##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   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 2250, Atlanta, GA 30326(Address of principal executive offices) (Zip Code)
 (404) 842-2600
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
 o þ




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##### Table of Contents



TABLE OF CONTENTS
 PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    1Item 2.
    
    Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    10Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4.
    
    Controls and Procedures
    
    
    26PART II.
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    26Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 6.
    
    Exhibits
    
    
    27Signatures
    
    
    28Index to Exhibits
    
    
    29EX-31.1EX-31.2EX-32.1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS.
  1




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Premier Exhibitions, Inc. and Subsidiaries
Consolidated Balance Sheets
 February 28,
    
    
    November 30,2006
    
    
    2006restated
    
    
    (unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    4,129,000
    
    
    $
    10,176,000Marketable securities
    
    
    570,000
    
    
    
    Accounts receivable, net
    
    
    1,585,000
    
    
    
    3,149,000Prepaid expenses and other current assets
    
    
    3,458,000
    
    
    
    4,481,000Total current assets
    
    
    9,742,000
    
    
    
    17,806,000Artifacts owned, at cost
    
    
    4,476,000
    
    
    
    4,472,000Salvors lien
    
    
    1,000
    
    
    
    1,000Property and equipment, net
    
    
    2,033,000
    
    
    
    3,714,000Exhibition licenses, net
    
    
    3,475,000
    
    
    
    2,909,000Deferred income taxes
    
    
    2,504,000
    
    
    
    1,733,000Other assets
    
    
    132,000
    
    
    
    141,000$
    22,363,000
    
    
    $
    30,776,000Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    
    1,038,000
    
    
    
    1,764,000Deferred revenue
    
    
    300,000
    
    
    
    371,000Notes payable
    
    
    1,350,000
    
    
    
    Total current liabilities
    
    
    2,688,000
    
    
    
    2,135,000Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common stock; $.0001 par value; authorized 40,000,000 shares;
issued and outstanding 26,062,089 and 28,560,144 shares
at February 28, 2006 and November 30, 2006, respectively
    
    
    3,000
    
    
    
    3,000Common stock payable
    
    
    920,000
    
    
    
    96,000Additional paid-in capital
    
    
    27,178,000
    
    
    
    32,724,000Accumulated deficit
    
    
    (8,324,000
    )
    
    
    (3,733,000
    )Accumulated other comprehensive income (loss)
    
    
    (102,000
    )
    
    
    (127,000
    )Treasury stock, at cost; 46,523 shares at November 30, 2006
    
    
    
    
    
    
    (322,000
    )Total shareholders equity
    
    
    19,675,000
    
    
    
    28,641,000$
    22,363,000
    
    
    $
    30,776,000
  2




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Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2005
    
    
    2006
    
    
    2005
    
    
    2006restated
    
    
    
    
    
    
    restatedRevenue:Exhibition revenues
    
    $
    2,650,000
    
    
    $
    7,659,000
    
    
    $
    8,540,000
    
    
    $
    19,006,000Merchandise and other
    
    
    101,000
    
    
    
    262,000
    
    
    
    411,000
    
    
    
    961,000Sale of coal
    
    
    21,000
    
    
    
    25,000
    
    
    
    87,000
    
    
    
    81,000Total revenue
    
    
    2,772,000
    
    
    
    7,946,000
    
    
    
    9,038,000
    
    
    
    20,048,000Cost of revenue:Exhibition costs
    
    
    895,000
    
    
    
    1,867,000
    
    
    
    2,318,000
    
    
    
    4,404,000Cost of merchandise sold
    
    
    4,000
    
    
    
    30,000
    
    
    
    22,000
    
    
    
    105,000Cost of coal sold
    
    
    1,000
    
    
    
    4,000
    
    
    
    9,000
    
    
    
    10,000Total cost of revenue (exclusive of depreciation and
amortization shown separately below)
    
    
    900,000
    
    
    
    1,901,000
    
    
    
    2,349,000
    
    
    
    4,519,000Gross profit
    
    
    1,872,000
    
    
    
    6,045,000
    
    
    
    6,689,000
    
    
    
    15,529,000Operating expenses:General and administrative
    
    
    1,677,000
    
    
    
    2,105,000
    
    
    
    4,076,000
    
    
    
    6,563,000Depreciation and amortization
    
    
    292,000
    
    
    
    341,000
    
    
    
    655,000
    
    
    
    1,053,000Litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    350,000Loss on sale of fixed assets
    
    
    
    
    
    
    
    
    
    
    84,000
    
    
    
    Total operating expenses
    
    
    1,969,000
    
    
    
    2,446,000
    
    
    
    4,815,000
    
    
    
    7,966,000Income from operations
    
    
    (97,000
    )
    
    
    3,599,000
    
    
    
    1,874,000
    
    
    
