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<TYPE>EX-99.1
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<FILENAME>v05126_99-1.txt
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                                                                    EXHIBIT 99.1

                     DATA SYSTEMS & SOFTWARE INC. ANNOUNCES
                            NOTIFICATION FROM KARDAN

         Mahwah, New Jersey - July 26, 2004 -- Data Systems & Software Inc.
(NASDAQ: DSSIC) today announced that it was informed today by Kardan
Communications Ltd. that Kardan no longer intends to proceed with the
transaction with the Company contemplated by the agreement in principle dated
April 19, 2004. A spokesperson for the Company stated that in light of the
notification, the Company intends to consider other strategic alternatives which
could include possible restructuring, merger or acquisition and/or financing
transactions.

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. Through its Comverge Inc. affiliate, the Company
provides energy intelligence solutions to utilities.

                          ****************************

         This press release includes forward-looking statements, which are
subject to risks and uncertainties, including risks associated with (i) the
Company's consideration of strategic alternatives, and (ii) the Company's
business generally. There can be no assurance that the Company will be
successful in consummating any alternative strategic transaction. A more
complete discussion of risks and uncertainties which may affect the accuracy of
these statements and 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.

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