Burger King Mclamore Foundation, Inc. Financial

BURGER KING MCLAMORE FOUNDATION, INC.

FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

TABLE OF CONTENTS

INDEPENDENT AUDITORS' REPORT...... …….. 1-2

FINANCIAL STATEMENTS

Statement of Financial Position for the year ended December 31, 2016...... 3

Statement of Financial Position for the year ended December 31, 2015……….. 4

Statement of Activities for the year ended December 31, 2016………………… 5

Statement of Activities for the year ended December 31, 2015...... 6

Statements of Cash Flows for the years ended December 31, 2016 and 2015. . . 7

Notes to Financial Statements...... …….. 8-19

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of Burger King McLamore Foundation, Inc. Miami, Florida

We have audited the accompanying statements of financial position of Burger King McLamore Foundation, Inc. (the “Foundation”) (a nonprofit organization) which comprise the statements of financial position as of December 31, 2016 and 2015, and the related statements of activities, and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Foundation as of December 31, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

CERTIFIED PUBLIC ACCOUNTANTS Coral Gables, Florida May 8, 2017

BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 1 – ORGANIZATION Burger King McLamore Foundation, Inc. (the “Foundation”) was established in October 2005 and incorporated in the State of Florida as a 501(c) (3) organization. The Foundation was organized as a way for the BURGER KING® system to make a difference in the communities in which it operates.

The Foundation supports education and disaster assistance. Its focus is on improving education and offering scholastic opportunities by providing scholarship awards that honor student’s scholastic achievements and community service efforts. It also focuses on providing disaster assistance through direct grants to service organizations that focus on disaster support and victims who experience unexpected hardships. The Foundation is designed to engender greater support by leveraging the power of the BURGER KING® brand to gather and distribute funds worldwide. Foundation contributions come from voluntary contributions made by Burger King Corporation (“BKC”) employees, BURGER KING® franchisees, vendors and restaurant guests.

The BK℠ Family Fund (the “Fund”) provides immediate, short-term financial assistance to victims of a natural disaster, medical hardship, death, or other emergency hardship situations through grant amounts ranging from $100 to $3,000. The Fund is not intended to replace personal or homeowners insurance, federal disaster relief or other types of aid, but rather to assist on an immediate and short-term basis. Fund donations come from voluntary contributions made by BKC employees and BURGER KING® franchisees.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Statement Presentation The accompanying Statement of Financial Position, Statement of Activities and Cash Flow (collectively “Financial Statements”) of the Foundation have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Financial Accounting Standards Board (“FASB”) implemented the Accounting Standards Codification (“ASC”) which establishes FASB ASC as the source of authoritative U.S. accounting and reporting standards for nongovernmental entities. Presented below is a summary of significant accounting principles followed in the preparation of the accompanying financial statements.

These Financial Statements are presented in accordance with FASB ASC 958-205 Presentation of Financial Statements. In accordance with these standards, the Foundation is required to classify its resources into three separate classes of net assets: unrestricted, temporarily restricted, and permanently restricted. In addition, the Foundation is required to present a statement of cash flows.

Unrestricted Unrestricted net assets consist of net assets that are neither permanently nor temporarily restricted by donor- imposed stipulations. Management or the governing board has discretionary control to use these funds in carrying on the mission of the Foundation.

Temporarily Restricted Temporarily restricted net assets represent net assets with a donor-imposed restriction that is satisfied either by passage of time or by actions of the Foundation.

When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is fulfilled, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions.

Permanently Restricted Permanently restricted net assets result primarily from contributions that contain a donor-imposed stipulation that neither expires within a certain period of time nor can be fulfilled or otherwise removed by actions of the Foundation.

8 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents Cash and cash equivalents are comprised of interest-bearing cash accounts. Short-term, highly liquid investments are treated as investments rather than cash equivalents and are included in investments. Investments are presented in the Statement of Financial Position at their fair market values.

Investments The Foundation reports their investments as required by the Investments-Debt and Equity Securities Subtopic FASB ASC 958-320. Under FASB ASC 958-320, a not-for-profit organization is required to report investments in equity securities with readily determinable fair values and all investments in debt securities at fair value, with net unrealized gains and losses included in the statements of activities.

