**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

| x      | QUARTERLY REPORT PURSUANT TO SECTION              13 OR              15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|--------|--------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                               |
|   | For                the Quarterly Period Ended March 31, 2006                                                       |
|   |  OR                                                                                                           |
| o      | TRANSITION REPORT PURSUANT TO SECTION              13 OR              15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|   |                                                                                                               |
|   | For                the transition period from                _____________________to______________________         |

|   |                              |   |
|--------|-----------------------------------|--------|
|   | **PokerTek,                Inc.** |   |

| **North                  Carolina**                                                            |   | **61-1455265**                                        |
|------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| (State                  or other jurisdiction of incorporation or organization)                |   | (I.R.S.                  Employer Identification No.) |
|                                                                                           |
| **1020                  Crews Road, Suite J, Matthews, North Carolina                  28106** |
| (Address                  of principal executive                  offices)                     |

|                                                                                     |
|------------------------------------------------------------------------------------------|
| **(704)                849-0860**                                                        |
| (Registrant’s                telephone number, including area                code) |

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**POKERTEK,      INC.**

**QUARTERLY      REPORT ON FORM 10-Q **

**Table      of Contents**

|                    | **PART                I - FINANCIAL INFORMATION**                                                                         | **Page** |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------|----------|
| Item                1.  | Financial                Statements                                                                                       | 1        |
| Item                2.  | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations | 8        |
| Item                3.  | Quantitative                and Qualitative Disclosures about Market Risk                                                 | 11       |
| Item                4.  | Controls                and Procedures                                                                                    | 11       |
|                    |                                                                                                                      |     |
|                    | **PART                II - OTHER INFORMATION**                                                                            |     |
|                    |                                                                                                                      |     |
| Item                1.  | Legal                Proceedings                                                                                          | 12       |
| Item                1A. | Risk                Factors                                                                                               | 12       |
| Item                2.  | Unregistered                Sales of Equity Securities and Use of Proceeds                                                | 12       |
| Item                6.  | Exhibits                                                                                                                  | 13       |
| SIGNATURES              | 14                                                                                                                        |

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**PART      I. - FINANCIAL INFORMATION**

**Item      1. Financial Statements **

**PokerTek,      Inc.**

**(A      Development Stage Company)**

**Balance      Sheets**

|                                                                                                                                                                                                                                                                               |   |   | March                  31, 2006  |   |   | December                  31, 2005  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------|--------|--------|------------------------------------------|--------|
| **Assets**                                                                                                                                                                                                                                                                         |   |   | (unaudited)                 |   |   |                                     |   |
| Current                  Assets                                                                                                                                                                                                                                                    |   |   |                                  |   |   |                                     |   |
| Cash                  and cash equivalents                                                                                                                                                                                                                                         |   | $      | 18,290,940                            |   | $      | 20,373,900                               |   |
| Trade                  receivables                                                                                                                                                                                                                                                 |   |   | 228,049                               |   |   | 151,200                                  |   |
| Prepaid                  expenses and other assets                                                                                                                                                                                                                                 |   |   | 370,086                               |   |   | 315,550                                  |   |
| Inventory                  (Note 3)                                                                                                                                                                                                                                                |   |   | 1,031,790                             |   |   | 600,675                                  |   |
| **Total                  current assets**                                                                                                                                                                                                                                          |   |   | 19,920,865                            |   |   | 21,441,325                               |   |
|                                                                                                                                                                                                                                                                               |   |   |                                  |   |   |                                     |   |
| Other                  Assets                                                                                                                                                                                                                                                      |   |   |                                  |   |   |                                     |   |
| Security                  deposit                                                                                                                                                                                                                                                  |   |   | 2,800                                 |   |   | 2,800                                    |   |
| Property                  and equipment, net of accumulated depreciation (Note 2)                                                                                                                                                                                                  |   |   | 1,423,608                             |   |   | 1,259,025                                |   |
|                                                                                                                                                                                                                                                                               |   |   |                                  |   |   |                                     |   |
| **Total                  assets**                                                                                                                                                                                                                                                  |   | $      | 21,347,273                            |   | $      | 22,703,150                               |   |
|                                                                                                                                                                                                                                                                               |   |   |                                  |   |   |                                     |   |
| **Liabilities                  and Shareholder's Equity**                                                                                                                                                                                                                          |   |   |                                  |   |   |                                     |   |
| Current                  Liabilities                                                                                                                                                                                                                                               |   |   |                                  |   |   |                                     |   |
| Accounts                  payable and accrued expenses                                                                                                                                                                                                                             |   | $      | 365,208                               |   | $      | 214,465                                  |   |
|                                                                                                                                                                                                                                                                               |   |   |                                  |   |   |                                     |   |
| Commitments                  (Notes 4 and 5)                                                                                                                                                                                                                                       |   |   |                                  |   |   |                                     |   |
|                                                                                                                                                                                                                                                                               |   |   |                                  |   |   |                                     |   |
| Shareholder's                  Equity (Note 6)                                                                                                                                                                                                                                     |   |   |                                  |   |   |                                     |   |
| Preferred                    stock, no par value per share; authorized 5,000,000, none issued                    and outstanding                                                                                                                                                   |   |   | -                                     |   |   | -                                        |   |
| Common                      stock, no par value per share; authorized 100,000,000 shares,                      issued and                      outstanding 9,472,020 and 9,468,020 at March 31, 2006 and December                      31,                      2005, respectively |   |   | -                                     |   |   | -                                        |   |
| Capital                                                                                                                                                                                                                                                                            |   |   | 27,264,156                            |   |   | 27,180,041                               |   |
| Accumulated                  deficit during the development stage                                                                                                                                                                                                                  |   |   | (6,282,091                            | )      |   | (4,691,356                               | )      |
| **Total                  shareholder's equity**                                                                                                                                                                                                                                    |   |   | 20,982,065                            |   |   | 22,488,685                               |   |
|                                                                                                                                                                                                                                                                               |   |   |                                  |   |   |                                     |   |
| **Total                  liabilities and shareholder's equity**                                                                                                                                                                                                                    |   | $      | 21,347,273                            |   | $      | 22,703,150                               |   |

