfferingMaster Senior Secured Notes Note Purchase Agreement, and the Company extended this draw period for an additional 6 months by delivery of an extension notice to the Note Purchaser, in January 2021 pursuant to the terms of the agreement. On August 11, 2021, WeWork Companies LLC, WW-Co-Obligor Inc. and the Note Purchaser executed an amendment to the Master Senior Secured Notes Note Purchase Agreement governing the SoftBank Senior Secured Notes, which (i) amended the maturity date of any notes to be issued thereunder from 4 years from the date of first drawing to February 12, 2023 and (ii) extended the expiration of the draw period from August 12, 2021 to September 30, 2021. On September 27, 2021, WeWork Companies LLC, WW Co-Obligor Inc. and the Note Purchaser executed a further amendment to the agreement, which extended the expiration of the draw period from September 30, 2021 to October 31, 2021. As of March 31, 2022 and December 31, 2021, no draw notices had been delivered pursuant to the senior secured note purchase agreement.
Amended and Restated Senior Secured Notes
On March 25, 2021, the Company and the Note Purchaser entered into a letter agreement (the "Commitment Letter") pursuant to which the Company and the Note Purchaser agreed to amend and restate the terms of the Master Senior Secured Notes Note Purchase Agreement that governs the
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SoftBank Senior Secured Notes (as amended and restated, the “A&R NPA”) on the earlier of (i) the Closing Date and (ii) August 7,12, 2021 (subsequently amended to October 31, 2021). On the Closing Date, the Company, WW Co-Obligor Inc. and the Note Purchaser entered into the A&R NPA for up to an aggregate principal amount of $550 million of senior secured debt in the form of 7.5% senior secured notes. Entry into the A&R NPA superseded and terminated the Master Senior Secured Notes Note Purchase Agreement governing the SoftBank Senior Secured Notes and the Commitment Letter. It was a condition to the execution of the A&R NPA that any outstanding SoftBank Senior Secured Notes be redeemed, repurchased or otherwise repaid and canceled at a price of 101% of the principal amount thereof plus accrued and unpaid interest.
The A&R NPA allows the Company to borrow once every 30 days up to the maximum remaining capacity with minimum draws of $50 million. On December 16, 2021, the Company, WW Co-Obligor Inc. and the Note Purchaser entered into an amendment to the A&R NPA pursuant to which the Note Purchaser agreed to extend its commitment to purchase up to an aggregate principal amount of $500 million of the Amended Senior Secured Notes that may be issued by the Company from February 12, 2023 to February 12, 2024. The Amended Senior Secured Notes will mature on February 12, 2024. The Company has the ability to draw until February 12, 2024.
2020 LC Facility
On December 27, 2019, WeWork Companies LLC entered into the Company Credit Agreement (as amended by the First Amendment, dated as of February 10, 2020, the liquidity needs have been satisfied throughSecond Amendment to the net proceeds fromCredit Agreement and First Amendment to the consummationSecurity Agreement, dated as of April 1, 2020, and the Third Amendment to the Credit Agreement, dated as of December 6, 2021), among WeWork Companies LLC, as co-obligor, the SoftBank Obligor, as co-obligor, Goldman Sachs International Bank, as administrative agent, and the issuing creditors and letter of credit participants party thereto. The Company Credit Agreement provides for a $1.75 billion senior secured letter of credit facility (the "2020 LC Facility"), which was made available on February 10, 2020, for the support of WeWork Companies LLC's or its subsidiaries' obligations. The termination date of the Private Placement not held2020 LC Facility is February 9, 2024. As of March 31, 2022, $1.2 billion of standby letters of credit were outstanding under the 2020 LC Facility, of which $6 million has been utilized to secure letters of credit that remain outstanding under the 2019 Credit Facility and the 2019 LC Facility, which were terminated in 2020. As of March 31, 2022, there was $0.6 billion in remaining letter of credit availability under the Trust Account. We fully repaid2020 LC Facility.
The 2020 LC Facility is guaranteed by substantially all of the Note on August 7, 2020. domestic wholly-owned subsidiaries of WeWork Companies LLC (collectively the “Guarantors”) and is secured by substantially all the assets of WeWork Companies LLC and the Guarantors, in each case, subject to customary exceptions.
In addition, in orderconnection with the 2020 LC Facility WeWork Companies LLC also entered into a reimbursement agreement, dated February 10, 2020 (as amended, the "Company/SBG Reimbursement Agreement"), with the SoftBank Obligor pursuant to finance transaction costswhich (i) the SoftBank Obligor agreed to pay substantially all of the fees and expenses payable in connection with the Company Credit Agreement, (ii) the Company agreed to reimburse SoftBank Obligor for certain of such fees and expenses (including fronting fees up to an amount 0.125% on the undrawn and unexpired amount of the letters of credit, plus any fronting fees in excess of 0.415% on the undrawn and unexpired amount of the letters of credit) as well as to pay the SoftBank Obligor a Business Combination, our officers, directorsfee of 5.475% on the amount of all outstanding letters of credit and initial stockholders may, but are not(iii) the Guarantors agreed to guarantee the obligations of WeWork Companies LLC under the Company/SBG Reimbursement Agreement. During the three months ended March 31, 2022, the Company recognized $17 million in interest expense in connection with amounts payable to SBG pursuant to the Company/SBG Reimbursement Agreement. As the Company is also obligated to issue 35,770,699 shares in the future pursuant to warrants issued to the SoftBank Obligor in connection with the SoftBank Obligor's commitment to provide us Working Capital Loans. To date, there were no amounts outstanding under any Working Capital Loans.
