##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended August 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 000-24452
 PREMIER EXHIBITIONS, INC.
  Florida
    
    20-1424922(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)3340 Peachtree Road, NE, Suite 900, Atlanta, GA
    
    30326(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 QUARTERLY PERIOD ENDED AUGUST 31, 2010
 TABLE OF CONTENTS
 PagePART I.  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21PART II.  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 6. Exhibits
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



Item 1. Financial Statements.
 Premier Exhibitions, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
 August 31,2010
    
    
    February 28,(unaudited)
    
    
    2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    4,809
    
    
    $
    10,339Marketable securities
    
    
    3,312
    
    
    
    3,308Accounts receivable, net of allowance for doubtful accounts
of $682 and $697 respectively
    
    
    3,110
    
    
    
    2,613Merchandise inventory, net of reserve of $279 and $281, respectively
    
    
    838
    
    
    
    845Income taxes receivable
    
    
    3,108
    
    
    
    3,161Prepaid expenses and other current assets
    
    
    2,843
    
    
    
    1,866Total current assets
    
    
    18,020
    
    
    
    22,132Artifacts owned, at cost
    
    
    3,028
    
    
    
    3,048Salvors lien
    
    
    1
    
    
    
    1Property and equipment, net of accumulated depreciation
of $13,447 and $11,454, respectively
    
    
    12,281
    
    
    
    13,545Exhibition licenses, net of accumulated amortization
of $5,270 and $4,979, respectively
    
    
    3,276
    
    
    
    3,269Deferred income taxes
    
    
    928
    
    
    
    927Other long term assets
    
    
    829
    
    
    
    829Titanic expedition costs incurred
    
    
    2,567
    
    
    
    Total Assets
    
    $
    40,930
    
    
    $
    43,751Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    5,336
    
    
    $
    5,518Deferred revenue
    
    
    666
    
    
    
    1,705Total current liabilities
    
    
    6,002
    
    
    
    7,223Long-term liabilities:Lease abandonment
    
    
    3,317
    
    
    
    3,666Income taxes payable
    
    
    1,238
    
    
    
    1,214Total long-term liabilities
    
    
    4,555
    
    
    
    4,880Shareholders equity:Common stock; $.0001 par value; authorized 65,000,000 shares;
issued 47,839,661 and 47,804,742 shares, respectively;
outstanding 47,773,212 and 46,738,293 shares, respectively
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    58,092
    
    
    
    57,759Accumulated deficit
    
    
    (20,282
    )
    
    
    (18,613
    )Accumulated other comprehensive loss
    
    
    (390
    )
    
    
    (313
    )Treasury
stock, at cost; 1,181,530 and 1,066,449 shares, respectively
    
    
    (7,326
    )
    
    
    (7,190
    )Equity Attributable to Shareholders of Premier Exhibitions, Inc.
    
    
    30,099
    
    
    
    31,648Equity Attributable to Noncontrolling Interests
    
    
    274
    
    
    
    Total Liabilities and Shareholder Equity
    
    $
    40,930
    
    
    $
    43,751
   3




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##### Table of Contents



Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 Three Months Ended August 31,
    
    
    Six Months Ended August 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue:Exhibition revenue
    
    $
    12,641
    
    
    $
    12,503
    
    
    $
    22,874
    
    
    $
    22,353Merchandise and other
    
    
    1,069
    
    
    
    937
    
    
    
    1,897
    
    
    
    2,024Total revenue
    
    
    13,710
    
    
    
    13,440
    
    
    
    24,771
    
    
    
    24,377Cost of revenue:Exhibition costs
    
    
    8,480
    
    
    
    5,052
    
    
    
    14,596
    
    
    
    9,942Cost of merchandise sold
    
    
    298
    
    
    
    213
    
    
    
    500
    
    
    
    465Total cost of revenue (exclusive of depreciation and amortization shown separately below)
    
    
    8,778
    
    
    
    5,265
    
    
    
    15,096
    
    
    
    10,407Gross profit
    
    
    4,932
    
    
    
    8,175
    
    
    
    9,675
    
    
    
    13,970Operating expenses:General and administrative
    
    
    3,940
    
    
    
    7,449
    
    
    
    8,870
    
    
    
    14,773Depreciation and amortization
    
    
    1,207
    
    
    
    1,318
    
    
    
    2,539
    
    
    
    2,945Impairment of goowill and intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,512Total operating expenses
    
    
    5,147
    
    
    
    8,767
    
    
    
    11,409
    
    
    
    22,230Loss from operations
    
    
    (215
    )
    
    
    (592
    )
    
    
    (1,734
    )
    
    
    (8,260
    )Other income (expense)
    
    
    8
    
    
    
