##### 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, 2009
 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 2250, Atlanta, GA
    
    30326(Address of principal executive offices)
    
    (Zip Code)
 (404) 842-2600
  þ o
 o o
  Large
accelerated
filer oAccelerated
filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




---



##### 



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 QUARTERLY PERIOD ENDED AUGUST 31, 2009
 TABLE OF CONTENTS
 PagePART I.  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    3Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4.
    
    Controls and Procedures
    
    
    22PART II.  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    22Item 1A.
    
    Risk Factors
    
    
    22Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 6.
    
    Exhibits
    
    
    23EX-10.6EX-10.7EX-10.8EX-31.1EX-31.2EX-32.1




---



##### Table of Contents



Item 1.
Financial Statements.
 Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share data)
 August 31,2009
    
    
    February 28,(unaudited)
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    7,653
    
    
    $
    4,452Marketable securities
    
    
    3,284
    
    
    
    1,277Accounts receivable, net of allowance for doubtful accounts
of $2,080 and $1,193, respectively
    
    
    5,265
    
    
    
    5,009Merchandise inventory, net of reserve of $182 and $143, respectively
    
    
    546
    
    
    
    431Income taxes receivable
    
    
    4,113
    
    
    
    3,806Deferred income taxes
    
    
    2,087
    
    
    
    1,408Prepaid expenses and other current assets
    
    
    2,058
    
    
    
    4,981Total current assets
    
    
    25,006
    
    
    
    21,364Artifacts owned, at cost
    
    
    3,063
    
    
    
    3,081Salvors lien
    
    
    1
    
    
    
    1Property and equipment, net of accumulated depreciation
of $9,376 and $7,503, respectively
    
    
    14,876
    
    
    
    15,706Exhibition licenses, net of accumulated amortization
of $4,887 and $4,806, respectively
    
    
    4,207
    
    
    
    7,225Goodwill
    
    
    
    
    
    
    2,567Deferred income taxes
    
    
    3,506
    
    
    
    2,685Note receivable
    
    
    625
    
    
    
    625Other assets
    
    
    250
    
    
    
    521$
    51,534
    
    
    $
    53,775Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    4,805
    
    
    $
    11,712Deferred revenue
    
    
    676
    
    
    
    2,340Total current liabilities
    
    
    5,481
    
    
    
    14,052Long-term liabilities:Convertible promissory notes
    
    
    12,000
    
    
    
    Income taxes payable
    
    
    1,191
    
    
    
    1,166Total long-term liabilities
    
    
    13,191
    
    
    
    1,166Shareholders equity:Common stock; $.0001 par value; authorized 65,000,000 shares;
issued 31,314,507 and 31,265,415 shares, respectively outstanding 30,248,058 and 29,414,919, respectively
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    45,293
    
    
    
    44,691(Accumulated deficit) retained earnings
    
    
    (4,934
    )
    
    
    1,384Accumulated other comprehensive loss
    
    
    (310
    )
    
    
    (331
    )Treasury stock, at cost; 1,066,449 shares
    
    
    (7,190
    )
    
    
    (7,190
    )Total shareholders equity
    
    
    32,862
    
    
    
    38,557$
    51,534
    
    
    $
    53,775
  3




---



##### 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 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue:Exhibition revenue
    
    $
    12,503
    
    
    $
    12,636
    
    
    $
    22,353
    
    
    $
    25,895Merchandise and other
    
    
    937
    
    
    
    2,468
    
    
    
    2,024
    
    
    
    4,439Total revenue
    
    
    13,440
    
    
    
    15,104
    
    
    
    24,377
    
    
    
    30,334Cost of revenue:Exhibition costs
    
    
    5,052
    
    
    
    7,440
    
    
    
    9,942
    
    
    
    13,799Cost of merchandise sold
    
    
    213
    
    
    
    522
    
    
    
    465
    
    
    
    1,496Total cost of revenue (exclusive of depreciation
and amortization shown separately below)
    
    
    5,265
    
    
    
    7,962
    
    
    
    10,407
    
    
    
    15,295Gross profit
    
    
    8,175
    
    
    
    7,142
    
    
    
    13,970
    
    
    
    15,039Operating expenses:General and administrative
    
    
    7,449
    
    
    