Basedcredit support for the 2020 LC Facility, the implied interest rate for the Company on the foregoing, management believes that we will have sufficient working capital and borrowing capacity2020 LC Facility at issuance, assuming the full commitment is drawn, is approximately 12.47%. In December 2021, the Company/SBG Reimbursement Agreement was amended following the entry into the Amended Credit Support Letter (as defined below) to, meet its needs throughamong other things, change the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds for paying existing accountsfees payable identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
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Management continuesby WeWork Companies LLC to evaluate the impactSBG to (i) 2.875% of the
COVID-19
pandemic face amount of letters of credit issued under the 2020 LC Facility (drawn and has concluded thatundrawn), payable quarterly in arrears, plus (ii) the specific impactamount of any issuance fees payable on the drawn amounts under the 2020 LC Facility.
On March 25, 2021, the Company and the SoftBank Obligor entered into a letter agreement (the “Credit Support Letter”) pursuant to which SBG committed to consent to an extension of the termination date of the 2020 LC Facility from February 10, 2023 to no later than February 10, 2024 (the "LC Facility Extension"), subject to the terms and conditions set forth therein. In November 2021, the parties amended the Credit Support Letter (as so amended, the “Amended Credit Support Letter”), pursuant to which SBG agreed to consent to a reduction of the total commitment under the 2020 LC Facility from $1.75 billion to $1.25 billion starting on February 10, 2023 and to an extension of the commitment under the A&R NPA for up to $500 million from February 12, 2023 to February 12, 2024. On December 6, 2021, the parties entered into an amendment to the Company Credit Agreement to effect the changes contemplated by the Amended Credit Support Letter and the Company issued to the SoftBank Obligor a warrant (the “LC Warrant”) to purchase 11,923,567 shares of the Company's Class A common stock at a price per share equal to $0.01. The LC Warrant is not readily determinable asimmediately exercisable, in whole or in part, and expires on the tenth anniversary of the date of issuance.
On May 10, 2022, WeWork Companies LLC, as co-obligor (the “WeWork Obligor”), the unaudited condensed consolidated financial statements.SoftBank Obligor, as co-obligor, Goldman Sachs International Bank, as existing administrative agent and senior tranche administrative agent, Kroll Agency and Trust Services Ltd., as junior tranche administrative agent, and the issuing creditors and letter of credit participants party thereto entered into the Fourth Amendment to the Credit Agreement (the "Fourth Amendment to the Credit Agreement") pursuant to which the existing 2020 LC Facility was amended and subdivided into a $1.25 billion senior letter of credit tranche (the "Senior LC Tranche"), which decreases to $1.05 billion in February 2023, and a $350 million junior letter of credit tranche (the "Junior LC Tranche"). The unaudited condensed consolidated financial statements doletter of credit under the Junior LC Tranche was issued and drawn for the benefit of the WeWork Obligor in full upon effectiveness of the Fourth Amendment to the Credit Agreement. The termination date of the Junior LC Tranche is November 30, 2023 and the termination date of the Senior LC Tranche is February 9, 2024. The letters of credit issuable under the Senior LC Tranche have substantially similar terms as the existing 2020 LC Facility. The reimbursement obligations under the Junior LC Tranche bear interest at the ABR (as defined in the Fourth Amendment to the Credit Agreement) plus 5.50% or the Term SOFR Rate (as defined in the Fourth Amendment to the Credit Agreement), with a floor of 0.75%, plus 6.50%, at the WeWork Obligor’s option. The reimbursement obligations under the Junior LC Tranche are voluntarily repayable at any time, subject to a prepayment fee such that the minimum return to the letter of credit participants under the Junior LC Tranche on the Junior LC Tranche reimbursement obligations is an amount equal to the sum of 6.50% (the Applicable Margin of the Junior LC Tranche reimbursement obligations) and 2.00% of the total principal amount of the Junior LC Tranche reimbursement obligations, as set forth in the Fourth Amendment to the Credit Agreement. Obligations of the WeWork Obligor and its restricted subsidiaries under the Junior LC Tranche are subordinated in right of payment to the obligations under the Senior LC Tranche to the extent of the value of the collateral securing such obligations. In connection with the Fourth Amendment to the Credit Agreement, the Company/SBG Reimbursement Agreement was amended to clarify that the payment obligations in connection with fees and expenses related to the Fourth Amendment to the Credit Agreement are the responsibility of the Company and not include any adjustments that might resultSBG.
LC Debt Facility
In May 2021, the Company entered into a loan agreement with a third party to raise up to $350 million of cash in exchange for letters of credit issued from the outcomeLC Facility (the “LC Debt Facility”). The third party will issue a series of this uncertainty.discount notes to investors of varying short term (1-6 month) maturities and make a matching discount loan to WeWork Companies LLC. WeWork Companies LLC will pay the 5.475% issuance fee on the letter of credit, the 0.125% fronting fee on the letter of credit and the interest on the discount note. At maturity, the Company has the option, based on prevailing market conditions and liquidity needs, to roll the loan to a new maturity or pay off the loan at par. No loans drawn under the LC Debt Facility can have maturity dates that extend beyond the termination date of the 2020 LC Facility.