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**PokerTek,      Inc.**

**(A      Development Stage Company)**

**Statements      of Operations**

**(Unaudited)**

|                                                                             |   |   | Three                  Months Ended March 31,  |   |   | Period                  fromAug                  22, 2003(date                  of inception) to March 31,  |   |
|----------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------|--------|
|                                                                             |   |   | 2006                                           |   |   | 2005                                                                                                        |   |   | 2006  |   |
|                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Revenues:                                                                        |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| License                  Fee                                                     |   | $      | 360,000                                             |   | $      | -                                                                                                                |   | $ | 630,400 |   |
| Product                  Sales                                                   |   |   | 112,516                                             |   |   | -                                                                                                                |   |   | 156,464 |   |
| **Total                  revenues**                                              |   | $      | 472,516                                             |   | $      | -                                                                                                                |   | $ | 786,864 |   |
|                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Costs                  and operating expenses:                                   |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Cost                  of product sales                                           |   | $      | 109,688                                             |   | $      | -                                                                                                                |   | $ | 148,194 |   |
| Selling,                  general and administrative                             |   |   | 992,576                                             |   |   | 259,779                                                                                                          |   |   | 3,206,682 |   |
| Research                  and development                                        |   |   | 1,040,759                                           |   |   | 464,988                                                                                                          |   |   | 3,870,112 |   |
| Depreciation                                                                     |   |   | 115,923                                             |   |   | 3,314                                                                                                            |   |   | 236,012 |   |
| **Total                  costs and operating expenses**                          |   |   | 2,258,946                                           |   |   | 728,081                                                                                                          |   |   | 7,461,000 |   |
|                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| **Operating                  loss**                                              |   |   | (1,786,430                                          | )      |   | (728,081                                                                                                         | )      |   | (6,674,136 | ) |
|                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Non-operating                  income:                                           |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Interest                  income, net                                            |   |   | 195,695                                             |   |   | 3,082                                                                                                            |   |   | 392,045 |   |
|                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| **Net                  loss**                                                    |   | $      | (1,590,735                                          | )      | $      | (724,999                                                                                                         | )      | $ | (6,282,091 | ) |
|                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Net                  loss per common share - basic and diluted:                  |   | $      | (0.17                                               | )      | $      | (0.11                                                                                                            | )      |   |  |   |
|                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Weighted                  average common shares outstanding - basic and diluted: |   |   | 9,469,598                                           |   |   | 6,695,576                                                                                                        |   |   |   |   |

