ZST Digital Networks, Inc. Comments on Recent Market Speculation and Issues Letter to Shareholders

ZHENGZHOU, China, April 25, 2011 /PRNewswire-Asia-FirstCall/ -- ZST Digital Networks, Inc. (NASDAQ: ZSTN) ("ZST" or the "Company"), a major developer, manufacturer and supplier of digital and optical network equipment to cable system operators and provider of GPS tracking devices and support services for transport-related enterprises in China, announces that its Chairman and Chief Executive Officer, Mr. Zhong Bo, has issued a letter to shareholders in response to short-seller allegations regarding the Company's operations, financial disclosure and transparency. The full text of the letter is provided below and can also be accessed on the company's website at www.zstdigital.com/english.  

The Company has received numerous inquiries from investors seeking further insight into the recent market speculation and share price volatility, which it believes are a result of targeted efforts on behalf of short-sellers to reduce ZST's share price and thereby profit financially. The Company believes that the allegations made against it by certain market participants are baseless and without merit. The Company's financial position and operations are fundamentally sound, and it continues to be well positioned to benefit from the growth opportunities in the IPTV and commercial GPS markets in Henan Province. The Company is in the midst of evaluating various legal options with respect to such baseless statements.

Chairman's Letter

April 22, 2011

Dear Shareholders,

I am writing to address shareholder questions that have emerged following some very targeted negative online media commentary. These accusations are being circulated by individual investors who are short-sellers, which is to say that they benefit financially if our stock price declines. There are no facts to support these accusations and I believe many of our sophisticated institutional investors continue to support us by holding positions in our Company.

ZST Digital Networks is a major developer, manufacturer and supplier of digital and optical network equipment to cable system operators and provider of GPS tracking devices and support services for transport-related enterprises in Henan Province in the People's Republic of China. We are well positioned to take advantage of the tremendous growth opportunities in one of the fastest growing economies in the world. Our year-over-year net income growth for 2010, in financial statements certified by BDO China Li Xin Da Hua CPA Co., Ltd, a BDO Member Firm, was 117%. We look forward to continue to deliver such tangible results for our shareholders, and to focus on strong top and bottom line growth.

I have never sold a single share of ZST Digital Networks in our Company's history because I believe in the long term growth potential for our business, as a number of our initiatives are supported by local government. I am confident in our track record of success, including the continued expansion of our GPS platform. I would like to welcome our investors, current and potential, to visit our headquarters located in Zhengzhou City to learn more about our operations and will continue to provide honest, factual information to our investors and the market as a whole.

I thank you for your continued support and confidence in ZST Digital Networks; we will communicate updates as appropriate and are looking forward to putting this matter behind us in an expeditious manner.

Sincerely,

ZST Digital Networks, Inc. (Nasdaq: ZSTN) is a China-based company, principally engaged in (1) supplying digital and optical network equipment and providing installation services to cable system operators in China and (2) providing GPS location and tracking services to local logistics and transportation companies in China. The Company has developed a line of IPTV devices that are used to provide bundled cable television, Internet and telephone services to residential and commercial customers. The Company has assisted in the installation and construction of over 400 local cable networks in more than 90 municipal districts, counties, townships, and enterprises. The Company has also launched a commercial line of vehicle tracking devices utilizing our GPS tracking technologies and support services for transport-related enterprises to track, monitor and optimize their businesses. For more information about ZST Digital Networks, Inc., please visit www.zstdigital.com/english.