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Our entire activity since inception through JuneIn connection with the Merger Agreement, the Company agreed to not enter into loan facilities utilizing the LC Debt Facility without consent from SBG. In May 2021, the Company entered into a letter agreement with SBG pursuant to which SBG consented to the LC Debt Facility and the Company agreed to certain restrictions that will apply to the LC Debt Facility, including that (i) until such time as no amounts remain undrawn by the Company under the $2.2 billion SoftBank Senior Unsecured Notes, amounts issued under the LC Debt Facility will not exceed $100 million, (ii) the Company would repay all amounts outstanding under the LC Debt Facility within 30 2021 was in preparation for our formation, the Initial Public Offering, and, sincedays after the closing of our Initial Public Offering, a searchthe Business Combination, and (iii) the prior written consent of SBG will be required for business combination candidates. We will not be generating any operating revenues until the first draw under the LC Debt Facility that occurs after closing and completion of our initialthe Business Combination.
Senior Notes
In April 2018, we issued $702 million in aggregate principal amount of unsecured 7.875% Senior Notes (the "Senior Notes") in a private offering. The Senior Notes mature on May 1, 2025. We received gross proceeds of $702 million from the issuance of the Senior Notes. As of March 31, 2022, $669 million in aggregate principal amount remains outstanding.
The indenture that governs the Senior Notes restricts us from incurring indebtedness or liens or making certain investments or distributions, subject to a number of exceptions. The indenture that governs the Senior Notes also restricts us from incurring indebtedness or liens or making certain investments or distributions, subject to a number of exceptions. Certain of these exceptions included in the indenture that governs our Senior Notes are subject to us having Minimum Growth-Adjusted EBITDA (as defined in the indenture that governs our Senior Notes) for the most recent four consecutive fiscal quarters. For incurrences in fiscal years ending December 31, 2019, 2020, 2021 and 2022-2025, the Minimum Growth-Adjusted EBITDA required for the immediately preceding four consecutive fiscal quarters is $200 million, $500 million, $1.0 billion and $2.0 billion, respectively. For the four quarters ended March 31, 2022, the Company's Minimum Growth-Adjusted EBITDA, as calculated in accordance with the indenture, was less than the $2.0 billion requirement effective as of January 1, 2022. As a result, the Company was restricted in its ability to incur certain new indebtedness in 2022 that was not already executed or committed to as of December 31, 2019, unless such Minimum Growth-Adjusted EBITDA increased above the threshold required. The restrictions of the Senior Notes did not impact our ability to access the unfunded commitments pursuant to the SoftBank Senior Unsecured Notes and the SoftBank Senior Secured Notes.
Subsequent to the Company's July 2019 legal entity reorganization, WeWork Companies LLC is the obligor of the Senior Notes, which is also fully and unconditionally guaranteed by WeWork Inc. WeWork Inc. and the other subsidiaries that sit above WeWork Companies LLC in our legal structure are holding companies that conduct substantially all of their business operations through WeWork Companies LLC. As of March 31, 2022, based on the covenants and other restrictions of the Senior Notes, WeWork Companies LLC is restricted in its ability to transfer funds by loans, advances or dividends to WeWork Inc. and as a result all of the net assets of WeWork Companies LLC are considered restricted net assets of WeWork Inc.. See the Supplementary Information — Consolidating Balance Sheet included in Part I, Item 1 of this Form 10-Q for additional details regarding the net assets of WeWork Companies LLC.
For the three months ended June 30, 2021, weMarch 31, 2022, our non-guarantor subsidiaries represented approximately 56% of our total revenue and approximately 43% of loss from operations, and approximately 2% of our Senior Notes—Adjusted EBITDA (as defined in the indenture that governs our Senior Notes). As of March 31, 2022, our non-guarantor subsidiaries represented approximately 47% of our total assets, and had net loss$0.8 billion of approximately $11.2 million, which consistedtotal liabilities, including trade payables but excluding intercompany liabilities and lease obligations.
Bank Facilities
In conjunction with the availability of approximately $1.8the 2020 LC Facility, our 2019 Credit Facility and 2019 LC Facility were terminated in February 2020. As of March 31, 2022, $6 million in general and administrative expenses, approximately $9.4 million in change in fair valueletters of warrant liabilities and approximately $50,000 in franchise tax expense, partially offset by approximately $12,000 of interest income from investments held in Trust Account.
For the six months ended June 30, 2021, we had net loss of approximately $16.8 million, which consisted of approximately $4.1 million in general and administrative expenses, approximately $12.7 million in change in fair value of warrant liabilities and approximately $99,000 in franchise tax expense, partially offset by approximately $59,000 of interest income from investments held in Trust Account.
For the period from May 19, 2020 (inception) through June 30, 2020, we had a net loss of approximately $23,000, which consisted of $401 in general and administrative expenses and approximately $23,000 of franchise tax expense.
credit remain outstanding
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On May 26,under the 2019 LC Facility and 2019 Credit Facility that are secured by new letters of credit issued under the 2020 we issued 10,062,500 sharesLC Facility.