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**PokerTek,      Inc.**

**(A      Development Stage Company)**

**Statements      of Cash Flows**

**(Unaudited)**

|                                                                                                                                                                                                    |   |   | Three                  Months Ended March 31,  |   |   | Period                  fromAug                  22, 2003(date                  of inception) to March 31,  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                    |   |   | 2006                                           |   |   | 2005                                                                                                        |   |   | 2006  |   |
| Cash                  Flows from Operating Activities                                                                                                                                                   |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Net                  loss                                                                                                                                                                               |   | $      | (1,590,735                                          | )      | $      | (724,999                                                                                                         | )      | $ | (6,282,091 | ) |
| Adjustments                  to reconcile net loss to net cash used in operating                  activities:                                                                                           |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Depreciation                                                                                                                                                                                            |   |   | 115,923                                             |   |   | 3,314                                                                                                            |   |   | 236,012 |   |
| Stock-based                  compensation expense                                                                                                                                                       |   |   | 120,786                                             |   |   | 1,122                                                                                                            |   |   | 412,269 |   |
| Provision                  for other receivables                                                                                                                                                        |   |   | -                                                   |   |   | -                                                                                                                |   |   | 8,000 |   |
| Changes                  in assets and liabilities:                                                                                                                                                     |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Increase                  in security deposit                                                                                                                                                           |   |   | -                                                   |   |   | -                                                                                                                |   |   | (2,800 | ) |
| Increase                  in trade and other receivables                                                                                                                                                |   |   | (76,849                                             | )      |   | -                                                                                                                |   |   | (236,049 | ) |
| Increase                  in prepaid expenses and other assets                                                                                                                                          |   |   | (54,536                                             | )      |   | -                                                                                                                |   |   | (370,086 | ) |
| Increase                  in inventory                                                                                                                                                                  |   |   | (431,115                                            | )      |   | (112,464                                                                                                         | )      |   | (1,031,790 | ) |
| Increase                    (decrease) in accounts payable and accrued expenses                                                                                                                         |   |   | 150,743                                             |   |   | (9,271                                                                                                           | )      |   | 365,208 |   |
| **Net                  cash used in operating activities**                                                                                                                                              |   |   | (1,765,783                                          | )      |   | (842,298                                                                                                         | )      |   | (6,901,327 | ) |
| Cash                  flows from investing activities                                                                                                                                                   |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Purchases                  of property and equipment                                                                                                                                                    |   |   | (280,506                                            | )      |   | -                                                                                                                |   |   | (1,659,620 | ) |
| **Net                  cash used in investing activities**                                                                                                                                              |   |   | (280,506                                            | )      |   | -                                                                                                                |   |   | (1,659,620 | ) |
| Cash                  flows from financing activities                                                                                                                                                   |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Proceeds                  (expenses) from issuance of common stock,  private                  placement of common stock and common  stock                  options exercised, net of expenses |   |   | (36,671                                             | )      |   | 1,364,746                                                                                                        |   |   | 26,851,887 |   |
| **Net                  cash provided by (used in) financing activities**                                                                                                                                |   |   | (36,671                                             | )      |   | 1,364,746                                                                                                        |   |   | 26,851,887 |   |
| **Net                    increase (decrease) in cash and cash**equivalents                                                                                                                              |   |   | (2,082,960                                          | )      |   | 522,448                                                                                                          |   |   | 18,290,940 |   |
| Cash                  and cash equivalents:                                                                                                                                                             |   |   |                                                |   |   |                                                                                                             |   |   |   |   |
| Beginning                                                                                                                                                                                               |   |   | 20,373,900                                          |   |   | 1,322,871                                                                                                        |   |   | - |   |
| Ending                                                                                                                                                                                                  |   | $      | 18,290,940                                          |   | $      | 1,845,319                                                                                                        |   | $ | 18,290,940 |   |

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**POKERTEK,      INC.**

**NOTES      TO UNAUDITED FINANCIAL STATEMENTS **

**March      31, 2006**

**Note      1. **
**Nature      of Business and Interim Basis of Presentation**

***Basis      of Presentation.***
*** ***

***Description      of Business.***

*Recent      accounting pronouncements:*

*“Accounting      for Servicing of Financial Assets,” *
*“Accounting      for Transfers and Servicing of Financial Assets and Extinguishments of      Liabilities”. *

