8-K

                                  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): October 25, 2004

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

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



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


                5949 Sherry Lane, Suite 1050, Dallas, Texas       75225
               ---------------------------------------------    ----------
                 (Address of Principal 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 Disclosure


On Oct. 25, 2004, Digital Recorders, Inc. announced in a press release that it
expects to report third quarter revenue of approximately $11.6 million, or an
increase of about 9.8 percent over same-period results a year ago.

A copy of the Company's press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference. 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

(a) Exhibits.
         99.1     Press release dated October 25, 2004.








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: October 25, 2004           By:    /s/ David L. Turney
                                        ---------------------------
                                        David L. Turney
                                        Chairman, Chief Executive
                                        Officer and President




INDEX TO EXHIBITS

EXHIBIT
NUMBER     DESCRIPTION
- --------   -----------
  99.1     Press release dated October 25, 2004.

EX-99.1

                                                                    Exhibit 99.1


                         Digital Recorders, Inc. Reports
                 Third Quarter 2004 Preliminary Revenue Results

    DALLAS--(BUSINESS WIRE)--Oct. 25, 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 expects to report third quarter revenue of
approximately $11.6 million, or an increase of about 9.8 percent over
same-period results a year ago.
    "Third quarter 2004 was another active period for DRI. Our
domestic and international operations' revenue increased over the same
period last year, and holders of our outstanding Series E convertible
preferred stock converted shares having a liquidation value of
$955,000 into shares of common stock. Third quarter activity also
helped us raise an additional $5.0 million in capital, before offering
expenses, through a private equity placement in October -- our second
of the year. Thus, our balance sheet continues to strengthen," David
L. Turney, the Company's Chairman, Chief Executive Officer, and
President, said.
    The Company will release its final results and file its third
quarter 2004 Form 10-Q with the Securities and Exchange Commission on
or before Nov. 15, 2004.

    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(R) route
destination signage 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
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
             or
             IR Counsel Contact:
             Citigate Financial Intelligence
             Robin Weinberg, 201-499-3500
             Fax: 201-499-3600
             E-Mail: Robin.Weinberg@citigatefi.com