1. MARTIN STARNES & ASSOCIATES, CPAs, P.A. HICKORY, NC

2. Audit Highlights Unqualified opinion General fund cash (total)$ 6,578,854 General fund revenues$ 10,878,506 General fund expenditures$ 10,692,979

3. Audit Highlights Increase in GF fund balance $ 1,119,381 Fund balance – GF $ 9,945,933 Unreserved fund balance $ 6,859,833 Unreserved fund balance is 64% of general fund expenditures.

4. Audit Highlights 2007 Property tax revenues $ 4,482,387 2006 Property tax revenues $ 4,440,726 2007 Collection rate 99.96 % 2006 Collection rate 99.97%

5. Fund Balance History

6. Property Valuation History

7. Comparative Averages for NC Municipalities Without Electrical Systems and Permanent Population of 2,500 – 9,999 Town Nags Head Average Available GF fund bal. $ 6,859,833 $ 2,199,906* Expenditures $ 10,692,979 $ 3,512,822* * Reference: LGC memos # 1050 (6/30/06 averages) Note: Town of Nags Head’s figures are as of 6/30/07, except as noted. Amounts are not adjusted for coastal/seasonal adjustments in population from tourism.

8. Comparative Averages for NC Municipalities Without Electrical Systems and Permanent Population of 2,500 – 9,999 Town of Nags Head Average Property Tax Rate.1475%.2921%* Tax Collection %’s 99.96% 96.72%* * Reference: LGC memos # 1050 (6/30/06 averages) Note: Town of Nags Head’s figures are as of 6/30/07, except as noted. Amounts are not adjusted for coastal/seasonal adjustments in population from tourism.

9. Net Cost of Services Provided – Governmental Activities

10. General Fund Revenues

11. General Fund Revenues 2006 and 2007

14. General Fund Expenditures

15. General Fund Expenditures 2006 and 2007

17. Water Fund Operating revenues 2006 $ 2,556,310 Operating revenues 2007 $ 2,636,011 2006 Operating Loss $ 223,923 2007 Operating Loss $ 169,561

18. Storm Water Fund Operating revenues 2006 $ 110,796 Operating revenues 2007 $ 141,620 2006 Operating Income $ 10,083 2007 Operating Income $ 34,278

19. MARTIN STARNES & ASSOCIATES, CPAs, P.A. HICKORY, NC