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): August 3, 2006

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

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



        North Carolina                    1-13408                56-1362926
 (State or Other Jurisdiction    (Commission File Number)      (IRS Employer
       of 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 August 3, 2006, Digital Recorders, Inc. noted that, according to a
recent report from the American Public Transportation Association, U.S. public
transportation ridership grew by 4.25 percent in first quarter 2006 compared to
the same period last year.

         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 August 3, 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: August 3, 2006          By:  /s/ KATHLEEN BROWN OHER, CPA
                                   ---------------------------------------------
                                   Kathleen Brown Oher, CPA
                                   Vice President, Chief Financial Officer,
                                   Treasurer, and Secretary








INDEX TO EXHIBITS

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

   99.1    Press release dated August 3, 2006.

EX-99.1

                                                                    Exhibit 99.1

                       Digital Recorders, Inc. Notes 4.25
    Percent Increase in U.S. Public Transit Ridership in First Quarter 2006

    DALLAS--(BUSINESS WIRE)--Aug. 3, 2006--Digital Recorders, Inc.
(DRI) (Nasdaq:TBUS), a digital communications technology leader in the
transportation, law enforcement, and security industries, noted today
that, according to a recent report from the American Public
Transportation Association (APTA), U.S. public transportation
ridership grew by 4.25 percent in first quarter 2006 compared to the
same period last year.
    According to the APTA ridership report, nearly 2.5 billion trips
were taken using public transportation in first quarter 2006, and all
modes of public transportation showed ridership increases.
    "Over the last 10 years, U.S. transit ridership has increased an
average of approximately 2.2 percent annually. So, this 4.25 percent
increase in one quarter is most noteworthy. According to APTA, high
gas prices are driving more Americans to make their daily commutes
using public transportation. With increased transit ridership
potentially comes an increased demand for all modes of public
transportation and related equipment in DRI's domestic market.
Continued increases in U.S. transit ridership could help DRI to
achieve further growth," David L. Turney, the Company's Chairman,
President, and Chief Executive Officer, said.

    APTA RIDERSHIP REPORT FOR FIRST QUARTER 2006

    According to the APTA ridership report, light rail (modern
streetcars, trolleys and heritage trolleys) had an 11.2 percent
increase in first quarter 2006 -- the highest percentage of increase
among all modes. Bus ridership increased by 4.5 percent during the
same period, which was the second highest percentage of increase among
all modes. For more information about the first quarter 2006 APTA
ridership report, go to www.apta.com.

    ABOUT APTA

    APTA is a non-profit international association of 1,600 member
organizations, including public transportation systems; planning,
design, construction and finance firms; product and service providers;
academic institutions; and state associations and departments of
transportation. APTA members serve the public interest by providing
safe, efficient and economical public transportation services and
products. APTA members serve more than 90 percent of persons using
public transportation in the United States and Canada.

    ABOUT THE COMPANY

    Digital Recorders, Inc. is a digital communications technology
leader in the transportation, law enforcement, and security
industries. Using proprietary hardware and software applications, our
products improve the flow and mobility of people through
transportation infrastructure, improve energy efficiency, 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, Digital Recorders(R)
Internet-based passenger information and automatic vehicle
location/monitoring systems, and VacTell(TM) video actionable
intelligence systems -- enhance public transportation and mitigate
security threats worldwide. By assisting transit vehicle operators in
their quest to increase ridership, our products help reduce dependence
on fuel. Our DAC(R) 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 APTA and its ridership report's
results, the anticipated need for the Company's products and services,
our assessment of current transit industry trends and indicators, 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 regarding the
assumptions behind the APTA ridership report's results, the
anticipated need for the Company's products and services, our
assessment of current transit industry trends and indicators, as well
as other risks and uncertainties set forth in our Annual Report on
Form 10-K filed April 17, 2006, 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: Veronica B. Marks
             Manager, Corporate Communications
             Digital Recorders, Inc.
             Phone: (214) 378-4776
             Fax: (214) 378-8437
             E-Mail: veronicam@digrec.com