Income Tax The Foundation is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Accordingly, no provision for federal or state income taxes has been made in the accompanying financial statements. The Foundation recognizes and measures tax positions taken or expected to be taken in its tax return based on their technical merit and assesses the likelihood that the positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. Interest and penalties on tax liabilities, if any, would be recorded in interest expense and other non-interest expense, respectively.

The U.S. Federal jurisdiction and Florida are the major tax jurisdictions where the Foundation files tax returns. The Foundation is generally no longer subject to U.S. Federal or State examinations by tax authorities for years before 2013.

Contributions The Foundation records contributions as required by the Revenue Recognition Subtopic, FASB ASC 958-605. FASB ASC 958-605 generally requires that contributions received and made, including unconditional promises to give, be recognized as revenues and expenses, respectively, in the period.

Unconditional pledges to give cash and other assets are reported at fair value at the date the pledge is received to the extent it is estimated to be collectible by the Foundation. Pledges received with donor restrictions that limit the use of the donated assets are reported as temporarily or permanently restricted support.

FASB ASC 958-605 also requires pledges receivable due in excess of one year to be discounted to present value. Pledges are classified as unrestricted and temporarily restricted.

The Foundation’s contributions consist primarily of voluntary donations from BKC employees, BURGER KING® restaurant guests, and from other interested organizations such as franchisees, vendors, and suppliers.

9 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Donated Goods and Services The Foundation records the value of donated goods and services when there is an objective basis available to measure the value. Donated items are reflected as support in the accompanying financial statements at the fair market values at the date of receipt. However, for donated items that do not meet the criteria in FASB ASC 958-605 for recognition, the value is neither recorded nor recognized. For the years ended December 31, 2016 and 2015, donated goods and services amounted to approximately $199,000 and $175,000, respectively.

Significant Contributions and Receivables Significant contributions are defined as any contribution greater than 10% of the total support and revenues. For the years ended December 31, 2016 and 2015, the Foundation received no contributions in excess of 10% of the total support and revenues.

Credit Risk Financial instruments, which potentially subject the Foundation to concentrations of credit risk, consist principally of cash and investments. The Foundation tries to limit the amount of its credit risk by placing its cash with highly liquid financial institutions. At times during the years ended December 31, 2016 and 2015, the Foundation held cash in excess of federally insured limits. To reduce its credit risk with respect to investment, the Foundation directs the investments of its funds in accordance with an established investment policy and in conjunction with investment guidelines.

Net Assets Released From Restrictions Net assets released from restrictions amounted to $4,111,056 and $3,855,182 due to expiration of time or purpose restrictions for the years ended December 31, 2016 and 2015, respectively.

Functional Allocation of Expenses The costs of providing the various programs and activities have been summarized on a functional basis as disclosed in Note 10. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

Reclassification Certain reclassifications have been made to the 2015 financial statements presentation to correspond to the current year’s format. Total Net Assets and Statement of Activities are unchanged due to these reclassifications.

Subsequent Events The Foundation has evaluated subsequent events through May 8th, 2017, which is the date the financial statements were available to be issued.

10 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 3 – PLEDGES RECEIVABLE, NET Pledges receivable include the following unconditional promises to give as of December 31, 2016 and 2015:

Amounts due in: 2016 2015 Less than one year$ - $ 125,000 One to five years - - Total - 125,000 Less: present value discount - - Total pledges receivable, net$ - $ 125,000

NOTE 4 – CONTRIBUTIONS RECEIVABLE, NET Contributions receivable as of December 31, 2016 and 2015 are summarized as follows:

2016 2015 Less than one year$ 944,210 443,384 Total 944,210 443,384

Less: Allowance for uncollectible accounts (311,000) (1,078) Contributions Receivables, net$ 633,210 $ 442,306

NOTE 5 – INVESTMENTS The Foundation has investments held in an account at a licensed brokerage firm. Investments at December 31, 2016 and 2015 are summarized as follows:

2016 2015 Fair Fair Value Value Fixed income 6,184,322 5,060,257 Domestic equity 4,752,798 6,029,416 International equity 3,805,309 2,215,934 Alternative assets 3,528,840 2,969,200 Total investments$ 18,271,269 $ 16,274,807

The following schedule summarizes the investment return and its classification in the Statement of Activities for the years ended December 31, 2016 and 2015, respectively:

2016 2015 Investment income$ 302,217 $ 359,192 Net realized and unrealized gain (loss) 665,295 (759,370) Total $ 967,512 $ (400,178)

11 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 5 – INVESTMENTS (Continued) Net Asset Value Per Share The Foundation’s brokerage firm uses net asset value (“NAV”) to determine the fair value of all of the underlying investments which (a) do not have a readily determinable fair value and (b) prepare their financial statements consistent with the measurement principles of an investment company or have the attributes of an investment company.

