Exhibit 99.1

       Digital Recorders, Inc. Announces Filing of Request for
                    Extension for Filing Form 10-Q

    DALLAS--(BUSINESS WIRE)--Aug. 16, 2004--Digital Recorders, Inc.
(DRI) (Nasdaq:TBUS), a market leader in transit, transportation and
law enforcement digital communications and audio enhancement systems,
announced today it has filed a Form 12b-25 with the Securities and
Exchange Commission, requesting a 5-day extension of the Aug. 16,
2004, deadline for filing its Form 10-Q for the quarter ended June 30,
2004.
    "The Company is in the process of finalizing certain complex
accounting questions on revenue recognition that have not yet been
resolved, and the resolution of these matters may have a material
effect on the Company's unaudited financial statements for the quarter
ended June 30, 2004, and related disclosures in its Form 10-Q. The
Company is currently evaluating and consulting with its independent
auditors regarding these issues. Because of these matters, the Company
has been unable to complete the unaudited financial statements and
related disclosures. For these reasons, although the Company's
management and Audit Committee have been working diligently to
complete these matters, the Company was unable to complete and submit
the Company's Form 10-Q by the Aug. 16, 2004, prescribed due date.
Management anticipates that the Form 10-Q will be filed on or before
Aug. 23, 2004. At that time, the Company will issue another news
release and conduct a shareholders' conference call," David L. Turney,
the Company's Chairman, Chief Executive Officer, and President, said.

    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