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For a printable copy of the letter below, click here.



Forum Report: North State Telecommunications Corporation


Request for Management View of Responsibilities to Respect Shareholder Questions

The letter copied below was sent on Friday to the chairman of North State's board of directors inviting his clarification of management's view of their responsibilities to understand and respond to investor interests.

The company's management had not responded to the questions that shareholders submitted in the March survey report or to shareholder requests that issues summarized in an April 4 letter be addressed at the annual meeting. There has also been no response of any kind to the Forum's May 3 letter asking management to consider alternatives such as a preferred stock exchange offer for long-term shareholders who cannot prudently expose their capital and income to management's recently undertaken risks of technology competition.

In this context, concerns were raised last week by a local news report quoting the company's chief operating officer as saying that the shareholder submission of questions through the Shareholder Forum "doesn’t represent 'a reputable way' to communicate with management," and that the "vast majority of North State shareholders ... are pleased with the management and the company’s direction."

The company's chairman was asked to let us know within a week if management intends to respond to any of these shareholder interests.

GL – June 20, 2011


Gary Lutin

Chairman, The Shareholder Forum

c/o Lutin & Company, 575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335



The Shareholder Forum

c/o Lutin & Company

575 Madison Avenue – 10th Floor, New York, New York 10022

Telephone: (212) 605-0335


June 17, 2011



By email


Mr. C. Hayden McKenzie

Chairman, Board of Directors

North State Telecommunications Corporation

111 North Main Street

High Point, North Carolina 27260



Dear Mr. McKenzie:

As you probably know, an article was published earlier this week by The High Point Enterprise reporting statements of a senior North State executive that suggested he did not consider the expressed interests of your company’s shareholders to be relevant.[1] This report was especially disappointing in the context of evident concerns of your investors, as well as your community, about your plans for North State’s transformation from a telephone service utility to a technology innovator.

Please let me know if you wish to clarify the position of North State’s management, and particularly its board of directors, concerning your responsibilities to understand and respond to investor interests. I will appreciate your reply by the end of next week, even if it is only with advice that you need more time.

Please also tell me by the end of next week if you intend to respond to the Forum’s April 4, 2011 request that you address shareholder questions[2] and to our May 3, 2011 request that you address alternatives to limit investor risk.[3]

The Forum will of course distribute any statements you want to provide for your shareholders.


The Shareholder Forum


Gary Lutin, Chairman

is managed by

The Shareholder Forum, Inc.



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.

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