##### 



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, 2007
 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  (Registrants telephone number, including area code)
 þ o
  o þ o
 o þ




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##### 



Part 1.
    
    Financial Information
    

Page No.Item 1.
    
    Financial Statements
    
    
    3Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    8Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    22Part II.
    
    Other InformationItem 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 6.
    
    Exhibits
    
    
    24Signatures
    
    
    25
 2




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##### 



PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS.
 Premier Exhibitions, Inc. and Subsidiaries
Consolidated Balance Sheets
 February 28,
    
    
    August 31,2007
    
    
    2007(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    16,811,000
    
    
    $
    24,534,000Marketable securities
    
    
    
    
    
    
    1,033,000Accounts receivable, net of allowance for doubtful accounts
of $252,000 and $223,000, respectively
    
    
    3,050,000
    
    
    
    5,903,000Carpathia receivable, related party
    
    
    2,500,000
    
    
    
    2,500,000Prepaid expenses and other current assets
    
    
    2,309,000
    
    
    
    2,645,000Total current assets
    
    
    24,670,000
    
    
    
    36,615,000Artifacts owned, at cost
    
    
    3,091,000
    
    
    
    3,089,000Salvors lien
    
    
    1,000
    
    
    
    1,000Property and equipment, net of accumulated depreciation
of $3,141,000 and $3,797,000, respectively
    
    
    3,620,000
    
    
    
    5,415,000Exhibition licenses, net of accumulated amortization
of $1,407,000 and $1,806,000, respectively
    
    
    3,266,000
    
    
    
    5,137,000Deferred income taxes
    
    
    238,000
    
    
    
    $
    34,886,000
    
    
    $
    50,257,000Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    
    1,450,000
    
    
    
    1,432,000Income taxes payable
    
    
    
    
    
    
    3,194,000Deferred revenue
    
    
    536,000
    
    
    
    Total current liabilities
    
    
    1,986,000
    
    
    
    4,626,000Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common stock; $.0001 par value; authorized 40,000,000 shares;
issued and outstanding 29,004,318 and 30,009,168 shares
at February 28, 2007 and August 31, 2007, respectively
    
    
    3,000
    
    
    
    3,000Common stock payable
    
    
    90,000
    
    
    
    75,000Additional paid-in capital
    
    
    34,252,000
    
    
    
    38,376,000Retained earnings
    
    
    (903,000
    )
    
    
    7,897,000Accumulated other comprehensive income (loss)
    
    
    (129,000
    )
    
    
    (266,000
    )Less treasury stock, at cost; 56,641 and 58,945 shares
at February 28, 2007 and August 31, 2007, respectively
    
    
    (413,000
    )
    
    
    (454,000
    )Total shareholders equity
    
    
    32,900,000
    
    
    
    45,631,000$
    34,886,000
    
    
    $
    50,257,000
  3




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##### 



Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
 Three Months Ended August 31,
    
    
    Six Months Ended August 31,2006
    
    
    2007
    
    
    2006
    
    
    2007Revenue:Exhibition revenue
    
    $
    5,887,000
    
    
    $
    15,480,000
    
    
    $
    11,347,000
    
    
    $
    26,496,000Merchandise and other
    
    
    371,000
    
    
    
    612,000
    
    
    
    699,000
    
    
    
    970,000Sale of coal
    
    
    20,000
    
    
    
    30,000
    
    
    
    56,000
    
    
    
    62,000Total revenue
    
    
    6,278,000
    
    
    
    16,122,000
    
    
    
    12,102,000
    
    
    
    27,528,000Cost of revenue:Exhibition costs
    
    
    1,432,000
    
    
    
    3,940,000
    
    
    
    2,537,000
    
    
    
    6,999,000Cost of merchandise sold
    
    
    19,000
    
    
    
    98,000
    
    
    
    75,000
    
    
    
    199,000Cost of coal sold
    
    
    2,000
    
    
    
    4,000
    
    
    
    6,000
    
    
    
    11,000Total cost of revenue (exclusive of
depreciation
and amortization shown separately below)
    
    
    1,453,000
    
    
    
    4,042,000
    
    
    
    2,618,000
    
    
    
    7,209,000Gross profit
    
    
    4,825,000
    
    
    