Other Letter of Class B common stockCredit Arrangements
The Company has also entered into various other letter of credit arrangements, the purpose of which is to guarantee payment under certain leases entered into by JapanCo and other fully owned subsidiaries. There was $8 million of standby letters of credit outstanding under these other arrangements that are secured by $8 million of restricted cash at March 31, 2022.
Uses of Cash
Contractual Obligations
The following table sets forth certain contractual obligations as of March 31, 2022 and the timing and effect that such obligations are expected to have on our Company’s Chairmanliquidity and
Co-Chief
Executive Officer capital requirements in exchangefuture periods:
(Amounts in millions)Remainder of 202220232024202520262027 and beyondTotal
Non-cancelable operating lease commitments(1)
$1,863 $2,421 $2,481 $2,503 $2,529 $18,799 $30,596 
Finance lease commitments, including interest7 9 7 6 7 26 62 
Construction commitments(2)
55 — — — — — 55 
Asset retirement obligations(3)
3 1 3 1 2 204 214 
Debt obligations, including interest(4)
74 62 55 695 — — 886 
Unsecured related party debt, including interest(5)
83 110 110 2,255 — — 2,558 
Warrant liabilities(6)
13 — — — — — 13 
Total$2,098 $2,603 $2,656 $5,460 $2,538 $19,029 $34,384 
(1)Future undiscounted fixed minimum lease cost payments for a paymentnon-cancelable operating leases, inclusive of $25,000escalation clauses and exclusive of lease incentive receivables and contingent lease cost payments, that have initial or remaining lease terms in excess of one year as of March 31, 2022. Excludes an additional $0.8 billion relating to executed non-cancelable leases that have not yet commenced as of March 31, 2022. See Note 17 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for offering costs made by our Sponsor on behalfadditional details.
(2)In the ordinary course of our company (the “Founder Shares”). In July 2020, the Chairmanbusiness, we enter into certain agreements to purchase construction and
Co-Chief
Executive Officer transferred certain Founder Shares to our directors and officers as well as to certain third parties. On August 4, 2020, we effected a stock dividend of 0.2 shares of Class B common stock for each share of Class B common stock outstanding, resulting in an aggregate of 12,075,000 Founder Shares outstanding. All shares and associated amounts have been retroactively restated to reflect the share dividend. On August 13, 2020, the underwriters exercised their 15% over-allotment option in full; thus, the Founder Shares were no longer subject to forfeiture.
The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after the initial Business Combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Related Party Loans
On May 26, 2020, our Chairman and
Co-Chief
Executive Officer agreed to loan us up to an aggregate of $150,000 pursuant to an unsecured promissory note (the “Note”) to cover expenses related contracting services related to the Initial Public Offering. This loan was payable without interest uponbuild-outs of our locations that are enforceable and legally binding and that specify all significant terms and the completionapproximate timing of the Initial Public Offering. We borrowedpurchase transaction. Our purchase orders are based on current needs and are fulfilled by the vendors as needed in accordance with our construction schedule.
(3)Certain lease agreements contain provisions that require us to remove leasehold improvements at the end of the lease term. When such an obligation exists, we record an asset retirement obligation at the inception of the lease at its estimated fair value. These obligations are recorded as liabilities on our condensed consolidated balance sheet as of March 31, 2022.
(4)Primarily represents principal and interest payments on Senior Notes, LC Debt Facility and other loans as of March 31, 2022.
(5)Primarily represents principal and interest payments on SoftBank Senior Unsecured Notes as of March 31, 2022.
(6)Represents the fair value as of March 31, 2022, of the Company's obligation to deliver 7,773,333 shares in respect of the Company’s outstanding Private Placement Warrants, as defined and as further described in Note 13 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Lease Obligations
The future undiscounted fixed minimum lease cost payment obligations under operating and finance leases signed as of March 31, 2022 were $31.5 billion. A majority of our leases are held by individual
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special purpose subsidiaries, and as of March 31, 2022, the total security packages provided by the Company and its subsidiaries in respect of these lease obligations was approximately $5.0 billion in the form of corporate guarantees, outstanding standby letters of credit, cash security deposits to landlords and surety bonds issued, representing less than 20% of future undiscounted minimum lease cost payment obligations. In addition, individual property lease security obligations on any given lease typically decrease over the life of the lease, although we may continue to enter into new leases in the ordinary course of our business.
Capital Expenditures and Tenant Improvement Allowances
Capital expenditures are primarily for the design and build-out of our spaces, and include leasehold improvements, equipment and furniture. Our leases often contain provisions regarding tenant improvement allowances, which are contractual rights to reimbursements paid by landlords for a portion of the costs we incur in designing and developing our workspaces. Tenant improvement allowances are reflected in the condensed consolidated financial statements upon lease commencement as our practice and intent is to spend up to or more than the full amount of the Note and received additional advances of approximately $45,000 advancement of funds from such officer, for a total outstanding loan of approximately $195,000. We fully repaid the Note and the advances to such officer on August 7, 2020.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, the initial stockholders, officers and directors and their affiliates may, but are not obligated to, loan us funds as may be required (the “Working Capital Loans”). Up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. Except for the foregoing,tenant improvement allowance that is contractually provided under the terms of such loans, if any,the contract.
