SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               AMENDMENT NO. 1 ON
                                   FORM 10-K/A
                          TO ANNUAL REPORT ON FORM 10-K

          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the fiscal year ended December 31, 2000


Commission file number 0-19771


                         DATA SYSTEMS AND SOFTWARE INC.
             (Exact name of registrant as specified in its charter)

     Delaware                                                   22-2786081
- ----------------------------------------                    -------------------
(State or other jurisdiction of                                (I.R.S. employer
incorporation or organization)                              identification no.)

200 Route 17, Mahwah, New Jersey                                     07430
- ----------------------------------------                             -------
(Address of principal executive offices)                             (Zip code)

Registrant's telephone number, including area code (201) 529-2026
                                                   ----------------

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, par value $.01 per share
                          Common Stock Purchase Rights
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

[X] Yes     No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the common stock of the registrant held by
non-affiliates of the registrant at March 26, 2001 was approximately $31.2
million. Such aggregate market value was calculated by using the closing price
of the stock on that date on the Nasdaq National Market.

Number of shares outstanding of the registrant's common stock, as of March 26,
2001: 7,044,687.

                      Documents incorporated by reference:

None.




                          DATA SYSTEMS & SOFTWARE INC.
                         AMENDMENT NO. 1 ON FORM 10-K/A
                                TABLE OF CONTENTS

                                                                            PAGE

PART III

 Item 10   Directors and Executive Officers of the Registrant..............  2

 Item 11   Executive Compensation..........................................  4

 Item 12   Security Ownership of Certain Beneficial Owners and
           Management......................................................  9

 Item 13   Certain Relationships and Related Transactions.................. 10

           Signatures...................................................... 11



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

     Set forth below is certain information concerning the nominees for director
and the executive officers and key employees of the Company:

Name                   Age   Position
- ----                   ---   --------
George Morgenstern     67    Director; Chairman of the Board, President and
                             Chief Executive Officer of DSSI; Chairman of the
                             Board and Acting President of the Company's
                             Decision Systems Israel Ltd. subsidiary ("DSI
                             Israel"); Chairman of the Board of the Company's
                             Comverge Technologies, Inc. subsidiary ("Comverge")

Robert L. Kuhn         56    Director; Vice Chairman of the Board of DSSI

Yacov Kaufman          43    Vice President and Chief Financial Officer of DSSI;
                             Vice President and Chief Financial Officer of DSI
                             Israel; Chief Financial Officer of Comverge

Harvey Eisenberger     56    Director

Sheldon Krause         45    Director and Secretary

Susan L. Malley        52    Director

Maxwell M. Rabb        90    Director

Allen I. Schiff        55    Director

Frank Magnotti         40    President of Comverge

Shlomie Morgenstern    38    Vice President - Operations

     GEORGE  MORGENSTERN has been Chairman of the Board since June 1993, and has
been President and Chief Executive  Officer of DSSI since its  incorporation  in
1986. Since January 1999, Mr. Morgenstern has also served as Acting President of
DSI Israel.  Mr.  Morgenstern also serves as Chairman of the Board of DSI Israel
and as Chairman of the Board of Comverge.

     ROBERT L. KUHN has been a director of DSSI since 1986 and Vice  Chairman of
the Board of DSSI since 1994.  Since 1991, Dr. Kuhn has been President of Geneva
Financial Corporation,  a company specializing in mergers and acquisitions.  Dr.
Kuhn  has  been  active  in   establishing   joint  ventures  and   cross-border
transactions  with Japan and China,  and has been an advisor for the governments
of the People's Republic of China, Israel and Germany on commercializing science
and technology.

     YACOV KAUFMAN has been Vice President and Chief  Financial  Officer of DSSI
since  February  1996.  Mr.  Kaufman has also served as a Vice  President of DSI
Israel since 1992 and as Chief  Financial  Officer of DSI Israel since 1990. Mr.
Kaufman also serves and Chief Financial Officer of Comverge.


                                       2




     HARVEY  EISENBERGER  has been a director of the Company  since 1994.  Since
March  1997,   Mr.   Eisenberger   has  been  employed  by  the  Company  in  an
administrative capacity. From 1986 to March 1997, Mr. Eisenberger was an account
executive with a New York investment firm.

