##### 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 May 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 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 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
(Do not check if a smaller reporting company)
    
    Smaller reporting Company þ
 Yes o No þ




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##### 



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 QUARTERLY PERIOD ENDED MAY 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
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    18PART II.  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 6. Exhibits
    
    
    21Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 Premier Exhibitions, Inc.  Condensed Consolidated Balance Sheets
(in thousands, except share data)
 May 31,
    
    
    February 28,2010
    
    
    2010(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    9,134
    
    
    $
    10,339Marketable securities
    
    
    3,304
    
    
    
    3,308Accounts receivable, net of allowance for doubtful accounts
of $755 and $697, respectively
    
    
    2,860
    
    
    
    2,613Merchandise inventory, net of reserve of $255 and $281, respectively
    
    
    766
    
    
    
    845Income taxes receivable
    
    
    3,107
    
    
    
    3,161Prepaid expenses and other current assets
    
    
    2,771
    
    
    
    1,866Total current assets
    
    
    21,942
    
    
    
    22,132Artifacts owned, at cost
    
    
    3,041
    
    
    
    3,048Salvors lien
    
    
    1
    
    
    
    1Property and equipment, net of accumulated depreciation
of $12,445 and $11,454, respectively
    
    
    12,875
    
    
    
    13,545Exhibition licenses, net of accumulated amortization
of $5,270 and $4,979, respectively
    
    
    3,278
    
    
    
    3,269Deferred income taxes
    
    
    928
    
    
    
    927Other assets
    
    
    829
    
    
    
    829Total Assets
    
    $
    42,894
    
    
    $
    43,751Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    6,111
    
    
    $
    5,518Deferred revenue
    
    
    1,502
    
    
    
    1,705Total current liabilities
    
    
    7,613
    
    
    
    7,223Long-term liabilities:Lease abandonment
    
    
    3,478
    
    
    
    3,666Income taxes payable
    
    
    1,226
    
    
    
    1,214Total long-term liabilities
    
    
    4,704
    
    
    
    4,880Shareholders equity:Common stock; $.0001 par value; authorized 65,000,000 shares;
issued 47,879,742 and 47,804,742 shares, respectively;
outstanding 46,813,293 and 46,738,293 shares, respectively
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    57,915
    
    
    
    57,759Accumulated deficit
    
    
    (20,134
    )
    
    
    (18,613
    )Accumulated other comprehensive loss
    
    
    (310
    )
    
    
    (313
    )Treasury stock, at cost; 1,066,449 shares
    
    
    (7,190
    )
    
    
    (7,190
    )Equity Attributable to Shareholders of Premier Exhibitions, Inc.
    
    
    30,286
    
    
    
    31,648Equity Attributable to Noncontrolling Interests
    
    
    291
    
    
    
    Total Liabilities and Shareholder Equity
    
    $
    42,894
    
    
    $
    43,751
   3




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##### Table of Contents



Premier Exhibitions, Inc.  Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 Three Months Ended May 31,2010
    
    
    2009Revenue:Exhibition revenues
    
    $
    10,233
    
    
    $
    9,850Merchandise and other
    
    
    828
    
    
    
    1,087Total revenue
    
    
    11,061
    
    
    
    10,937Cost of revenue:Exhibition costs
    
    
    6,116
    
    
    
    4,890Cost of merchandise sold
    
    
    202
    
    
    
    252Total cost of revenue (exclusive of depreciation and
amortization shown separately below)
    
    
    6,318
    
    
    
    5,142Gross profit
    
    
    4,743
    
    
    
    5,795Operating expenses:General and administrative
    
    
    4,930
    
    
    
    7,324Depreciation and amortization
    
    
    1,303
    
    
    
    1,627Net loss on disposal of assets
    
    
    29
    
    
    
    Impairment of goodwill and intangible assets
    
    
    
    
    
    
    4,512Total operating expenses
    
    
    6,262
    
    
    
    13,463Loss from operations
    
    
    (1,519
    )
    
    
    (7,668
    )Other income (expense)
    
    
    11
    
    
    
    (39
    )Loss before income taxes
    
    
    (1,508
    )
    
    
    (7,707
    )(Provision for) benefit from income taxes
    
    
    (12
    )
    
    
    1,902Net loss
    
    $
    (1,520
    )
    
    $
    (5,805
    )Plus: Net loss attributable to noncontrolling interests
    
    
    33
    
    
    
    Net loss attributable to shareholders of Premier Exhibitions, Inc.
    
