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.

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.

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.

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.

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.

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

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).

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.

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.

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