<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>v05959_ex99-1.txt
<TEXT>

                                                                    EXHIBIT 99.1

FOR IMMEDIATE RELEASE

CONTACT:

George Morgenstern, CEO
DATA SYSTEMS & SOFTWARE INC.
(201) 529-2026
E-mail: ir@dssiinc.com

                     DATA SYSTEMS & SOFTWARE INC. ANNOUNCES
                  RESULTS FOR THE SECOND QUARTER AND SIX MONTHS
                               ENDED JUNE 30, 2004

MAHWAH,  NEW JERSEY - AUGUST 13, 2004 -- DATA SYSTEMS & SOFTWARE  INC.  (NASDAQ:
DSSIC)  today  announced  results for the quarter and six months  ended June 30,
2004.

         The  results  for the  quarter  and six  months  ended  June  30,  2004
announced  today reflect  improvement in the Company's  operating  results.  The
Company reported net income of $0.2 million for the second quarter of 2004 and a
net loss of $0.6  million  for the  first  six  months  of 2004,  a  significant
improvement  over a net loss of $1.7  million  and $3.5  million  in the  second
quarter and first six months of 2003, respectively.

         Sales in the second quarter of 2004 were $7.3 million, similar to those
in the second quarter of 2003, with a slight shift of revenues from projects and
products in favor of revenue from services.  The $5.4 million  decrease in sales
in the first six months of 2004,  as compared  to the same  period in 2003,  was
primarily  due the  inclusion of $4.7 million of  Comverge's  sales in the first
quarter of 2003;  commencing  the second  quarter of 2003, the Company no longer
consolidates  Comverge's  operations.  The remaining  decrease was due to a $0.6
million  decrease  in  computer  hardware  sales in the first  quarter  of 2004,
compared  to  the  first  quarter  of  2003.  In  the  software  consulting  and
development  segment,  sales  decreased  by  $0.3  million,  primarily  due to a
decrease in revenues in US-based consulting operations,  which were discontinued
during the second quarter of 2004.

         Gross profit and the gross profit margin improved in the second quarter
of 2004, as compared to the second quarter of 2003, due to improved gross profit
margins in both consolidated  segments.  At dsIT, gross profit margins increased
from 18% in the second quarter of 2003, to 24% in the second quarter of 2004 and
at Databit gross profit margins  increased to 19% in the second quarter of 2004,
compared  to 17% in the second  quarter of 2003.  The $1.2  million  decrease in
gross profits in the first six months of 2004, as compared to the same period in
2003, was  attributable to the inclusion of Comverge's $1.3 million gross profit
in the first quarter of 2003 and the Company no longer consolidating  Comverge's
operations starting the second quarter of 2003.

         SG&A decreased by $0.6 million, or 28%, from $2.1 million in the second
quarter of 2003, to $1.5 million in the second quarter of 2004. This reflected a
decrease in SG&A expenses in all activities,  particularly corporate activities.
This  decrease  was in addition to the  decrease  already  achieved in the first
quarter  of 2004  compared  to the first  quarter  of 2003,  bringing  the total
decrease  in SG&A in the first six  months  of 2004  from  ongoing  consolidated
activities,  as compared to the same period in 2003, to $0.9 million, or 20%. In

<PAGE>

addition,  SG&A in the first six months of 2003 included $2.2 million of SG&A of
Comverge from the first quarter of 2003 in which the Company fully  consolidated
Comverge.

         To date, the Company has incurred  approximately  $0.3 million in costs
related to the  contemplated  deal with Kardan;  these costs will be expensed in
the third  quarter of 2004. As was recently  announced,  Kardan has informed the
Company that it does not wish to proceed with the  transaction.  The decrease in
interest  expense in the 2004 periods as compared to the  comparable  periods in
2003 was  attributable  to  completion  in the first  few  months of 2003 of the
accretion of discounts and the  amortization of related costs in connection with
convertible debt and warrants,  which had accounted for a significant portion of
the interest expense in 2003 periods.

         Since the second  quarter of 2003,  with the dilution of the  Company's
equity  position in Comverge  which  resulted  from the  issuance by Comverge of
shares  in  its  venture  capital  financing,   Comverge's  operations  are  not
consolidated  in  the  Company's  reports.  The  Company  continues  to  include
Comverge's results in the Company's consolidated results on an equity basis, and
equity losses from Comverge had a negative  effect on the Company's net results.
The Company's  share of Comverge's  net loss of $2.2 million and $4.2 million in
the  second  quarter  and first six  months  of 2004 was $0.3  million  and $0.7
million, respectively.  Comverge's increased losses during the 2004 periods were
primarily  due to  increased  SG&A  expenses,  primarily  due  to the  marketing
expenses associated with its new VPC programs.