    (171
    )
    
    
    19
    
    
    
    (209
    )Loss before provision for income taxes
    
    
    (207
    )
    
    
    (763
    )
    
    
    (1,715
    )
    
    
    (8,469
    )(Provision for) benefit from income taxes
    
    
    (29
    )
    
    
    250
    
    
    
    (41
    )
    
    
    2,152Net loss
    
    $
    (236
    )
    
    $
    (513
    )
    
    $
    (1,756
    )
    
    $
    (6,317
    )Plus: Net loss attributable to non-controlling interests
    
    
    56
    
    
    
    
    
    
    
    89
    
    
    
    Net loss attributable to shareholders of Premier
    
    $
    (180
    )
    
    $
    (513
    )
    
    $
    (1,667
    )
    
    $
    (6,317
    )Net loss per share:Basic loss per common share
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.21
    )Diluted loss per common share
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.21
    )Shares used in basic per share calculations
    
    
    46,853,678
    
    
    
    30,212,306
    
    
    
    46,801,472
    
    
    
    29,954,630Shares used in diluted per share calculations
    
    
    46,853,678
    
    
    
    30,212,306
    
    
    
    46,801,472
    
    
    
    29,954,630
   4




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Six Months Ended August 31,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (1,756
    )
    
    $
    (6,317
    )Adjustments to reconcile net (loss) income to net cash
(used) provided by operating activities:Depreciation and amortization
    
    
    2,478
    
    
    
    2,945Stock based compensation
    
    
    279
    
    
    
    312Provision for doubtful accounts
    
    
    (15
    )
    
    
    887Stock issued in settlement of a lawsuit
    
    
    
    
    
    
    50Lease abandonment
    
    
    (349
    )Impairment of goodwill and intangibles assets
    
    
    
    
    
    
    4,512Changes in operating assets and liabilities:Increase in accounts receivable
    
    
    (482
    )
    
    
    (1,143
    )Decrease (increase) in merchandise inventory
    
    
    7
    
    
    
    (115
    )Decrease (increase) in deferred income taxes
    
    
    24
    
    
    
    (1,498
    )(Decrease) increase in prepaid expenses and other assets
    
    
    (978
    )
    
    
    3,214Decrease in deferred revenue
    
    
    (1,039
    )
    
    
    (1,664
    )Decrease in accounts payable and accrued liabilities
    
    
    (182
    )
    
    
    (6,907
    )Decrease (increase) in income taxes receivable
    
    
    53
    
    
    
    (307
    )Total adjustments
    
    
    (204
    )
    
    
    286Net cash used by operating activities
    
    
    (1,960
    )
    
    
    (6,031
    )Cash flows (used in) provided by investing activities:Purchases of property and equipment
    
    
    (728
    )
    
    
    (1,043
    )Net increase in marketable securities
    
    
    (4
    )
    
    
    (2,007
    )Purchase and development of exhibition licenses
    
    
    (492
    )
    
    
    Titanic expedition costs incurred
    
    
    (2,567
    )
    
    
    Cash provided by investing activity
    
    
    274
    
    
    
    Net cash used in investing activities
    
    
    (3,517
    )
    
    
    (3,050
    )Cash flows from financing activities:Proceeds from convertible notes
    
    
    
    
    
    
    12,000Proceeds from option and warrant exercises
    
    
    24
    
    
    
    261Net cash provided by financing activities
    
    
    24
    
    
    
    12,261Effects of exchange rate changes on cash and cash equivalents
    
    
    (77
    )
    
    
    21Net (decrease) increase and cash equivalents
    
    
    (5,530
    )
    
    
    3,201Cash and cash equivalents at beginning of period
    
    
    10,339
    
    
    
    4,452Cash and cash equivalents at end of period
    
    $
    4,809
    
    
    $
    7,653Supplemental disclosure of non-cash investing and financing activities:Cashless exercise of stock options
    
    $
    
    
    
    $
    14
   5




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PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Background and Basis of Presentation
    6




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2. Loss Per Share Data
  Three Months Ended August 31,
    
    
    Six Months Ended August 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net loss
attributable to shareholders
    
    $
    (180
    )
    
    $
    (513
    )
    
    $
    (1,667
    )
    
    $
    (6,317
    )Denominator:Basic weighted-average
shares outstanding
    
    
    46,853,678
    
    
    
    30,212,306
    
    
    
    46,801,472
    
    
    
    29,954,630Effect of dilutive stock
options and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted-average
shares outstanding
    
    
    46,853,678
    
    
    
    30,212,306
    
    
    
    46,801,472
    
    
    
    29,954,630Net loss per share:Basic
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.21
    )Diluted
    
