<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the quarterly period ended November 30, 1996

[ ]      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

                                RMS TITANIC, INC.
             (Exact name of registrant as specified in its charter)


           Florida                                       59-2753162
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

17 Battery Place, Suite 203, New York, NY               10004
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code: (212) 558-6300


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No
                                             ---    ---

         The number of shares outstanding of the registrant's common stock on
January 17, 1997 was 16,137,119.
<PAGE>   2
<TABLE>
<CAPTION>
                                                                                PAGE
                                                                               NUMBER
                                     PART I

                              FINANCIAL INFORMATION

<S>       <C>                                                                   <C>
Item 1.    Financial Statements                                                   3

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations                         12

                                     PART II

                                OTHER INFORMATION

Item 1.    Legal Proceedings                                                     17

Item 2.    Changes in Securities                                                 17

Item 3.    Defaults Upon Senior Securities                                       17

Item 4.    Submission of Matters to a Vote of Security Holders                   17

Item 5.    Other Information                                                     18

Item 6.    Exhibits and Reports on Form 8-K                                      18

Signatures                                                                       19
</TABLE>


                                        2
<PAGE>   3
                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS.

         The financial statements of RMS Titanic, Inc. (the "Company"), formerly
First Response Medical, Inc. ("FRM") included herein were prepared, without
audit, pursuant to rules and regulations of the Securities and Exchange
Commission. The Financial Statements include the assets acquired and liabilities
assumed from Titanic Ventures Limited Partnership ("TVLP") on May 4, 1993 (the
"Acquisition"). Since TVLP owns a controlling interest in FRM after the
Acquisition, the transaction has been accounted for as a "reverse acquisition"
with TVLP deemed to be the acquiring entity. Because certain information and
notes normally included in financial statements prepared in accordance with
generally accepted accounting principles were condensed or omitted pursuant to
such rules and regulations, these financial statements should be read in
conjunction with the financial statements and notes thereto included in the
audited financial statements of the Company as reported on Form 10-K for the
Company's fiscal year ended February 29, 1996.


                                        3
<PAGE>   4
                                                               RMS TITANIC, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                                   BALANCE SHEET

<TABLE>
<CAPTION>
                                                                       NOVEMBER 30,        FEBRUARY 28,
                                                                          1996                 1996
                                                                       ------------        ------------
                                                                       (unaudited)

<S>                                                                    <C>                 <C>         
ASSETS

Current Assets:
  Cash                                                                 $     14,717        $     43,803
  Accounts receivable                                                        30,608              19,510
  Refundable withholding tax                                                 87,500
  Other current assets                                                       14,372              10,000
                                                                       ------------        ------------

      TOTAL CURRENT ASSETS                                                  147,197              73,313

Artifacts Recovered, at cost                                              7,714,709           5,922,350

Deferred Income Tax Asset, net of valuation allowance of
 $1,980,000 and $1,640,000, respectively

Property and Equipment, net of accumulated depreciation
 of $47,547 and $41,333, respectively                                        22,053              26,182

Other                                                                        38,611              38,611
                                                                       ------------        ------------

      TOTAL ASSETS                                                     $  7,922,570        $  6,060,456
                                                                       ============        ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Notes payable                                                        $    126,050        $    126,050
  Accounts payable and accrued liabilities                                3,041,335           2,023,574
  Deferred revenue                                                          550,000
  Loans payable to partners                                                  45,000              45,000
                                                                       ------------        ------------

      TOTAL CURRENT LIABILITIES                                           3,762,385           2,194,624
                                                                       ------------        ------------

Stockholders' Equity:
  Common stock - $.0001 par value; authorized 30,000,000 shares,
   issued and outstanding 16,137,128 shares                                   1,614               1,614
  Additional paid-in capital                                             13,869,963          13,869,963
  Deficit accumulated during the development stage                       (9,711,392)        (10,005,745)
                                                                       ------------        ------------

      STOCKHOLDERS' EQUITY                                                4,160,185           3,865,832
                                                                       ------------        ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $  7,922,570        $  6,060,456
                                                                       ============        ============
</TABLE>


