<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>c32481_ex99-1.txt
<TEXT>



                                                                    EXHIBIT 99.1


DATA SYSTEMS & SOFTWARE INC. ANNOUNCES NASDAQ NOTIFICATION

Tuesday May 25, 5:00 pm ET

MAHWAH,  N.J.,  May 25  /PRNewswire-FirstCall/--  Data  Systems & Software  Inc.
(Nasdaq: DSSI - NEWS) today announced receipt of a notice from the Nasdaq Office
of Listing  Qualifications  Hearings  notifying  the  Company  that it is not in
compliance  with the  requirement  for  continued  listing  set  forth in Nasdaq
Marketplace Rule 4310(c)(2)(B), and that the Nasdaq Listing Qualifications Panel
will consider such  deficiency in rendering a decision  concerning the continued
listing of the Company's Common Stock on The Nasdaq SmallCap Market.  As applied
to the Company,  Nasdaq Marketplace Rule 4310(c)(2)(B) requires that the Company
maintain  shareholders'  equity  of not less than $2.5  million.  The  Company's
shareholders'  equity as reported in the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004 was $2.44 million.

In its  submission  to Nasdaq dated today,  the Company  stated that it believes
that its non-compliance with Nasdaq Marketplace Rule 4310(c)(2)(B) was temporary
and set forth its short-term  and long-term  plans to maintain  compliance  with
Nasdaq's minimum shareholders' equity requirement. The Company's short-term plan
calls for compliance to be reflected in the Company  financial  statements which
will be included in its Quarterly  Report on Form 10-Q for the second quarter of
2004. The Company's  plan for long-term  compliance is based upon the previously
announced pending strategic  transaction with Kardan  Communications Ltd. which,
if and when consummated,  would increase the Company's shareholders' equity well
beyond  the  minimum  requirement  over the  long-term.  Additional  information
regarding  the pending  transaction  with  Kardan is  included in the  Company's
Current Report on Form 8- K as filed with the Securities and Exchange Commission
on April 19, 2004.

About Data Systems & Software Inc.

Data  Systems  &  Software  Inc.  is  a  provider  of  software  consulting  and
development services and is an authorized direct seller and value-added reseller
of computer  hardware.  Its  Comverge  affiliate  provides  energy  intelligence
solutions to utilities. For more information,  contact: George Morgenstern, CEO,
(201) 529-2026, IR@DSSIINC.COM.

This press release  includes  forward-looking  statements,  which are subject to
risks and uncertainties. Actual results may vary from those projected or implied
by such forward-looking  statements.  There is no assurance that (i) the Listing
Panel  will  accept  the  Company's  plan  for   compliance   with  the  minimum
shareholders'  equity  requirement  and  allow  the  continued  listing  of  the
Company's Common Stock on the Nasdaq SmallCap  Market,  (ii) the Company will be
able to achieve and/or maintain compliance with the minimum shareholders' equity
or the other listing maintenance  standards of The Nasdaq SmallCap Market, (iii)
the Company will complete the  transaction  with Kardan as  contemplated  by the
agreement in principle,  which is subject to the  negotiation and execution of a
definitive  agreement between the Company and Kardan,  approval by the directors
of both  companies,  satisfactory  completion of due  diligence  and  applicable
governmental approvals, or (iv) the contemplated transaction with Kardan will be
approved by the  Company's  shareholders  as  required  by Nasdaq's  qualitative
maintenance  standards. A discussion of risks and uncertainties which may affect
the  Company's  business  generally is included in  "Business-Factors  Which May
Affect Future  Results" in the Company's  most recent Annual Report on Form 10-K
as filed by the Company with the Securities and Exchange Commission.


<PAGE>

CONTACT:
     George Morgenstern, CEO
     Data Systems & Software Inc.
     (201) 529-2026
     E-mail: IR@DSSIINC.COM



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