     SHELDON  KRAUSE has served as Secretary of the Company  since 1986 and as a
director  since 1994.  Since 1987,  Mr.  Krause has been  engaged in the private
practice  of law in New York  City  and is  currently  a  member  of the firm of
Ehrenreich  Eilenberg & Krause LLP. From 1981 to 1986, Mr. Krause was associated
with the New  York law firm of  Cravath,  Swaine  &  Moore.  Mr.  Krause  is the
son-in-law  of George  Morgenstern,  Chairman of the Board,  President and Chief
Executive Officer of the Company.

     SUSAN M. MALLEY has been a director of the  Company  since March 1998.  Dr.
Malley has served since 1995 as President and Chief Investment Officer of Malley
Associates  Capital  Management,  an asset  management  firm  which  Dr.  Malley
founded.  Dr.  Malley is also a  Professor  of Finance at the  Hofstra  Graduate
School of Business.  From 1990 until 1995,  Dr. Malley was Co-Chair of the Board
of Directors and Chief Investment  Officer of Citicorp  Investment  Services,  a
retail brokerage subsidiary of Citibank, N.A.

     HON.  MAXWELL  M.  RABB has been a  director  of the  Company  since  1992.
Ambassador Rabb has been Of Counsel to the law firm of Kramer, Levin, Naftalis &
Frankel  since  1991 and was Of  Counsel  to the law firm of Stroock & Stroock &
Lavan from 1989 to 1991.  From 1981 to 1988,  Ambassador  Rabb was United States
Ambassador to Italy.

     ALLEN I. SCHIFF has been a director of the Company since 1992.  Since 1978,
Dr.  Schiff has been a Professor of Accounting  at Fordham  University  Graduate
School  of  Business  Administration,  serving  as  Chairman  of the  Accounting
Department from 1981 to 1983 and from 1985 to 1990.

     FRANK MAGNOTTI has been the President of Comverge since October 1997.  From
1993 to 1997,  Mr.  Magnotti was the founder and General  Manager of the Utility
Solutions Division of Lucent Technologies, Inc.

     SHLOMIE  MORGENSTERN  has been Vice  President-Operations  of  the  Company
since  February  2000.  Since 1996,  Mr.  Morgenstern  has been  employed by the
Company in various  administrative  capacities.  Mr.  Morgenstern  is the son of
George Morgenstern, Chairman of the Board, President and Chief Executive Officer
of the Company.


      COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

     Section 16(a) of the Securities  Exchange Act of 1934 (the "Exchange  Act")
requires the Company's  executive  officers and  directors,  and persons who own
more than 10% of a registered class of the Company's  equity  securities to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission ("SEC"). These persons are also required by SEC regulation to furnish
the Company  with copies of all Section  16(a) forms they file.  Based solely on
its review of such forms received by it, or written representations from certain
reporting  persons,  the Company believes that during 2000 all applicable filing
requirements were complied with by its executive officers and directors.

                                       3



Item 11.  EXECUTIVE AND DIRECTOR COMPENSATION

EXECUTIVE COMPENSATION

     The  following  table  sets  forth for the  periods  indicated  information
concerning the  compensation of the Chief Executive  Officer and the three other
officers of the  Company who  received in excess of $100,000 in salary and bonus
during 2000.

                                            SUMMARY COMPENSATION TABLE



                                                                      Long Term                     All Other
                                    Annual Compensation           Compensation Awards            Compensation ($)
                                  ----------------------    -------------------------------      ----------------
                                                                                 Securities
Name and                                                    Restricted Stock     Underlying
Principal Position       Year     Salary ($)   Bonus ($)       Awards ($)        Options (#)
- ------------------       ----     ----------   ---------    ----------------     -----------
                                                                                   
George Morgenstern       1998      427,600        --           435,000(1)            --              146,000
Chief Executive Officer  1999      434,700        --              --                 (2)             195,280
                         2000      446,568      550,000           --                                 193,931(3)


Yacov Kaufman            1998      124,200        --              --                 --               25,725
Chief Financial Officer  1999      127,200        --              --                 (4)              22,000
                         2000      150,870       31,958           --                                  27,415(5)


Shlomie Morgenstern      1998      122,700        --              --                 --                --
Vice President           1999      131,400        --              --                 --                --
                         2000      160,000      100,000           --                 --                --

Frank Magnotti           1998      143,500        --              --                 --                --
President, Comverge      1999      158,000        --              --                 --                --
Technologies, Inc.       2000      175,400        --              --                 --                --


(1)  Represents  the fair market value of 155,000 shares of Common Stock awarded
     in a restricted  stock award pursuant to the Company's 1994 Stock Incentive
     Plan,  valued at the market  price for the Common  Stock on the date of the
     award. The shares vested over a two-year period, commencing August 1998.