    4,718
    
    
    
    14,773
    
    
    
    12,740Depreciation and amortization
    
    
    1,318
    
    
    
    1,123
    
    
    
    2,945
    
    
    
    2,418Impairment of goowill and intangible assets
    
    
    
    
    
    
    
    
    
    
    4,512
    
    
    
    Total operating expenses
    
    
    8,767
    
    
    
    5,841
    
    
    
    22,230
    
    
    
    15,158(Loss) Income from operations
    
    
    (592
    )
    
    
    1,301
    
    
    
    (8,260
    )
    
    
    (119
    )Other (expense) income
    
    
    (171
    )
    
    
    78
    
    
    
    (209
    )
    
    
    159(Loss) income before provision for income taxes
    
    
    (763
    )
    
    
    1,379
    
    
    
    (8,469
    )
    
    
    40Benefit from (provision for) income taxes
    
    
    250
    
    
    
    (440
    )
    
    
    2,152
    
    
    
    (13
    )Net (loss) income
    
    $
    (513
    )
    
    $
    939
    
    
    $
    (6,317
    )
    
    $
    27Net (loss) income per share:Basic (loss) income per common share
    
    $
    (0.02
    )
    
    $
    0.03
    
    
    $
    (0.21
    )
    
    $
    0.00Diluted (loss) income per common share
    
    $
    (0.02
    )
    
    $
    0.03
    
    
    $
    (0.21
    )
    
    $
    0.00Shares used in basic per share calculations
    
    
    30,212,306
    
    
    
    29,203,500
    
    
    
    29,954,630
    
    
    
    29,176,833Shares used in diluted per share calculations
    
    
    30,212,306
    
    
    
    31,245,556
    
    
    
    29,954,630
    
    
    
    31,442,467
  4




---



##### Table of Contents



Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Six Months Ended August 31,2009
    
    
    2008Cash flows from operating activities:Net (loss) income
    
    $
    (6,317
    )
    
    $
    27Adjustments to reconcile net (loss) income to net cash
(used) provided by operating activities:Depreciation and amortization
    
    
    2,945
    
    
    
    2,267Stock based compensation
    
    
    312
    
    
    
    (1,018
    )Provision for doubtful accounts
    
    
    887
    
    
    
    219Stock issued in settlement of lawsuit
    
    
    50
    
    
    
    Impairment of goodwill and intangibles assets
    
    
    4,512
    
    
    
    Excess tax benefit on the exercise of employee stock options
    
    
    
    
    
    
    (5
    )Changes in operating assets and liabilities:Increase in accounts receivable
    
    
    (1,143
    )
    
    
    (2,111
    )Increase in merchandise inventory
    
    
    (115
    )
    
    
    Increase in deferred income taxes
    
    
    (1,498
    )
    
    
    (17
    )Decrease (increase) in prepaid expenses and other assets
    
    
    3,214
    
    
    
    (1,111
    )Decrease in Carpathia receivable
    
    
    
    
    
    
    2,500(Increase) in income tax benefit
    
    
    
    
    
    
    (2,495
    )Increase (decrease) in deferred revenue
    
    
    (1,664
    )
    
    
    453(Decrease) increase in accounts payable and accrued liabilities
    
    
    (6,907
    )
    
    
    1,810Increase in income taxes recievable
    
    
    (307
    )
    
    
    Total adjustments
    
    
    286
    
    
    
    492Net cash (used) provided by operating activities
    
    
    (6,031
    )
    
    
    519Cash flows used in investing activities:Purchases of property and equipment
    
    
    (1,043
    )
    
    
    (4,829
    )Net increase in marketable securities
    
    
    (2,007
    )
    
    
    (19
    )Purchase of exhibition licenses
    
    
    
    
    
    
    (2,107
    )Acquisition, net of cash received
    
    
    
    
    
    
    (2,101
    )Net cash used in investing activities
    
    
    (3,050
    )
    
    
    (9,056
    )Cash flows from financing activities:Proceeds from convertible notes
    
    
    12,000
    
    
    
    Proceeds from option and warrant exercises
    
    
    261
    
    
    
    229Excess tax benefit on the exercise of stock options
    
    
    
    
    
    
    5Net cash provided by financing activities
    
    
    12,261
    
    
    