    12,080,000
    
    
    
    9,484,000
    
    
    
    20,319,000Operating expenses:General and administrative
    
    
    2,260,000
    
    
    
    3,442,000
    
    
    
    4,458,000
    
    
    
    5,977,000Depreciation and amortization
    
    
    365,000
    
    
    
    567,000
    
    
    
    712,000
    
    
    
    1,055,000Litigation settlement
    
    
    
    
    
    
    
    
    
    
    350,000
    
    
    
    Total operating expenses
    
    
    2,625,000
    
    
    
    4,009,000
    
    
    
    5,520,000
    
    
    
    7,032,000Income from operations
    
    
    2,200,000
    
    
    
    8,071,000
    
    
    
    3,964,000
    
    
    
    13,287,000Other income and expenses:Interest income
    
    
    20,000
    
    
    
    248,000
    
    
    
    52,000
    
    
    
    447,000Interest expense
    
    
    (5,000
    )
    
    
    
    
    
    
    (39,000
    )
    
    
    Other income
    
    
    
    
    
    
    
    
    
    
    11,000
    
    
    
    10,000Total other income and expenses
    
    
    15,000
    
    
    
    248,000
    
    
    
    24,000
    
    
    
    457,000Income before provision for income taxes
    
    
    2,215,000
    
    
    
    8,319,000
    
    
    
    3,988,000
    
    
    
    13,744,000Provision for income taxes
    
    
    886,000
    
    
    
    2,774,000
    
    
    
    1,595,000
    
    
    
    4,944,000Net income
    
    $
    1,329,000
    
    
    $
    5,545,000
    
    
    $
    2,393,000
    
    
    $
    8,800,000Net income per share:Basic income per common share
    
    $
    0.05
    
    
    $
    0.19
    
    
    $
    0.09
    
    
    $
    0.30Diluted income per common share
    
    $
    0.04
    
    
    $
    0.17
    
    
    $
    0.08
    
    
    $
    0.27Shares used in basic per share calculations
    
    
    27,372,761
    
    
    
    29,792,671
    
    
    
    26,857,721
    
    
    
    29,528,177Shares used in diluted per share calculations
    
    
    31,155,333
    
    
    
    33,474,800
    
    
    
    30,352,591
    
    
    
    33,134,080
  4




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##### 



Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
 Six Months Ended August 31,2006
    
    
    2007Cash flows from operating activities:Net income
    
    $
    2,393,000
    
    
    $
    8,800,000Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    712,000
    
    
    
    1,055,000Stock based compensation
    
    
    679,000
    
    
    
    917,000Issuance of stock for services
    
    
    191,000
    
    
    
    Issuance of warrant for services
    
    
    10,000
    
    
    
    Provision for doubtful accounts
    
    
    
    
    
    
    29,000Excess tax benefit on the exercise of employee stock options
    
    
    
    
    
    
    (1,105,000
    )Changes in operating assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (4,723,000
    )
    
    
    (2,890,000
    )(Increase) decrease in deferred income taxes
    
    
    (387,000
    )
    
    
    238,000(Increase) decrease in prepaid expenses and other current assets
    
    
    (1,035,000
    )
    
    
    (336,000
    )(Increase) decrease in other assets
    
    
    4,000
    
    
    
    Increase (decrease) in deferred revenue
    
    
    (125,000
    )
    
    
    (536,000
    )Increase (decrease) in accounts payable and accrued liabilities
    
    
    729,000
    
    
    
    (18,000
    )Increase (decrease) in income taxes payable
    
    
    
    
    
    
    4,322,000Total adjustments
    
    
    (3,945,000
    )
    
    
    1,676,000Net cash provided (used) by operating activities
    
    
    (1,552,000
    )
    
    
    10,476,000Cash flows used by investing activities:Purchases of property and equipment
    
    
    (1,814,000
    )
    
    
    (2,451,000
    )Purchase of exhibition licenses
    
    
    
    
    
    
    (2,020,000
    )Purchase of subrogation rights
    
    
    
    
    
    
    (250,000
    )Net decrease (increase) in marketable securities
    
    
    
    
    
    
    (23,000
    )Purchase of certificate of deposit
    
    
    
    
    
    
    (1,000,000
    )Net cash used by investing activities
    
    
    (1,814,000
    )
    