Over the course of a typical lease with tenant improvement allowances, we incur certain capital expenditures that we expect to be reimbursed by the landlords pursuant to provisions in our leases providing for tenant improvement allowances but for which we have not yet satisfied all conditions for reimbursement and, therefore, the landlords have not been determinedbilled at the time of such capital expenditures. Thus, while such receivables are reflected in our condensed consolidated financial statements upon lease commencement, the timing of the achievement of the applicable milestones and billing of landlords will impact when reimbursements for tenant improvement allowances will be received, which may impact the timing of our cash flows.
We monitor gross and net capital expenditures, which are primarily associated with our leasehold improvements, to evaluate our liquidity and workstation development efforts. We define net capital expenditures as the gross purchases of property, equipment and capitalized software, as reported in “cash flows from investing activities” in the condensed consolidated statements of cash flows, less cash collected from landlords for tenant improvement allowances. While cash received for tenant improvement allowances is reported as “cash flows from operating activities” in the condensed consolidated statements of cash flows, we consider cash received for tenant improvement allowances to be a reduction against our gross capital expenditures in the calculation of net capital expenditures.
As the payments received from landlords for tenant improvement allowances are generally received after certain project milestones are completed, payments received from landlords presented in the table below are not directly related to the cash outflows reported for the capital expenditures reported.
The table below shows our gross and net capital expenditures for the periods presented:
(Amounts in millions)Three Months Ended
March 31,
20222021
Gross capital expenditures$(74)$129 
Cash collected for tenant improvement allowances(43)(128)
Net capital expenditures$31 $1 
Our ability to negotiate lease terms that include significant tenant improvement allowances has been and may continue to be impacted by our expansion into markets where such allowances may be less common. Our capital expenditures have also been and may continue to be impacted by our focus on enterprise members, who generally require more customization than a traditional workspace, resulting in higher build-out costs. However, we expect any increase in build-out costs resulting from expansion of configured solutions for our growing enterprise member base to be offset by increases in committed
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revenue, as enterprise members often sign membership agreements with longer terms and for a greater number of memberships than our other members. Future decisions to enter into long-term revenue-sharing agreements with building owners, rather than more standard fixed lease arrangements, may also impact future cash inflows relating to tenant improvement allowances and cash outflows relating to capital expenditures.
In the ordinary course of our business, we enter into certain agreements to purchase construction and related contracting services related to the build-outs of our operating locations that are enforceable, legally binding, and that specify all significant terms and the approximate timing of the purchase transaction. Our purchase orders are based on current needs and are fulfilled by the vendors as needed in accordance with our construction schedule. As of March 31, 2022, we have issued approximately $55 million in such outstanding construction commitments. As of March 31, 2022, we also had a total of $358 million in lease incentive receivables, recorded as a reduction of our long-term lease obligations on our condensed consolidated balance sheets. Of the total $358 million lease incentive receivable, $280 million was accrued at the commencement of the respective lease but unbilled as of March 31, 2022.
Summary of Cash Flows
Comparison of the three months ended March 31, 2022 and 2021
A summary of our cash flows from operating, investing and financing activities for the three months ended March 31, 2022 and 2021 is presented in the following table:
Three Months Ended
March 31,		Change
(Amounts in millions, except percentages)20222021$%
Cash provided by (used in):
Operating activities$(338)$(541)$203 (38)%
Investing activities(88)(137)49 (36)%
Financing activities22 589 (567)(96)%
Effects of exchange rate changes(1)(7)6 (86)%
Net increase (decrease) in cash, cash equivalents and restricted cash(405)(96)(309)321 %
Cash, cash equivalents and restricted cash - Beginning of period935 854 81 10 %
Cash, cash equivalents and restricted cash - End of period$530 $758 $(228)(30)%
Operating Cash Flows
Cash used in operating activities consists primarily of the revenue we generate from our members and the tenant improvement allowances we receive offset by rent, real estate taxes, common area maintenance and other operating costs. In addition, uses of cash from operating activities consist of employee compensation and benefits, professional fees, advertising, office supplies, utilities, cleaning, consumables, and repairs and maintenance related payments as well as member referral fees and various other costs of running our business.
The $203 million decrease in net cash used in operating activities from the three months ended March 31, 2022 compared to the three months ended March 31, 2021, was primarily attributable to the increase in total revenues of $167 million due to the continued impact of COVID-19 in 2021 and recovery in the first quarter of 2022. The decrease was also driven by net savings achieved for the three months ended March 31, 2022 through the continuation of our operational restructuring program and progress towards our efforts to create a leaner, more efficient organization which drove a decrease in location operating expenses, pre-opening location expenses, and SG&A expenses of $107 million, net of $41 million
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decrease in stock-based compensation expenses, $7 million increase of non-cash GAAP straight-line lease cost and $5 million decrease lease incentive amortization. The decrease in net cash used in operating activities was partially offset by a decrease of $85 million in tenant improvement allowances received during the three months ended March 31, 2022.
Included in our cash flow from operating activities was $41 million of cash used by consolidated VIEs for the three months ended March 31, 2022, compared to $25 million of cash used by consolidated VIEs for the three months ended March 31, 2021.
