##### Table of Contents



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
   o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
   WPT ENTERPRISES, INC.
  Delaware
    
    77-06390000(State or other jurisdiction
of incorporation or organization)
    
    (I.R.S. Employer
Identification No.)5700 Wilshire Boulevard
Suite 350
Los Angeles, California
    
    90036(Address of principal executive offices)
    
    (Zip Code)
 
  Yes x
    
    No o
  Large accelerated filer o
    
    Accelerated filer x
    
    Non-accelerated filer o
 o x




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##### 



WPT ENTERPRISES, INC.
 INDEX
 Page ofForm 10-QPART I.
    
    FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSCondensed Balance Sheets as of April 2, 2006 (unaudited)
and January 1, 2006
    
    
    3Condensed Statements of Earnings (Loss) for the three
months ended April 2, 2006 and April 3, 2005 (unaudited)
    
    
    4Condensed Statements of Comprehensive Income (Loss) for the
three months ended April 2, 2006 and April 3, 2005 (unaudited)
    
    
    5Condensed Statements of Stockholders Equity for the three
months ended April 2, 2006 and April 3, 2005 (unaudited)
    
    
    6Condensed Statements of Cash Flows for the three
months ended April 2, 2006 and April 3, 2005 (unaudited)
    
    
    7Notes to Condensed Financial Statements (unaudited)
    
    
    8ITEM 2.
    
    MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    13ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    20ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    20PART II.
    
    OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    21ITEM 1A.
    
    RISK FACTORS
    
    
    21ITEM 6.
    
    EXHIBITS
    
    
    22SIGNATURES
    
    
    23Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  2




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##### Table of Contents



WPT ENTERPRISES, INC.
Condensed Balance Sheets
April 2, 2006 (unaudited) and January 1, 2006
 April 2, 2006
    
    
    January 1, 2006(In thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    3,671
    
    
    $
    1,737Short-term investments
    
    
    35,906
    
    
    
    26,735Accounts receivable, net of allowance of $58 and $74
    
    
    2,442
    
    
    
    3,091Deferred television costs
    
    
    1,998
    
    
    
    1,520Inventory
    
    
    41
    
    
    
    45Other
    
    
    533
    
    
    
    66544,591
    
    
    
    33,793Property and equipment, net
    
    
    1,164
    
    
    
    1,271Restricted cash
    
    
    253
    
    
    
    249Investment
    
    
    5,382
    
    
    
    10,627Other assets
    
    
    304
    
    
    
    320$
    51,694
    
    
    $
    46,260Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    835
    
    
    $
    1,550Accrued payroll and related
    
    
    324
    
    
    
    246Other accrued expenses
    
    
    1,392
    
    
    
    941Deferred revenue
    
    
    9,400
    
    
    
    5,15011,951
    
    
    
    7,887Stockholders equity:Preferred stock, $0.001 par value, authorized 20,000 shares;
none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value, authorized 100,000 shares;
20,273 and 20,158 shares
issued and outstanding
    
    
    20
    
    
    
    20Additional paid-in capital
    
    
    37,138
    
    
    
    34,113Deficit
    
    
    (2,618
    )
    
    
    (6,208
    )Accumulated other comprehensive income
    
    
    5,203
    
    
    
    10,449Deferred compensation
    
    
    
    
    
    
    (1
    )39,743
    
    
    
    38,373$
    51,694
    
    
    $
    46,260
 3
    Table of Contents   
 WPT ENTERPRISES, INC.
Condensed Statements of Earnings (Loss)
Three Months ended April 2, 2006 and April 3, 2005
(unaudited)
 2006
    
    
    2005(In thousands, except per share data)Revenues:License fees:Domestic television
    
    $
    3,045
    
    
    $
    1,963International
television
    
    
    907
    
    
    
    419Product licensing
    
    
    713
    
    
    
    1,0794,665
    
    
    
    3,461Online gaming
    
    
    911
    
    
    
    Event hosting and sponsorship fees
    
    
    797
    
    
    
    543Other
    
    
    81
    
    
    
    996,454
    
    
    
    4,103Cost of revenues
    
    
    2,420
    
    
    
    3,188Gross profit
    
    
    4,034
    
    
    