    $
    (1,487
    )
    
    $
    (5,805
    )Net loss per share:Basic loss per common share
    
    $
    (0.03
    )
    
    $
    (0.20
    )Diluted loss per common share
    
    $
    (0.03
    )
    
    $
    (0.20
    )Shares used in basic per share calculations
    
    
    46,749,831
    
    
    
    29,696,954
   4




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##### Table of Contents



Premier Exhibitions, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Three Months Ended May 31,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (1,520
    )
    
    $
    (5,805
    )Adjustments to reconcile net loss to net cash
(used) by operating activities:Depreciation and amortization
    
    
    1,303
    
    
    
    1,627Stock based compensation
    
    
    126
    
    
    
    212Allowance for doubtful accounts
    
    
    58
    
    
    
    (439
    )Impairment of goodwill and intangible assets
    
    
    
    
    
    
    4,512Lease abandonment
    
    
    (188
    )
    
    
    Loss on disposal of assets
    
    
    (29
    )Stock issued in connection with lawsuit settlement
    
    
    
    
    
    
    50Changes in operating assets and liabilities:Decrease (increase) in accounts receivable
    
    
    (305
    )
    
    
    1,100Increase in deferred income taxes
    
    
    
    
    
    
    (983
    )Decrease in prepaid expenses and other current assets
    
    
    (574
    )
    
    
    851Decrease in artifacts owned
    
    
    7
    
    
    
    Increase in inventory
    
    
    79
    
    
    
    Decrease (increase) in income tax receivable
    
    
    54
    
    
    
    (364
    )Decrease in deferred revenue
    
    
    (203
    )
    
    
    (435
    )Increase (decrease) in accounts payable and accrued liabilities
    
    
    593
    
    
    
    (2,600
    )Total adjustments
    
    
    921
    
    
    
    3,531Net cash used in operating activities
    
    
    (599
    )
    
    
    (2,274
    )Cash flows used by investing activities:Purchases of property and equipment
    
    
    (321
    )
    
    
    (642
    )Purchase of exhibition licenses
    
    
    (300
    )
    
    
    Marketable securities
    
    
    4
    
    
    
    Net cash used by investing activities
    
    
    (617
    )
    
    
    (642
    )Cash flows from financing activities:Proceeds from issuance of convertible notes
    
    
    
    
    
    
    6,000Proceeds from option exercises
    
    
    30
    
    
    
    261Net cash provided by financing activities
    
    
    30
    
    
    
    6,261Effects of exchange rate changes on cash and cash equivalents
    
    
    (19
    )
    
    
    6Net increase (decrease) in cash and cash equivalents
    
    
    (1,205
    )
    
    
    3,351Cash and cash equivalents at beginning of year
    
    
    10,339
    
    
    
    4,452Cash and cash equivalents at end of period
    
    
    9,134
    
    
    $
    7,803Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    3
    
    
    $
    48Supplemental disclosure of non-cash investing and financing activities:Cashless exercise of stock options
    
    $
    
    
    
    $
    14Receivable from noncontrolling interest
    
    $
    324
    
    
    $
    
   5




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PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Background and Basis of Presentation
   2. Loss Per Share Data
  Three Months Ended May 31,2010
    
    
    2009(in thousands, except share and per share data)Numerator:Net loss
    
    $
    (1,520
    )
    
    $
    (5,805
    )Denominator:Basic weighted-average shares outstanding
    
    
    46,749,831
    
    
    
    29,696,954Effect of dilutive stock options and warrants
    
    
    
    
    
    
    Diluted weighted-average shares outstanding
    
    
    46,749,831
    
    
    
    29,696,954Net loss per share:Basic
    
    $
    (0.03
    )
    
    $
    (0.20
    )
  6




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3. Noncontrolling Interest
  4. Legal Proceedings and Contingencies
       7




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Status of International Treaty Concerning the Titanic Wreck
     8




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Other Litigation
    Proposed Legislation and Government Inquiries
     Settled Litigation
   9




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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 join 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.
   Overview
  
    
    Titanic: The Artifact Exhibition, (seven exhibitions)
 
    
    Bodies...The Exhibition, and Bodies Revealed (fourteen exhibitions)
 
    
    Dialog in the Dark; (one exhibition)
   10




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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.
   11




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Our Exhibitions
 Titanic: The Artifact Exhibition
  Titanic Expeditions
    12