    
    (5,744,000
    )Cash flows from financing activities:Proceeds from notes payable
    
    
    342,000
    
    
    
    Principal payments on notes payable
    
    
    (1,434,000
    )
    
    
    Proceeds from option and warrant exercises
    
    
    1,188,000
    
    
    
    2,032,000Excess tax benefit on the exercise of employee stock options
    
    
    1,982,000
    
    
    
    1,105,000Net cash provided by financing activities
    
    
    2,078,000
    
    
    
    3,137,000Effects of exchange rate changes on cash and cash equivalents
    
    
    110,000
    
    
    
    (146,000
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,178,000
    )
    
    
    7,723,000Cash and cash equivalents at beginning of year
    
    
    4,129,000
    
    
    
    16,811,000Cash and cash equivalents at end of year
    
    $
    2,951,000
    
    
    $
    24,534,000Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    15,000
    
    
    $
    Supplemental disclosure of non-cash investing and financing activities:Cashless exercise of stock options
    
    $
    294,000
    
    
    $
    (41,000
    )Supplemental disclosure of non-cash investing and financing activities:Unrealized (gain) loss on marketable securities
    
    $
    
    
    
    $
    (10,000
    )
  5




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##### 



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
     2. Earnings Per Share Data
     6




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##### 



Three Months Ended August 31,
    
    
    Six Months Ended August 31,2006
    
    
    2007
    
    
    2006
    
    
    2007Numerator:Net income
    
    $
    1,329,000
    
    
    
    5,545,000
    
    
    $
    2,393,000
    
    
    
    8,800,000Denominator:Basic
weighted-average
shares outstanding
    
    
    27,372,761
    
    
    
    29,792,671
    
    
    
    26,857,721
    
    
    
    29,528,177Effect of dilutive
stock
options and warrants
    
    
    3,782,572
    
    
    
    3,682,129
    
    
    
    3,494,870
    
    
    
    3,605,903Diluted
weighted-average
shares outstanding
    
    
    31,155,333
    
    
    
    33,474,800
    
    
    
    30,352,591
    
    
    
    33,134,080Net income per share:Basic
    
    $
    0.05
    
    
    
    0.19
    
    
    $
    0.09
    
    
    
    0.30Diluted
    
    $
    0.04
    
    
    
    0.17
    
    
    $
    0.08
    
    
    
    0.27
 3. Equity Transactions
    4. Exhibition License Agreements
  7




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##### 



5. Subsequent Events
     ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  8




---



##### 



Overview
       Exhibitions Operated by the Company
 Titanic Exhibitions
  9




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##### 




    
    Cincinnati Museum Center at Union Terminal, Cincinnati, Ohio
(November 4, 2006 to May 13, 2007);
    
    Atlanta Civic Center, Atlanta, Georgia (November 11, 2006 to May 6, 2007);
    
    Turtle Bay Exploration Park, Redding, California (February 24, 2007 to May 28,
2007);
    
    Exploration Place, Wichita, Kansas (January 13, 2007 to March 25, 2007);
    
    The Tropicana Resort and Casino, Las Vegas, Nevada (June 1, 2006 to an undetermined
date);
    
    Royal BC Museum, Victoria, British Columbia, Canada (April 14, 2007 to October 14,
2007);
    
    Visual Arts Center of Northwest Florida, Panama City, Florida (May 25, 2007 to
September 3, 2007);
    
    Denver Museum of Nature & Science, Denver, Colorado (June 22, 2007 to January 6,
2008);
    
    Ontario Science Centre, Toronto, Canada (June 2, 2007 to January 6, 2008); and
    
    Three city European tour beginning in
Kiel, Germany (June 16, 2007 to August 12, 2007)
Budapest, Hungary (September 2, 2007 to an undetermined date)
  Bodies...
The Exhibition and Bodies Revealed Exhibitions
    
    
    Bodies...The Exhibition, South Street Seaport, New York, New York (November 19,
2005 to an undetermined date);
    
    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 March 25, 2007);
    
    Bodies...The Exhibition, 800 Pike Street (across from the Washington State
Convention Center), Seattle, Washington (September 30, 2006 to April 29, 2007);
    