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**Note      2. Property and Equipment**

|                                          |   |   | Useful                life (years)  |   |   | March                31, 2006  |   |   | December                31, 2005  |   |
|-----------------------------------------------|--------|--------|------------------------------------------|--------|--------|-------------------------------------|--------|--------|---------------------------------------------|--------|
| PokerProTM                systems        |   |   | 3                                        |   | $      | 1,261,948                           |   | $      | 1,074,423                                   |   |
| Equipment                                     |   |   | 5                                        |   |   | 343,468                             |   |   | 273,628                                     |   |
| Leasehold                improvements         |   |   | Lease                term                |   |   | 54,204                              |   |   | 31,063                                      |   |
|                                          |   |   |                                     |   | $      | 1,659,620                           |   | $      | 1,379,114                                   |   |
| Less:                accumulated depreciation |   |   |                                     |   |   | (236,012                            | )      |   | (120,089                                    | )      |
| Property                and equipment, net    |   |   |                                     |   | $      | 1,423,608                           |   | $      | 1,259,025                                   |   |

**Note      3. Inventory**

|                            |   | March                31, 2006 |      | December                31, 2005 |   |
|---------------------------------|--------|-------------------------------|-----------|---------------------------------------|--------|
| Product                hardware |   | $                             | 1,031,790 |                                  | $      | 600,675 |   |

**Note      4. Commitments**

| Year                EndingMarch                31, |   |   | Amount  |   |
|----------------------------------------------------|--------|--------|--------------|--------|
| 2007                                               |   | $      | 135,920      |   |
| 2008                                               |   |   | 135,660      |   |
| 2009                                               |   |   | 132,800      |   |
| 2010                                               |   |   | 132,800      |   |
|                                               |   | $      | 537,180      |   |

**Note      5. Employee Benefit Plan**

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**Note      6. Shareholder’s Equity**

*Stock      Incentive Plan*

----

|                                   |   |   | March                31,  |   |
|----------------------------------------|--------|--------|--------------------------------|--------|
|                                   |   |   | 2006                      |   |   | 2005  |   |
| Risk-free                interest rate |   |   | 4.82                           | %      |   | 3.70 | % |
| Expected                volatility     |   |   | 30                             | %      |   | 0 | % |
| Expected                dividend yield |   |   | 0                              | %      |   | 0 | % |
| Expected                life (years)   |   |   | 5.0                            |   |   | 5.0 |   |

|                                            |   |   | Shares  |   |   | WeightedAverageExercise                Price  |   |   | WeightedAverageContractualTerm                (Years) |   |   | AggregateIntrinsic                Value  |   |
|-------------------------------------------------|--------|--------|--------------|--------|--------|----------------------------------------------------|--------|--------|-------------------------------------------------------|--------|--------|-----------------------------------------------|--------|
| Outstanding                at December 31, 2005 |   |   | 1,053,650    |   | $      | 4.81                                               |   |   |                                                  |   |   |                                          |   |
| Granted                                         |   |   | 281,500      |   |   | 11.96                                              |   |   |                                                  |   |   |                                          |   |
| Exercised                                       |   |   | (4,000       | )      |   | 0.01                                               |   |   |                                                  |   |   |                                          |   |
| Forfeited                                       |   |   | (3,000       | )      |   | 9.84                                               |   |   |                                                  |   |   |                                          |   |
| Outstanding                at March 31, 2006    |   |   | 1,328,150    |   |   | 6.33                                               |   |   | 9.8                                                   |   | $      | 7,477,485                                     |   |
| Exercisable                at March 31, 2006    |   |   | 349,083      |   | $      | 3.59                                               |   |   | 8.6                                                   |   | $      | 2,921,825                                     |   |
| Available                for grant              |   |   | 284,100      |   |   |                                               |   |   |                                                  |   |   |                                          |   |

|                Nonvested                Shares: |   |   | Shares  |   |   | WeightedAverageGrant-DateFair                Value |   |
|------------------------------------------------------|--------|--------|--------------|--------|--------|----------------------------------------------------|--------|
| Balance                at December 31, 2005          |   |   | 790,675      |   | $      | 1.05                                               |   |
| Granted                                              |   |   | 273,167      |   |   | 4.26                                               |   |
| Forfeited                                            |   |   | (3,000       | )      |   | 3.41                                               |   |
| Vested                                               |   |   | (81,775      | )      |   | 0.74                                               |   |
| Balance                at March 31, 2006             |   |   | 979,067      |   | $      | 1.96                                               |   |