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Science, Archaeology and Conservation Related to the Titanic and Titanic Artifacts
  Bodies...The Exhibition and Bodies Revealed
    Dialog in the Dark
   13




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Other Exhibitions
  Merchandising
  Information Regarding Exhibitions Outside the United States
  The Quarter Ended May 31, 2010 Compared to the Quarter Ended May 31, 2009
 Revenue.
  Three Months EndedMay 31,2010
    
    
    2009Exhibition revenueAdmissions revenue
    
    $
    9,096
    
    
    $
    7,930Non-refundable license fees for current exhibitions
    
    
    1,137
    
    
    
    1,920Total exhibition revenue
    
    
    10,233
    
    
    
    9,850Merchandise and other
    
    
    828
    
    
    
    1,087Total revenue
    
    $
    11,061
    
    
    $
    10,937Key non-financial measurementsNumber of venues presented
    
    
    24
    
    
    
    22Operating days
    
    
    1,314
    
    
    
    1,624Attendance (in thousands)
    
    
    754
    
    
    
    1,188Average attendance per operating day
    
    
    574
    
    
    
    732
  14




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Cost of revenue.
 Cost of Revenue(in thousands, except percentages)Change2010
    
    
    2009
    
    
    Amount
    
    
    PercentExhibition costsProduction
    
    $
    767
    
    
    $
    1,235
    
    
    $
    (468
    )
    
    
    (37.9
    %)Operating expenses
    
    
    3,564
    
    
    
    3,393
    
    
    
    171
    
    
    
    5.0
    %Marketing
    
    
    1,785
    
    
    
    262
    
    
    
    1,523
    
    
    
    581.3
    %6,116
    
    
    
    4,890
    
    
    
    1,226
    
    
    
    25.1
    %Exhibition expense as percent of exhibition revenue
    
    
    59.8
    %
    
    
    49.6
    %Cost of merchandise
    
    
    202
    
    
    
    252
    
    
    
    (50
    )
    
    
    (19.8
    %)Cost of merchandise as percent of merchandise revenue
    
    
    24.4
    %
    
    
    23.2
    %Total
    
    $
    6,318
    
    
    $
    5,142
    
    
    
    1,176
    
    
    
    22.9
    %Percent of total revenue
    
    
    57.1
    %
    
    
    47.0
    %
   Gross profit.
 Operating
expenses.
    Loss from operations.
 Loss before income taxes.
  15




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(Provision for) benefit from income taxes.
 Net loss.
 Loss per share
 Liquidity and Capital Resources
  Selected cash flow information:
 As ofThree Months Ended May 31,2010
    
    
    2009Net cash used by operating activities
    
    $
    (599
    )
    
    $
    (2,274
    )Net cash used by investing activities
    
    
    (617
    )
    
    
    (642
    )Net cash provided by financing activities
    
    
    30
    
    
    
    6,261Effects of exchange rate changes on cash and cash equivalents
    
    
    (19
    )
    
    
    6Net decrease (increase) in cash and cash equivalents
    
    $
    (1,205
    )
    
    $
    3,351
 Selected balance sheet data:
 As ofMay 31, 2010
    
    
    February 28, 2010Cash and cash equivalents
    
    $
    9,134
    
    
    $
    10,339Marketable securities
    
    
    3,304
    
    
    
    3,308Total assets
    
    
    42,894
    
    
    
    43,751Total stockholders equity
    
    
    30,286
    
    
    
    31,648
 Operating Activities.
  16




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As ofMay 31, 2010
    
    

February
28, 2010Working Capital
    
    $
    14,329
    
    
    $
    14,909Current Ratio
    
    
    2.88
    
    
    
    3.06
 Investing Activities.
  Financing
Activities.
 Capital requirements.
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Contractual Obligations
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
   17




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Foreign Currency Risk
  
 Item 4. Controls and Procedures.
    18




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PART II  OTHER INFORMATION
  
 Item 1. Legal Proceedings.
   
 Item 1A. Risk Factors.
    
 Item 6. Exhibits.
   19




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SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: July 9, 2010
    By:
    /s/ Christopher J. DavinoChristopher J. DavinoPresident and Chief Executive Officer
(Principal Executive Officer)Dated:  July 9, 2010
    By:
    /s/ John A. StoneJohn A. StoneChief Financial Officer(Principal Financial Officer)  20




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INDEX TO EXHIBITS
 Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceNo.
    
    Exhibit Description
    
    Herewith
    
    Form
    
    Exhibit
    
    Filing Date31.1
    
    
    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
  21