         The other income of $0.2 million was  attributable to a decision in the
second  quarter of 2004 of the Israeli  Supreme Court in the  Company's  dispute
with an Israeli bank. In its decision,  the Court reversed the district  court's
award for costs in favor of the bank,  for  which  the  Company  had  previously
accrued,  and  remanded  the  Company's  counterclaims  against  the bank to the
district court for a determination of damages.

         Since the latter part of 2003,  the Company has not had  revenues  from
its US-based consulting business. During the second quarter of 2004, the Company
decided to discontinue efforts to reestablish this business as it was previously
conducted. As a result, the Company recorded a gain from discontinued operations
of $0.3 million in the second quarter of 2004.

         George  Morgenstern,  Chairman  and  Chief  Executive  Officer  of DSSI
commented:  "We had expected that the  transactions  contemplated  by our signed
agreement in principle with Kardan would both provide  additional  liquidity and
enhance  long-term  shareholder  value. With the termination of the agreement by
Kardan,  we have  intensified our efforts to control and reduce costs,  while we
consider  other  strategic  alternatives  to insure  adequate  liquidity for our
current activities and to drive future growth, including possible restructuring,
merger, acquisition and/or financing transactions."

         DSSI is a provider of software consulting and development services, and
is an authorized direct seller and value added reseller of computer hardware. In
addition,  its Comverge Inc. 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,   including  risks  associated  with  (i)  successful
implementation  of the Company's plan for financing its operations over the next
12 months,  (ii) conditions in the computer  hardware and IT solutions  markets,

<PAGE>

and  (iii)  the  Company's  business  generally.   The  Company  is  considering
alternatives  to provide  additional  liquidity for its  operations  and enhance
shareholder  value,  including  possible  restructuring,  merger or  acquisition
and/or financing  transactions.  The Company may require additional liquidity to
finance its US-based operating and corporate activities over the next 12 months.
Should the Company be  unsuccessful  in completing a  transaction  providing the
necessary  liquidity,  it may not have sufficient  funds to finance its US-based
operating  activities  and corporate  activities  for the 12 months.  If needed,
there is no assurance  that the Company  will be  successful  in obtaining  such
financing on a timely basis from any of the  alternatives  being  considered  or
from any other  transaction.  Actual  results may vary from those  projected  or
implied by such forward-looking  statements. 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.


                                  Tables Follow

<PAGE>

                  DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                    AS OF        AS OF
                                                                                  DECEMBER      JUNE 30,
                                     ASSETS                                       31, 2003        2004
                                                                                  --------    -----------
Current assets:                                                                               (unaudited)
<S>                                                                               <C>          <C>
     Cash and cash equivalents ...............................................    $  1,213     $    497
     Restricted cash .........................................................         241          235
     Accounts receivable, net ................................................       7,053        6,197
     Inventory ...............................................................          88          130
     Other current assets ....................................................         661          861
                                                                                  --------     --------
         Total current assets ................................................       9,256        7,920
                                                                                  --------     --------

Investment in Comverge, net ..................................................          68           --
Property and equipment, net ..................................................         814          723
Other assets .................................................................         613          627
Funds in respect of employee termination benefits ............................       2,379        2,581
Goodwill .....................................................................       4,430        4,355
Other intangible assets, net .................................................         114           96
                                                                                  --------     --------
         Total assets ........................................................    $ 17,674     $ 16,302
                                                                                  ========     ========

                        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Short-term bank credit and current maturities of long-term debt .........    $  1,517     $  1,417
     Trade accounts payable ..................................................       2,586        1,947
     Accrued payroll, payroll taxes and social benefits ......................       1,451        1,366
     Other current liabilities ...............................................       2,973        2,225
                                                                                  --------     --------
         Total current liabilities ...........................................       8,527        6,955
                                                                                  --------     --------

