PNS Pinnacle Data Systems Common Stock

Pinnacle Data Systems, Inc. (PDSi) (AMEX: PNS) today announced that it has entered into an agreement with Telrad Networks Ltd (Telrad), an Israel-based telecommunications equipment and services organization that provides communications products and services used by millions of end-users worldwide. Under the terms of this agreement, PDSi will supply customized versions of its carrier-grade ComputeNode� chassis manufactured to Telrad�s specific requirements. PDSi�s ComputeNode line is based on the PCI Industrial Computer Manufacturers Group (PICMG) Compact PCI (cPCI) standard. Two different designs will be supplied to Telrad - a 4U chassis, and a larger 8U, both with customized backplanes and featuring specially-enhanced versions of PDSi�s proven Alert!Node chassis management and alarming card. Both chassis designs have passed required telecommunications certification for use in North American (NEBS) and international markets. Telrad will integrate these chassis into Carrier Grade Voice-over-IP (VoIP) Trunk/Media gateway systems to be sold globally by their customer, a major North American telecommunications OEM, over the next several years. �Telrad chose to work with PDSi because of their experience with carrier-grade systems, including NEBS certification,� said Moiz Terem, Vice President of Telrad�s Commatch Line of Business. Continuing, �We also selected PDSi for their experience in cPCI-based telecommunications systems, plus the company�s ability to rapidly design and deliver the customized solutions we require.� Michael R. Sayre, President and Chief Executive Officer, stated, �Developing this significant relationship with Telrad over the past two years was accomplished by a talented team of PDSi sales and engineering folks located in the U.S. (California and Ohio) and The Netherlands. We look forward to working with Telrad on this multi-year program and continue to discuss additional opportunities to provide world-class telecommunications solutions for its global customer base.� About PDSi PDSi provides computer design, production, and repair services to original equipment manufacturers who build computers into their products in industries including medical equipment, telecommunications, defense and imaging. PDSi also helps major computer platform manufacturers respond to customer requirements for customized solutions and extended service life. PDSi specializes in areas where these OEMs often get little help from larger outsource firms, solving the challenges associated with complex technologies, low to medium volume production, and long-term service of third party products. Not simply a repair depot or a contract manufacturer, PDSi represents a more collaborative and flexible outsourcing partner who helps its clients manage costs, meet unplanned demand changes, improve customer satisfaction, and respond aggressively to new trends in the technology market place. With its innovative and proactive staff of engineering, manufacturing, program management and supply chain specialists, PDSi tailors solutions that meet the particular business and operational needs of each OEM. For more information, visit the PDSi website at www.pinnacle.com. About Telrad Networks Telrad Networks has been developing carrier-grade communications equipment for more than half a century. Telrad provides development capabilities that focus on integration of core technologies into standardized, Tier-1 carrier-class products. Telrad is devoted to providing a highly flexible development team, allowing its partners and customers a high level of control in the development cycle and product roadmap. Telrad is a privately-owned company founded in 1951. For more information, visit the Telrad website at www.telrad.co.il.