    915Expenses:Selling and administrative
    
    
    5,102
    
    
    
    2,753Depreciation
    
    
    48
    
    
    
    205,150
    
    
    
    2,773Loss from operations
    
    
    (1,116
    )
    
    
    (1,858
    )Other income:Realized gain on sale of
investment
    
    
    5,675
    
    
    
    Interest income
    
    
    325
    
    
    
    256Earnings (loss) before income taxes
    
    
    4,884
    
    
    
    (1,602
    )Income taxes
    
    
    1,294
    
    
    
    Net earnings (loss)
    
    $
    3,590
    
    
    
    ($1,602
    )Net earnings (loss) per common share  basic
    
    $
    0.18
    
    
    
    ($0.08
    )Net earnings (loss) per common share  diluted
    
    $
    0.17
    
    
    
    ($0.08
    )Weighted average
common shares
outstanding  basic
    
    
    20,017
    
    
    
    19,058Dilutive effect of stock warrants
    
    
    400
    
    
    
    Dilutive effect of stock options
    
    
    484
    
    
    
    Weighted average common shares outstanding  diluted
    
    
    20,901
    
    
    
    19,058
  4




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##### Table of Contents



WPT ENTERPRISES, INC.
Condensed Statements of Comprehensive Income (Loss)
Three Months ended April 2, 2006 and April 3, 2005
(unaudited)
 2006
    
    
    2005(In thousands)Net earnings (loss)
    
    $
    3,590
    
    
    
    ($1,602
    )Other comprehensive income (loss), net of tax:Unrealized gains (losses) on marketable securities:
    
    $
    429
    
    
    
    ($48
    )Comprehensive income (loss)
    
    $
    4,019
    
    
    
    ($1,650
    )
  5




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##### Table of Contents



WPT ENTERPRISES, INC.
Condensed Statements of Stockholders Equity
Three Months ended April 2, 2006 and April 3, 2005
(unaudited)
 AccumlatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    
    
    
    
    Deferred
    
    
    ComprehensiveShares
    
    
    Dollars
    
    
    Capital
    
    
    Deficit
    
    
    Compensation
    
    
    Income/(Loss)
    
    
    Total(In thousands)2006BALANCES AT JANUARY 1, 2006
    
    
    20,158
    
    
    $
    20
    
    
    $
    34,113
    
    
    $
    (6,208
    )
    
    $
    (1
    )
    
    $
    10,449
    
    
    $
    38,373Reduction of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Common stock issued
    
    
    115
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    1,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,731Income taxes
    
    
    
    
    
    
    
    
    
    
    1,293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,293Sale of investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,675
    )
    
    
    (5,675
    )Other comprehensive gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    429
    
    
    
    429Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,590
    
    
    
    
    
    
    
    
    
    
    
    3,590BALANCES AT APRIL 2, 2006
    
    
    20,273
    
    
    $
    20
    
    
    $
    37,138
    
    
    
    ($2,618
    )
    
    $
    0
    
    
    $
    5,203
    
    
    $
    39,7432005BALANCES AT JANUARY 2, 2005
    
    
    19,480
    
    
    $
    19
    
    
    $
    32,767
    
    
    $
    (1,205
    )
    
    $
    (6
    )
    
    $
    (6
    )
    
    $
    31,569Reduction of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Common stock issued
    
    
    640
    
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    425
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    425Interest on common shares subject to repurchase
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42
    )
    
    
    (42
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,602
    )
    
    
    
    
    
    
    
    
    
    
    (1,602
    )BALANCES AT APRIL 3, 2005
    
    
    20,120
    
    
    $
    20
    
    
    $
    33,184
    
    
    $
    (2,807
    )
    
    $
    (5
    )
    
    $
    (48
    )
    
    $
    30,344
  6




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##### Table of Contents



WPT ENTERPRISES, INC.
Condensed Statements of Cash Flows
Three Months ended April 2, 2006 and April 3, 2005
(unaudited)
 2006
    
    
    2005(In thousands)OPERATING ACTIVITIES:Net earnings (loss)
    
    $
    3,590
    
    
    
    ($1,602
    )Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:Depreciation
    
    
    48
    
    
    
    20Production depreciation
    
    
    72
    
    
    