(2)  In 1999, Mr.  Morgenstern was also awarded options to purchase shares which
     after the combination of the Company's  Comverge and Powercom  subsidiaries
     represented  0.5% of the  outstanding  stock of  Comverge,  at an aggregate
     exercise  price of $9,925.  Mr.  Morgenstern  also  serves as  Chairman  of
     Comverge.

(3)  Consists of (i) $111,640 in  contributions  to a  non-qualified  retirement
     fund,  (ii)  $24,275 in life  insurance  premiums,  (iii)  $42,260 paid for
     accrued vacation (iv) $6,000 in director's fees and (v) $9,756 with respect
     to the imputed value of automobile fringe benefits.

(4)  In 1999,  Mr.  Kaufman was also  awarded  options to purchase  shares which
     after the combination of the Company's  Comverge and Powercom  subsidiaries
     represented  0.5% of the  outstanding  stock of  Comverge,  at an aggregate
     exercise price of $9,925. Mr. Kaufman also serves as CFO of Comverge.

(5)  Represents  primarily  contributions to severance and pension funds.  These
     contributions  are made on  substantially  the same  basis as those made on
     behalf of all Israeli employees.

                                       4




     The  following  tables  summarize  (i) the  options  granted in 2000 to the
executive  officers  named in the Summary  Compensation  Table  above,  (ii) the
potential value of these options at the end of the option term assuming  certain
levels of appreciation of the Company's Common Stock, (iii) the number of shares
acquired by such named  executive  officers upon the exercise of options in 2000
and the value  realized  thereon,  and (iv) the number and value of all  options
held by such executive officers at the end of 2000.

                            OPTION/SAR GRANTS IN 2000


                                                                                            Potential Realizable Value
                                                                                            at Assumed Annual Rates of
                                                                                             Stock Price Appreciation
                                                Individual Grants(1)                           for Option Terms (2)
                             ----------------------------------------------------------     --------------------------
                                              % of Total
                               Number of       Options
                              Securities      Granted to
                              Underlying       Employees                    Exercise or
                                Options        in Fiscal      Base Price     Expiration
Name                          Granted (#)      Year (%)       ($/Share)         Date          5% ($)         10% ($)
- ----                          -----------    ------------     -----------   -----------       ------         -------
                                                                                            
Yacov Kaufman                  20,000(3)         4.9%          $6.375         5/17/05         35,226          77,840
George Morgernstern            97,250(3)        23.6%          $6.375         5/17/05         174,583        386,817


- ----------

(1)  The Company did not grant any stock appreciation rights (SARs) in 2000.

(2)  The dollar  amounts under these columns are the result of  calculations  at
     the 5% and 10%  compounded  annual  appreciation  rates  prescribed  by the
     Securities  and Exchange  Commission  and,  therefore,  are not intended to
     forecast possible future price appreciation, if any, of the Common Stock.

(3)  These  options  represent  extensions  of options  previously  granted  and
     scheduled to expire in April 2000.  Such options were extended  under their
     original  terms,  subject to an additional  vesting  period.  These options
     became exercisable on December 31, 2000.

                                        5



                       AGGREGATED OPTION EXERCISES IN 2000
                     AND FISCAL YEAR END STOCK OPTION VALUES



                            Number of                 Number of Securities Underlying
                             Shares                          Unexercised Options             Value of Unexercised
                            Acquired                          at Year End (#)            In-the-Money Options ($) (1)
                              Upon         Value       ------------------------------    ---------------------------
                            Exercise     Realized
           Name                (#)          ($)        Exercisable      Unexercisable    Exercisable   Unexercisable
           ----             --------     --------      -----------      -------------    -----------   -------------
                                                                                          
George Morgenstern              --           --           347,250           100,000            --             --
Yacov Kaufman                   --           --           116,667           33,333          73,080          49,200
Shlomie Morgernstern          7,500       13,639          29,167            13,333           3,263          17,013


- ----------

(1)  Based on the closing  price for the Common Stock on December  31, 2000,  of
     $4.188.


