NCTI Subsidiary Distributed Media Signs Letter of Intent for $15 Million License for Los...

Business Editors

WESTPORT, Conn.--(BUSINESS WIRE)--May 3, 2001

Nation's #2 Media Spending Region To Be Developed By the Wells

Investment Group in Conjunction with Digital Compact Classics

NCT Group, Inc. (OTCBB: NCTI) subsidiary Distributed Media Corporation

Under the terms of the LOI, DCC Compact Classics, Inc. ("DCC"), a producer of high-quality music CDs with projected 2001 revenues of $3 million, will be granted an exclusive license for the use of DMCI's Sight & Sound(TM) microbroadcasting system in the Los Angeles market.

A group of investors led by Wells Investment Group of Carmel, California will invest $12 million for 40% of DCC, the proceeds of which will remain in the company for working capital.

The LA territory license, valued at $15 million, will result in DMC-US owning 50% of DCC. Upon completion of the transaction the name of the entity will be changed from DCC Compact Classics, Inc. to DMC-Los Angeles, Inc. (DMC-LA). The transaction is expected to close this quarter.

"Los Angeles is the number two media market in the country and a very important territory to develop," said James McManus, President and CEO, DMC-US. "We are pleased to have the Wells Investment Group and DCC as our partners. The Wells Investment Group brings a long history of investing in media and entertainment companies, and DCC has access to the premiere music store sites in LA including Tower Records and MusicLand. We believe that our partners will be a tremendous asset and we look forward to working with them."

DMC-US is targeting its licensing efforts to the top 50 media markets, or Designated Market Areas ("DMAs"), a term defined by Nielsen Research, and is building on its relationships with major chains in books, music and movies. DMC-US has begun to successfully sell advertising for its Sight & Sound media nationwide, and this LA partnership is expected to accelerate those sales and expand the company's market reach to the local level. The Wells Investment Group and DCC will develop the Los Angeles DMA by signing commercial and professional establishments as sites for DMC's Sight & Sound systems. In total, it is estimated that this region consists of approximately 100,000 potential sites.

Each Sight & Sound system utilizes NCTI-developed patented and patent-pending technology. Flat panel speakers are supplied by NCT Audio Products, Inc., an NCTI subsidiary.

"DMC-LA presents the ideal opportunity for us to grow our business," said Marshall Blonstein, President and CEO, DCC. "The industry relationships we have can be expanded with this innovative new advertising medium, and at the same time our relationships in the music industry can substantially enhance the presence of Sight & Sound in the greater Los Angeles area."

The Wells Investment Group brings considerable investment experience and a wide range of contacts expected to accelerate the growth of DMC-LA. According to Larry Wells, President of the Wells Investment Group, "The formation of DMC-LA is a truly exciting development in out-of-home place based media and could easily capture a large portion of the advertising market."

DMC-US Strategic Media Board Members Tony Wainwright, Ernest Pomerantz, Michael Donohue, Charlie Lanktree and George Sosson will work closely with Wells and Blonstein to maximize DMC-LA's potential.

About Wells Investment Group

The Wells Investment Group of Carmel, California is the Manager of Sundance Venture Partners, a venture capital fund, and is active in the syndication of investments with other venture capital funds, strategic investors, and individuals. Wells Investment Group and Sundance Venture Partners have been active investors in communications technologies since 1990.

About DCC Compact Classics, Inc.

DCC Compact Classics Inc. is a Los Angeles based company with advanced digital capability in the business of reproducing and selling classic CDs. DCC is a leader in this niche and markets high quality CD collections under its 24 Karat Gold line. Since its inception in 1986, DCC has made its mark as an exceptional independent label and a name closely associated with quality and creative marketing.

About Distributed Media Corporation International, Ltd.

Distributed Media Corporation International, Ltd., a subsidiary of NCT Group, Inc., utilizes advanced IT and communications technologies to manage a worldwide network of place-based Sight & Sound(TM) microbroadcasting systems used in the delivery of audio and billboard advertising along with high-quality ambient music to a variety of retail and professional venues. This global network is controlled from one central location in the U.S. DMCI is the parent company of Distributed Media Corporation ("DMC-US"), the U.S. subsidiary whose Sight & Sound(TM) systems are currently being deployed to retail environments including Barnes & Noble college bookstores, Trans World Entertainment and Wherehouse music stores. DMC-US subsidiary, DMC Cinema, Inc., is a provider of music programming and advertising to multiplex cinemas nationwide including Sony, Loews, Cineplex Odeon, Regal, and United Artists. DMC subsidiary, DMC HealthMedia, Inc., is targeting the installation of Sight & Sound(TM) systems to hospital waiting rooms, cafeterias and doctors' lounges. For more information, refer to www.distributedmedia.com.

About NCT Group, Inc.

NCT Group, Inc. is a publicly-traded, high-tech company with operating subsidiaries in media and communications. NCTI's strong technology base of using sound and signal waves to electronically reduce noise, improve signal-to-noise ratio and enhance sound quality, drives leading edge technological innovations in media, through its Distributed Media Corporation International (DMCI) subsidiary, and communications, through its MidCore Software and Pro Tech subsidiaries, with a specific concentration on IP telephony applications. The Company's emerging technology incubation strategy nurtures development of NCTI technologies and complementary technologies from outside developers. For more information refer to www.nct-active.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain information contained in this press release comprise forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 (the "Act"), which became law in December 1995. In order to obtain the benefits of the "safe harbor" provisions of the Act for any such forward-looking statements, NCTI wishes to caution investors and prospective investors about significant factors, which among others, have in some cases affected NCTI's actual results and are in the future likely to affect NCTI's actual results and cause them to differ materially from those expressed in any such forward-looking statements. Investors and prospective investors should read this press release in conjunction with NCTI's recent filings with the Securities and Exchange Commission available online in the EDGAR database at http://www.sec.gov.