    55Share-based compensation awards
    
    
    1,712
    
    
    
    423Realized gain on sale of investment
    
    
    (5,675
    )
    
    
    Income taxes
    
    
    1,294
    
    
    
    Increase in operating (assets) and liabilities:Accounts receivable
    
    
    649
    
    
    
    746Inventory
    
    
    4
    
    
    
    (3
    )Deferred television costs
    
    
    (459
    )
    
    
    (508
    )Other
    
    
    148
    
    
    
    (231
    )Accounts payable
    
    
    (715
    )
    
    
    60Accrued expenses
    
    
    529
    
    
    
    587Deferred revenue
    
    
    4,250
    
    
    
    321Net cash provided by (used in) operating activities
    
    
    5,447
    
    
    
    (132
    )INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (13
    )
    
    
    (467
    )Proceeds from sale of investment
    
    
    5,686
    
    
    
    Short-term investments, purchases
    
    
    (14,593
    )
    
    
    (11,647
    )Short-term investments, sales/maturities
    
    
    5,410
    
    
    
    19,883Net cash provided by (used in) investing activities
    
    
    (3,510
    )
    
    
    7,769FINANCING ACTIVITIES:Increase in restricted cash
    
    
    (4
    )
    
    
    (2
    )Proceeds from stock option exercises
    
    
    1
    
    
    
    3Net cash provided by (used in) financing activities
    
    
    (3
    )
    
    
    1Net increase in cash and cash equivalents
    
    $
    1,934
    
    
    $
    7,638Cash and cash equivalents  beginning of period
    
    
    1,737
    
    
    
    4,525Cash and cash equivalents  end of period
    
    $
    3,671
    
    
    $
    12,163
  7




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##### Table of Contents



WPT ENTERPRISES, INC.
Notes to Condensed Financial Statements
(Unaudited)
 1. BASIS OF PRESENTATION
    2. EARNINGS (LOSS) PER SHARE
  3. SHARE-BASED COMPENSATION
  Share-Based Payment Accounting
for Stock Issued to Employees
  8




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##### Table of Contents



WPT ENTERPRISES, INC.
Notes to Condensed Financial Statements (Continued)
(Unaudited)
 
    
    Annualized volatility  As the Company has limited operating history and no
definitive peer or peer groups, expected volatility was based on historical volatility
of the Companys stock price since it began trading
    
    Forfeiture rate  The Company used historical data to estimate employee departure
behavior in estimating future forfeitures
    
    Expected term  Due to the Companys limited operating history including stock option
exercises and forfeitures, the Company calculated expected term using the Simplified
Method in accordance with SAB 107
    
    Risk free interest rate  For periods within the expected term of the share option,
risk free interest rate is based on the U.S. Treasury yield curve in effect at the time
of grant
  Three Months EndedApril 2, 2006Risk free interest rate
    
    
    4.31
    %Expected life
    
    6.5 yearsExpected dividend yield
    
    
    0
    %Weighted average fair value
    
    $
    4.68Annualized volatility
    
    
    84.22
    %
  Three Months EndedApril 2, 2006Total cost of share-based payment plans
    
    $
    1,602Amounts capitalized in deferred television costs
    
    $
    34Amounts charged against income, before income tax benefit
    
    $
    1,568Amount of related income tax benefit recognized in income
    
    $
    
  9




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##### Table of Contents



WPT ENTERPRISES, INC.
Notes to Condensed Financial Statements (Continued)
(Unaudited)
  Number of Common SharesOptions
    
    
    
    
    
    
    Available
    
    
    Weighted Avg.Outstanding
    
    
    Exercisable
    
    
    For Grant
    
    
    Exercise Price2006Balance at January 1, 2006
    
    
    2,158,000
    
    
    
    620,333
    
    
    
    283,667
    
    
    $
    7.14AuthorizedGranted
    
    
    219,000
    
    
    
    
    
    
    
    (219,000
    )
    
    $
    6.20Forfeited /cancelled/expired
    
    
    (159,333
    )
    
    
    
    
    
    
    159,333
    
    
    $
    8.13Exercised
    
    
    (115,000
    )
    
    
    
    
    
    
    
    
    
