UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): ~~January~~May 2817, 2005

TeraForce Technology Corporation
__________________________________________
(Exact name of registrant as specified in its charter)


Delaware	0-11630	76-0471342
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

1240 East Campbell Road, Richardson, Texas		75081
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


Registrant’s telephone number, including area code:		469-330-4960

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.0302. ~~Creation~~Results of aOperations ~~Direct~~and Financial ~~Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant~~Condition.

On ~~January~~May 2817, 2005 ~~our~~the ~~wholly-owned~~Company ~~subsidiary,DNA~~issued ~~Computing~~a ~~Solutions,~~press ~~Inc.~~release ~~("DCS"),~~announcing ~~expanded~~ its ~~revolving~~financial ~~credit~~results ~~arrangement~~for ~~with~~its ~~FirstCapital~~first ~~Bank~~quarter ~~("FirstCapital")~~ended byMarch ~~entering~~31, ~~into~~2005. The aCompany's ~~new~~press ~~Loan~~release ~~Agreement~~is ~~whereby~~attached itas ~~can~~Exhibit ~~borrow~~99.1 upand tois ~~$550,000~~incorporated onherein aby ~~revolving basis~~reference. The ~~new~~information ~~loan~~in ~~bears~~this ~~interest~~Current atReport ~~prime~~on ~~plus~~Form 2%8-K and ~~all~~the ~~amounts~~Exhibit ~~outstanding~~attached ~~under~~hereto ~~the~~shall ~~loan~~not ~~are~~be ~~due~~deemed ~~July~~"filed" ~~31,~~for ~~2005. The~~purposes ~~new~~of ~~loan~~Section is18 ~~secured~~of bythe ~~certain~~Securities ~~intangible~~Exchange ~~assets~~Act of ~~DCS~~1934 ~~and~~(the by"Exchange ~~guaranties~~Act") ~~provided~~or byotherwise asubject ~~group~~to ofthe ~~investors,~~liabilities ~~including~~of ~~one~~that ofsection, ~~our~~nor ~~directors.This~~shall ~~loan~~it isbe indeemed ~~addition~~incorporated toby ~~previous~~reference ~~loans~~in ~~with~~any ~~FirstCapital~~filing ~~amounting~~under tothe ~~$1,175,000~~Securities ~~which~~Act ~~are~~of ~~secured~~1933 byor the ~~same~~Exchange ~~group~~Act, regardless of ~~investors~~any ~~providing~~general ~~the~~incorporation ~~guaranies~~language ~~for~~in ~~the~~such ~~new $550,000 loan~~filing.

Item 39.0201. ~~Unregistered~~Financial ~~Sales~~Statements ofand ~~Equity Securities~~Exhibits.

AaExhibit ~~consideration for providing the guaranties that secure the loan agreement referred to in Section 2~~99.031 ~~herein,~~Press weRelease ~~have entered into a Reimbursement Agreement~~ dated ~~January~~May 26, 2005 with the guarantors. Pursuant to the Reimbursement Agreement and related agreements, the investors have the right to purchase 3,437,500 shares of our common stock for $550,000 in cash, the proceeds of which will be used to repay amounts outstanding under the new loan agreement and to provide for the release of the guaranties. In addition, the guarantors have recieved warrants to pruchase an aggregate of 6,875,000 shares of our common stock at a price of $0.17 ~~per share. The warrants may be exercised at any time through January 31~~, 2011.We have entered into a registration rights agreement with each of the investors and have agreed to file a registration statement registering the shares of common stock to be issued upon exercise of the conversion rights and the warrants no later than March 31, 2005.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TeraForce Technology Corporation
February 1, 2005	By:	Herman M. Frietsh
May 17, 2005	By:	Robert P. Capps
		Name: Herman M. Frietsh
		Name: Robert P. Capps
		Title: Chairman and CEO
		Title: Chief Financial Officer

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Exhibit Index

Exhibit No.		Description
4.1		Form of Warrant
99.1		Press release dated May 17, 2005
4.2		Form of Registration Rights Agreement
10.1		Reimbursement Agreement
10.2		Loan Agreement

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