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TouchTunes Stock Split Will Privatize Firm; Allegro Bows At Open House

Posted On: 2/16/2006

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LAKE ZURICH, IL -- TouchTunes Music Corp. saw shareholders approve a stock split that took the company private at the annual meeting here on Dec. 1, 2005. Officials said shareholders approved "a going private transaction by means of a 1-to-2,000 reverse stock split of the class A voting common stock of the company." At press time, TouchTunes said it intended to cause the reverse stock split to become effective as soon as practicable, not later than Dec. 31.

As soon as the reverse stock split was effected, TouchTunes intended to terminate the registration of its common stock under the Securities Exchange Act of 1934, and thereby end the company's obligations as a public company under U.S. securities laws. Thereafter, the company's common stock would no longer be eligible for trading through the OTC Bulletin.

Subsequently, the mood was both confident and optimistic on Dec. 9 as TouchTunes previewed the new Allegro floor model jukebox and hosted a distributor meeting. These events were followed by an open house and grand opening celebration of the company's expansive new headquarters here. The star of the occasion was the new jukebox, which had TouchTunes executives beaming. "With 16,000 units operating on location across America, we have the experience to know what works," declared vice-president of sales Dan McAllister. "The idea behind Allegro is to make a more reliable unit to drive service costs down and help operators improve their return on investment. We are doing both."

Allegro was slated to ship on Jan. 1 with the original amplifiers. Another version with new, twin digital amplifiers designed by TouchTunes is expected to become available in April. Also arriving this spring will be an operating system that will be upgradeable to TouchTunes' upcoming Generation 3 software.

Allegro's cabinet is designed to look more like traditional jukeboxes than previous TouchTunes units; the appearance gives a nod to the industry's classic era. The product features a larger (19 in.) monitor and LCD display than earlier TouchTunes jukes. Engineering has been simplified with fewer moving parts. Convection technology is at the heart of Allegro's improved, no-fan cooling system, which officials said will keep the unit running at optimal temperatures with few, if any, heat-related shutdowns.

These changes are expected to contribute to a longer-lasting hard drive, resulting in reduced operator purchase costs on the front end, fewer maintenance costs and fewer service calls during the life of the product. Working with its subcontract manufacturer, Bose, TouchTunes has also developed a line of external speakers for second and third zones of any given location.

Another factor helping reduce unit costs of new TouchTunes jukeboxes, said McAllister, is the company's increasingly healthy online service revenues from existing units in the field. TouchTunes provides a complete music library to its operators and is now earning a strong majority of its revenues (60%) through software. The company derives just 40% from new jukebox sales. Accordingly, the company can afford to sell Allegro at a very competitive price, the executive noted.

The Dec. 9 product launch, distributor meeting and grand opening took place at TouchTunes' newly constructed, 21,000-sq. ft. building here, which now serves as the company's U.S. sales and service headquarters. The new address is 1280 Rose Rd., Lake Zurich, IL 60047. Phone numbers are unchanged. The new site is nearly twice the size of TouchTunes' prior headquarters in nearby Buffalo Grove.