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.