                        See Notes to Financial Statements


                                        4
<PAGE>   5
                                                               RMS TITANIC, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                         STATEMENT OF OPERATIONS
                                                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                    PERIOD FROM
                                                                                                                   AUGUST 5, 1987
                                  THREE-MONTH PERIOD   THREE-MONTH PERIOD  NINE-MONTH PERIOD   NINE-MONTH PERIOD   (INCEPTION) TO
                                  ENDED NOVEMBER 30,   ENDED NOVEMBER 30,  ENDED NOVEMBER 30,  ENDED NOVEMBER 30,   NOVEMBER 30,
                                        1996                 1995                1996                1995             1996
                                  ------------------   -----------------   ------------------  ------------------  --------------

<S>                                   <C>                 <C>                 <C>               <C>               <C>          
Revenue:

  Licensing fees                                                             $    860,000                         $  1,435,000
  Exhibitions                         $     14,916        $     57,758             14,916       $   547,493            880,715
  Merchandise and other                      4,888               4,160             12,794           114,969            260,925
  Sponsorship fees                                                                150,000                              150,000
  Sale of coal                              18,657                                 84,753                              115,458
                                      ------------        ------------        -----------       -----------       ------------ 

Total revenue                               38,461              61,918          1,122,463           662,462          2,842,098
                                      ------------        ------------        -----------       -----------       ------------ 

Expenses:
  General and administrative               262,160             166,486            821,896           563,923          7,244,021
  Depreciation and amortization              2,070               3,089              6,214             9,267            112,980
  Interest                                                                                           13,826            915,875
  Financing fees                                                                                      6,667            387,012
  Acquisition of Management
    Agreement Option                                                                                                 3,400,000
  Settlement expense                                                                                 35,000            221,715
  Provision for uncollectible
    advances to affiliates                                                                                             271,887
                                      ------------        ------------        -----------       -----------       ------------ 
Total expenses                             264,230             169,575            828,110           628,683         12,553,490

Net income (loss)                     $   (225,769)       $   (107,657)       $   294,353       $    33,779       $ (9,711,392)
                                      ============        ============        ===========       ===========       ============ 

Net income (loss) per common
  share                               $       (.01)       $       (.01)       $       .02       $       .00
                                      ============        ============        ===========       ===========       ============ 

Weighted average common shares
  outstanding                           16,137,128          16,136,628         16,137,128        15,734,485
                                      ============        ============        ===========       ===========       ============ 
</TABLE>


                        See Notes to Financial Statements


                                        5
<PAGE>   6


                                                               RMS TITANIC, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                         STATEMENT OF CASH FLOWS
                                                                     (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                       PERIOD FROM
                                                                  NINE-MONTH         NINE-MONTH       AUGUST 5, 1987
                                                                  PERIOD ENDED       PERIOD ENDED     (INCEPTION) TO
                                                                  NOVEMBER 30,       NOVEMBER 30,       NOVEMBER 30,
                                                                     1996               1995               1996
                                                                   -----------        -----------        -----------

<S>                                                               <C>                <C>                <C>         
Cash flows from operating activities:
  Net income (loss)                                               $   294,353        $    33,779        $(9,711,392)
                                                                  -----------        -----------        ----------- 

  Adjustments to reconcile net income (loss) to net
   cash provided by (used in)operating activities:
    Depreciation and amortization                                       6,214              9,267            112,980
    Noncash financing costs                                                                6,667            387,012
    Acquisition of Management Agreement Option
     for noncash consideration                                                                            3,400,000
    Write-off of advances to affiliates                                                                     271,887
    Noncash interest expense                                                               4,500            886,202
    Expenses paid by TVLP partners and TVLP affiliate
     on behalf of TVLP                                                                                      427,564
    Reduction in artifacts recovered                                    7,641                                10,641
    Changes in operating assets and liabilities,
     net of effect from acquisition:
       Decrease (increase) in accounts receivable                     (11,098)            39,532            (30,608)
       Increase in refundable withholding tax                         (87,500)                              (87,500)
       Decrease (increase) in other current assets                     (4,372)            10,631            (14,372)
       Increase in advances to TVLP affiliates                                                             (271,887)
       Increase in other assets                                                                             (38,611)
       Increase in organization costs (fully amortized)                                                     (60,483)
       (Decrease) increase in note payable, accounts
         payable and accrued liabilities                               37,761           (480,394)         3,399,730
       Increase in deferred revenue                                   550,000                               550,000
                                                                  -----------        -----------        ----------- 

        TOTAL ADJUSTMENTS                                             498,646           (409,797)         8,942,555
                                                                  -----------        -----------        ----------- 

        NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES           792,999           (376,018)          (768,837)
                                                                  -----------        -----------        ----------- 

Cash flows from investing activities:
  Artifact recovery costs, including related deposits                (820,000)                           (4,672,975)
  Purchases of property and equipment                                  (2,085)                              (74,550)
                                                                  -----------        -----------        ----------- 

        CASH USED IN INVESTING ACTIVITIES                            (822,085)                           (4,747,525)
                                                                  -----------        -----------        ----------- 
</TABLE>

                                                                     (continued)


                        See Notes to Financial Statements


                                        6
<PAGE>   7
                                                               RMS TITANIC, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                         STATEMENT OF CASH FLOWS
                                                                     (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                       PERIOD FROM
                                                                  NINE-MONTH         NINE-MONTH       AUGUST 5, 1987
                                                                  PERIOD ENDED       PERIOD ENDED     (INCEPTION) TO
                                                                  NOVEMBER 30,       NOVEMBER 30,       NOVEMBER 30,
                                                                     1996               1995               1996
                                                                   -----------        -----------        -----------

<S>                                                               <C>                <C>                <C>         
Cash flows from financing activities:
  Loans from TVLP partners                                                                              $    432,705
  Proceeds from notes payable                                                                                650,000
  Proceeds from issuance of common stock and
   capital contributions                                                             $    921,956          7,209,446
  Stock issuance costs                                                                                    (1,150,707)
  Repayment of advances from TVLP partner                                                                   (475,000)
  Repayment of notes payable                                                             (492,165)        (1,135,365)
                                                                   -----------        -----------        -----------

        NET CASH PROVIDED BY FINANCING ACTIVITIES                                         429,791          5,531,079
                                                                   -----------        -----------        -----------

Net increase (decrease) in cash                                    $   (29,086)            53,773             14,717

Cash at beginning of period                                             43,803                531              - 0 -
                                                                   -----------        -----------        -----------

Cash at end of period                                              $    14,717        $    54,304        $    14,717
                                                                   ===========        ===========        ===========
</TABLE>


                        See Notes to Financial Statements


                                        7
<PAGE>   8
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)



Note 1 -          The accompanying condensed financial statements of RMS
                  Titanic, Inc. (the "Company"), formerly First Response
                  Medical, Inc. ("FRM"), include the assets acquired and the
                  liabilities assumed from Titanic Ventures Limited Partnership
                  ("TVLP") on May 4, 1993 (the "Acquisition"). Since TVLP owns a
                  controlling interest in FRM after the Acquisition, the
                  transaction has been accounted for as a "reverse acquisition"
                  with TVLP deemed to be the acquiring entity. Accordingly, the
                  historical financial statements of TVLP prior to May 4, 1993
                  have been substituted for the historical financial statements
                  of FRM.

                  The accompanying financial statements contain all adjustments
                  necessary to present fairly the financial position of the
                  Company as of November 30, 1996 and its results of operations
                  and its cash flows for the three months and nine months ended
                  November 30, 1996 and 1995. Results of operations for the
                  three and nine month periods ended November 30, 1996 are not
                  necessarily indicative of the results that may be expected for
                  the year ending February 28, 1997.

Note 2 -          Net income per share on common stock is based upon the
                  weighted average number of shares outstanding.  The dilutive
                  effect of common stock equivalents is not material.  For the
                  calculation of the net loss per share on common stock for the
                  three months ended November 30, 1996 and 1995, options and
                  warrants to purchase common stock have been excluded from
                  the computation of weighted average shares outstanding since
                  their inclusion would have an anti-dilutive effect.

Note 3 -          The Company has entered into an agreement with CRE-CO Finanz
                  GmbH, a German company, for an exhibition of Titanic artifacts
                  in Europe in 1997. Pursuant to the agreement, the Company will
                  receive two-thirds of the net profits, as defined, after the
                  recoupment of certain project expenses, as defined. During the
                  six months ended August 31, 1996 the Company received a
                  $350,000 advance against the Company's share of


                                        8
<PAGE>   9
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)


                  profits, less a 25% ($87,500) refundable withholding tax. The
                  advance is secured by a lien on the currency recovered from
                  the Titanic until the artifacts are delivered. Such exhibition
                  profit advance is included in deferred revenue in the
                  accompanying November 30, 1996 balance sheet.

