On March 26, 2009, Pinnacle Data Systems, Inc. (the "Company") entered into a Second Amendment to Amended and Restated Loan Agreement (the "Second Amendment") with KeyBank National Association ("KeyBank"). The Second Amendment provides for the amendment of certain terms of an Amended and Restated Loan Agreement by and between the Company and KeyBank, dated as of September 30, 2008, and as amended by that certain First Amendment to Amended and Restated Loan Agreement dated December 24, 2008 (collectively, the "Loan Agreement").

The Second Amendment provides for the following material amendments to the Loan Agreement:

• the agreement has been revised to reflect a reduction in the principal amount of the line of credit from $8,000,000 to $5,500,000;

• the agreement has been revised to reflect a reduction in the amount of the maximum inventory Borrowing Base from $5,000,000 to $2,500,000; and

• the agreement has been revised to reflect the execution of a replacement cognovit promissory note in the principal amount of $5,500,000 (the "Replacement Note").

The change in the amount of the line of credit sufficiently supports the Company's future projected operating cash requirements.

Except as disclosed in this Form 8-K, all other material terms and conditions of the Loan Agreement remain the same.

The Second Amendment is attached as Exhibit 10.1.

The Replacement Note is attached as Exhibit 10.2.

The information described above under Item 1.01 of this Form 8-K is hereby incorporated by reference into this Item 2.03.

(c) Exhibits

      Exhibit No.   Description
      10.1          Second Amendment to Amended and Restated Loan Agreement

      10.2          Cognovit Promissory Note, Demand Line of Credit