Per Accounting Standards Update No. 2009-12, the following table lists such investments for the years ended December 31, 2016 and 2015:

December 31, Purchases, Sales, Realized and December 31, 2015 Issuances, net Unrealized Losses 2016 Alternative Assets: Hedge Funds$ 2,001,252 $ (308,364) $ (48,141) $ 1,644,747 Total$ 2,001,252 $ (308,364) $ (48,141) $ 1,644,747

December 31, Purchases, Sales, December 31, 2014 Issuances, net Unrealized Losses 2015 Alternative Assets: Hedge Funds$ 2,071,002 $ - $ (69,750) $ 2,001,252 Total$ 2,071,002 $ - $ (69,750) $ 2,001,252

Investment strategies a - The fund seeks to ladder portfolios across the intermediate sector of the yield curve and generally targets approximately 10% of the portfolio to mature each year. b - The fund is comprised of a diversified portfolio of high yield, fixed income securities which seeks a high level of current income and may also consider the potential for capital appreciation.

NOTE 6- FAIR VALUE MEASUREMENTS FASB ASC 820 requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Observable inputs that reflect quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly.

Level 3 – Unobservable inputs that are supported by little or no markets activity and that are significant to the fair value of the assets.

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2016 and 2015.

Equity securities Investments in equity securities are valued at quoted prices of active markets and are classified as Level 1 and 2 within the fair value hierarchy.

12 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 6- FAIR VALUE MEASUREMENTS (Continued) Fixed income and Alternative Assets The fair value of fixed income securities, real estate, and hard assets are determined using the net asset value (NAV) per share as a practical expedient. The investments are redeemable on a daily basis and as such are classified as Level 1 and 2 within the fair value hierarchy.

Hedge Funds The fair value of hedge funds is determined using the net asset value (NAV) per share 10 to 15 business days following the last day of the month. As such, hedge funds are classified as Level 3 within the fair value hierarchy. Financial instruments measured at fair value on a recurring basis are summarized below: Fair Value Measurements Using: Quoted Prices in Significant Other Significant Other Active Markets for Observable Unobservable Identical Assets Inputs Inputs Description December 31, 2016 (Level 1) (Level 2) (Level 3) Equity securities: Domestic 4,752,798 4,752,798 - - International 3,805,309 3,805,309 - - Fixed income: Domestic 6,184,322 6,184,322 - - Alternative assets: Hedge Funds 2,156,145 511,398 - 1,644,747 Real Estate 1,052,195 1,052,195 - - Hard Assets 320,500 320,500 - - Total investments$ 18,271,269 $ 16,626,522 $ - $ 1,644,747

Fair Value Measurements Using: Quoted Prices in Significant Other Significant Other Active Markets for Observable Unobservable Identical Assets Inputs Inputs Description December 31, 2015 (Level 1) (Level 2) (Level 3) Equity securities: Domestic 6,029,416 6,029,416 - - International 2,215,934 2,215,934 - - Fixed income: Domestic 5,060,257 5,060,257 - - Alternative assets: Hedge Funds 2,158,618 157,366 - 2,001,252 Real Estate 636,680 636,680 - - Hard Assets 173,902 173,902 - -

Total investments$ 16,274,807 $ 14,273,555 $ - $ 2,001,252

13 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 6- FAIR VALUE MEASUREMENTS (Continued) The following table set forth a summary of changes in the fair value of the Foundation’s level 3 investments for the years ended December 31, 2016 and 2015:

NOTE 7 – TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are composed of amounts received by the Foundation whose use was limited by either the passage of time or stipulations set forth by the donor. As of December 31, 2016 and 2015, temporarily restricted net assets consisted of the following:

2016 2015 BK Scholarship Fund$ 5,115,923 $ 4,561,259 BK Family Fund 45,397 (6,610) Restricted to Regions 567,315 671,750 $ 5,728,635 $ 5,226,399

These funds are held as follows:

2016 2015 Cash and cash equivalents$ 1,026,538 $ 1,249,637 Contributions and prepaid expenses 319,578 426,474 Investments 3,448,679 2,647,335 Due from funds 942,271 934,672 Accounts Payable (8,431) (31,719) $ 5,728,635 $ 5,226,399

14 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 8 – PERMANENTLY RESTRICTED NET ASSETS BURGER KING/McLamore Foundation, Inc. (d/b/a BURGER KING Scholars) was a nonprofit organization with the purpose to encourage, aid and promote the education of young people. The BURGER KING/ McLamore Foundation, Inc., an unrelated organization to the Foundation, was dissolved on January 13, 2009. Prior to its dissolution, the organization entered into a grant agreement (the “Agreement”) with the Foundation. Pursuant to the Agreement, the Foundation was awarded a grant in the amount of $4,500,000 of which $4,399,415 were received.

These funds are to be utilized for charitable and educational purposes as stipulated by the Agreement. It is intended that the grant be managed by the Foundation as an endowment for the benefit of the Foundation. Commencing 15 years from October 22, 2007, the date of the Agreement, the Foundation may use up to 5% of the corpus of the grant each year to fund post-secondary school educational scholarship programs in the name of James W. McLamore and any related operating expense.

Permanently restricted net assets are composed of amounts received by the Foundation whose use is limited by donor-imposed stipulations that neither expire with the passage of time nor can be fulfilled or otherwise removed by actions of the Foundation. As of December 31, 2016 and 2015, there were permanently restricted net assets of $4,399,415.

These funds are held as follows:

2016 2015 Investments$ 4,936,824 $ 4,954,857 Cash 138,041 34,574 Due to funds (675,450) (590,016) $ 4,399,415 $ 4,399,415

NOTE 9- ENDOWMENTS The Foundation’s endowment consists of individual funds established for a variety of purposes. Its endowment includes both donor-restricted endowment funds and funds designated by the Board of Directors to function as endowments. Although these board-designated funds are included in unrestricted net assets, management and the Board of Directors segregated these funds so that the principal is designated not to be expended without Board approval. As required by accounting principles generally accepted in the United States of America, net assets associated with endowment funds, including funds designated by the Board of Directors to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions.

Interpretation of Relevant Law The State of Florida enacted the Florida Uniform Prudent Management of Institutional Funds Act (“FUPMIFA”) effective July 1, 2012, the provisions of which apply to endowment funds existing on or established after that date. The Foundation has interpreted the FUPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by FUPMIFA.

15 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 9- ENDOWMENTS (Continued)

In accordance with the FUPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

(1) The duration and preservation of the fund (2) The purposes of the Foundation and the donor-restricted endowment fund (3) General economic conditions (4) The possible effect of inflation and deflation (5) The expected total return from income and the appreciation of investments (6) Other resources of the Foundation (7) The investment policies of the Foundation

For the years ended December 31, 2016 and 2015, the Foundation has elected not to add appreciation for cost of living or other spending policies to its permanently restricted endowment for inflation and other economic conditions.

Endowment net asset composition by type of fund as of December 31, 2016 was as follows: Board Designated Temporarily Permanently 2016 Unrestricted Restricted Restricted Total Donor-restricted endowment funds$ - $ 675,450 $ 4,399,415 $ 5,074,865 Board designated endowment funds 9,715,869 - - 9,715,869 Total Funds$ 9,715,869 $ 675,450 $ 4,399,415 $ 14,790,734

Endowment net asset composition by type of fund as of December 31, 2015 was as follows: Board Designated Temporarily Permanently 2015 Unrestricted Restricted Restricted Total Donor-restricted endowment funds$ - $ 590,016 $ 4,399,415 $ 4,989,431 Board designated endowment funds 8,062,581 - - 8,062,581 Total Funds$ 8,062,581 $ 590,016 $ 4,399,415 $ 13,052,012

16 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

Note 9 ENDOWMENTS (Continued)