    234Effects of exchange rate changes on cash and cash equivalents
    
    
    21
    
    
    
    (18
    )Net increase (decrease) in cash and cash equivalents
    
    
    3,201
    
    
    
    (8,321
    )Cash and cash equivalents at beginning of period
    
    
    4,452
    
    
    
    16,426Cash and cash equivalents at end of period
    
    $
    7,653
    
    
    $
    8,105Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    
    
    
    
    $
    3Cash paid during the period for taxes
    
    
    
    
    
    $
    1,537Supplemental disclosure of non-cash investing and financing activities:Cashless exercise of stock options
    
    $
    14
    
    
    
    
  5




---



##### Table of Contents



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Background and Basis of Presentation
   2. Significant Accounting Policies
  3. Recent Accounting Pronouncements
  6




---



##### Table of Contents



a b c
 4. Goodwill and Other Intangible Assets
   7




---



##### Table of Contents



GoodwillBalance as of February 28, 2009
    
    $
    2,567Impairment charge
    
    
    (2,567
    )Balance as of August 31, 2009
    
    $
    Intangible AssetsBalance as of February 28, 2009
    
    $
    7,225Amortization during the period
    
    
    (1,074
    )Impairment charge
    
    
    (1,945
    )Balance as of August 31, 2009
    
    $
    4,206
 5. Shareholders Equity
     
    
    the maximum aggregate number of shares that may be subject to stock options or
SARs granted in any calendar year to any one participant is 1,200,000 shares;
    
    the maximum aggregate number of shares of restricted stock and shares subject
to restricted stock units and other stock-based awards granted in any calendar
year to any one participant is 600,000 shares;
    
    the maximum aggregate number of shares deliverable under performance shares
granted in any calendar year to any one participant is 750,000 shares;
    
    the maximum aggregate compensation that can be paid pursuant to performance
units or other cash-based awards granted in any calendar year to any one
participant is $1.2 million or a number of shares having an aggregate fair market
value not in excess of such amount; and
 8




---



##### Table of Contents




    
    the maximum dividend equivalent that may be paid in any calendar year to any
one participant is $0.3 million.
        6. Debt
  9




---



##### Table of Contents



7. Loss Per Share Data
  Three Months Ended August 31,
    
    
    Six Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net (loss) income
    
    $
    (513
    )
    
    $
    939
    
    
    $
    (6,317
    )
    
    $
    27Denominator:Basic weighted-average
shares outstanding
    
    
    30,212,306
    
    
    
    29,203,500
    
    
    
    29,954,630
    
    
    
    29,176,833Effect of dilutive stock
options and warrants
    
    
    
    
    
    
    2,042,056
    
    
    
    
    
    
    
    2,265,634Diluted weighted-average
shares outstanding
    
    
    30,212,306
    
    
    
    31,245,556
    
    
    
    29,954,630
    
    
    
    31,442,467Net (loss) income per share:Basic
    
    $
    (0.02
    )
    
    $
    0.03
    
    
    $
    (0.21
    )
    
    $
    0.00Diluted
    
    $
    (0.02
    )
    
    $
    0.03
    
    
    $
    (0.21
    )
    
    $
    0.00
  8. Post Employment Benefits
   10




---



##### Table of Contents



9. Legal Proceedings and Contingencies
 Status of International Treaty Concerning the Titanic Wreck
    Status of Salvor-in-Possession and Interim Salvage Award Proceedings
   11




---



##### Table of Contents



Other Litigation
   12




---



##### Table of Contents



Contingencies
    10. Subsequent Events
      13




---



##### Table of Contents




    
    The Company has rights to present between five and fifteen human anatomy
exhibitions itself in the European, Asian and other territories previously
reserved exclusively for JAM/S2BN.
    
    The remaining options for S2BN to jointly present additional exhibitions with
the Company are exercisable at the discretion of S2BN, and moneys owed for any such
options will be paid as those shows occur.
    
    S2BN has an additional six months to exercise each of its remaining options.
    
