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Initiation of Program for North State Telecommunications

The Shareholder Forum is initiating a program to address what appears to be more than a 50% value enhancement opportunity for investments in North State Telecommunications Corporation.* The issues that have been identified are presented in the summary copied below, and a Forum web site for the program has been established at this address for reports and reference material:

Your questions and comments will be welcomed. Forum participants who are familiar with the company, including investors as well as the company’s management, are encouraged to offer advice during the next week to help us focus on the interests that will be considered important to the full range of North State’s shareholders.

GL – November 12, 2010


Gary Lutin

Chairman, The Shareholder Forum

c/o Lutin & Company

575 Madison Avenue, 10th Floor

New York, New York 10022

Tel: 212-605-0335



* NORSA (Pink Sheets): Class A (voting) common stock, 1,407,767 shares issued and outstanding as of the most recent annual report for 2008; NORSB (Pink Sheets): Class B (non-voting) common stock, 894,801 shares issued and outstanding as of 2008.




Forum Program Summary

North State Telecommunications Corporation

Shareholders of North State Telecommunications Corporation have asked the Forum to address investor interests in alternative strategies for maximizing long term value, stimulated partly by an independent expert’s analysis[1] concluding that

►either public listing or a sale of the company could be expected to generate immediately realizable value of at least 50% more than the $80 per share highest reported trading price of the company’s common stock during the three months before the start of this program, and possibly greater than a 150% premium;[2] and

the current value of the company can be expected to decline significantly over the next five years as earnings are reduced by technology-driven competitive conditions and potential buyers are eliminated in the continuing process of industry consolidation.

The report’s conclusions suggest shareholder consideration of these questions:

  1. What is the likely range of long-term, risk-adjusted value realizable from continuing stand-alone management of the company?

  2. What is the likely range of value realizable from the company’s operations if combined with those of other companies?

  3. What is the likely range of value realizable from an actively managed “auction” sale?

The company’s management will be asked to provide shareholders with the information they need to evaluate these alternatives, including (a) sufficient explanations of the strategies and supporting analyses on which management’s expectations are based and (b) comments on the recent shareholder-commissioned independent analysis and any other expert views that may be worthy of investor attention. Following standard Forum practice allowing participants to communicate anonymously,[3] shareholders will be able to ask questions and offer views to the company’s management, as well as to other shareholders.

After management has had an opportunity to offer its explanations and answer any shareholder questions, the Forum will report views offered by shareholders concerning any issues relating to their decisions about capital commitment and voting alternatives.

November 12, 2010

Forum chairman:

Gary Lutin

Lutin & Company, 575 Madison Avenue, New York, New York 10022

Telephone: 212-605-0335




[2] According to the Balhoff & Williams report referenced above, the total market value of the company if publicly traded would be in the range of $278 million to $310 million, or approximately $120 to $135 per share of common stock based on the 2.3 million shares the company reported outstanding in its most recently released annual report (for the 2008 fiscal year). Balhoff & Williams also reported that comparable company transactions suggested a minimum $283 million and maximum $490 million value, or from $123 to $213 per share, for a sale of the company.

[3] See the summary of Forum policies in the box at the bottom of each page in this website.



This Forum program is open to all shareholders of North State Telecommunications Corporation, and to any fiduciaries or professionals concerned with their investment decisions. Participation is free of charge, according to the Forum's standard Conditions of Participation.

The purpose of the program is to provide shareholders with access to information and a free exchange of views relating to their consideration of issues described in the Forum Summary. As stated in the Conditions, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants. Forum polices are intended to support anonymous communication, and provide that participants will not be identified or quoted without their explicit permission.

Inquiries and requests to be included in the Forum's distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.