Changes in endowment net assets for the year ended December 31, 2016 was as follows:

Board Designated Temporarily Permanently 2016 Unrestricted Restricted Restricted Total Endowment net assets, beginning of year$ 8,062,581 $ 590,016 $ 4,399,415 $ 13,052,012

Investment return: Investment income 142,899 93,815 - 236,714 Net appreciation (realized and unrealized) 295,701 213,055 - 508,756 Total investment return 438,600 306,870 - 745,470

Contributions 1,236,779 - - 1,236,779

Appropriation of endowment assets for expenditure (22,091) (221,436) - (243,527)

Endowment net assets, end of year$ 9,715,869 $ 675,450 $ 4,399,415 $ 14,790,734

17 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 9- ENDOWMENTS (Continued) Changes in endowment net assets for the year ended December 31, 2015 was as follows: Board Designated Temporarily Permanently 2015 Unrestricted Restricted Restricted Total Endowment net assets, beginning of year$ 7,872,518 $ 921,717 $ 4,399,415 $ 13,193,650

Investment return: Investment income 162,224 122,623 - 284,847 Net appreciation (realized and unrealized) (366,834) (259,881) - (626,715) Total investment return (204,610) (137,258) - (341,868)

Contributions 416,434 - - 416,434

Appropriation of endowment assets for expenditure (21,761) (194,443) - (216,204)

Endowment net assets, end of year$ 8,062,581 $ 590,016 $ 4,399,415 $ 13,052,012

Funds with Deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donors or FUPMIFA require the Foundation to retain as a fund of perpetual duration. In accordance with GAAP and the Board of Directors interpretations, deficiencies of this nature are reported in temporarily restricted net assets. There were no such deficiencies as of December 31, 2016 and 2015.

NOTE 10- RELATED PARTY TRANSACTIONS BKC provides significant in-kind support to the Foundation, which enables the Foundation to operate. Such in- kind support includes corporate office space, BKC employees assigned to the task of providing general support, processing and distribution of grants, and other ancillary infrastructure support. These donated services were valued at $199,039 and $174,996 for the years ended December 31, 2016 and 2015.

In addition, $211,675 and $238,587 is owed to the Foundation from BKC, and are included in contribution receivables in the Statement of Financial Position at December 31, 2016 and 2015, respectively. Amounts owed by the Foundation to BKC were $79,223 and $71,681, and are included in accounts payable and accrued expenses in the Statement of Financial Position at December 31, 2016 and 2015, respectively.

18 BURGER KING MCLAMORE FOUNDATION, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 11 – FUNCTIONAL EXPENSES The Foundation incurred the following expenses for the year ended December 31, 2016 and 2015:

2016 Program Services Supporting Services Management Fund Expenses Education and General Raising Total Bank fees$ - $ 40,739 $ - $ 40,739 Bad debt expense - - 311,200 311,200 Advertising 73,896 27,146 8,847 109,889 Professional services - 92,775 - 92,775 Grants 3,740,877 - - 3,740,877 Legal services 523 569 - 1,092 Office expense 99,622 144,237 33,027 276,886 Special events - - 590,769 590,769 In-kind services - 199,039 - 199,039 Travel 5,676 - 3,973 9,649 $ 3,920,594 $ 504,505 $ 947,816 $ 5,372,915

2015 Program Services Supporting Services Management Fund Expenses Education and General Raising Total Bank fees$ - $ 17,901 $ - $ 17,901 Advertising 35,369 16,898 12,741 65,008 Professional services 190,925 105,669 - 296,594 Grants 3,359,771 - - 3,359,771 Legal services - 158 - 158 Office expense 100,583 152,860 68,041 321,484 Special events - - 493,077 493,077 In-kind services - 174,996 - 174,996 Travel 6,751 - 2,233 8,984 Total expenses$ 3,693,399 $ 468,482 $ 576,092 $ 4,737,973

NOTE 12 – COMMITMENTS Every year, the Foundation awards $150,000 to three (3) students, a $50,000 conditional scholarship per student. The $50,000 James McLamore Whopper scholarship is paid in four (4) annual installments of $12,500 per student. The four year commitment with the student and educational institution is dependent upon the student successfully maintaining a minimum grade point average and class standing.