    If S2BN elects not to proceed with any option, the Company will be free to expand
upon its existing international presentation rights and to jointly present
exhibitions worldwide with the numerous other third party international promoters
with whom the Company already has successful working relationships in connection with
its other properties.
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
   14




---



##### Table of Contents



Overview
   Titanic
  Bodies
  Dialog in the Dark
  Star Trek
   15




---



##### Table of Contents



Merchandise
  Information Regarding Exhibitions Outside the United States
  The Quarter Ended August 31, 2009 Compared to the Quarter Ended August 31, 2008
 Revenue.
  Cost of revenue.
   Gross profit.
 16




---



##### Table of Contents



Operating expenses.
  (Loss) income from operations.
 (Loss) income before benefit from (provision for) income taxes.
 Benefit from (provision for) income taxes.
 Net (loss) income.
 (Loss) income per share
 The Six Months Ended August 31, 2009 Compared to the Six Months Ended August 31, 2008
 Revenue.
  17




---



##### Table of Contents



Cost of revenue.
   Gross
profit.
 Operating expenses.
   Loss from operations.
 (Loss) income before benefit from (provision for) income taxes.
 Benefit from income taxes.
 18




---



##### Table of Contents



Net loss.
 Loss per share
 Liquidity and Capital Resources
  Selected cash flow information:
 As ofSix
Months Ended August 31,2009
    
    
    2008Net cash (used) provided by operating activities
    
    $
    (6,031
    )
    
    $
    519Net cash used by investing activities
    
    
    (3,050
    )
    
    
    (9,056
    )Net cash provided by financing activities
    
    
    12,261
    
    
    
    234Effects of exchange rate changes on cash and cash equivalents
    
    
    21
    
    
    
    (18
    )Net increase (decrease) in cash and cash equivalents
    
    $
    3,201
    
    
    $
    (8,321
    )
 Selected balance sheet data:
 As ofAugust 31, 2009
    
    February 28, 2009Cash and cash equivalents
    
    $
    7,653
    
    
    $
    4,452Marketable securities
    
    
    3,284
    
    
    
    1,277Working capital
    
    
    19,525
    
    
    
    7,312Total assets
    
    
    51,534
    
    
    
    53,775Total shareholders equity
    
    
    32,862
    
    
    
    38,557
 Operating Activities.
  
    
    Our net loss of $6.3 million
    
    Depreciation and amortization expense of $2.9 million
    
    Stock based compensation of $0.3 million
    
    Impairment of goodwill and intangible assets of $4.5 million
    
    Accounts receivable of $(1.1) million
    
    Deferred income taxes of $(1.5) million
 19




---



##### Table of Contents




    
    Prepaid and other current assets of $3.2 million
    
    Deferred revenue of $(1.7) million
    
    Accounts payable and accrued liabilities of $(6.9) million
 Investing Activities.
 Financing Activities.
  Capital requirements.
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
  20




---



##### Table of Contents



Contractual Obligations
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
  Foreign Currency Risk
  21




---



##### Table of Contents



Item 4. Controls and Procedures.
   
 PART II  OTHER INFORMATION
  
 Item 1. Legal Proceedings.
 alvor-in-possession
   
 Item 1A. Risk Factors.
  22




---



##### Table of Contents






Item 4.
Submission of Matters to a Vote of Security Holders.




1.
    
    Elected William M. Adams, Douglas Banker, Christopher J. Davino, Jack Jacobs,
Mark A. Sellers, Bruce Steinberg and Samuel S. Weiser as directors to serve until our
2010 Annual Meeting of Shareholders and until the subsequent election and
qualification of their respective successors;2.
    
    Approved the issuance of our common stock upon conversion of our notes held
by Sellers Capital Master Fund, Ltd. and SAF Capital Fund LLC in the aggregate
principal amount of $12.0 million;3.
    
    Approved an amendment to our articles of incorporation to increase the number
of our authorized shares of common stock from 40 million to 65 million shares, to
enable the full conversion of the notes held by Sellers Capital Master Fund, Ltd. and
SAF Capital Fund LLC in the aggregate principal amount of $12.0 million, the issuance
of shares under our 2009 Equity Incentive Plan, and for other corporate purposes;4.
    
    Approved our 2009 Equity Incentive Plan; and5.
    
    Ratified the selection of Cherry, Bekaert & Holland, L.L.P. as our
independent registered public accounting firm for our fiscal year ending February 28,
2010.






1.
    