    Bodies...The Exhibition, Beurs van Berlage Concert and Conference Hall, Amsterdam,
The Netherlands (November 25, 2006 to April 14, 2007);
 10




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##### 




    
    Bodies Revealed, OCA Ibirapuera Park, Sao Paulo, Brazil (February 28, 2007 to July
29, 2007);
    
    Bodies...The Exhibition, The Streets at Southpoint, Durham, North Carolina (April
5, 2007 to an undetermined date);
    
    Bodies...The Exhibition, 1101 Wilson Boulevard (the former Newseum site),
Arlington, Virginia (Washington, D.C. Metro Area) (April 14, 2007 to an undetermined
date);
    
    Bodies...The Exhibition, Westfield UTC, San Diego, California (May 12, 2007 to an
undetermined date);
    
    Bodies...The Exhibition, Palacio dos Condes do Restelo, Lisbon, Portugal (May 5,
2007 to an undetermined date);
    
    Bodies...The Exhibition, Lucerna, Prague, Czech Republic (May 5, 2007 to an
undetermined date);
    
    Bodies...The Exhibition, 9 Treasure Lake Drive, adjacent to the IMAX Entertainment
Complex, Branson, Missouri (June 30, 2007 to an undetermined date);
    
    Bodies...The Exhibition, Easton Market, Columbus, Ohio (June 30, 2007 to an
undetermined date); and
    
    Bodies Revealed, Abasto Shopping, Buenos Aries, Argentina (August 15, 2007 to
December 2, 2007).
  
    
    Bodies...The Exhibition, Carnegie Science Center, Pittsburgh, Pennsylvania
(October 1, 2007 to an undetermined date); and
 
    
    Bodies....The Exhibition, Cincinnati Museum Center at Union Terminal, Cincinnati,
Ohio (January 26, 2008 to September 1, 2008).
  Co-Presentation Agreement
   11




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##### 



Additional Exhibitions
  Results of Operations
  Three Months Ended August 31,
    
    
    Six Months Ended August 31,2006
    
    
    2007
    
    
    2006
    
    
    2007Revenue:Exhibition revenues
    
    
    93.8
    %
    
    
    96.0
    %
    
    
    93.8
    %
    
    
    96.3
    %Merchandise and other
    
    
    5.9
    %
    
    
    3.8
    %
    
    
    5.8
    %
    
    
    3.5
    %Sale of coal
    
    
    0.3
    %
    
    
    0.2
    %
    
    
    0.5
    %
    
    
    0.2
    %Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenue:Exhibition costs
    
    
    22.8
    %
    
    
    24.4
    %
    
    
    21.0
    %
    
    
    25.4
    %Cost of merchandise sold
    
    
    0.3
    %
    
    
    0.6
    %
    
    
    0.6
    %
    
    
    0.7
    %Cost of coal sold
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Total cost of revenue (exclusive of
depreciation
and amortization shown separately
below)
    
    
    23.1
    %
    
    
    25.0
    %
    
    
    21.6
    %
    
    
    26.1
    %Gross profit
    
    
    76.9
    %
    
    
    75.0
    %
    
    
    78.4
    %
    
    
    73.9
    %Operating expenses:General and administrative
    
    
    36.0
    %
    
    
    21.3
    %
    
    
    36.8
    %
    
    
    21.7
    %Depreciation and amortization
    
    
    5.8
    %
    
    
    3.5
    %
    
    
    5.9
    %
    
    
    3.8
    %Litigation settlement
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    2.9
    %
    
    
    0.0
    %Total operating expenses
    
    
    41.8
    %
    
    
    24.8
    %
    
    
    45.6
    %
    
    
    25.5
    %Income from operations
    
    
    35.1
    %
    
    
    50.2
    %
    
    
    32.8
    %
    
    
    48.4
    %Other income and expenses:Interest income
    
    
    0.3
    %
    
    
    1.5
    %
    
    
    0.4
    %
    
    
    1.6
    %Interest expense
    
    
    (0.1
    %)
    
    
    0.0
    %
    
    
    (0.3
    %)
    
    
    0.0
    %Other income
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    0.0
    %Total other income and expenses
    