    $
    0.0049Balance at April 2, 2006
    
    
    2,102,667
    
    
    
    785,500
    
    
    
    224,000
    
    
    $
    7.362005Balance at January 2, 2005
    
    
    2,561,000
    
    
    
    560,000
    
    
    
    559,000
    
    
    $
    4.61AuthorizedGranted
    
    
    24,500
    
    
    
    
    
    
    
    (24,500
    )
    
    $
    19.50Forfeited /cancelled/expired
    
    
    (32,000
    )
    
    
    
    
    
    
    32,000
    
    
    $
    8.60Exercised
    
    
    (640,000
    )
    
    
    
    
    
    
    
    
    
    $
    0.0049Balance at April 3, 2005
    
    
    1,913,500
    
    
    
    200,000
    
    
    
    566,500
    
    
    $
    6.27
  Options Outstanding
    
    
    Options ExercisableWeighted Avg.Range of
    
    
    Number
    
    
    Remaining
    
    
    Weighted Avg.
    
    
    Aggregate
    
    
    Number
    
    
    Weighted Avg.
    
    
    AggregateExercise Prices
    
    
    Outstanding
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Intrinsic Value
    
    
    Exercisable
    
    
    Price
    
    
    Intrinsic Value$
    0.0049
    
    
    
    330,000
    
    
    
    5.90
    
    
    $
    0.0049
    
    
    $
    2,427,183
    
    
    
    330,000
    
    
    $
    0.0049
    
    
    $
    2,427,183$
    6.20  9.92
    
    
    
    1,438,167
    
    
    
    8.58
    
    
    $
    7.78
    
    
    $
    237,800
    
    
    
    445,334
    
    
    $
    8.04
    
    
    $
    $
    11.95  14.51
    
    
    
    286,000
    
    
    
    9.36
    
    
    $
    12.18
    
    
    $
    
    
    
    
    8,666
    
    
    $
    14.51
    
    
    $
    $
    15.05  19.50
    
    
    
    48,500
    
    
    
    9.25
    
    
    $
    16.32
    
    
    $
    
    
    
    
    1,500
    
    
    $
    19.50
    
    
    $
    $
    0.0049  19.50
    
    
    
    2,102,667
    
    
    
    8.28
    
    
    $
    7.36
    
    
    $
    2,664,983
    
    
    
    785,500
    
    
    $
    4.76
    
    
    $
    2,427,183
   10




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##### Table of Contents



WPT ENTERPRISES, INC.
Notes to Condensed Financial Statements (Continued)
(Unaudited)
  Three Months EndedApril 3, 2005Net earnings (loss) as reported
    
    $
    (1,602
    )Deduct: Total equity-based compensation expense determined
under the fair value method, net of tax
    
    
    (569
    )Pro Forma net earnings (loss) under FAS No. 123
    
    $
    (2,171
    )Net loss per common share  basic and diluted -as reported
    
    
    ($0.08
    )Pro Forma net loss per common share  basic and diluted
    
    
    ($0.11
    )
   Three Months EndedApril 3, 2005Risk free interest rate
    
    
    4.14
    %Expected life
    
    6 yearsExpected dividend yield
    
    
    Weighted average fair value
    
    $
    14.10Annualized volatility
    
    
    82.14
    %
 Restricted shares issued
  4. INVESTMENT
  Accounting for Certain Investments in Debt and Equity Securities.
 11




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##### Table of Contents



WPT ENTERPRISES, INC.
Notes to Condensed Financial Statements (Continued)
(Unaudited)
 5. SEGMENT INFORMATION
  Three months ended April 2, 2006 (in thousands):
 Consumer
    
    
    Online
    
    
    CorporateStudios
    
    
    Products
    
    
    Gaming
    
    
    Alliances
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    4,455
    
    
    $
    791
    
    
    $
    911
    
    
    $
    297
    
    
    $
    
    
    
    $
    6,454Cost of revenues
    
    
    1,832
    
    
    
    138
    
    
    
    408
    
    
    
    42
    
    
    
    
    
    
    
    2,420Gross profit
    
    
    2,623
    
    
    
    653
    
    
    
    503
    
    
    
    255
    
    
    
    
    
    
    
    4,034Total assets
    
    
    3,229
    
    
    