COMPENSATION OF DIRECTORS

     Each  director of the Company is paid  $1,000 for each  meeting  which such
director attends and is reimbursed for associated  out-of-pocket  expenses.  Dr.
Schiff is paid an  additional  $24,000  per annum for his service as Chairman of
the Audit Committee and Compensation  Committee,  plus additional amounts in the
event of special committee assignments,  and was paid a total of $31,000 in 2000
in connection  with his service on the Board of Directors and Board  committees.
Dr. Kuhn was paid an additional  $50,000 in 2000 in connection  with his service
as Vice Chairman of the Company.  Dr. Malley was paid a total of $14,000 in 2000
in connection  with her service on the Board of Directors and Board  committees.
Mr.  Eisenberger  was paid a total of  $11,000  in 2000 in  connection  with his
service on the Board of Directors.

     In addition to the  director's  fees  described  above,  at the last Annual
Meeting of  Stockholders  each member of the Board of  Directors  who was not an
employee of the Company (Mr. Krause, Ambassador Rabb, Dr. Malley and Dr. Schiff)
was granted  options to  purchase  7,500  shares of Common  Stock at an exercise
price of $4.69 per share  (the fair  market  value of the  Common  Stock on such
date).  These options were granted  pursuant to the Company's  1994 Stock Option
Plan for Outside Directors described below.

     The  Company's  1994 Stock Option Plan for Outside  Directors  provides for
awards  of  non-qualified  options  to  directors  of the  Company  who  are not
employees  of  the  Company  or  its  affiliates  and  who  meet  certain  other
eligibility  criteria.  Pursuant  to  the  plan,  (i)  upon  first  election  or
appointment to the Board of Directors,  each newly elected eligible  director is
granted an option to purchase 7,500 shares of Common Stock and (ii)  immediately
following  each Annual  Meeting of  Stockholders  of the Company,  each eligible
director will  generally be granted an option to purchase 7,500 shares of Common
Stock.  Options granted under the plan have an exercise price per share equal to
the fair  market  value of the  Common  Stock  on the date of  issuance  and are
exercisable  beginning on the first  anniversary  of the date of the grant until
the earliest of (a) ten years from the date of grant, (b) one year from the date
on which an  optionee  ceases  to be an  eligible  director  and (c) the date an
optionee  ceases  to be a  director  (90  days  thereafter  if due to  death  or
disability).  The maximum  number of shares of Common  Stock in respect of which
awards may be granted under the plan is 200,000,  of which  177,500  non-expired
options have been granted to date.

     In addition to serving as a director of the Company,  Mr.  Eisenberger also
serves  as an  employee  of the  Company's  Comverge  subsidiary  and  was  paid
approximately $92,000 during 2000 in connection with such employment.

                                        6



COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The mandate of the Compensation  Committee of the Board of Directors of the
Company encompasses all matters related to compensation, including determination
of stock option and other  stock-based  compensation  and review and approval of
employment terms and compensation of executive officers. Certain matters related
to the  compensation of the Chief  Executive  Officer are also considered by the
full Board of Directors.

     The following  persons served both as members of the Board of Directors and
officers or employees of the Company in 2000:  George  Morgenstern  (Chairman of
the Board,  President and Chief Executive  Officer),  Dr. Kuhn (Vice Chairman of
the Board),  Mr. Krause (Secretary) and Harvey  Eisenberger,  who is employed by
the  Company's  Comverge  subsidiary.  During  2000,  no  member of the Board of
Directors  who  was  also  an  officer  of  the  Company   participated  in  any
deliberations of the Board of Directors or any committee thereof relating to his
own  compensation  or to the  compensation  of any person to whom he is related.
Except as described above, each member of the Board of Directors participated in
2000 in deliberations  of the Board of Directors  concerning  executive  officer
compensation.  For information concerning transactions with the Company in which
directors  or  officers  may  be  deemed  to  have  an  interest,  see  "Certain
Relationships and Related Transactions" below.

EMPLOYMENT ARRANGEMENTS

     George  Morgenstern  serves as Chairman of the Board,  President  and Chief
Executive  Officer of the Company  pursuant  to an  employment  agreement  which
commenced  on January 1, 1997 and was amended in March 2001,  to extend  through
December  31,  2002  (the  "Employment  Agreement").  The  Employment  Agreement
provides  for a salary of $420,000  per annum  (subject to annual  review by the
Board  and an  annual  cost  of  living  adjustment  commencing  in  1998)  plus
contributions to a nonqualified retirement fund equal to 25% of his base salary.
Mr.  Morgenstern's  compensation  pursuant  to  the  Employment  Agreement  also
includes  the  use  of  two  company  automobiles,  premium  payments  on a life
insurance policy owned by Mr. Morgenstern and other fringe benefits.

