Exhibit 99.1

           Digital Recorders, Inc. Announces Fourth Quarter
             and Year 2003 Preliminary Revenue Estimates

    DALLAS--(BUSINESS WIRE)--Jan. 20, 2004--Digital Recorders, Inc.
(DRI) (Nasdaq:TBUS), a market leader in transit, transportation, and
law enforcement digital communications and audio enhancement systems,
announced today that fourth quarter 2003 sales were approximately
$10.4 million and fiscal year 2003 sales were approximately $44.4
million, or decreases of about 20 percent and 2 percent from
same-period results a year ago, respectively.
    "Order slippages in the U.S. caused the shortfall in fourth
quarter and fiscal year 2003 revenues. While international operations
achieved gains of about 21 percent period-over-period for the year,
domestic operations posted a 12 percent decline. The domestic sales
decline primarily was attributable to orders that we could not
finalize or, in some cases, could not ship before year-end.
Customer-directed delays, which caused shipment levels to drop
significantly below our previous forecast, made up a majority of the
shortfall. However, the majority of this delayed revenue that we had
planned for the fourth quarter is now re-scheduled and is expected to
ship in the first half of 2004. This includes a $700,000 new order for
TwinVision(R) Chroma IV Color Destination Sign Systems for the Long
Beach (Calif.) transit system. We expect the quarter and year to be in
a loss position, before recognizing the non-cash, financing-related
charges discussed in our third quarter 2003 earnings release. We
expect to file the 2003 Form 10-K and report results by March 30,
2004," David L. Turney, the Company's Chairman, Chief Executive
Officer, and President, said.

    Outlook

    "The basic nature of our business makes meaningful quarterly
financial guidance very difficult. We have a business that has a high
percentage of larger size contracts and orders. This is in an
environment that provides only a limited set of sales opportunities at
any point in time. Further, shifts in required delivery dates not only
cause delays in revenue recognition but also impact our scheduling of
production and often make it difficult to predict when the delayed
revenue ultimately will be received. These disruptions very often
occur with little warning, often are not timed such that we can
replace or offset the delayed sales, and frequently are such that
recovery of the current period shortfall may not be possible in
immediately ensuing periods," Mr. Turney said. "Therefore, in fiscal
year 2004, we will move to a different approach in giving financial
guidance. Instead of providing specific period-to-period estimates, we
will begin focusing on our longer-term trends, plans, actions, and
events that are materially important. In that context, our outlook for
the next 12 months to 18 months indicates top-line growth into the $55
million to $60 million annualized revenue range without including any
possible acquisitions. On that revenue range, we would expect to
report a profit for 2004. Supporting that outlook is an array of new
products and new served markets, most of which we launched in 2003,
and that are now part of our on-going business. Additionally, through
several specific actions, we have achieved period-over-period product
and operating expense reductions that could potentially result in
approximately $2.0 million of annualized cost savings in 2004."

    Mark Your Calendar

    By March 30, 2004, the Company will: (1) file Securities and
Exchange Commission Form 10-K; (2) provide additional comments,
including an income statement and balance sheet data, in a separate
news release; and (3) hold a shareholders' conference call.
    Tentatively, the Annual Meeting of Shareholders will be held
Wednesday, May 26, 2004, at 10 a.m. (Eastern) at the Radisson
Governor's Inn in Durham, N.C. Preliminarily, the record date for this
meeting is March 26. Final details will be announced later in the
first quarter.

    About the Company

    Digital Recorders, Inc. is a market leader in transit,
transportation and law enforcement digital communications and audio
enhancement systems using proprietary software applications. Our
products improve the flow and mobility of people through
transportation infrastructure, as well as enhance law enforcement
agencies' surveillance capabilities. Our transit communications
products -- TwinVision(R) and Mobitec route destination signage
systems, Talking Bus(R) voice announcement systems, and
Internet-based, automatic vehicle monitoring systems -- enhance public
transportation around the globe. Our electronic surveillance tools,
including microphone amplifiers and processors, countermeasures
devices, speech activity detectors, and radio/television noise
cancellers, help law-enforcement agencies worldwide capture, arrest
and prosecute criminals. For more information about DRI and its
operations worldwide, go to www.digrec.com.

    Forward-Looking Statements

    This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
In particular, any statement, express or implied, concerning future
events or expectations is a forward looking statement. Use of words
such as "expect," "fully expect," "expected," "appears," "believe,"
"plan," "anticipate," "would," "goal," "potential," "potentially,"
"range," "pursuit," "run rate," "stronger," "preliminarily," etc., is
intended to identify forward-looking statements that are subject to
risks and uncertainties, including those described below. There can be
no assurance that any expectation, express or implied, in a
forward-looking statement will prove correct or that the contemplated
event or result will occur as anticipated. The risks associated with
forward-looking statements include, but are not limited to, product
demand and market acceptance risks, the impact of competitive products
and pricing, the effects of economic conditions and trade, legal,
social and economic risks, such as import, licensing and trade
restrictions, the results of implementing the Company's business plan,
and the impact on the Company of its relationships with its lenders
and creditors. Refer to the Company's various Securities and Exchange
Commission filings, such as its Forms 10-Q and 10-K, for further
information about forward-looking statements and the risks associated
with our business.


    CONTACT: Digital Recorders, Inc., Dallas
             Veronica B. Marks, 214-378-4776
             Fax: 214-378-8437
             veronicam@digrec.com