    
    0.2
    %
    
    
    1.5
    %
    
    
    0.2
    %
    
    
    1.6
    %Income before provision for income taxes
    
    
    35.3
    %
    
    
    51.7
    %
    
    
    33.0
    %
    
    
    50.0
    %Provision for income taxes
    
    
    14.1
    %
    
    
    17.2
    %
    
    
    13.2
    %
    
    
    18.0
    %Net income
    
    
    21.2
    %
    
    
    34.5
    %
    
    
    19.8
    %
    
    
    32.0
    %
 The Quarter Ended August 31, 2007 Compared to the Quarter Ended August 31, 2006
  12




---



##### 



13




---



##### 



The Six Months Ended August 31, 2007 Compared to the Six Months Ended August 31, 2006
   14




---



##### 



15




---



##### 



Liquidity and Capital Resources
 Cash flows from operating activities
   As of
    
    As ofFebruary 28, 2007
    
    August 31, 2007Working Capital (in thousands)
    
    $
    22,684
    
    
    $
    31,989Current Ratio
    
    
    12.42
    
    
    
    7.92
 16




---



##### 



Cash flows from investing activities
  Cash flows from financing activities
      17




---



##### 



Off-Balance Sheet Arrangements
  Critical Accounting Policies
  
    
    Revenue recognition;
    
    Accounts receivables;
    
    Income taxes;
    
    Legal contingencies;
    
    Property an equipment; and
    
    Impairment of long-lived and intangible assets.
 Revenue Recognition
 Exhibition Revenue.
 
    
    persuasive evidence of an exhibition arrangement with a customer exists;
    
    the exhibition is complete and, in accordance with the terms of the arrangement, has
been delivered;
 18




---



##### 




    
    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.
    Audio Tour Revenue.
 Merchandise Revenue.
 Sponsorship Revenue.
 Licensing Revenue.
 Accounts Receivable
  Income Taxes
  19




---



##### 



Legal Contingencies
  Property and Equipment
  Impairment of Long-Lived Assets and Other Intangibles
     Recent Accounting Pronouncements
  20




---



##### 



Forward-Looking Statements
  21




---



##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Interest Rate Risk
  Foreign Currency Risk
  ITEM 4. CONTROLS AND PROCEDURES
  
 22




---



##### 



PART II
 OTHER INFORMATION
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  1.
    
    Elected Arnie Geller, Stephen Couture, Alan R. Reed, N. Nick Cretan and Douglas
Banker to serve as directors until our 2008 Annual Meeting of Stockholders and until
their respective successors are elected and have been qualified or until their earlier
resignation, removal or death.2.
    
    Approved our 2007 Restricted Stock Plan.3.
    
    Ratified the selection of Kempisty & Company, Certified Public Accountants,
P.C. as our independent registered public accounting firm for the fiscal year ending
February 29, 2008.
    Votes in Favor
    
    Votes WithheldArnie Geller
    
    
    20,414,228
    
    
    
    35,077Stephen Couture
    
    
    20,233,113
    
    
    
    216,192Alan Reed
    
    
    20,253,305
    
    
    
    196,000N. Nick Cretan
    
    
    20,231,674
    
    
    
    217,631Douglas Banker
    
    
    20,242,304
    
    
    
    207,011Proposal II  Adoption of the 2007 Restricted Stock Plan.Votes in Favor
    
    
    7,359,227Votes against
    
    
    6,452,490Abstentions
    
    
    222,502Broker non-votes
    
    
    10,425,426Proposal III  Ratification of Selection of Independent Registered Public Accounting Firm:Votes in Favor
    
    
    23,646,857Votes against
    
    
    61,375Abstentions
    
    
    11,570Broker non-votes
    
    
    
 23




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ITEM 6. EXHIBITS.
  24




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SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: October 10, 2007
    
    By:
    
    /s/ Arnie GellerArnie Geller, ChairmanDated: October 10, 2007
    
    By:
    
    /s/ Stephen CoutureStephen Couture, Vice Presidentand Chief Financial Officer(Principal Financial Officer)
 25




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INDEX TO EXHIBITS
 Exhibit#10.1
    
    Employment Agreement dated September 1, 2007, between
the Company and Bruce Eskowitz.31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.32.1
    
    Section 1350 Certifications.
 
 #
    
    Management compensatory plan or arrangement. 26