Investing Cash Flows
The $49 million decrease in net cash used in investing activities from the three months ended March 31, 2022 compared to the three months ended March 31, 2021, was primarily due to $58 million decrease in cash paid for purchases of property and equipment. This decrease in net cash used in investing activities was partially offset by the cash used in acquisitions of $9 million for the acquisition of Common Desk during the three months ended March 31, 2022.
Financing Cash Flows
The $567 million decrease in net cash provided by financing activities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, was primarily due to $600 million in proceeds received from draws on the SoftBank Senior Unsecured Notes for the three months ended March 31, 2021 with no written agreements exist with respectcomparable activity during the three months ended March 31, 2022. The decreases in cash flows provided by financing activities for the three months ended March 31, 2022 compared to such loans to date. To date,the three months ended March 31, 2021, were partially offset by a $34 million decrease in refunds of members’ service retainers.
Off-Balance Sheet Arrangements
Except for certain letters of credit and surety bonds entered into as security under the terms of several of our leases, our unconsolidated investments, and the unrecorded construction and other commitments set forth above, we did not have any borrowings underoff-balance sheet arrangements as of March 31, 2022. Our unconsolidated investments are discussed in Note 10 of the Working Capital Loans.
notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Critical Accounting Estimates
See section entitled "Critical Accounting Estimates, Significant Accounting Policies and New Accounting Standards" included inPart II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Form 10-K filed on March 21, 2021, for the year ended December 31, 2021 for discussion on the Company's critical accounting estimates. There have been no significant changes to our critical accounting estimates since our 2021 Form 10-K
Significant Accounting Policies and New Accounting Standards
See Note 2, Summary of Significant Accounting Policies, of the notes to the Consolidated Financial Statements included in Part II, Item 8 of the Company's Form 10-K filed on March 21, 2021, for the year ended December 31, 2021 for discussion of significant accounting policies.
See sections entitled "Recently Adopted Accounting Pronouncements" and "Recently Issued Accounting Pronouncements" in Note 2 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for discussion of recent accounting pronouncements.
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Contractual Obligations
Registration Rights
The initial stockholders and holders of the Private Placement Warrants are entitled to registration rights pursuant to a registration rights agreement. The initial stockholders and holders of the Private Placement Warrants will be entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by us. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriter a
45-day
option to purchase up to 6,300,000 additional Units to cover any over-allotments, at the Initial Public Offering price less the underwriting discounts and commissions. On August 10, 2020, the underwriter fully exercised the over-allotment option.
The underwriter was entitled to an underwriting discount of $0.20 per unit, or $8.4 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or $14.7 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
In connection with the consummation of the sale of Units pursuant to the over-allotment option on August 13, 2020, the underwriter received an aggregate of $1.26 million in underwriting fees and additional deferred underwriting commissions of approximately $2.2 million.
Critical Accounting Policies
Investments Held in the Trust Account
Our portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in net gain from investments held in Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Shares of conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2021 and December 31, 2020, 43,231,098 and 44,911,184 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the accompanying unaudited condensed consolidated balance sheet.
Net Income (Loss) per Share of Common Stock
Our unaudited condensed consolidated statements of operations include a presentation of income (loss) per share of Class A common stock subject to redemption in a manner similar to the
two-class
method of income (loss) per share. Net income per share of Class A common stock, basic and diluted, is calculated by dividing the investment income earned on the Trust Account, net of applicable franchise taxes, by the weighted average number of Class A common stock outstanding for the periods. Net loss per shares of Class B common stock, basic and diluted, is calculated by dividing the net loss, less income attributable to Class A common stock, by the weighted average number of Class B common stock outstanding for the periods.
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The calculation of diluted net income (loss) per share of common stock does not consider the effect of the warrants issued in connection with the Initial Public Offering and Private Placement since their inclusion would be anti-dilutive.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of its financial instruments, including issued shares purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is
re-assessed
at the end of each reporting period.
We account for the warrants issued in connection with the Private Placement as derivative warrant liabilities in accordance with ASC 815. Accordingly, we recognize the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is recognized in the statements of operations. The fair value of warrants issued by us in connection with the Private Placement has been estimated using Public Warrant trading prices at each measurement date. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. Derivative warrant liabilities are classified as
non-current
liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Recent Accounting Pronouncements
Our management does not believe there are any recently issued, but not yet effective, accounting pronouncements, if currently adopted, that would have a material effect on our financial statements.
Off-Balance
Sheet Arrangements
As of June 30, 2021, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for
non-emerging
growth companies. As a result, the unaudited condensed financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risks
Interest Rate Risk
As of March 31, 2022, there were no loans outstanding under the Company Credit Agreement and the payments due on the outstanding standby letters of credit and the unused portion represent a fixed 1.5% of the amount outstanding and 0.375% of the unused amount. The interest rates on the 2020 LC Facility, the SoftBank Senior Secured Notes, the SoftBank Senior Unsecured Notes, and other loans include fixed rates of interest.
