Pinnacle Data Systems (PNS) 8-K/A Financial Statements for the Years

Exhibit 99.2

The required pro forma financial information is set forth below.

INTRODUCTION TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The pro forma data is presented for informational purposes only and may not necessarily reflect future results of operations or financial position or what the results of operations or financial position would have been had Pinnacle Data Systems, Inc. (PDSi) and GNP Computers, Inc. (GNP) been operating as combined entities for the periods presented. The unaudited pro forma combined financial statements should be read in conjunction with historical financial statements, including the notes thereto, of PDSi included in our Form 10-KSB for the year ended December 31, 2004, and the historical financial statements included elsewhere in the Form 8-K/A.

The accompanying unaudited pro forma combined financial statements are based on the historical financial statements of PDSi, and GNP after giving effect to its acquisition by PDSi. PDSi completed the acquisition of substantially all of the assets and assumed certain liabilities of GNP on August 15, 2005.

The unaudited pro forma combined balance sheet as of June 30, 2005, is presented as if the acquisition of GNP occurred on June 30, 2005. The unaudited pro forma combined statements of operations for the year ended December 31, 2004 and for the six months ended June 30, 2005, are presented as if the acquisition of GNP had occurred on January 1, 2004.

Pro Forma Combined Statement of Operations

For the Six Months Ending June 30, 2005

(in thousands, except per share data)

Unaudited

	PDSi			GNP			Pro Forma Adjustments			Pro Forma
SALES
Product sales	$	10,303		$	11,039					$	21,342
Service sales		4,134			888						5,022
		14,437			11,927			—			26,364
COST OF SALES
Product sales		8,869			8,260						17,129
Service sales		1,902			297						2,199
		10,771			8,557			—			19,328
GROSS PROFIT		3,666			3,370			—			7,036
OPERATING EXPENSES		3,271			5,618			(115	)(a)		8,774
INCOME (LOSS) FROM OPERATIONS		395			(2,248	)		115			(1,738	)
OTHER INCOME (EXPENSE)		(61	)		38						(23	)
INCOME (LOSS) BEFORE INCOME TAXES		334			(2,210	)		115			(1,761	)
INCOME TAXES		126			19						145
NET INCOME (LOSS)	$	208		$	(2,229	)	$	115		$	(1,906	)
BASIC EARNINGS (LOSS) PER SHARE	$	0.04								$	(0.33	)
DILUTED EARNINGS (LOSS) PER SHARE	$	0.03								$	(0.33	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		5,780,083									5,780,083
Diluted		6,272,914									5,780,083

Pro-Forma Combined Balance Sheet

June 30, 2005

(in thousands, except per share data)

	PDSi			GNP			Pro Forma Adjustments			Pro Forma
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	16		$	642		$	(658	)(b)	$	0
Accounts receivable		4,759			3,718						8,477
Allowance for doubtful accounts		(30	)		(40	)					(70	)
Inventory		5,607			3,232						8,839
Prepaid expenses		185			99			(26	)(c)		258
Refundable income taxes		267			—						267
Deferred income taxes		477			—						477
		11,280			7,651			(684	)		18,247
PROPERTY AND EQUIPMENT
Total property and equipment		3,949			4,773			—			8,722
Less accumulated depreciation and amortization		(3,017	)		(4,529	)		(191	)		(7,737	)
		932			244			(191	)(d)		985
OTHER ASSETS		24			157			—			181
	$	12,236		$	8,052		$	(875	)	$	19,413
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Line of credit		3,236			1,800			(376	)(e)		4,660
Current portion of long-term debt		—			48			(48	)(f)		—
Accounts payable		2,411			3,890						6,300
Accrued expenses:		—									—
Wages, payroll taxes and benefits		420			493			(182	)(g)		731
Income taxes		—			330						330
Other		265			312			355	(h)		932
Unearned revenue		74			182						256
		6,406			7,055			(251	)		13,210
LONG-TERM LIABILITIES
Long-term debt, less current portion		—			253			(253	)(f)		—
Deferred income taxes		101			—						101
		101			253			(253	)		101
STOCKHOLDERS’ EQUITY
Prefered stock		—			25			(25	)(i)		—
Common stock		2,594			6			(6	)(i)		2,594
Treasury stock		—			(6	)		6	(i)		2,594
Additional paid-in-capital		680			99			274	(i)		1,053
Retained earnings		2,454			620			(620	)(i)		2,454
		5,729			744			(371	)		6,102
	$	12,236		$	8,052		$	(875	)	$	19,413

Pro Forma Combined Statement of Operations

For the Year Ended December 31, 2004

(in thousands, except per share data)

	PDSi			GNP			Pro Forma Adjustments			Pro Forma
							(Unaudited)			(Unaudited)
SALES
Product sales		28,351			16,268						44,619
Service sales		6,046			4,853			(12	)(j)		10,887
		34,397			21,121			(12	)		55,506
COST OF SALES
Product sales		22,653			13,957						36,610
Service sales		3,730			840						4,570
		26,383			14,797			—			41,180
GROSS PROFIT		8,015			6,324			(12	)		14,327
OPERATING EXPENSES		6,616			11,440			(665	)(a)		17,391
INCOME (LOSS) FROM OPERATIONS		1,399			(5,116	)		653			(3,064	)
OTHER INCOME (EXPENSE)		(113	)		14						(99	)
INCOME (LOSS) BEFORE INCOME TAXES		1,286			(5,102	)		653			(3,163	)
INCOME/(LOSS) TAX EXPENSE (BENEFIT)		402			(1	)					401
NET INCOME (LOSS)	$	884		$	(5,101	)	$	653		$	(3,564	)
BASIC EARNINGS PER COMMON SHARE	$	0.16								$	(0.64	)
DILUTED EARNINGS PER COMMON SHARE	$	0.14								$	(0.64	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		5,572,811									5,572,811
Diluted		6,121,675									5,572,811

NOTE 1 – PRO FORMA ADJUSTMENTS TO THE COMBINED CONSOLIDATED FINANCIAL STATEMENTS

PRO FORMA COMBINED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2005

(a) Operating expenses – decrease in depreciation expense as a result of purchase accounting.

PRO FORMA COMBINED BALANCE SHEET AT JUNE 30, 2005

(b) Cash – includes the payoff of the line of credit balance, penalties and interest and the payout of vacation required by the state of California.

(c) Prepaid expenses – to reduce assets to the fair market value.

(d) Property and equipment – to adjust to estimated fair market.

(e) Line of credit – reduced due to payoff.

(f) Term debt – amount was forgiven.

(g) Wages, payroll taxes and benefits – increased for the stay bonuses offered and decreased as a result of the vacation payout required by the state of California.

(h) Other – increases the total liabilities as a result of legal, accounting and other direct acquisition costs.

(i) Equity – to adjust GNP’s current assets to fair market values at acquisition.

PRO FORMA COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004

(a) Operating expenses – decrease in depreciation expense as a result of purchase accounting.

(j) Service sales – eliminates sale that occurred in 2004 between the Company and GNP.