                  The Company has entered into an agreement with the City of
                  Memphis, Tennessee for an exhibition of Titanic artifacts in
                  Memphis, Tennessee from April 3, 1997 to September 30, 1997.
                  Pursuant to the agreement, the Company will receive $720,000
                  in installments between September 1996 and August 1, 1997, and
                  will receive two-thirds of the net profits, as defined,
                  derived from ticket, merchandise and sponsorship revenues in
                  excess of $4,850,000. During the three months ended November
                  30, 1996, the Company was paid $200,000 pursuant to such
                  agreement. Such amount is included in deferred revenue in the
                  accompanying November 30, 1996 balance sheet.

                  During the three months ended November 30, 1996, the Company
                  has entered into an agreement with the National Maritime
                  Center ("Nauticus"), a political subdivision of the City of
                  Norfolk, Virginia, for an exhibition of Titanic artifacts at
                  Nauticus from November 27, 1996 through March 31, 1997.
                  Pursuant to the agreement, the Company will receive one-third
                  of revenues from the sale of the first 150,000 tickets and
                  fifty (50%) percent of revenues from the sale of more than
                  150,000 tickets, as defined. In addition, the Company will
                  receive fifty (50%) percent of net profits, as defined, from
                  the sale of merchandise at the exhibition, and fifty (50%) of
                  sponsorship revenues net of the difference, if any, between
                  $500,000 expended by Nauticus for the design, construction and
                  marketing of the exhibition and Nauticus' share of ticket
                  revenues and net profits from the sale of merchandise at the
                  exhibition, as defined.

Note 4 -          The Company is a named defendant in a lawsuit commenced in
                  the Supreme Court of the State of New York, County of New
                  York on or about September 22, 1994 (Glenville Properties


                                        9
<PAGE>   10
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)


                  Incorporated v. RMS Titanic, Inc. et al., 94/127087). The
                  plaintiff therein alleges Lone Star Casino Corporation ("Lone
                  Star") has assigned to it Lone Star's rights under a
                  promissory note (the "Note") executed by the Company in favor
                  of Lone Star in May, 1993, certain security interests granted
                  to Lone Star in connection therewith, and other contractual
                  rights related thereto. The complaint alleges, inter alia,
                  that the Company breached its obligations owed under the Note
                  and its obligations under the agreement granting a security
                  interest to Lone Star, misrepresented the value of the
                  property which is the subject of such security interest, and
                  interfered with rights under the agreements relating to the
                  grant of such security interest. The relief sought is an award
                  of compensatory damages approximating $360,000, punitive
                  damages of a minimum of $1,080,000, and declaratory and
                  injunctive relief. The Company denied the material allegations
                  of the Complaint and asserted counterclaims for a judgment
                  declaring the promissory note paid and additional
                  counterclaims and third-party claims seeking an award of
                  compensatory and punitive damages. This action has been
                  settled, subject to the execution of definitive settlement
                  documents. Pursuant to the settlement, the Company will pay to
                  Lone Star $154,271.62 in twelve (12) equal monthly
                  installments commencing as of January 15, 1997, subject to
                  acceleration if the Company achieves certain revenue levels
                  ("Threshold Amounts") during such twelve month period. The
                  Company has agreed to issue 15,000 shares of its Common Stock
                  in escrow, with such shares to be either released in 5,000
                  shares increments to Lone Star in the event such Threshold
                  Amounts are not achieved as of the end of the Company's
                  quarterly periods, or to be cancelled in the event such
                  Threshold Amounts are achieved. Additionally, affiliates of
                  Lone Star have agreed to release the Company from liabilities
                  amounting to approximately $40,000, and the Company has agreed
                  to issue 40,000 unregistered shares of Common Stock to Lone
                  Star.