    Director Election


Nominee
    
    Votes For
    
    Votes WithheldWilliam M. Adams
    
    
    16,891,610
    
    
    
    9,856,416Douglas Banker
    
    
    16,769,825
    
    
    
    9,978,201Christopher J. Davino
    
    
    16,867,877
    
    
    
    9,880,149Jack Jacobs
    
    
    16,884,312
    
    
    
    9,863,714Mark A. Sellers
    
    
    16,889,846
    
    
    
    9,858,180Bruce Steinberg
    
    
    16,896,644
    
    
    
    9,851,382Samuel S. Weiser
    
    
    14,919,801
    
    
    
    11,828,225


2.
    
    Approval of Issuance of Common Stock Upon Conversion of Notes


Votes For
    
    Votes Against
    
    Abstentions9,485,429
    
    6,806,268
    
    
    2,092,785


3.
    
    Approval of Amendment to Articles of Incorporation


Votes For
    
    Votes Against
    
    Abstentions9,452,908
    
    6,835,484
    
    
    2,096,090


4.
    
    Approval of 2009 Equity Incentive Plan Votes For
    
    Votes Against
    
    Abstentions8,855,105
    
    8,206,358
    
    
    1,323,019
 5.
    
    Ratification of Cherry, Bekaert & Holland, L.L.P.
 Votes For
    
    Votes Against
    
    Abstentions24,206,524
    
    320,529
    
    
    2,220,971
 
 Item 6.
Exhibits.
  23




---



##### Table of Contents



SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: October 9, 2009
    By:
    /s/ Christopher J. DavinoChristopher J. DavinoPresident and Chief Executive Officer
(Principal Executive Officer)Dated:  October 9, 2009
    By:
    /s/ John A. StoneJohn A. Stone,Chief Financial Officer
(Principal Financial Officer) 24




---



##### Table of Contents



INDEX TO EXHIBITS
 Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceNo.
    
    Exhibit Description
    
    Herewith
    
    Form
    
    Exhibit
    
    Filing Date3.1
    
    Second Amendment, dated August 6, 2009, to Articles of
Incorporation of Premier Exhibitions, Inc.
    
    
    
    S-8
    
    
    4.3
    
    
    08-17-093.2
    
    Amended and Restated Bylaws of Premier Exhibitions, Inc., dated
September 16, 2009
    
    
    
    8-K
    
    
    3.2
    
    
    09-21-0910.1#
    
    Premier Exhibitions, Inc. 2009 Equity Incentive Plan
    
    
    
    S-8
    
    
    10.1
    
    
    08-17-0910.2#
    
    Form of Premier Exhibitions, Inc. 2009 Equity Incentive Plan
Nonqualified Stock Option Agreement
    
    
    
    S-8
    
    
    10.2
    
    
    08-17-0910.3#
    
    Form of Premier Exhibitions, Inc. 2009 Equity Incentive Plan
Restricted Shares Agreement
    
    
    
    S-8
    
    
    10.3
    
    
    08-17-0910.4#
    
    Employment Agreement, dated September 3, 2009, by and between
the Company and Christopher J. Davino
    
    
    
    8-K
    
    
    10.1
    
    
    09-08-0910.5#
    
    Nonqualified Stock Option Agreement, dated September 3, 2009, by
and between the Company and Christopher J. Davino
    
    
    
    8-K
    
    
    10.2
    
    
    09-08-0910.6#
    
    Employment Agreement, dated June 2009, by and between the
Company and John A. Stone
    
    X10.7#
    
    Restricted Shares Agreement, dated August 6, 2009, by and
between the Company and John A. Stone
    
    X10.8#
    
    Consulting Agreement, dated
October 8, 2009, by and
between the Company and Douglas Banker
    
    X+10.9
    
    Letter Agreement, entered into as of September 25, 2009, by and
between the Company and S2BN Entertainment Corporation
    
    
    
    8-K
    
    
    10.1
    
    
    10-01-0931.1
    
    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
 
 #
    
    Management contract or compensatory plan or arrangement.+
    
    The Company has requested confidential treatment of certain information contained in this exhibit.
Such information has been filed separately with the Securities and Exchange Commission pursuant to
the Companys application for confidential treatment under 17 C.F.R. §200.80(b)(4) and § 240.24b-2. 25