    7,563,000Other income and expenses:Interest income
    
    
    33,000
    
    
    
    55,000
    
    
    
    37,000
    
    
    
    107,000Interest expense
    
    
    (14,000
    )
    
    
    (12,000
    )
    
    
    (65,000
    )
    
    
    (51,000
    )Other income
    
    
    168,000
    
    
    
    25,000
    
    
    
    168,000
    
    
    
    36,000Total other income and expenses
    
    
    187,000
    
    
    
    68,000
    
    
    
    140,000
    
    
    
    92,000Income before provision for income taxes
    
    
    90,000
    
    
    
    3,667,000
    
    
    
    2,014,000
    
    
    
    7,655,000Provision for income taxes
    
    
    
    
    
    
    1,467,000
    
    
    
    
    
    
    
    3,062,000Net income
    
    $
    90,000
    
    
    $
    2,200,000
    
    
    $
    2,014,000
    
    
    $
    4,593,000Net income per share:Basic income per common share
    
    $
    0.00
    
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.17Diluted income per common share
    
    $
    0.00
    
    
    $
    0.07
    
    
    $
    0.08
    
    
    $
    0.15Shares used in basic per share calculations
    
    
    24,517,620
    
    
    
    28,310,105
    
    
    
    23,453,426
    
    
    
    27,338,690Shares used in diluted per share calculations
    
    
    27,824,242
    
    
    
    31,881,095
    
    
    
    26,760,048
    
    
    
    30,665,766
  3




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Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
 Nine Months Ended November 30,2005
    
    
    2006restatedCash flows from operating activities:Net income
    
    $
    2,014,000
    
    
    $
    4,593,000Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    655,000
    
    
    
    1,053,000Issuance of compensatory stock options
    
    
    127,000
    
    
    
    1,023,000Issuance of common stock and warrants for services
    
    
    823,000
    
    
    
    476,000(Increase) decrease in cost of artifacts
    
    
    (1,000
    )
    
    
    4,000Changes in operating assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (596,000
    )
    
    
    (1,564,000
    )(Increase) decrease in deferred income taxes
    
    
    181,000
    
    
    
    771,000(Increase) decrease in prepaid expenses and other current assets
    
    
    (2,355,000
    )
    
    
    (1,023,000
    )(Increase) decrease in other assets
    
    
    416,000
    
    
    
    (9,000
    )Increase (decrease) in deferred revenue
    
    
    (700,000
    )
    
    
    71,000Increase (decrease) in accounts payable and accrued liabilities
    
    
    829,000
    
    
    
    726,000Total adjustments
    
    
    (621,000
    )
    
    
    1,528,000Net cash provided by operating activities
    
    
    1,393,000
    
    
    
    6,121,000Cash flows used by investing activities:Purchases of property and equipment
    
    
    (1,216,000
    )
    
    
    (2,146,000
    )Purchase of exhibition licenses
    
    
    (2,082,000
    )
    
    
    Net cash used by investing activities
    
    
    (3,298,000
    )
    
    
    (2,146,000
    )Cash flows from financing activities:Proceeds from notes payable and credit facility
    
    
    2,425,000
    
    
    
    342,000Reduction in marketable securities
    
    
    
    
    
    
    (570,000
    )Principal payments on notes payable and credit facility
    
    
    (1,848,000
    )
    
    
    (1,690,000
    )Proceeds from option and warrant exercises
    
    
    69,000
    
    
    
    1,726,000Excess tax benefit on the exercise of employee stock options
    
    
    
    
    
    
    2,219,000Proceeds from sale of common stock
    
    
    5,468,000
    
    
    
    Net cash provided by financing activities
    
    
    6,114,000
    
    
    
    2,027,000Effects of exchange rate changes on cash and cash equivalents
    
    
    (39,000
    )
    
    
    45,000Net increase (decrease) in cash and cash equivalents
    
    
    4,170,000
    
    
    
    6,047,000Cash and cash equivalents at beginning of period
    
    
    1,258,000
    
    
    
    4,129,000Cash and cash equivalents at end of period
    
    $
    5,428,000
    
    
    $
    10,176,000Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    30,000
    
    
    $
    27,000Non-cash investing and financing transactions:Cashless exercise of stock options
    
    $
    
    
    
    $
    322,000
  4




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PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
     2. Earnings Per Share Data
   5




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Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2005
    
    
    2006
    
    
    2005
    
    
    2006Numerator:Net income
    
    $
    90,000
    
    
    $
    2,200,000
    
    
    $
    2,014,000
    
    
    $
    4,593,000Denominator:Basic weighted-average shares outstanding
    
    
    24,517,620
    
    
    
    28,310,105
    
    
    
    23,453,426
    
    
    
    27,338,690Effect of dilutive stock options and warrants
    
    
    3,306,622
    
    
    