     Pursuant to the Employment Agreement, Mr. Morgenstern may at any time prior
to December 31, 2002,  elect to terminate  his  employment  with the Company and
thereafter  to continue to serve the Company as a  consultant  for a period (the
"Consulting  Period")  ending on December 31 of the seventh year  following  the
year in which he first commences to serve as a consultant. During the Consulting
Period,  Mr.  Morgenstern  would be entitled to receive an annual consulting fee
plus contributions to a nonqualified  retirement fund and fringe benefits on the
same  basis as  during  the  term of his  employment  as  described  above.  Mr.
Morgenstern's  annual consulting fee during the Consulting Period would be equal
to 50% of his annual salary in effect immediately prior to the Consulting Period
through the end of the fourth calendar year of the Consulting Period, and 25% of
such annual salary for the remainder of the  Consulting  Period  (subject in all
cases to an  annual  cost of living  adjustment).  However,  if Mr.  Morgenstern
elects  to  become  a  consultant  following  a  breach  by the  Company  of its
obligations  under the Employment  Agreement or following a change in control of
the Company (as defined in the Employment  Agreement),  Mr. Morgenstern would be
entitled  to receive  his full  annual  salary  until  December  31,  2002,  and
thereafter  to  receive  an annual  consulting  fee as  described  above for the
balance of the Consulting  Period. The Company is obligated under the Employment
Agreement  to fund at the  beginning  of the  Consulting  Period all  amounts to
become payable to Mr.  Morgenstern for consulting  services and to fund upon his
death all  amounts  payable to his  estate.  During  the term of the  Employment
Agreement (including any Consulting Period), Mr. Morgenstern may not engage in a
business that is in substantial and direct  competition with the business of the
Company or any of its subsidiaries.

     In addition to the  compensation  provided  for  Employment  Agreement,  in
January  2000 the  Company  awarded  Mr.  Morgenstern  a bonus in the  amount of
$550,000,  at least  half of which was to be used to reduce  the  balance of his
outstanding  loan from the Company  discussed below under "Certain Related Party
Transactions."  The Board also approved an  additional  bonus of up to $300,000,
$150,000  of which would have been  payable  only upon  completion  of an equity
financing  of the  Company's  Comverge  subsidiary  of at least $10  million  by
December 31, 2000 (which condition was not satisfied),  and $150,000 of which is
payable only if Mr.  Morgenstern  remains  employed  full-time as President  and
Chief Executive  Officer of the Company through  December 31, 2001.  Under terms
approved  by the Board,  at least  one-half of


                                        7



any bonus  paid was to be used to reduce  any then  outstanding  balance of  the
Company's loan to Mr. Morgenstern.  In February, the Board of Directors approved
a purchase by the Company of an  aggregate of up to $300,000 of the Common Stock
from Mr. Morgenstern at fair market value,  provided that the proceeds from such
purchases  be applied to reduce the  balance of his loans.  The loans were fully
repaid during the first quarter of 2000, from the bonus and from the proceeds of
sales by Mr.  Morgenstern of Common Stock to the Company on February 2, 2000 and
March 2, 2000 at then current market prices.

     Yacov Kaufman serves as Vice President and Chief  Financial  Officer of the
Company and of DSI Israel pursuant to an employment  agreement entered into with
the  Company on January 1, 1999.  Although  the  employment  agreement  with Mr.
Kaufman  expired by its terms on  December  31,  2000 and has not been  formally
renewed,  the Company continues to employ Mr. Kaufman, and Mr. Kaufman continues
to serve as Vice President and Chief Financial Officer of the Company and of DSI
Israel, pursuant to the terms of such employment agreement.

     The stock option agreements with the Company's executive officers generally
provide  for  accelerated  vesting  in the event of a "Change  in Control of the
Company" (as defined in such agreements).

                                       8



Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table and the notes  thereto set forth  information,  as of
March 31, 2001 (except as otherwise  set forth  herein),  concerning  beneficial
ownership (as defined in Rule 13d-3 under the  Securities  Exchange Act of 1934)
of Common Stock by (i) each director of the Company,  (ii) each of the executive
officers of the Company named in the Summary Compensation Table under "Executive
and Director Compensation" and (iii) all executive officers and directors of the
Company as a group. Except as indicated,  the Company is not aware of any person
that is the beneficial owner of more than 5% of the outstanding  Common Stock of
the Company.