    1,707
    
    
    
    725
    
    
    
    42
    
    
    
    45,991
    
    
    
    51,694Depreciation
    
    
    72
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    120
 Three months ended April 3, 2005 (in thousands):
 Consumer
    
    
    Online
    
    
    CorporateStudios
    
    
    Products
    
    
    Gaming
    
    
    Alliances
    
    
    Corporate
    
    
    TotalRevenues
    
    $
    2,663
    
    
    $
    1,147
    
    
    $
    
    
    
    $
    293
    
    
    $
    
    
    
    $
    4,103Cost of revenues
    
    
    3,154
    
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,188Gross profit
    
    
    (491
    )
    
    
    1,113
    
    
    
    
    
    
    
    293
    
    
    
    
    
    
    
    915Total assets
    
    
    2,242
    
    
    
    904
    
    
    
    
    
    
    
    12
    
    
    
    33,709
    
    
    
    36,867Depreciation
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    75
 6. SUBSEQUENT EVENTS
   12




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##### Table of Contents



WPT ENTERPRISES, INC.
Managements Discussion and Analysis of Financial Condition
And Results of Operations
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 Overview
 ®
 WPT Studios TM
 th
  Date of TRV
    
    Number ofAgreement or
    
    episodesWorld Poker
    
    Option for
    
    (including
    
    Production Period and
    
    Initial Telecast of Episodes inTour Season
    
    Season
    
    specials)
    
    Delivery of Episodes to TRV
    
    SeasonSeason One
    
    January 2003
    
    
    15
    
    
    February 2002  June 2003
    
    March 2003  June 2003Season Two
    
    August 2003
    
    
    25
    
    
    July 2003 June 2004
    
    December 2003  September 2004Season Three
    
    May 2004
    
    
    21
    
    
    May 2004  April 2005
    
    October 2004  August 2005Season Four
    
    March 2005
    
    
    21
    
    
    May 2005  April 2006
    
    October 2005  June 2006Season Five
    
    March 2006
    
    
    22(est.)
    
    
    April 2006  April 2007
(expected)
    
    August 2006  June 2007 (expected)
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##### Table of Contents



WPT ENTERPRISES, INC.
Managements Discussion and Analysis of Financial Condition
And Results of Operations (Continued)
   WPT Consumer Products
 WPT Corporate Alliances
 WPT Online Gaming
 Results of Operations
 Three Months Ended April 2, 2006 Compared to the Three Months Ended April 3, 2005
 Revenues.
 Cost of revenues
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WPT ENTERPRISES, INC.
Managements Discussion and Analysis of Financial Condition
And Results of Operations (Continued)
 Gross margins.
 Selling and administrative expenses. Share-Based Payment
 Other income
 Income taxes
 Net earnings (loss).
 Liquidity and Capital Resources
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##### Table of Contents



WPT ENTERPRISES, INC.
Managements Discussion and Analysis of Financial Condition
And Results of Operations (Continued)
 Payments Due by PeriodYears 6 andContractual obligations
    
    Total
    
    
    Year 1
    
    
    Years 2-3
    
    
    Years 4-5
    
    
    BeyondOperating lease obligations (1)
    
    $
    2,582
    
    
    $
    467
    
    
    $
    980
    
    
    $
    1,046
    
    
    $
    89Purchase obligations (2)
    
    
    95
    
    
    
    95
    
    
    
    
    
    
    
    
    
    
    
    Employee obligations (3)
    
    
    394
    
    
    
    394
    
    
    
    
    
    
    
    
    
    
    
    $
    3,071
    
    
    $
    956
    
    
    $
    980
    
    
    $
    1,046
    
    
    $
    89
 (1)
    
    Operating lease obligations include rent payments on our corporate office space. Monthly
lease payments began at approximately $38,000 and escalate to approximately $45,000 over the
six-year lease term. The amount set forth in the table above assumes monthly lease payments
through May 2011.(2)
    
    Purchase obligations include contractual obligations related to the establishment of our
Internet gaming site.(3)
    
    Employee obligations include the base salaries payable to Steven Lipscomb and Robyn Moder
under their respective employment agreements. Critical Accounting Estimates and Policies
  Revenue recognition: Accounting by
Producers or Distributors of Films
 
