Exhibit 99.1

                  Digital Recorders, Inc. Notes Announcement of
                         Short-Term Extension Of TEA-21

    DALLAS--(BUSINESS WIRE)--July 20, 2005--Digital Recorders, Inc. (DRI)
(Nasdaq:TBUS), a market leader in transportation, law enforcement, and
security digital communications systems, announced today that despite
long delays in the completion of federal reauthorization legislation
for public transportation funding, the Company believes progress is
being made.
    According to the American Public Transportation Association
(APTA), a two-day extension has been implemented with notation that
additional extensions might be required in bringing the legislation to
conclusion in July. APTA notes that federal public transportation
funding currently under consideration by Congress could reach an
all-time high of more than $52 billion over a six-year reauthorization
period - more than 40 percent greater than the expiring funding
legislation. The proposed amount is part of the overall funding in the
federal "highways" bill expected to come under the reauthorization of
the Transportation Equity Act for the 21st Century (TEA-21), where
total U.S. Department of Transportation funding being considered is in
excess of $280 billion.
    "U.S. public transportation has operated for more than two years
with the uncertainties created by short-term extensions of TEA-21
initiated by Congress in lieu of the historical and intended six-year
reauthorization legislation period. Federal funding has been available
at historically high levels during this interval, but I believe that
underlying longer-term funding uncertainties have been a source of
significant market disruption. While there can be no certainty on the
matter, it now appears that Congress may soon complete this essential
piece of legislation which is so vital to the country's transportation
infrastructure. The transportation industry has people to move, jobs
to fill, communities to serve, and safety and security issues to
consider. Reauthorization of this six-year legislation should lead to
progress in all of these matters," David L. Turney, the Company's
Chairman, Chief Executive Officer, and President, said.

    ABOUT THE COMPANY

    Digital Recorders, Inc. is a market leader in transportation, law
enforcement, and security digital communications systems using
proprietary hardware and 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 transportation communications products
- - TwinVision(R) and Mobitec(R) electronic destination sign systems,
Talking Bus(R) voice announcement systems, Internet-based passenger
information systems, and computer-aided dispatch/ 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 noise cancellation equipment,
help law-enforcement agencies around the globe 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, statements concerning future federal public
transportation funding, the projected benefits of such funding, and
the impact it may have on the transportation industry and on the
Company, as well as 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
risks and uncertainties surrounding the timing and amount of federal
public transportation funding, the deployment of those funds, and as
well as other risks and uncertainties set forth in our Annual Report
on Form 10-K filed April 1, 2005, particularly those identified in
Risk Factors Affecting Our Business. 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.

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