EXHIBIT 10.28

STATE OF NORTH CAROLINA

COUNTY OF DURHAM FIRST LEASE AMENDMENT

THIS FIRST LEASE AMENDMENT (the "Amendment") is entered into and effective
this 11 day of December, 2002, by and between PROPERTY RESERVE, INC, a Utah
corporation (hereinafter "Landlord"), and DIGITAL RECORDERS, INC., a North
Carolina corporation (hereinafter, "Tenant").

RECITALS:

A. The Prudential Savings Bank, F.S.B., as Trustee ("Prudential") and
Tenant entered into a Lease Agreement dated December 18, 1998 (the "Lease") for
approximately eighteen thousand four hundred eighty-four (18,484) rentable
square feet of space (the "Existing Premises") located in Suite 100 at that
certain building known as 4018 Patriot Drive, Durham, Durham County North
Carolina 27709, being part of that development known as One Park Center.

B. Landlord succeeded to Prudential's interest as Landlord under the
Lease.

C. Landlord and Tenant now desire to modify and amend the Lease pursuant
to the terms and conditions contained herein.

AGREEMENT:

NOW, THEREFORE, for valuable consideration and ONE AND NO/100 DOLLARS
($1.00) paid by Tenant to Landlord, Landlord and Tenant agree that the Lease is
modified and amended as follows:

1. Commencing on the Additional Space Commencement Date, as defined
herein, the Premises shall be expanded to include approximately four
thousand rentable square feet (4,000 r.s.f.), more or less, (the
"Additional Space") contiguous to the Existing Premises, as shown
on Exhibit A, attached hereto and incorporated herein by reference.
As of the Additional Space Commencement Date, the Premises shall
contain a total of twenty-two thousand four hundred eighty-four
rentable square feet (22,484 r.s.f.).

2. As of January 1, 2003:

a. Tenant's Pro Rata Share for operating expense pass throughs
and other purposes shall be recalculated based on the revised
square footage of the Premises; and

b. The Base Year Amount for determining operating expense pass
throughs attributable for the Additional Space incurred after
the Additional Space

Commencement Date shall be the operating expenses paid or
incurred by Landlord for calendar year 2003. The Base Year for
the Existing Space shall remain unchanged; and

c. In addition to the Base Rent on the Existing Premises, Tenant
shall pay Base Rent on the Additional Space as follows:

Installment of Monthly Base
---------------------------
Month Rent
----- ----

January 1, 2003 - April 30, 2004 $1,983.33
May 1, 2004 - April 30, 2005 $2,042.83
May 1, 2005 - April 30, 2006 $2,104.12
May 1, 2006 - April 30, 2007 $2,167.24
May 1, 2007 - April 30, 2008 $2,232.26
May 1, 2008 - April 30, 2009 $2,299.23

d. Any other sums calculated based on rentable square footage of
the Premises shall be recalculated based on 22,484 rentable
square feet. The provisions of Paragraph 3(h) of the Lease
limiting annual increases in Controllable Expenses shall not
limit increases arising from the increase in the rentable
square footage of the Premises.

e. Except as specifically modified hereby, all references to
"rent," "Base Rent," "operating expenses," and "additional
rent" shall be interpreted to apply as and to reflect the
revised square footage of the Premises.

3. The term of the Lease shall not be affected by this First Amendment;
the Lease shall expire as of April 30, 2009, unless earlier
terminated as set forth in the Lease.

4. The "Additional Space Commencement Date" shall mean the date
Landlord and Tenant execute this Lease. It is understood that Tenant
may use the Additional Space once the Lease is fully executed and
pay no rent until January 1, 2003. Tenant agrees to execute a
document setting out the actual Additional Space Commencement Date
upon Landlord's request.

5. Tenant has examined and inspected the Additional Space and accepts
the Additional Space in all respects "AS IS" and "WHERE IS."

6. Landlord acknowledges that it currently holds $12,707.25 as a
Security Deposit pursuant to Paragraph 3(b) of the Lease. As of the
Additional Space Commencement Date, Tenant shall deposit an
additional $ -0- with Landlord to

be added to the Security Deposit, bringing the total Security
Deposit being held by Landlord in connection with the Lease to
$12,707.25.

7. Tenant acknowledges that it has accepted possession of the Existing
Premises and that Landlord has completed any required Tenant
Improvements of the Existing Premises, and Tenant has received all
the Tenant Improvement Allowance.

8. The permitted usage under Paragraph 5(a) of the Lease is revised to
include storage, subject to the prohibitions set forth in the Lease
such as the prohibition on storage of explosive or highly flammable,
toxic or hazardous substances.

9. Tenant is currently in the process of negotiating adding an
additional 8,000 approximate rentable square feet to the Premises.
It is understood and agreed that so long as allowed by applicable
law, Landlord initially will simply mark the boundaries of the
Additional Space on the floor of the warehouse space and will not
build a wall separating the Additional Space. Tenant will respect
such marked lines as the boundary of its Additional Space. If
Landlord and Tenant have not negotiated a lease or lease amendment
for the contemplated 8,000 additional rental square feet within
sixty (60) days from the date hereof, then Landlord may build a wall
setting off the Additional Space.

10. Tenant acknowledges that any guaranty, letter of credit, or other
form of security which was intended to be applicable to the Existing
Premises or Lease pursuant to Paragraph 3 of Exhibit D to the Lease
shall also be applicable to the Additional Space and the Lease as
amended by this First Lease Amendment. Tenant agrees to deliver such
documents or other items, signed by all appropriate parties as may
be requested by Landlord to evidence this agreement.

11. Tenant represents and warrants to Landlord that Tenant has not
entered into any agreements, nor will Tenant enter into any
agreement in the future whereby Landlord would be obligated to pay
any broker's commission or finder's fee in connection with Tenant's
execution of this First Lease Amendment. Tenant agrees to indemnify
Landlord against, and to hold Landlord harmless from, all
liabilities arising from any such claim.

12. The Termination Option set out in Paragraph 1 of Exhibit D to the
Lease has not been exercised and is hereby deleted, null and void
and of no further force or effect.

13. Capitalized terms not defined herein shall have the same meaning as
set forth in the Lease.

14. Except as specifically modified hereby, all the terms and provisions
of the Lease shall remain in full force and effect and are hereby
affirmed and ratified.

IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment
to Lease in triplicate originals, all as of the day and year first above
written.

LANDLORD:

PROPERTY RESERVE, INC.,
a Utah corporation

By: /s/ Mark B. Gibbons
------------------------
Name:
Title:
-----------------------

Date: 12/12/02

TENANT:

DIGITAL RECORDERS, INC.,
a North Carolina corporation

By: /s/ Lawrence A. Hagemann
------------------------
Name: LAWRENCE A. HAGEMANN
Title: EVP DRI

Date: Dec. 11, 2002

SCHEDULE OF EXHIBITS

Exhibit A Diagram showing Additional Space in relation to its location in the
Building. Preferable to cross hatch Additional Space.

EXHIBIT "A"
PREMISES

[ONE PARK CENTER MAP]

ADDITIONAL DRI SPACE AS PART
OF SUITE 100 PER FIRST LEASE
AMENDMENT DECEMBER 2002