    $
    (0.00
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.21
    )
  3. 2010 Expedition to Titanic Wreck Site
      7




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4. Non-controlling Interest
  5. Stock Repurchase
  6. Legal Proceedings and Contingencies
      8




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Status of International Treaty Concerning the Titanic Wreck
    9




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Other Litigation
    Proposed Legislation and Government Inquiries
   10




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IRS Exams
    
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 This report contains information that may constitute forward-looking statements. Generally,
the words believe, expect, intend, estimate, anticipate, project, will and similar
expressions identify forward-looking statements, which generally are not historical in nature.
However, the absence of these words or similar expressions does not mean that a statement is not
forward-looking. All statements that address operating performance, events or developments that we
expect or anticipate will occur in the future  including statements relating to volume growth,
share of sales and earnings per share growth, and statements expressing general views about future
operating results  are forward-looking statements. Management believes that these forward-looking
statements are reasonable as and when made. However, such statements are dependent upon, and can
be influenced by, a number of external variables over which management has little or no control,
including but not limited to, general economic conditions, public tastes and demand, competition,
the availability of venues, the results of certain legal matters described herein, governmental
regulation and the efforts of co-sponsors and joint venture participants. As a result, caution
should be taken not to place undue reliance on any such forward-looking statements. Our Company
undertakes no obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law. Forward-looking
statements should not be relied upon as a guarantee of future performance or results, nor will they
necessarily prove to be accurate indications of the performance that is ultimately achieved. As a
result, actual outcomes and results may differ materially from those expressed in forward-looking
statements.
    11




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Overview
  
    
    Titanic: The Artifact Exhibition, (seven exhibitions)
 
    
    Bodies...The Exhibition and Bodies Revealed, (fourteen exhibitions)
 
    
    Dialog in the Dark. (one exhibition)
        12




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
    
    Restructuring the business  First, management executed a reduction-in-force to
align the human resources properly against the business. Then management began to
rationalize the number of Bodies shows touring, reducing touring capacity from 16 to
13, and also negotiated the early termination of the Star Trek exhibition, three
touring shows. Dialog in the Dark was scaled back to only one show installed
long-term in Atlanta. These touring capacity adjustments were made to eliminate
unprofitable shows, and bring capacity in line with the Companys ability to keep
shows touring profitably.
 
    
    Raising capital  After an exhaustive process to identify potential sources of
capital, the Company issued convertible bonds worth $12 million in order to properly
capitalize the business.
 
    
    Repairing or severing ties with key trading partners  Management also worked to
mend or end relationships with trade partners that had become strained under the prior
management. To begin with, the Company changed advertising agencies to achieve
greater media buying leverage and cost effectiveness as advertising is a significant
operating cost. Key relationships with museums and independent promoters required
attention as did relationships with members of the Maritime community surrounding the
Titanic. Ending some relationships required capital and significant working capital
was also required to return the Company to trading terms with its vendors.
           13




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Our Exhibitions
 Titanic: The Artifact Exhibition
  Titanic Expeditions
   2010 Expedition to Titanic Wreck Site
     14




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Bodies...The Exhibition and Bodies Revealed
    Dialog in the Dark
   15




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Other Exhibitions
  Merchandising
  Information Regarding Exhibitions Outside the United States
  The Quarter Ended August 31, 2010 Compared to the Quarter Ended August 31, 2009
 Revenue.
   16




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Three Months EndedAugust 31,2010
    
    
    2009Exhibition revenueAdmissions revenue
    
    $
    11,022
    
    
    $
    10,718Guaranty and licensing revenue
    
    
    1,619
    
    
    
    1,785Total exhibition revenue
    
    
    12,641
    
    
    
    12,503Merchandise and other
    
    
    1,069
    
    
    
    937Total revenue
    
    $
    13,710
    
    
    $
    13,440Key non-financial measurementsNumber of venues presented
    
    
    22
    
    
    
    24Operating days
    
    
    1,757
    
    
    
    1,639Attendance (in thousands)
    
    
    1,176
    
    
    
    1,324Average attendance per
operating day
    
    
    669
    
    
    
    808
 Cost of revenue.
   Gross profit.
 Operating expenses.
 Loss from operations.
 Loss before income taxes.
 Benefit from (provision for) income taxes.
  17




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Net loss.
 (Loss) income per share
 The Six Months Ended August 31, 2010 Compared to the Six Months Ended August 31, 2009
 Revenue.
  Six Months EndedAugust 31,2010
    
    
    2009Exhibition revenueAdmissions revenue
    
    $
    20,118
    
    
    $
    18,648Guaranty and licensing revenue
    
    
    2,756
    
    
    
    3,705Total exhibition revenue
    
    
    22,874
    
    
    