Foreign Currency Risk
The U.S. dollar is the functional currency of our consolidated and unconsolidated entities operating in the United States. For our consolidated and unconsolidated entities operating outside of the United States, we generally assign the relevant local currency as the functional currency, as the local currency is generally the principal currency of the economic environment in which the foreign entity primarily generates and expends cash. Our international operating companies typically earn revenue and incur expenses in local currencies that are consistent with the functional currency of the relevant entity, and therefore they are not subject to significant foreign currency risk in their daily operations. However, as exchange rates may fluctuate between periods, revenue and operating expenses, when converted into U.S. dollars, may also fluctuate between periods. For the three months ended March 31, 2022, we earned approximately 56% of our revenues from subsidiaries whose functional currency is not the U.S. dollar. Although we are impacted by the exchange rate movements from a number of currencies relative to the U.S. dollar, our results of operations for the three months ended March 31, 2022 were primarily impacted by fluctuations in the U.S. dollar-British Pound, U.S. dollar-Euro, U.S. dollar-Japanese Yen, U.S. dollar-South Korean Won and U.S. dollar-Russian Ruble exchange rates.
We hold cash and cash equivalents in foreign currencies to have funds available for use by our international operations. In addition, monetary intercompany transactions that are not of a smaller reporting companylong-term investment nature may be denominated in currencies other than the U.S. Dollar and/or in a different currency than the respective entity’s functional currency. As a result, we are subject to foreign currency risk and changes in foreign currency exchange rates can impact the foreign currency gain (loss) recorded in our condensed consolidated statements of operations relating to these monetary intercompany transactions. As of March 31, 2022, we had a balance of $7 million in cash and cash equivalents, $1.9 billion in various other monetary assets and $0.9 billion in various other monetary liabilities that were subject to foreign currency risk. We estimate that a 10% change in the relevant exchange rates would result in a total net change of approximately $103 million in foreign currency gain or loss on these transactions.
Inflation Risk
Inflationary factors such as defined by Rule
12b-2
increases in the cost of raw materials and overhead costs may adversely affect our results of operations. During the Exchange Actthree months ended March 31, 2022, inflation in the United States rose to its highest level since the Company opened its first location in 2010. Although a large portion of our operating costs are lease costs that are contractual with fixed escalation clauses, a portion of our costs are subject to inflationary pressures including, capital expenditures, a portion of our international real estate portfolio, payroll, and other operating costs. Our inflation-linked leases represent less than 20% of our total portfolio and are primarily located in Latin America and EMEA. Base case in our assumptions was a 3% increase in inflation. For every 1% increase in inflation above that base case, our annual rent expense would increase by $3 million. In Latin America, almost all of our membership agreements provide for inflation indexing, thereby functioning as offsets to any inflation-linked adjustments to rent. In addition, consumables, which is the operating expense most impacted by inflation, represents less than 1% of direct location operating expenses, during the three months ended March 31, 2022. We do not requiredbelieve that inflation has had a material effect on our business, financial condition or results of operations to provide the information otherwise required under this item.date. If our costs were to become subject to significant inflationary pressures, we
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may not be able to fully offset such higher costs through higher membership fees or price increases for services. Our inability or failure to do so could harm our business, financial condition or results of operations.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as such term is defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules
13a-15
(e) and
15d-15
(e) under the Exchange Act) were not effective as of June 30, 2021, due solely to the material weakness in our internal control over financial reporting described in “Management’s Report on Internal Control over Financial Reporting” included in our Annual Report on Form 10K/A as filed with the SEC on May 12, 2021. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Disclosure controls and procedures are designed to ensureprovide reasonable assurance that information required to be disclosed by us in our reports filed or submitted under the Securities Exchange Act reportsof 1934, as amended (the “Exchange Act”) is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is(ii) accumulated and communicated to our management, including our principal executive officerChief Executive Officer and principal financial officer or persons performing similar functions, as appropriateChief Financial Officer, to allow timely decisions regarding required disclosure.
As of March 31, 2022, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2022.
Changes in Internal Control over Financial Reporting
There washas been no change in our internal control over financial reporting that occurred(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three and six months ended June 30, 2021, covered by this Quarterly Report on Form
10-Q
our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, asreporting.
Limitations on Effectiveness of Controls and Procedures
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. In addition, the circumstancesdesign of a control system requires management to make judgments in evaluating the benefits of possible controls and procedures relative to their costs. Our management does not expect that led to the restatement of our financial statements had not yet been identified. Management has implemented remediation steps to address the material weaknessdisclosure controls and to improveprocedures or our internal control over financial reporting. Specifically, we expandedreporting will prevent or detect all error and improvedfraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our review process for complex securities and related accounting standards. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.company have been detected.

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PART II—OTHER INFORMATION
Part II.
