1. Audit Presentation Fiscal year ending June 30, 2012

2. Audit Report Unqualified The financial statements present fairly, in all material respects, the financial position of the governmental activities, the discretely presented component unit and each major fund for the Town of Topsail Beach, as of June 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof and respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. This represents the highest level of assurance.

3. Financial Highlights Assets exceeded liabilities by $8,371,405 Available fund balance for the General Fund of $2,482,097, or 45.96% of total General Fund Expenditures. Total Net Assets increased by $1,038,410, primarily due to decreases in governmental activities expenses.

4. General Fund Revenues and Expenditures

5. General Fund Fund Balance Available

6. General Fund- Fund Balance Available As A Percentage of Expenditures

7. Water Fund Revenues and Expenditures

8. Water Fund Fund Balance Available

9. Water Fund- Fund Balance Available As A Percentage of Expenditures

10. Cash

11. Long-Term Debt

12. Net Tax Levy

13. Tax Collection Rate

14. Other Matters Appreciation of cooperation and assistance extended by Connie Forand, Finance Officer, and other members of the Finance Department to us in successful completion of the audit. Any questions or comments, please contact: Wade Greene, CPA S. Preston Douglas & Associates, LLP 122 Memory Plaza Post Office Drawer 860 Whiteville, NC 28472 Email: wgreene@spdouglas.com Telephone: (910) 642-6692