PSE Circular for Brokers No. 3266-99

December 22, 1999 PSE CIRCULAR FOR BROKERS NO. 3266-99 1. Date of Report December 21, 1999 2. SEC Identification Number AS092-000589 3. BIR Tax Identification No. 001-817-292 4. Exact name of registrant as specified in its charter MUSIC CORPORATION 5. Province, Country or other Jurisdiction on incorporation or organization Canlubang, Laguna, Philippines 6. Industrial Classification Code ___________________ (SEC Use Only) 7. Address of Principal Office Lot 8 Phase IIB, SEPZ-I Carmelray Industrial Park, Canlubang, Laguna 8. Registrant's telephone No., area code (49) 549-1480 9. There have been no changes to our name, address and fiscal year, since our last report 10. Are any or all of these securities listed on the Philippine Stock Exchange. Yes[x] No[ ] All issued and outstanding securities are listed in the Philippine Stock Exchange. Part I Other Matters MUSIC Telecom, Inc., a wholly owned subsidiary of MUSIC Corporation based in Hackettstown, New Jersey, USA and known for being the price/performance leader in providing voice and data solutions for the Computer Telephony Integration (CTI) industry has acquired SUBSPACE COMMUNICATIONS, INC., (Subspace) also a leader and pioneer in voice compression and IP Telephony solutions. llcd Under the Purchase Agreement, shareholders of Subspace shall be partially paid in the form of a share exchange equivalent to 4% of the common shares of Music Telecom, Inc. and US$525,000 in cash payable with terms through 2003 bringing the total acquisition cost to US$1.7M. Moshe Tal, President and CEO of MUSIC Telecom believes that the acquisition is key to MUSIC's move into higher density CTI products and provides MUSIC with additional expertise in data communication and IP networking, real time voice processing and transmission, and Digital Signal Processing (DSP) algorithm voice compression design. LibLex Underscoring MUSIC Telecom's drive to support the converging voice and data markets with low cost component technology, Subspace's expertise will enable MUSIC to further develop Voice over IP products that enable network servers to operate as PC based PBX's. This development will significantly reduce telecommunications costs for the emerging Small Office marketplace. In addition, it will enable larger firms to easily move telephones throughout the corporation without incurring service or installation expenses. Since 1994, Subspace's DSP expertise has been used to develop algorithm voice compression, hardware design for Voice over the Internet (VolP) products, architecture designs for large packetized networks and real time voice processing. With its acquisition, the Subspace team will continue research and development activities from their Florida location, reporting to the Director of Engineering, Andrew Dumont. MUSIC Telecom's products are based on "open" standards-based platforms that provide the customer with significant price and performance benefits. MUSIC's products are used by OEM's, distributors and integrators such as Lucent Technologies, Geotel (a subsidiary of Cisco Systems) and Comverse Information Systems. We invite all shareholders and interested investors to visit the websites www.musictelecom.com and www.subcomm.com for more information on the products and business of MUSIC Telecom, Inc. prcd SIGNATURES Pursuant to the requirements of Section 11 of the RSA and Section 141 of the Corporation Code, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Canlubang, Laguna. MUSIC CORPORATION Issuer (SGD.) MITOS TANTUICO-ZSHORNACK VP for Corporate Affairs