UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

        Date of Report (Date of Earliest Event Reported): March 17, 2006

                                -----------------

                             Digital Recorders, Inc.
             (Exact Name of Registrant as Specified in Its Charter)



       North Carolina                   1-13408                 56-1362926
(State or Other Jurisdiction          (Commission              (IRS Employer
      of Incorporation)               File Number)           Identification No.)


                5949 Sherry Lane, Suite 1050, Dallas, Texas 75225
               (Address of Principle Executive Offices) (Zip Code)

        Registrant's Telephone Number, Including Area Code (214) 378-8992


         Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[_]  Written communications pursuant to Rule 425 under the Securities
     Act (17 CFR 230.425)

[_]  Soliciting material pursuant to Rule 14a-12 under the Exchange
     Act (17 CFR 240.14a-12)

[_]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[_]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))





ITEM 7.01. Regulation FD

     On March 17, 2006, Digital Recorders, Inc. (the "Company") announced in a
press release that it has entered into a new loan agreement with Laurus Master
Fund, Ltd., and reached the final stages of closing a $500,000 convertible
preferred stock private placement with a private investor.

     The Company anticipates filing a Form 8-K containing all of the necessary
disclosures with the Securities and Exchange Commission by close of business on
Tuesday, March 21, 2006.

     A copy of the Company's press release is attached hereto as Exhibit 99.1.
This Form 8-K and the attached exhibit are furnished to, but not filed with, the
Securities and Exchange Commission.


ITEM 9.01. Financial Statements and Exhibits

(c)  Exhibits.
     99.1   Press release dated March 17, 2006.





Signature(s)

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                               DIGITAL RECORDERS, INC.

Date: March 17, 2006                           By: /s/ DAVID N. PILOTTE
                                                  ------------------------------
                                                   David N. Pilotte
                                                   Chief Financial Officer





INDEX TO EXHIBITS

EXHIBIT
NUMBER     DESCRIPTION
- ------     -----------

  99.1     Press release dated March 17, 2006.