                  On February 20, 1996, a third-party filed a motion pursuant to
                  Rule 60(b) of the Federal Rules of Civil Procedure in the


                                       10
<PAGE>   11
RMS TITANIC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)


                  United States District Court for the Eastern District of
                  Virginia motion for an order rescinding the June 7, 1994 award
                  to the Company of salvor-in-possession status with respect to
                  the Titanic (R.M.S. Titanic, Inc. v. The Wrecked and Abandoned
                  Vessel believed to be the RMS TITANIC, in rem, No. 2:93cv902).
                  By order entered May 10, 1996, such motion was denied and the
                  Court modified its June 7, 1994 order awarding
                  salvor-in-possession status to the Company to the extent of
                  requiring the Company to file more frequent periodic reports
                  as to the status of its activities. On August 13, 1996, the
                  Court amended such May 10, 1996 order so as to include the
                  award of exclusive rights to photograph the Titanic within the
                  award of salvor-in-possession status. The third-party has
                  filed a notice of appeal from such May 10, 1996 and August 13,
                  1996 orders, and the Company has filed a cross-appeal with
                  respect to the Court having granted standing to such
                  third-party. Subsequent to November 30, 1996, such appeals and
                  cross-appeal were dismissed pursuant to an agreement between
                  the parties which provided such third-party has assigned to
                  the Company all of the rights to certain television
                  productions, video footage and photographs from the 1987
                  expedition to the Titanic wreck site. Additionally, the
                  Company has licensed to such third party certain footage from
                  the 1987 and 1993 expeditions to the Titanic wreck for
                  incorporation into a television program, in consideration for
                  which the Company will receive a production fee of $75,000 in
                  installments, as defined.


                                       11

<PAGE>   12
ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

         The following discussion provides information to assist in the
understanding of the Company's financial condition and results of operations,
and should be read in conjunction with the financial statements and related
notes appearing elsewhere herein.

                              RESULTS OF OPERATIONS

FOR THE QUARTER ENDED NOVEMBER 30, 1996 VERSUS
THE QUARTER ENDED NOVEMBER 30, 1995

FOR THE NINE MONTHS ENDED NOVEMBER 30, 1996 VERSUS
THE NINE MONTHS ENDED NOVEMBER 30, 1995

         During the third quarter of the Company's 1997 fiscal year and the
first nine months of its 1997 fiscal year, the Company's total revenues
decreased approximately 38% and increased approximately 69%, respectively, as
compared to the corresponding periods of its 1996 fiscal year. These changes
were principally attributable to the Company having earned licensing fees of
$860,000 during the second quarter of its 1997 fiscal year related to the
production and exploitation of audio and visual recordings with respect to the
Company's expedition to the Titanic wreck site during the Summer of 1996 (the
"Summer of 1996 Expedition"), and $150,000 from the granting of sponsorship
rights with respect to the Summer of 1996 expedition, as compared to no revenues
during the first nine months of the 1996 fiscal year from licensing or
sponsorship fees. Additionally, the Company earned revenue of $84,753 from the
sale of coal during the first nine months of its 1997 fiscal year, of which
$18,657 was earned during the third quarter, as compared to no revenue from the
sale of coal during the first nine months of the 1996 fiscal year. During the
third quarter and first nine months of its 1997 fiscal year, the Company earned
exhibition revenue of $14,916 from its exhibition at the National Maritime
Center ("Nauticus") in Norfolk, Virginia, which opened on November 27, 1996 as
compared to exhibition revenue of $57,758 and $547,493 during the third quarter
and first nine months of the 1996 fiscal year, respectively, from the Company's
exhibition at the National Maritime Museum, Greenwich, England which commenced
in October 1994 and concluded on October 1, 1995. In addition, during the third
quarter and first nine months of its 1997 fiscal year, the Company had
merchandise and other revenue of $4,888 and $12,794, respectively, as compared
to $4,160 and $114,969 for the third quarter and first nine months of its 1996
fiscal year, most of which was derived from the merchandising activities in
conjunction with the National Maritime Museum exhibition.

         The Company's general and administrative expenses increased
approximately 57% during the third quarter of its 1997 fiscal year as compared
to the third quarter of its 1996 fiscal year, and increased approximately 46%
during the first nine months of its 1997 fiscal year as compared to the first
nine months of its 1996 fiscal year. Such increases were


                                       12
<PAGE>   13
primarily attributable to expenses of $100,000 related to the production of
audio and visual recordings of the Summer of 1996 Expedition, travel
expenditures related to the Summer of 1996 Expedition, an increase in legal fees
attributable to a legal challenge to the Company's salvor-in-possession status,
and conservation expenses incurred in connection with artifacts to be included
in the Company's exhibition activities. Interest expenses decreased 100% during
the first nine months of the Company's 1997 fiscal year as compared to the first
nine months of its 1996 fiscal year, primarily as a result of the reduction of
notes payable. Financing fees attributable to notes payable decreased 100%
during the first six months of the Company's 1997 fiscal year as compared to the
first nine months of its 1996 fiscal year.