    22,353Merchandise and other
    
    
    1,897
    
    
    
    2,024Total revenue
    
    $
    24,771
    
    
    $
    24,377Key non-financial measurementsNumber of venues presented
    
    
    22
    
    
    
    21Operating days
    
    
    3,071
    
    
    
    3,263Attendance (in thousands)
    
    
    1,930
    
    
    
    2,512Average attendance per
operating day
    
    
    622
    
    
    
    770
 Cost of revenue.
   Gross profit.
  18




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Operating expenses.
  Loss from operations.
 Loss before income taxes.
 Provision for (benefit from) income taxes.
 Net loss.
 Loss per share
 Liquidity and Capital Resources
  Selected cash flow information:
 As ofSix Months Ended August 31,2010
    
    
    2009Net cash (used) provided by operating activities
    
    $
    (1,960
    )
    
    $
    (6,031
    )Net cash used by investing activities
    
    
    (3,517
    )
    
    
    (3,050
    )Net cash provided by financing activities
    
    
    24
    
    
    
    12,261Effects of exchange rate changes on cash and
cash equivalents
    
    
    (77
    )
    
    
    21Net (decrease) increase and cash equivalents
    
    $
    (5,530
    )
    
    $
    3,201
  19




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Selected balance sheet data:
 As ofAugust 31, 2010
    
    
    February 28, 2010Cash and cash equivalents
    
    $
    4,809
    
    
    $
    10,339Marketable securities
    
    
    3,312
    
    
    
    3,308Total assets
    
    
    40,930
    
    
    
    43,751Total shareholders equity
    
    
    30,099
    
    
    
    31,648
 Operating Activities.
   As ofAugust 31, 2010
    
    
    February 28, 2010Working Capital
    
    $
    12,018
    
    
    $
    14,909Current Ratio
    
    
    3.00
    
    
    
    3.06
 Investing Activities.
 Financing Activities.
 Capital requirements.
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Contractual Obligations
   20




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
  Foreign Currency Risk
  
 Item 4. Controls and Procedures.
    21




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PART II  OTHER INFORMATION
  
 Item 1. Legal Proceedings.
      
 Item 1A. Risk Factors.
  The plans of our largest shareholder to sell his block of common stock could have an effect on
our stock price and could result in changes to the strategic direction of the Company.
     22




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We may not be granted a salvage award that is commensurate with the efforts we have expended
to recover items from the Titanic wreck site or may be prohibited from exhibiting certain of the
Titanic artifacts already under our control.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities
 Maximum number (orTotal number of
    
    
    approximate dollarshares (or units)
    
    
    value) of shares (orTotal number of
    
    
    
    
    
    
    purchased as part of
    
    
    units) that may yet beshares (or units)
    
    
    Average price paid
    
    
    publicly announced
    
    
    purchased under thePeriod
    
    purchased
    
    
    per share (or unit)
    
    
    plans or programs(1)
    
    
    plans or programs(1)(a)
    
    
    (b)
    
    
    (c)
    
    
    (d)July 1, 2010 through July 31, 2010
    
    
    14,367
    
    
    $
    1.18
    
    
    
    14,367
    
    
    
    985,633August 1, 2010 through August 31,
2010
    
    
    100,714
    
    
    $
    1.15
    
    
    
    100,714
    
    
    
    884,919Total
    
    
    115,081
    
    
    
    
    
    
    
    115,081
 
 (1)
    
    On July 29, 2010, the Company announced the share repurchase program, pursuant to which up to
1 million shares of common stock can be repurchased through July 28, 2011. 
 Item 6. Exhibits.
   23




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SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: October 15, 2010
    
    By:
    
    /s/ Christopher J. Davino

Christopher J. DavinoPresident and Chief Executive Officer(Principal Executive Officer)Dated: October 15, 2010
    
    By:
    
    /s/ John A. Stone

John A. StoneChief Financial Officer(Principal Financial Officer)
  24




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INDEX TO EXHIBITS
 Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceNo.
    
    Exhibit Description
    
    Herewith
    
    Form
    
    Exhibit
    
    Filing Date10.1
    
    
    Optical Services Agreement between RMS Titanic, Inc. and Woods
Hole Oceanographic Institution, dated July 30, 2010
    
    
    
    8-K
    
    
    10.1
    
    
    08-05-1010.2
    
    
    Charter Agreement between RMS Titanic, Inc. and Hays Ships
Limited, dated August 19, 2010
    
    
    
    8-K
    
    
    10.1
    
    
    08-25-1031.1
    
    
    Rule 13a-14(a)/15d-14(a) Certification of President and Chief
Executive Officer
    
    X31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
    
    X32.1
    
    
    Section 1350 Certification
    
    X
  25