Item 1. Legal Proceedings
See the section entitled “Legal Matters” in Note 20 of the notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
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From time to time,
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Item 1A. Risk Factors
There have been no material changes from the Company is involved in legal matters arisingrisk factors disclosed in the ordinary course of business. While management believes that such matters are currently not material, there can be no assurance that matters arising inCompany’s Annual Report on Form 10-K for the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.
year ended December, 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
On August 7,May 10, 2022, WeWork Companies LLC, as co-obligor (the “WeWork Obligor”), the SoftBank Obligor, as co-obligor, Goldman Sachs International Bank, as existing administrative agent and senior tranche administrative agent, Kroll Agency and Trust Services Ltd., as junior tranche administrative agent, and the issuing creditors and letter of credit participants party thereto entered into the Fourth Amendment to the Credit Agreement (the "Fourth Amendment to the Credit Agreement") pursuant to which the existing 2020 we consummatedLC Facility was amended and subdivided into a $1.25 billion senior letter of credit tranche (the "Senior LC Tranche"), which decreases to $1.05 billion in February 2023, and a $350 million junior letter of credit tranche (the "Junior LC Tranche"). The letter of credit under the Initial Public OfferingJunior LC Tranche was issued and drawn for the benefit of 42,000,000 Units.the WeWork Obligor in full upon effectiveness of the Fourth Amendment to the Credit Agreement. The Units soldtermination date of the Junior LC Tranche is November 30, 2023 and the termination date of the Senior LC Tranche is February 9, 2024. The letters of credit issuable under the Senior LC Tranche have substantially similar terms as the existing 2020 LC Facility. The reimbursement obligations under the Junior LC Tranche bear interest at the ABR (as defined in the Initial Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $420 million. UBS Securities LLC acted as sole book-running manager. The securitiesFourth Amendment to the Credit Agreement) plus 5.50% or the Term SOFR Rate (as defined in the offering were registeredFourth Amendment to the Credit Agreement), with a floor of 0.75%, plus 6.50%, at the WeWork Obligor’s option. The reimbursement obligations under the Securities ActJunior LC Tranche are voluntarily repayable at any time, subject to a prepayment fee such that the minimum return to the letter of credit participants under the Junior LC Tranche on registration statements on Form
S-1
(Nos.
333-239941
and
333-240430).
The SEC declared the registration statements effective on August 4, 2020.
Simultaneous withJunior LC Tranche reimbursement obligations is an amount equal to the consummationsum of 6.50% (the Applicable Margin of the Initial Public Offering,Junior LC Tranche reimbursement obligations) and 2.00% of the Company consummatedtotal principal amount of the private placement of an aggregate of 6,933,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, generating total proceed of $10.4 million. The issuance was made pursuantJunior LC Tranche reimbursement obligations, as set forth in the Fourth Amendment to the exemption from registration contained in Section 4(a)(2)Credit Agreement. Obligations of the Securities Act.
On August 10, 2020,WeWork Obligor and its restricted subsidiaries under the underwriters exercisedJunior LC Tranche are subordinated in right of payment to the over-allotment optionobligations under the Senior LC Tranche to purchase an additionalthe extent of 6,300,000 Units at the Initial Public Offering price at $10.00 per Unit and we consummatedvalue of the sale ofcollateral securing such Units on August 13, 2020, generating additional gross proceeds of $63.0 million, and incurring additional offering costs of approximately $3.5 million, inclusive of an additional of approximately $2.2 million in deferred underwriting commissions.
obligations. In connection with the consummation of the sale of additional Units pursuantFourth Amendment to the underwriter’s over-allotment option on August 13, 2020, we sold an additional 840,000 Private Placement WarrantsCredit Agreement, the Company/SBG Reimbursement Agreement was amended to clarify that the Private Placement Warrants Purchasers, generating additional gross proceeds of approximately $1.3 million.
Of the gross proceeds received from the Initial Public Offering and sale of the Private Placement Warrants, including the over-allotment exercise, $483,000,000 was placed in the Trust Account.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form
10-Q.
As of June 30, 2021, after giving effect to our Initial Public Offering and our operations subsequent thereto, approximately $483,071,704 was held in the Trust Account, and we had approximately $506,334 of unrestricted cash available to us for our activitiespayment obligations in connection with identifyingfees and conducting due diligenceexpenses related to the Fourth Amendment to the Credit Agreement are the responsibility of a suitable Business Combination,the Company and for general corporate matters.
not SBG.
23
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Item 6. Exhibits.
Exhibits
Exhibit
Number
No.
Description
10.1
  2.1
10.2
31.1*31.1
Rule 13a-14(a) / 15d-14(a) Certification of Chairman and Co-ChiefChief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a). and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
31.2*
Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a). and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
32*32.2
101The following materials from WeWork Inc.’s quarterly report on Form 10-Q for the quarter ended March 31, 2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021, (iii) Consolidated Statements of Changes in Convertible Preferred Stock, Noncontrolling Interests and Equity for the three months ended March 31, 2022 and 2021, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021, (v) Notes to the Unaudited Condensed Consolidated Financial Statements, and (vi) Cover Page.
101.INS101.SCHXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema DocumentDocument.
101.CALXBRL Taxonomy Calculation Linkbase Document.
101.CAL101.DEFXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentLinkbase.
101.LABXBRL Taxonomy Label Linkbase Document.
101.LAB101.PREXBRL Taxonomy Extension LabelPresentation Linkbase DocumentDocument.
104
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the(formatted as Inline XBRL document)and contained in Exhibit 101).
Signatures
*
These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereuntothereunto duly authorized.
Dated: August 11, 2021WEWORK INC.
BOWX ACQUISITION CORP.
By:
/s/ Vivek Ranadive
Sandeep Mathrani
Sandeep MathraniName:Vivek Ranadive
Chief Executive Officer and Chairman of the Board
Date:Title:May 12, 2022Chairman and
Co-Chief
Executive Officer
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