Investment in Comverge, net ..................................................          --          616
                                                                                  --------     --------
Long-term liabilities:
     Long-term debt ..........................................................         632          304
     Other liabilities .......................................................         227          199
     Liability for employee termination benefits .............................       3,721        4,056
                                                                                  --------     --------
            Total long-term liabilities ......................................       4,580        4,559
                                                                                  --------     --------
Minority interests ...........................................................       1,367        1,495
                                                                                  --------     --------
Shareholders' equity:
     Common stock - $0.01 par value per share:
         Authorized - 20,000,000 shares;
         Issued - 8,740,729 and 8,742,395 shares as of
            December 31, 2003 and June 30, 2004, respectively ................          87           87
     Additional paid-in capital ..............................................      39,595       39,547
     Warrants ................................................................         461          461
     Accumulated deficit .....................................................     (33,069)     (33,457)
Treasury stock, at cost - 838,704 and 820,704 shares at December 31, 2003
         and June 30, 2004, respectively .....................................      (3,874)      (3,791)
     Accumulated other comprehensive loss ....................................          --         (170)
                                                                                  --------     --------
         Total shareholders' equity ..........................................       3,200        2,677
                                                                                  --------     --------
         Total liabilities and shareholders' equity ..........................    $ 17,674     $ 16,302
                                                                                  ========     ========
</TABLE>

<PAGE>

                  DATA SYSTEMS & SOFTWARE INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                          SIX MONTHS ENDED         THREE MONTHS ENDED
                                                                              JUNE 30,                   JUNE 30,
                                                                        ---------------------     ---------------------
                                                                          2003         2004         2003         2004
                                                                        --------     --------     --------     --------
                                                                        restated                  restated
<S>                                                                     <C>          <C>          <C>          <C>
Sales:
     Products ......................................................    $ 13,121     $  8,156     $  4,145     $  4,123
     Services ......................................................       4,979        4,927        2,247        2,467
     Projects ......................................................       1,895        1,472          832          710
                                                                        --------     --------     --------     --------
           Total sales .............................................      19,995       14,555        7,224        7,300
                                                                        --------     --------     --------     --------
Cost of sales:
     Products ......................................................      10,749        6,914        3,449        3,549
     Services ......................................................       3,386        3,379        1,686        1,684
     Projects ......................................................       1,517        1,186          805          541
                                                                        --------     --------     --------     --------
           Total cost of sales .....................................      15,652       11,479        5,940        5,774
                                                                        --------     --------     --------     --------
     Gross profit ..................................................       4,343        3,076        1,284        1,526

   Research and development expenses ...............................         153           --           --           --
   Selling, general and administrative expenses ....................       6,363        3,328        2,106        1,498
                                                                        --------     --------     --------     --------

Operating income (loss) ............................................      (2,173)        (252)        (822)          28
Interest income ....................................................          27           77            5           75
Interest expense ...................................................        (646)         (86)        (294)         (29)
Other income (expense), net ........................................        (165)         237         (151)         136
                                                                        --------     --------     --------     --------
     Income (loss) before taxes on income ..........................      (2,957)         (24)      (1,262)         210
Taxes on income ....................................................          34          (20)          22          (13)
                                                                        --------     --------     --------     --------
Income (loss) from operations of the Company and its consolidated
   subsidiaries ....................................................      (2,991)          (4)      (1,284)         223
Share of losses in Comverge ........................................        (550)        (684)        (550)        (331)
Minority interests .................................................         104          (48)         121          (33)
                                                                        --------     --------     --------     --------
       Net  loss from continuing operations ........................      (3,437)        (736)      (1,713)        (141)
Net income (loss) from discontinued operations, net of tax .........         (34)         348            3          348
                                                                        --------     --------     --------     --------
       Net income (loss) ...........................................      (3,471)        (388)      (1,710)         207
                                                                        --------     --------     --------     --------
Other comprehensive income (loss), net of tax:
Differences from translation of financial statements of subsidiaries          --         (170)          --           26
                                                                        --------     --------     --------     --------
       Comprehensive income (loss) .................................    $ (3,471)    $   (558)    $ (1,710)    $    233
                                                                        ========     ========     ========     ========

Basic and diluted net income (loss) per share:
  Loss per share from continuing operations ........................    $  (0.46)    $  (0.09)    $  (0.22)    $  (0.01)
  Discontinued operations ..........................................       (0.00)        0.04         0.00         0.04
                                                                        --------     --------     --------     --------
  Basic and diluted net income (loss) per share ....................    $  (0.46)    $  (0.05)    $  (0.22)    $   0.03
                                                                        ========     ========     ========     ========
Weighted average number of shares outstanding:
        Basic ......................................................       7,570        7,918        7,792        7,922
                                                                        ========     ========     ========     ========
        Diluted ....................................................       7,570        7,918        7,792        7,964
                                                                        ========     ========     ========     ========
</TABLE>


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