##### 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 November 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 000-24452
 PREMIER EXHIBITIONS, INC.
  Florida
    
    20-1424922(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)3340 Peachtree Road, NE, Suite 900, Atlanta, GA
    
    30326(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 QUARTERLY PERIOD ENDED NOVEMBER 30, 2010
 TABLE OF CONTENTS
 Page No.PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 6. Exhibits
    
    
    27Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share data)
 November 30,
    
    
    February 28,2010
    
    
    2010(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    6,329
    
    
    $
    10,339Marketable securities
    
    
    803
    
    
    
    3,308Accounts receivable, net of allowance for doubtful accounts of $664 and $697, respectively
    
    
    1,588
    
    
    
    2,613Merchandise inventory, net of reserve of $280 and $281, respectively
    
    
    1,127
    
    
    
    845Income taxes receivable
    
    
    521
    
    
    
    3,161Prepaid expenses
    
    
    4,030
    
    
    
    1,666Other current assets
    
    
    167
    
    
    
    200Total current assets
    
    
    14,565
    
    
    
    22,132Artifacts owned, at cost
    
    
    3,016
    
    
    
    3,048Salvors lien
    
    
    1
    
    
    
    1Property and equipment, net of accumulated depreciation of $14,416 and $11,454, respectively
    
    
    12,108
    
    
    
    13,545Exhibition licenses, net of accumulated amortization of $5,658 and $4,979, respectively
    
    
    2,890
    
    
    
    3,269Deferred income taxes
    
    
    
    
    
    
    927Other long term assets
    
    
    829
    
    
    
    829Titanic expedition costs incurred
    
    
    3,887
    
    
    
    Total Assets
    
    $
    37,296
    
    
    $
    43,751Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    8,428
    
    
    $
    5,518Deferred revenue
    
    
    961
    
    
    
    1,705Total current liabilities
    
    
    9,389
    
    
    
    7,223Long-term liabilities:Lease abandonment
    
    
    3,163
    
    
    
    3,666Income taxes payable
    
    
    
    
    
    
    1,214Total long-term liabilities
    
    
    3,163
    
    
    
    4,880Shareholders equity:Common stock; $.0001 par value; authorized 65,000,000 shares; issued 48,069,661 and
47,804,742 shares, respectively; outstanding 47,067,652 and 46,738,293 shares, respectively
    
    
    5
    
    
    
    5Additional paid-in capital
    
    
    58,158
    
    
    
    57,759Accumulated deficit
    
    
    (25,959
    )
    
    
    (18,613
    )Accumulated other comprehensive loss
    
    
    (503
    )
    
    
    (313
    )Treasury stock, at cost; 1,002,009 and 1,002,009 shares, respectively
    
    
    (7,190
    )
    
    
    (7,190
    )Equity Attributable to Shareholders of Premier Exhibitions, Inc.
    
    
    24,511
    
    
    
    31,648Equity Attributable to Noncontrolling Interests
    
    
    233
    
    
    
    Total Liabilities and Shareholder Equity
    
    $
    37,296
    
    
    $
    43,751
   3




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
 Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue:Exhibition revenue
    
    $
    8,870
    
    
    $
    7,949
    
    
    $
    31,744
    
    
    $
    30,302Merchandise and other
    
    
    1,352
    
    
    
    753
    
    
    
    3,249
    
    
    
    2,777Total revenue
    
    
    10,222
    
    
    
    8,702
    
    
    
    34,993
    
    
    
    33,079Cost of revenue:Exhibition costs
    
    
    10,299
    
    
    
    5,719
    
    
    
    24,895
    
    
    
    15,661Cost of merchandise sold
    
    
    370
    
    
    
    340
    
    
    
    870
    
    
    
    805Total cost of revenue (exclusive of depreciation
and amortization shown separately below)
    
    
    10,669
    
    
    
    6,059
    
    
    
    25,765
    
    
    
    16,466Gross (loss) profit
    
    
    (447
    )
    
    
    2,643
    
    
    
    9,228
    
    
    
    16,613Operating expenses:General and administrative
    
    
    4,627
    
    
    
    4,660
    
    
    
    13,521
    
    
    
    19,433Depreciation and amortization
    
    
    1,200
    
    
    