----

*Common      Stock*

**Note      7. Capitalized Software**

*      Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise      Marketed*

**Note      8. Subsequent Events**

**Note      9. Segment Information **

**.      **

**Item      2.**
**Management’s      Discussion and Analysis of Financial Condition and Results of      Operations**

**Forward-Looking      Statements**

*This      Quarterly Report on Form 10-Q contains “forward-looking statements” within the      meaning of Section 27A of the Securities Act of 1933, as amended (the“Securities Act”), and Section 21E of the Securities Exchange Act of 1934,      as amended (the “Exchange Act”). Forward-looking statements sometimes include      the words “may,” “will,” “estimate,” “intend,” “continue,” “expect,” or“anticipate,” and other similar words. Statements expressing expectations      regarding the Company’s future (including pending gaming and patent approvals)      and projections relating to products, sales, revenues and earnings are typical      of such statements.*

----

*All      forward-looking statements are subject to the risks and uncertainties inherent      in predicting the future. The Company’s actual results may differ materially      from those projected, stated or implied in these forward-looking statements      as a      result of many factors, including, but not limited to, overall industry      environment, customer acceptance of the Company’s products, delay in the      introduction of new products, the further approvals of regulatory authorities,      adverse court rulings, production and/or quality control problems, the denial,      suspension or revocation of privileged operating licenses by governmental      authorities, competitive pressures and general economic conditions, and the      Company’s financial condition.*

*Forward-looking      statements speak only as of the date they are made. The Company undertakes      no      obligation to update or revise such statements to reflect new circumstances      or      unanticipated events as they occur, and you are urged to review and consider      disclosures that the Company makes in this and other reports that discuss      factors germane to the Company’s business.*

**Overview**

**Results      of Operations for the Three Months Ended March 31, 2006 Compared to the Three      Months Ended March 31, 2005**

*Revenues.      *

*Selling,      General and Administrative Expenses. *

*Research      and Development Expenses.*

----

*Depreciation*

*Net      Interest Income*

**Liquidity      and Capital Resources**

**Contractual      Obligations**

**Critical        Accounting Policies**

----

**Recent      Accounting Pronouncements**

*“Accounting      for Servicing of Financial Assets,” *
*“Accounting      for Transfers and Servicing of Financial Assets and Extinguishments of      Liabilities”. *

**Off-Balance        Sheet Arrangements**

**Recent        Events**

**Item        3. **
**Quantitative        and Qualitative Disclosures about Market Risk.**

**Item      4. **
**Controls      and Procedures.**

*Evaluation      of disclosure controls and procedures*

----

*Changes      in internal control over financial reporting*

**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings**

**Item      1A.**
**Risk      Factors. **

**Item      2. **
**Unregistered      Sales of Equity Securities and Use of Proceeds.**

*Unregistered      Sales of Equity Securities*

*.*

*Use      of Proceeds*

**,**

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**Item      6.**
**Exhibits.**

|  Exhibit No.  | Description                                                                                                                                                                                                                        |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  31.1              | Certification of Chief Executive Officer              pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                              |
|  31.2              | Certification of Chief Financial Officer              pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                              |
|  32.1              | Certification of Chief Executive Officer              and              Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted              pursuant to Section 906 of the Sarbanes-Oxley Act of              2002. |

----

**SIGNATURES**

|                                              |                                                                                                                                                           |                                                     |
|---------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------|
|                                              | POKERTEK,              INC.                                                                                                                                    |
|                                         |                                                                                                                                                      |                                                |
| Date: May              11,              2006 | By:                                                                                                                                                  | /s/ Gehrig              H.              White  |
|                                              | Gehrig              H. White, Chief Executive Officer (Principal Executive              Officer)                                                               |
|                                              |                                                                                                                                                                |
|                                              |                                                                                                                                                           |
|                                              | /s/ Christopher              Daniels                                                                                                                      |
|                                              | Christopher              Daniels, Chief Financial  Officer              (Principal Financial Officer  and              Principal Accounting Officer) |
|                                              |                                                                                                                                                                |

----

**Exhibit          Index **

|  Exhibit No.  |  Description                                                                                                                                                                                                                                                   |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  31.1              | Certification of Chief Executive                  Officer                  pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                                          |
|  31.2              | Certification of Chief Financial                  Officer                  pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                                          |
|  32.1              | Certification of Chief Executive                  Officer and                  Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as                  adopted                  pursuant to Section 906 of the Sarbanes-Oxley Act of                  2002. |

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