         The Company has entered into an agreement with the City of Memphis,
Tennessee for the presentation of an exhibition of Titanic artifacts in Memphis,
Tennessee from April 3, 1997 through September 30, 1997. Pursuant to the
exhibition agreement, the City of Memphis is responsible for payment of all
costs and expenses related to the design, construction and operation of the
exhibition. Additionally, pursuant to the agreement, the Company will receive
$720,000 in installments between September 1996 and August 1, 1997, and will
also receive two-thirds of the net profits, as defined, derived from ticket,
merchandise and sponsorship revenues in excess of $4,850,000. The Memphis
exhibition will display in themed galleries approximately 300 artifacts
recovered between 1987 and 1994 by the Company.

         Additionally, the Company has entered into an agreement with the
National Maritime Center ("Nauticus"), a political subdivision of the City of
Norfolk, Virginia, to exhibit artifacts, expedition equipment, photographs and
film footage from the 1996 Titanic expedition from November 27, 1996 through
March 31, 1997 (the "Norfolk Exhibition"). Approximately twenty (20) unrestored
artifacts recovered during the Summer of 1996 expedition (including a telegraph,
a large silver soup tureen, binoculars in a leather case, a ship's whistle and a
porthole) and ten (10) conserved artifacts from prior expeditions will be
displayed at the Norfolk Expedition, together with a life-size rendition of the
20 ton section of the Titanic hull that the Company sought to raise from the
debris field surrounding the Titanic wreck site during the Summer of 1996
Expedition, a two-ton flotation bag used in artifact recovery operations, and a
full-size replica of a three-ton light tower that the Company utilized to
illuminate portions of the wreck during the Summer of 1996 Expedition. Pursuant
to the Norfolk Exhibition Agreement, Nauticus is responsible for payment of all
costs and expenses related to the design, construction and operation of the
exhibition. The Company will receive one-third of revenues from the sale of the
first 150,000 tickets and fifty (50%) of revenues from the sale of more than
150,000 tickets, as defined. In addition, the Company will receive fifty (50%)
percent of net profits, as defined, from the sale of merchandise at the Norfolk
Exhibition, and fifty (50%) of sponsorship revenues net of the difference, if
any, between $500,000 expended by Nauticus for the design, construction and
marketing of the exhibition and Nauticus' share of ticket revenues and net
profits from the sale of merchandise at the exhibition, as defined.


                                       13
<PAGE>   14
                         LIQUIDITY AND CAPITAL RESOURCES

         Notes payable as of November 30, 1996 represent approximately $126,000
(excluding accrued interest of approximately $25,000) owed to Lone Star Casino
Corporation ("Lone Star") pursuant to a promissory note executed in May 1993.
Pursuant to a settlement agreement to resolve legal proceedings to enforce such
promissory note and counterclaims and third-party claims asserted by the
Company, the Company has agreed to pay Lone Star $154,271.62 in twelve (12)
equal monthly installments, commencing as of January 15, 1997, subject to
acceleration in the event that the Company achieves certain levels of revenue
during such period. See Part II, Item 1 of this report. The Company's capital
commitments during its 1997 fiscal year also include lease payments for
principal offices in the base amount of $61,000 per annum, and compensation to
its executive officer. Material contingencies include the outcome of pending
lawsuits. The Company has agreed to pay $200,000 to LP3 for conservation of the
artifacts to be exhibited at the Memphis exhibition from the $720,000 to be paid
to the Company pursuant to the Memphis exhibition agreement, $50,000 of which
was paid to LP3 during the quarter ended November 30, 1996.