    3,570,990
    
    
    
    3,306,622
    
    
    
    3,327,076Diluted weighted-average shares outstanding
    
    
    27,824,242
    
    
    
    31,881,095
    
    
    
    26,760,048
    
    
    
    30,665,766Net income per share:Basic
    
    $
    0.00
    
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.17Diluted
    
    $
    0.00
    
    
    $
    0.07
    
    
    $
    0.08
    
    
    $
    0.15
 3. Equity Transactions
         6




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4. Legal Proceedings
     7




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##### Table of Contents



5. Credit Facility
    6. Commitments
    7. Co-Presentation Agreement
   8




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9




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  Overview
       10




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Titanic Exhibitions
  
    
    St. Louis Science Center, St. Louis, Missouri (November 11, 2005 to April 15,
2006);
    
    Queen Mary, Long Beach, California (December 17, 2005 to September 4, 2006);
    
    Oshkosh Public Museum, Oshkosh, Wisconsin (February 4, 2006 to April 30, 2006);
    
    Science Center of Iowa, Des Moines, Iowa (May 20, 2006 to August 20, 2006);
    
    Miami Museum of Science and Planetarium, Miami, Florida (March 25, 2006 to October
15, 2006);
    
    The Tropicana Resort and Casino, Las Vegas, Nevada (June 1, 2006 to an undetermined
date);
    
    The Metreon, San Francisco, California (June 10, 2006 to January 2007);
    
    El Paso Science Museum, El Paso, Texas (September 16, 2006 to December 31, 2006);
    
    Science Spectrum, Lubbock, Texas (October 5, 2006 to an undetermined date);
    
    Foro Polanco, Mexico City, Mexico (October 14, 2006 to an undetermined date);
    
    Cincinnati Museum Center at Union Terminal, Cincinnati, Ohio (November 4, 2006
to an undetermined date); and
    
    Atlanta Civic Center, Atlanta, Georgia (November 11, 2006 to an undetermined date).
  Bodies...The Exhibition and Bodies Revealed Exhibitions
   11




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
    
    Bodies...The Exhibition, Museum of Science and Industry, Tampa, Florida (August
18, 2005 to February 26, 2006, extended to September 5, 2006);
    
    Bodies...The Exhibition, South Street Seaport, New York, New York (November 19,
2005 to an undetermined date);
    
    Bodies...The Exhibition, Atlanta Civic Center, Atlanta, Georgia (March 4, 2006 to
September 4, 2006);
    
    Bodies Revealed, Mexico City, Mexico (March 11, 2006 to September 11, 2006);
    
    Bodies...The Exhibition, Earls Court Exhibition Centre, London, England (April
12, 2006 to July 30, 2006);
    
    Bodies...The Exhibition, The Tropicana Resort and Casino, Las Vegas, Nevada (June
23, 2006 to an undetermined date);
    
    Bodies...The Exhibition, The Shops at Sunset Place, Miami, Florida (September 22,
2006 to an undetermined date);
    
    Bodies...The Exhibition, 800 Pike Street (across from the Washington State
Convention Center), Seattle, Washington (September 30, 2006 to an undetermined date);
    
    Bodies Revealed, Campus De La Salud, Technologico de Monterrey, Monterrey, Mexico
(September 29, 2006 to undetermined date); and
    
    Bodies...The Exhibition, Beurs van Berlage Concert and Conference Hall,
Amsterdam, the Netherlands (November 25, 2006 to March 2007).
  Co-Presentation Agreement
    12




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Additional Exhibitions
  RMS Carpathia Recovery and Conservation
  13




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Results of Operations
  Three Months Ended
    
    
    Nine Months EndedNovember 30,
    
    
    November 30,2005
    
    
    2006
    
    
    2005
    
    
    2006Revenue:Exhibition revenues
    
    
    95.6
    %
    
    
    96.4
    %
    
    
    94.5
    %
    
    
    94.8
    %Merchandise and other
    
    
    3.6
    %
    
    
    3.3
    %
    
    
    4.5
    %
    
    
    4.8
    %Sale of coal
    
    
    0.8
    %
    
    
    0.3
    %
    
    
    1.0
    %
    
    
    0.4
    %Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenue:Exhibition costs
    
    
    32.3
    %
    
    
    23.5
    %
    
    
    25.6
    %
    
    
    22.0
    %Cost of merchandise sold
    
    
    0.1
    %
    
    
    0.4
    %
    
    
    0.2
    %
    
    
    0.5
    %Cost of coal sold
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.1
    %
    
    
    0.0
    %Total cost of revenue (exclusive of depreciation 
and amortization shown separately below)
    
