ZST Digital Networks, Inc. Issues Letter to Shareholders

ZHENGZHOU, China, April 19, 2012 /PRNewswire-Asia-FirstCall/ -- ZST Digital Networks, Inc. ("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, today issued an update to investors on recent developments at the Company.  As previously announced, ZST Digital and BDO China Dahua, CPA Co. Ltd. ("BDO China"), the Company's former auditor, had a disagreement over an audit procedure during the fiscal year ended December 31, 2011.  Despite its best efforts to cooperate in full with the auditor, the Company was not able to reach a consensus with BDO China. As a result, BDO China effectively resigned as the company's auditor on March 26th, 2012, and the Company was unable to submit its annual report for the year ended December 31, 2011 on schedule.  The Company regrets the outcome of this situation. 

Mr. Zhong Bo, the Company's Chairman and Chief Executive Officer said, "I would like to express my sincere gratitude for your continued support during this challenging period.  Since the company was founded, we have delivered steady and profitable growth, supported by favorable local government policies, and we have run our business in an ethical manner with a focus on transparency and disclosure. All of these factors have helped us to not only win the support of the local government but the trust and appreciation of our customers. We have built a solid foundation and our business remains fundamentally sound.  We firmly believe that the recent challenges we have faced are temporary in nature, and we have confidence in the continued leadership of our Board of Directors and management team.

"As a first step to bring the Company back in compliance with our financial reporting obligations, we are seeking to hire a reputable independent registered accounting firm. We again thank you for your continued support, and we will continue to work tirelessly for the benefit of our shareholders, customers and employees." 

About ZST Digital Networks, Inc.

ZST Digital Networks, Inc. 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: http://www.zstdigital.com/english.

"Safe Harbor" Statement

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes", "expects", "anticipates" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties, including, but not limited to, risks related to the trading in our common stock on the over-the-counter market after delisting, techniques employed by manipulative short sellers in Chinese small cap stocks that may drive down the market price of our common stock; our ability to maintain and increase revenues and sales of our products; our ability to develop and market new products; our reliance on access to the China Unicom wireless network for providing our GPS services; our ability to meet liquidity needs; competitive nature of our industry; our ability to efficiently establish city-wide GPS tracking platforms, including the project for Zhumadian; our strategic investments and acquisitions; compliance and changes in the laws of the People's Republic of China (the "PRC") that affect our operations; noncompliance of the SAIC reports filed for our PRC operating subsidiary, Zhengzhou ZST, with applicable PRC regulations and related risk of fines, penalties, and/or revocation of our business license; our ability to obtain all necessary government certifications and/or licenses to conduct our business; vulnerability of our business to general economic downturn, especially in the PRC; adverse capital and credit market conditions; and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.  Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the factors discussed above and in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. All information in this press release is as of the date of this release and the Company undertakes no duty to update this information.

Contacts:

SOURCE ZST Digital Networks, Inc.

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