    
    Persuasive evidence of an arrangement exists;
    
    The show/episode is complete, and in accordance with the terms of the arrangement, has
been delivered or is available for immediate and unconditional delivery;
    
    The license period has begun and the customer can begin its exploitation, exhibition or sale;
    
    The sellers price to the buyer is fixed and determinable; and
    
    Collectibility is reasonably assured.
 Reporting Revenue Gross as a
Principal versus Net as an Agent
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##### Table of Contents



WPT ENTERPRISES, INC.
Managements Discussion and Analysis of Financial Condition
And Results of Operations (Continued)
   Deferred television costs:
 Investment:
  Accounting for
Certain Investments in Debt and Equity Securities
 Income taxes:
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##### Table of Contents



WPT ENTERPRISES, INC.
Managements Discussion and Analysis of Financial Condition
And Results of Operations (Continued)
 Share-based compensation: Share-Based Payment
   Recently Issued Accounting Pronouncements
 Accounting for Certain Hybrid Instruments Accounting for Derivative Instruments and Hedging Activities, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
 Accounting for Servicing of Financial Assets  An
Amendment of FASB Statement No. 140. Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
 Off-Balance Sheet Arrangements
  Private Securities Litigation Reform Act
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##### Table of Contents



WPT ENTERPRISES, INC.
Managements Discussion and Analysis of Financial Condition
And Results of Operations (Continued)
  
    
    We remain heavily reliant upon our agreements with TRV as a source of revenue and any termination or
impairment of these agreements would materially and adversely affect the results of our operations;
    
    The termination or impairment of our relationships with key licensing and strategic partners could
harm our business performance;
    
    Our television programming may fail to maintain a sufficient audience for a variety of reasons, many
of which are beyond our control;
    
    Our ability to create and license our television programming profitably may be negatively affected
by adverse trends that apply to the television production business generally;
    
    Our competitors (many of whom have greater financial resources or marketplace presence) may develop
television programming that would directly compete with our television programming;
    
    A decline in general economic conditions or the popularity of our brand of televised poker
tournaments may negatively impact our business;
    
    We may be unable to protect our entertainment concepts, our current and future brands and our other
intellectual property rights;
    
    We may be unable to successfully expand into foreign markets or into new or complementary businesses;
    
    The regulatory environment for online gaming is currently uncertain, and despite out efforts to
comply with applicable laws, we may be unable to pursue this business fully or our activities may be
claimed or found to be in violation of applicable United States or foreign regulations; and
    
    The loss of our President and Chief Executive Officer or another member of our senior management
team may negatively impact the success of our business.
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##### Table of Contents



WPT ENTERPRISES, INC.
Quantitative and Qualitative Disclosures about Market Risk; Controls and Procedures
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
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##### Table of Contents



WPT ENTERPRISES, INC.
Part II
Other Information
 
 ITEM 1. LEGAL PROCEEDINGS
    
 ITEM 1A. RISK FACTORS
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WPT ENTERPRISES, INC.
Part II
Other Information (Continued)
 
 ITEM 6. EXHIBITS
 10.1
    
    Brand License and Online Casino Operating Agreement, dated June 19, 2005, by and
between WPT Enterprises, Inc. and WagerWorks Alderney 3 Limited **10.2
    
    Material terms of Peter Hughes employment arrangement10.3
    
    Letter dated March 16, 2006 from the Travel Channel, LLC to WPT Enterprises, Inc.10.4
    
    Amendment to Lease, effective as of May 8, 2006, by and between RREEF America
REIT II Corp. BBB (as successor in interest to Wilshire Courtyard L.L.C.), and WPT
Enterprises, Inc.31.1
    
    Certification of CEO pursuant to Securities Exchange Act Rules 13a-15(e) and
15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of CFO pursuant to Securities Exchange Act Rules 13a-15(e) and
15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 **Confidential treatment has been requested as to certain portions of this exhibit pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended.
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SIGNATURES
  Dated:   May 11, 2006
    WPT ENTERPRISES, INC.Registrant/s/ Steven LipscombSteven LipscombChief Executive Officer/s/ W. Todd SteeleW. Todd SteeleChief Financial Officer 23