         In connection with its 1994 expedition to the wreck site of the
Titanic, the Company entered into an agreement with IFREMER to charter equipment
and crew necessary to conduct research and recovery efforts. Pursuant to the
terms of such charter agreement, the Company has paid IFREMER the sum of
$300,000 and was obligated to pay an additional $700,000 in two installments of
$350,000 each payable on September 30 and December 1, 1994. The installment due
to IFREMER on September 30, 1994 was paid during the first quarter of the
Company's 1996 fiscal year, payment of the final $350,000 installment was
extended to October 1, 1995. During the 1996 fiscal year, the Company paid
$70,000 on account of such obligation, with the $280,000 balance thereof having
been paid subsequent to February 29, 1996. The source of such $280,000 payment
was an advance against the Company's share of profits from Titanic coal sales
and sales of cabins of cruise ships which accompanied the Company on its 1996
research and recovery expedition. The $280,000 was reduced by approximately
$85,000 from the sale of coal during the nine months ended November 30, 1996.
There were no profits from sale of cruise ship cabins for the 1996 expedition.
The Company cannot forecast when, if ever, reimbursement of such 1994 charter
expenses will be made to the Company by RMS Foundation, Inc. (an unrelated
entity) which had undertaken to provide such funding under its agreement for the
exhibition planned at the Queen Mary Seaport Complex in Long Beach, California,
or when, if ever, construction and fabrication of such exhibit will commence.

         The Company entered into an agreement with IFREMER to charter equipment
and crew necessary to conduct a research and recovery expedition to the wreck
site of the Titanic in the Summer, 1996. Pursuant to the terms of such charter
agreement, the Company agreed to pay IFREMER 2,000,000 French francs
(approximately $400,000 U.S. Dollars) on or before June 20, 1996; 2,100,000
French francs (approximately $420,000 U.S. Dollars) on or before July 15, 1996;
and the sum of $980,000, payable as follows: (a)


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<PAGE>   15
remittance of fifty (50%) of the wholesale price of any products sold by the
Company involving the 1996 expedition, up to a maximum of $480,000; and (b) up
to a maximum of $500,000 payable from the following sources: (i) $.50 per
visitor to any exhibition organized by the Company; (ii) a lump sum of $250,000
for the Memphis exhibition, payable prior to March 1, 1997; and (iii) one-third
of the Company's revenues received from any exhibition of artifacts organized by
a third party, as described. The agreement further provides that in the event
the payments from these sources do not amount to $980,000 within three (3) years
after September 1, 1996, any remaining balance shall be paid from the Company's
exhibition revenues, as defined above. All objects recovered during the 1996
expedition will be the subject of a lien granted to IFREMER until the Company
pays all sums due and owing to IFREMER for the 1996 expedition. The Company
entered into an agreement for a television production whereby the Company
granted certain rights to the production companies for the production and
exploitation of audio and visual recordings related to the 1996 expedition. The
Company's obligations to make the June and July 1996 payments to IFREMER were
paid as part of the television production budget. The Company is obligated to
contribute $100,000 to such production, $40,000 of which was satisfied through
the grant of certain rights to present information and images concerning the
1996 expedition on the Internet, and the balance of $60,000 of which is due from
the Company on April 16, 1997. The Company has retained the rights for
commercial exploitation of recordings made at the Titanic wreck site in a print
format and certain royalty and other rights with respect to the sale of home
videos based upon the 1996 expedition. The Company has also granted to the
television production companies a right of first negotiation with respect to the
Company's next expedition to the Titanic wreck site.

         Apart from the Company's obligations to IFREMER in connection with its
1996 research and recovery expedition, the Company's near term operating needs
will be financed principally from the advance distribution of profits paid to
the Company under its agreement for the exhibition of Titanic artifacts in
Europe in 1997, revenues from the Norfolk Exhibition, payment of exhibition fees
to the Company for the Memphis Exhibition, and revenues from its sale of
merchandise through direct marketing activities. The Company expects its
conservation expenses to increase in the twelve months commencing December 1,
1996 as a result of the need to prepare artifacts for exhibition in Europe and
Memphis. In the event that cash flows are not adequate to satisfy the Company's
future operating needs, inclusive of payment of outstanding liabilities,
additional debt and/or equity financing will be required.

         With respect to its long-term exhibition plans, the Company is
exploring the possibility of arranging other income producing exhibitions
similar to the prelude exhibition at the National Maritime Museum, or the
Norfolk, Memphis and planned 1997 European exhibitions, without the need for
substantial additional capital, prior to the commencement of the planned
worldwide touring Waterborne Exhibition.

         In order for the Company to design, construct and embark on the planned
Waterborne Exhibition, additional debt and/or equity financing will be required.
While


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<PAGE>   16
management believes that such financing will be available, no assurances can be
given that the Company will be successful in its efforts to obtain additional
financing, or that such financing will be available on a satisfactory timetable.
If the Company is unable to arrange income producing exhibitions similar to the
prelude exhibition at the National Maritime Museum, or the Norfolk, Memphis and
planned 1997 European exhibitions, or funding for the planned worldwide touring
exhibition is not obtained, there could be a curtailment of the Company's
long-term business activities and material delays in the implementation of its
business plans.