    
    32.5
    %
    
    
    23.9
    %
    
    
    26.0
    %
    
    
    22.5
    %Gross profit
    
    
    67.5
    %
    
    
    76.1
    %
    
    
    74.0
    %
    
    
    77.5
    %Operating expenses:General and administrative
    
    
    60.5
    %
    
    
    26.5
    %
    
    
    45.1
    %
    
    
    32.7
    %Depreciation and amortization
    
    
    10.5
    %
    
    
    4.3
    %
    
    
    7.2
    %
    
    
    5.3
    %Litigation settlement
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    1.7
    %Loss on sale of fixed assets
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.9
    %
    
    
    0.0
    %Total operating expenses
    
    
    71.0
    %
    
    
    30.8
    %
    
    
    53.3
    %
    
    
    39.7
    %Income from operations
    
    
    -3.5
    %
    
    
    45.3
    %
    
    
    20.7
    %
    
    
    37.7
    %Other income and expenses:Interest income
    
    
    1.2
    %
    
    
    0.7
    %
    
    
    0.4
    %
    
    
    0.5
    %Interest expense
    
    
    -0.5
    %
    
    
    -0.2
    %
    
    
    -0.7
    %
    
    
    -0.3
    %Other income
    
    
    6.1
    %
    
    
    0.3
    %
    
    
    1.9
    %
    
    
    0.2
    %Total other income and expenses
    
    
    6.7
    %
    
    
    0.9
    %
    
    
    1.5
    %
    
    
    0.5
    %Income before provision for income taxes
    
    
    3.2
    %
    
    
    46.1
    %
    
    
    22.3
    %
    
    
    38.2
    %Provision (benefit) for income taxes
    
    
    0.0
    %
    
    
    18.5
    %
    
    
    0.0
    %
    
    
    15.3
    %Net income
    
    
    3.2
    %
    
    
    27.7
    %
    
    
    22.3
    %
    
    
    22.9
    %
 The Quarter Ended November 30, 2006 Compared to the Quarter Ended November 30, 2005
   14




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15




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The Nine Month Period Ended November 30, 2006 Compared to the Nine Month Period Ended November 30,
2005
   16




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17




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Liquidity and Capital Resources
 Cash flows from operating activities
   As of February 28,
    
    
    As of November 30,2006
    
    
    2006(unaudited)Working Capital (in thousands)
    
    $
    7,054
    
    
    $
    15,671Current Ratio
    
    
    3.62
    
    
    
    8.34
 18




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Cash flows from investing activities
  Cash flows from financing activities
    19




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Off-Balance Sheet Arrangements
  Critical Accounting Policies
   
    
    Revenue recognition;
    
    Accounts receivables;
    
    Accounting for income taxes;
    
    Legal contingencies;
    
    Property and equipment;
    
    Impairment of long-lived and intangible assets; and
    
    Accounting policy for capitalizing exhibition license costs.
 Revenue Recognition
 Exhibition Revenue.
 20




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
    
    persuasive evidence of an exhibition arrangement with a customer exists;
    
    the exhibit is complete and, in accordance with the terms of the
arrangement, has been delivered;
    
    the exhibition period of the arrangement has begun and/or the customer
can begin its exploitation, exhibition or sale;
    
    the arrangement fee is fixed or determinable; and
    
    collection of the arrangement fee is reasonably assured.
    Merchandise Revenue.
 Sponsorship Revenue.
 Licensing Revenue.
 Accounts Receivable
  21




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Accounting for Income Taxes
   Legal Contingencies
  Property and Equipment
  Impairment of Long-Lived Assets and Other Intangibles
    22




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Accounting Policy for Capitalizing Exhibition License Costs
     23




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Recent Accounting Pronouncements
     24




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Forward-Looking Statements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Interest Rate Risk
  Foreign Currency Risk
  25




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ITEM 4. CONTROLS AND PROCEDURES
   PART II
 
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
 Exhibit Human: The Wonders Within, Inc. and RMS Titanic, Inc.
 Premier Exhibitions, Inc. v. Exhibit Human: The
Wonders Within, Inc.
 RMS Titanic, Inc. v. Georgette Alithinos,
International Advantage, Inc. and Renaissance Entertainment, EPE
 26




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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
   
 ITEM 6. EXHIBITS.
  27




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SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: January 9, 2007
    
    By: /s/ Arnie Geller
Arnie Geller, President
and Chief Executive OfficerDated: January 9, 2007
    
    By: /s/ Stephen Couture
Stephen Couture, Vice President
and Chief Financial Officer
(Principal Financial Officer)
 28




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INDEX TO EXHIBITS
 Exhibit
    
    
    
    Location31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of President and
Chief Executive Officer
    
    Filed herewith31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Vice President
and Chief Financial Officer
    
    Filed herewith32.1
    
    Section 1350 Certifications.
    
    Filed herewith
 29