ShengdaTech Provides an Update and Announces Receipt of NASDAQ Notice

ShengdaTech, Inc. SDTH today confirmed that it is continuing to conduct business operations while the Company is appealing the delisting determination issued by the Listing Qualifications Department of The NASDAQ Stock Market LLC. The appeal has temporarily stayed the delisting action pending a hearing on the matter. The Company recently submitted a new compliance plan to Nasdaq in preparation for a hearing scheduled for May 26, 2011 whereby the Company will present its appeal of the Nasdaq's delisting determination. There can be no assurance that the Company's appeal for continued listing will be granted, or even if it is granted that the Company will be able to execute upon such request in a timely manner or to the satisfaction of Nasdaq. In the event the Nasdaq affirms the delisting determination, the Company's securities will be subject to imminent delisting from Nasdaq and will be quoted for trading in over-the-counter securities markets. On April 16, 2011, the Company received a letter from Nasdaq stating that the Company's failure to file its Form 10-Q for the period ended March 31, 2011 with the Securities Exchange Commission and Nasdaq serves as an additional basis for delisting the Company's securities from The Nasdaq Stock Market under Nasdaq Listing Rule 5810(b). The Company intends to address this matter pursuant to Nasdaq Listing Rule 5810(d) at the appeals hearing. Additionally, as previously reported, the special committee, consisting of three independent members of the Board of Directors, is executing upon its mandate to conduct an internal investigation into serious discrepancies and unexplained issues relating to the Company and its subsidiaries' financial records identified by KPMG, the Company's former independent registered public accounting firm, in the course of their audit of the consolidated financial statements for the fiscal year ended December 31, 2010. The Company has started to implement the cash control and validation plan established by the special committee, which requires the transfer of control over the Company's cash assets by consolidating cash into accounts over which the audit committee would have authority.