         In connection with its activities outside of the United States, the
Company is exposed to the risk of currency fluctuations between the United
States dollar and certain foreign currency. If the value of the United States
dollar increases in relation to the foreign currency, the Company's potential
revenues from exhibition and merchandising activities outside of the United
States will be adversely affected. During the first nine months of its 1997
fiscal year, there were no significant fluctuations in the exchange rates.
Although the Company's financial arrangements with the National Maritime Museum
and other entities have been based in whole or in part upon foreign currencies,
the Company has sought and will continue to seek to base its financial
commitments and understandings upon the United States dollar in its material
business transactions so as to minimize the adverse potential effect of currency
fluctuations.

         The Company has been seeking and intends to continue to seek debt
financing to fund as much of the Waterborne Exhibition as may be available on
terms satisfactory to the Company. In connection with any such debt financing
that may be obtained, no assurances of which can be given, the Company expects,
among other things, to be required to pledge its assets to a lender, to be
restricted in its ability to incur additional obligations, and/or to abide by
certain financial covenants.

         To the extent that the Company has transactions outside of the United
States, the Company could be affected by nationalizations or unstable
governments or legal systems or intergovernmental disputes. These economic and
political uncertainties may affect the Company's results of operations,
especially to the extent that these matters affect the Company's exhibition
plans in Europe.

         In order to protect its salvor-in-possession status and to prevent
third-parties from salvaging the Titanic wreck and wreck site, or interfering
with the Company's rights and ability to salvage the wreck and wreck site, the
Company may have to commence judicial proceedings against third-parties. Such
proceedings could be expensive and time-consuming.




                                       16
<PAGE>   17
                                     PART II

                                OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

         The lawsuit previously reported commenced against the Company in the
Supreme Court of the State of New York, County of New York on or about September
22, 1994 (Glenville Properties Incorporated v. RMS Titanic, Inc. et al.,
94/127087) has been settled, subject to the execution of definitive settlement
documents. Pursuant to the settlement, the Company will pay to an affiliate of
the plaintiff $154,271.62 in twelve (12) equal monthly installments commencing
as of January 15, 1997, subject to acceleration if the Company achieves certain
revenue levels ("Threshold Amounts") during such twelve month period. The
Company has agreed to issue 15,000 shares of its Common Stock in escrow, with
such shares to be either released in 5,000 shares increments to Lone Star in the
event such Threshold Amounts are not achieved as of the end of the Company's
quarterly periods, or to be cancelled in the event such Threshold Amounts are
achieved.

         The appeal and cross-appeal in the legal proceedings in the United
States District Court for the Eastern District of Virginia previously reported
pertaining to the motion of a third-party seeking an order rescinding the
salvor-in-possession status of the Company will be voluntarily dismissed
pursuant to an agreement which provides for the such third-party's assignment to
the Company of all of the rights to certain television productions, video
footage and photographs from the from the 1987 expedition to the Titanic wreck
site. Additionally, the Company has licensed to such third party certain footage
from the 1987 and 1993 expeditions to the Titanic wreck for incorporation into a
television program, in consideration for which the Company will receive a
production fee of $75,000 in installments, as defined.

         There has been no other material change in litigation reported in the
Company's Annual Report on Form 10-K for its fiscal year ended February 29,
1996.

ITEM 2.           CHANGES IN SECURITIES.

                  None.

ITEM 3.           DEFAULT UPON SENIOR SECURITIES.

                  None.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

                  None.




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<PAGE>   18
ITEM 5.           OTHER INFORMATION.

                  None.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

                  (a) EXHIBITS

                  10.2     Agreement dated October 9, 1996 between the Company
                           and the National Maritime Center Authority.

                  (b) REPORTS ON FORM 8-K

                  None.




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                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                   RMS TITANIC, INC.
                                   (Registrant)

Dated:   January 21, 1997          By:  /s/ George Tulloch
                                      ------------------------------------------
                                        George Tulloch, Principal Executive 
                                        Officer





Dated:   January 21, 1997          By:  /s/ Nicholas Vitti
                                      ------------------------------------------
                                          Nicholas Vitti, Principal Accounting 
                                          Officer




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