                                             Number of Shares      Percentage of
Name and Address of                           of Common Stock      Common Stock
Beneficial Owner(1)(2)                     Beneficially Owned(2)  Outstanding(2)
- ----------------------                     ---------------------  --------------
George Morgenstern                               683,104(3)            9.36%
Howard Gutzmer                                   479,015(4)            6.97%
  5550 Oberlin Drive
  San Diego, CA 92121
Dimensional Fund Advisors Inc.                   514,700(5)            7.49%
  1299 Ocean Avenue
  Santa Monica, CA 90401
Robert L. Kuhn                                   372,656(6)            5.29%
Yacov Kaufman                                    116,667(7)            1.70%
Harvey Eisenberger                                10,000(7)             *
Sheldon Krause                                    51,000(8)             *
Susan L. Malley                                   22,500(7)             *
Hon. Maxwell M. Rabb                              50,000(7)             *
Allen I. Schiff                                   50,200(9)             *
Shlomie Morgenstern                               29,167(7)             *
Frank Magnotti                                        --                --
All executive officers and directors of the
Company as a group (9 people)                  1,385,294              17.78%

- ----------

*    Less than 1%

(1)  Unless otherwise indicated, business address is in care of the Company.

(2)  Unless  otherwise  indicated,  each person has sole  investment  and voting
     power with respect to the shares  indicated.  For purposes of this table, a
     person or group of persons is deemed to have "beneficial  ownership" of any
     shares as of a given date which such person has the right to acquire within
     60 days after such date.  Percentage  information is based on the 6,869,787
     shares outstanding as of April 25, 2001.

(3)  Consists of (i) 255,854 shares held by Mr.  Morgenstern,  including  20,000
     shares  received by Mr.  Morgenstern  pursuant to a restricted  stock grant
     which are not yet fully  vested,  and (ii)  427,250  currently  exercisable
     options held by Mr. Morgenstern.

(4)  As of December 31, 1999,  based on  information  in a Schedule 13G filed by
     such person on May 2, 2000.

(5)  As of December 31, 2000,  based on  information  in a Schedule 13G filed by
     such person on February 2, 2001.

(6)  Consists of 192,656 shares and 180,000 currently  exercisable  options held
     by Dr. Kuhn.

(7)  Consists of currently exercisable options.

(8)  Consists of 1,000 shares and 50,000 currently  exercisable  options held by
     Mr. Krause.

(9)  Consists of 200 shares and 50,000 currently exercisable options held by Dr.
     Schiff.

                                        9



Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During 1996 and 1997,  the Company made a loan to George  Morgenstern,  its
Chairman,  President and Chief Executive Officer.  The principal of and interest
on such loan was payable in installments as follows:  (i) 105 bi-weekly payments
of $3,000 each,  commencing  January 1998,  (ii) four annual payments of $72,000
each,  commencing  December 1998, and (iii) a final payment on December 31, 2001
in an amount equal to the then  remaining  outstanding  balance of the loan plus
accrued and unpaid  interest.  In addition,  in 1998, the Company made a loan to
Mr.  Morgenstern  in the  amount of $63,000 in  connection  with the  payment of
income tax relating to the vesting of a restricted stock award. During 2000, the
highest total aggregate  balance of loans to Mr.  Morgenstern was $511,000.  The
loans  were  fully  repaid  during  the first  quarter  of 2000,  from the bonus
described  and the proceeds of sales by Mr.  Morgenstern  of Common Stock to the
Company at then current market prices described above.

     During 2000,  the Company paid  approximately  $474,000 for legal  services
rendered and reimbursement of out-of-pocket  expenses to Ehrenreich  Eilenberg &
Krause LLP, a law firm in which Sheldon Krause,  a director and Secretary of the
Company,  is a member.  Such fees related to services rendered by Mr. Krause and
other members and  employees of his firm,  as well as certain  special and local
counsel retained and supervised by his firm who performed  services on behalf of
the Company.  Mr.  Krause is the  son-in-law  of George  Morgenstern,  Chairman,
President and Chief Executive Officer of the Company.

     As reported on the Summary  Compensation Table above,  Shlomie Morgenstern,
the son of George Morgenstern,  Chairman,  President and Chief Executive Officer
of the  Company,  received  compensation  during  2000 in  connection  with  his
positions as Vice President - Operations.

                                       10



                                    SIGNATURE

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be signed
on its behalf by the undersigned,  thereunto duly authorized, in the Township of
Mahwah, State of New Jersey, on April 30, 2001.


                                      DATA SYSTEMS & SOFTWARE INC.



                                      By: /s/ Sheldon Krause
                                         ----------------------------
                                           Sheldon Krause, Secretary


                                       11