Exhibit 99.1

Digital Recorders, Inc. Updates Plans to Introduce New Transit Security Products
and Services; Unveiling Will Take Place in September 2005 at APTA Expo in Dallas

    DALLAS--(BUSINESS WIRE)--July 26, 2005--Digital Recorders, Inc. (DRI)
(Nasdaq:TBUS), a market leader in transportation, law enforcement, and
security digital communications systems, announced today it plans to
introduce new transit security products and services during the
American Public Transportation Association International Public
Transportation Expo (APTA Expo 2005) slated Sept. 26-28, 2005, at the
Dallas Convention Center in Dallas.
    "The rollout plans fall in line with management's strategy of
delivering transit products with additional security features and
increasing security-related functionality in the Company's traditional
Intelligent Transportation Systems (ITS) market through specially
designed products, services, and strategic alliances," David L.
Turney, the Company's Chairman, Chief Executive Officer, and
president, said.
    Mr. Turney said many of DRI's core products and services have, for
a long time, included security-related elements. "These existing
products and services have provided transit authorities with the
ability to not only gather and deliver better, timelier information,
but also to enhance passenger security. For example, a very basic
element of security is real-time vehicle location and monitoring -- a
capability of the Digital Recorders(R) DR600 product and its
predecessor. Additionally, TwinVision(R) electronic destination sign
systems are capable of displaying covert emergency messages. We are
adding new security-related features to our existing ITS products and
services, including those associated with the recently announced
security integration agreement. We also are developing other new
security products, services, and functionality. APTA Expo 2005 will
provide an opportunity for us to showcase our capabilities in the
security market, as well as in the core ITS market."
    Mr. Turney cited an article in Barron's July 4, 2005, edition to
underscore the importance of management's decision to create
additional transit security-related products and services. "In
'Guarding America: The Profits of Patriotism,' reporter Jay Palmer
said, 'the homeland defense sector remains a hedge against disaster.'
Mr. Palmer went on to say that, 'four years ago, when the market
opened after the 9/11 attacks, the homeland defense stocks were among
the few to move higher and that if -- or rather, when -- the next
terrorist attack occurs, financial history may well repeat itself.' As
mentioned in the article, I, too, believe there is terrific long-term
growth potential here. That being said, however, the new transit
security-related products and services should not materially impact
the Company's 2005 results, but are expected to contribute to 2006
results."

    About APTA Expo 2005

    APTA Expo 2005 is slated to take place Sept. 26-28, 2005, at the
Dallas Convention Center in Dallas. DRI's exhibit booth number
is 3515. For more information about this transit industry event, refer
to www.apta.com/expo2005.

    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 the timing or amount of future
revenues; future product and service offerings; the ability to include
additional security features to existing products and services; the
potential benefits such security features may have for our customers;
the potential positive effect such product and service offering may
have on future revenues; statements made by Jay Palmer and quoted in
this press release regarding homeland defense, future terrorist
activities, and the potential effect such activities may have on the
performance of the equity securities of companies in the homeland
defense sector, and the future growth potential of such companies; the
expected contribution of sales of new and modified security related
products to our profitability; strategic alliances; 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 that the assumptions
behind future revenue timing or amounts may not prove accurate over
time; risks that future product and service offerings may not be
accepted by our customers; risks that we may be unable to create
meaningful security product features in either new or existing
products; risks that statements made by Jay Palmer and quoted in this
press release may not accurately predict future events or outcomes,
including the risk that certain predicted events may not occur or if
they do occur will not have the anticipated result on the homeland
defense sector; as well as other risks and uncertainties set forth in
our Annual Report on 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