Exhibit 99.1

          Digital Recorders, Inc. Announces Effectiveness of
                  Registration Statement on Form S-1

    DALLAS--(BUSINESS WIRE)--July 8, 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 its previously filed Registration Statement on
Form S-1 was declared effective on July 8, 2004.   The Registration
Statement relates to the resale by certain security holders of the
Company of 812,500 shares of common stock, consisting of 625,000
outstanding shares and 187,500 shares purchasable under outstanding
warrants.   The Company will not receive any proceeds from the sale of
the shares covered by that Registration Statement.

    About the Company

    Digital Recorders, Inc. is a market leader in transit,
transportation and law enforcement or security digital communications
and audio enhancement systems using proprietary software applications.
Our products improve the flow and mobility of people through
transportation infrastructure, mitigate security threats, and 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 locating and monitoring systems --
enhance public transportation and mitigate security threats worldwide.
Our electronic surveillance tools, including microphone amplifiers and
processors, countermeasures devices, speech activity detectors, and
radio/television noise cancellers, help law-enforcement agencies
around the globe detect, 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. It is important to note the
Company's actual results could differ materially from those
contemplated in the Company's forward-looking statements as a result
of various factors. Among other factors, the Company's results will be
affected, perhaps materially, by general economic conditions, the
availability of national government assistance and funding to local
transportation authorities, the adoption and implementation of
regulations concerning public transportation services, product demand
and market acceptance risks, the effect of import, licensing and trade
restrictions, the results of implementing the Company's business plan,
the impact on the Company of its relationship with its lenders, the
plans and prospects of competitors, the impact of competitive products
and pricing, currency fluctuations, infringement by third parties of
the Company's trade secrets and other intellectual property, the
burdens and costs of defending against potential infringement claims
against the Company, and our ability to attract and retain personnel.
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 risks associated with the
Company's business.


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