7ZST_Logo.jpgAs the market did not seem to appreciate the positive first quarter results filed in May, last week the market finally reacted to the promotional support that tries to change the long-term direction of ZST Digital Networks, Inc. (NASDAQ:ZSTN, ZSTN message board) stock price.

Although no additional demand was observed, ZST stock has a moderate 4.57% increase on Friday. But it looks like the market is still indecisive and a considerable volume spike toward the end of the trading session managed to raise the price, which then closed at $4.81. After the recent operational improvements during this year's first quarter got hardly reflected in the market valuation, ZST must have decided that the investor awareness for their stock has to be pushed forward.

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On Friday, the promotion disclosure was made again, which said that ZST Digital has engaged a stock promoting company to make investors notice the high potential of ZST stock.

The promoting company hired provides investor awareness services and equity research reports, and ZST paid for twelve months of these services with 13,000 shares under Rule 144, along with $27,000 in cash. The shares provided to the promoter do not really raise concern, as they are restricted and cannot be sold out immediately, though investors should consider that the promoter additionally discloses that some of their employees and affiliates may have positions in the stock being promoted.

It seems that ZST stock has been promoted since the beginning of March, and despite of the implied conflict of interests, there was a jump in the price initially. Though, afterwards the stock had lost much of its value up to date and now signals some chances to reverse that downtrend. That may also be supported by the recent operational improvements. It looks like the CEO's strong personal motivation for results, coming from his nearly 43% ownership of the company's common stock, has finally moved the business forward.

The newly offered by the company GPS devices and services were a good strategic decision, as the additional revenues in this year's first quarter have partially offset the decline in the sales of cable television equipment, which the company's core business. Further positive facts are that ZST has no long-term debt, but more importantly, in the last quarter operations finally generated enough cash to cover all the expenses and external financing will be needed only if the management decides to expand the GPS business.