$400,000 up front plus 76,010 annual service fees.
ZST Digital Networks, Inc. Signs Jiyuan Commercial GPS Tracking and Services Contract
8:00a ET April 14, 2011 (PR NewsWire)
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, today announced that it has signed an agreement with the Jiyuan Universal Taxi Leasing Company ("Jiyuan Universal"), a company located in Jiyuan City in Henan Province, to provide GPS tracking and monitoring products and services for Jiyuan Universal's fleet of over 1,300 taxis.
Under the terms of the agreement, ZST Digital will install its GPS tracking and monitoring units and accompanying accessories including digital camera systems and voice announcement systems in Jiyuan Universal's fleet of 1,382 taxis. Following installation and configuration, ZST Digital will provide training to Jiyuan Universal's staff on the GPS hardware and systems operation. The terms of the agreement include an RMB2.8 million (approximately US$0.4 million)(1) upfront payment by Jiyuan Universal to ZST Digital for the hardware, installation and first year service fee. After the first year, Jiyuan Universal will pay an annual service fee of RMB360 (approximately US$55.00) (1) per installed GPS unit.
The Company's GPS positioning devices are an internet based system with numerous features, including but not limited to real time GPS tracking and monitoring, WEBGIS platform with live updated maps, alternative positioning systems and other value-added functions such as speed limiting and vehicle exhaust emission testing. These features are well applied to government efforts to promote environmental protection and energy saving. In addition to the hardware, which ZST Digital installs and service, the Company operates a 24/7 call center to handle subscriber queries and emergency calls. As a result, the Company's GPS segment generates both one time revenue from the sale and installation of products, and recurring revenue from the service contracts.
Mr. Zhong Bo, Chairman and Chief Executive Officer of ZST, commented, "This new contract with Jiyuan Universal demonstrates the growing demand for efficient and effective transportation fleet management systems among a broad scope of commercial enterprises in Henan Province. We believe that our entry into the taxi market in Jiyuan City will provide a clear case study to support the expansion of our GPS products and services into taxi markets in other cities and counties in Henan Province. We have successfully expanded our GPS segment in every quarter since launch in late 2009, and this latest contract adds further momentum behind our efforts to become the leading commercial GPS tracking systems and services provider in Henan Province. We will continue to seek additional opportunities to expand our GPS customer base and remain confident in our ability to grow this segment in the year ahead."
(1) The amount in RMB was translated to U.S. Dollars using the spot rate of US$1 = RMB6.535 for April 8, 2011