    1,412
    
    
    
    3,716
    
    
    
    4,357Impairment of goodwill and intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,512Total operating expenses
    
    
    5,827
    
    
    
    6,072
    
    
    
    17,237
    
    
    
    28,302Loss from operations
    
    
    (6,274
    )
    
    
    (3,429
    )
    
    
    (8,009
    )
    
    
    (11,689
    )Other income (expense)
    
    
    12
    
    
    
    (46
    )
    
    
    30
    
    
    
    (255
    )Loss before provision for income taxes
    
    
    (6,262
    )
    
    
    (3,475
    )
    
    
    (7,979
    )
    
    
    (11,944
    )Benefit from income taxes
    
    
    529
    
    
    
    1,305
    
    
    
    488
    
    
    
    3,457Net loss
    
    
    (5,733
    )
    
    
    (2,170
    )
    
    
    (7,491
    )
    
    
    (8,487
    )Plus: Net loss attributable to non-controlling interests
    
    
    56
    
    
    
    
    
    
    
    146
    
    
    
    Net loss attributable to the shareholders of Premier
    
    $
    (5,677
    )
    
    $
    (2,170
    )
    
    $
    (7,345
    )
    
    $
    (8,487
    )Net loss per share:Basic loss per common share
    
    $
    (0.12
    )
    
    $
    (0.05
    )
    
    $
    (0.16
    )
    
    $
    (0.25
    )Diluted loss per common share
    
    $
    (0.12
    )
    
    $
    (0.05
    )
    
    $
    (0.16
    )
    
    $
    (0.25
    )Shares used in basic per share calculations
    
    
    46,913,601
    
    
    
    41,019,416
    
    
    
    46,873,879
    
    
    
    33,617,577Shares used in diluted per share calculations
    
    
    46,913,601
    
    
    
    41,019,416
    
    
    
    46,873,879
    
    
    
    33,617,577
   4




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
 Nine Months EndedNovember 30,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (7,491
    )
    
    $
    (8,487
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    3,716
    
    
    
    4,357Stock based compensation
    
    
    418
    
    
    
    468Stock issued in settlement of lawsuit
    
    
    
    
    
    
    50Provision for doubtful accounts
    
    
    (33
    )
    
    
    (588
    )Loss on sale of fixed assets
    
    
    31
    
    
    
    Lease abandonment
    
    
    (503
    )
    
    
    Impairment of goodwill and intangible assets
    
    
    
    
    
    
    4,512Accrued interest converted into common stock
    
    
    
    
    
    
    247Changes in operating assets and liabilities:Decrease in accounts receivable
    
    
    1,058
    
    
    
    2,599Increase in merchandise inventories
    
    
    (282
    )
    
    
    (318
    )Decrease in deferred income taxes
    
    
    927
    
    
    
    36(Increase) decrease in prepaid expenses
    
    
    (2,364
    )
    
    
    86Decrease in other assets
    
    
    33
    
    
    
    1,440Decrease (increase) in income tax receivable
    
    
    1,426
    
    
    
    (2,904
    )Decrease in deferred revenue
    
    
    (744
    )
    
    
    (399
    )Increase (decrease) in accounts payable and accrued
liabilities
    
    
    2,910
    
    
    
    (7,398
    )Total adjustments
    
    
    6,593
    
    
    
    2,188Net cash used in operating activities
    
    
    (898
    )
    
    
    (6,299
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (1,640
    )
    
    
    (1,486
    )Proceeds from sale of property and equipment
    
    
    9
    
    
    
    Purchase of exhibition licenses
    
    
    (300
    )
    
    
    Purchase of marketable securities
    
    
    (87
    )
    
    
    (2,023
    )Sale of marketable securities
    
    
    2,582
    
    
    
    Decrease in artifacts
    
    
    32
    
    
    
    Titanic expedition costs incurred
    
    
    (3,887
    )
    
    
    Cash provided by non-controlling interest
    
    
    379
    
    
    
    Net cash used in investing activities
    
    
    (2,912
    )
    
    
    (3,509
    )Cash flows from financing activities:Proceeds from convertible notes
    
    
    
    
    
    
    12,000Purchase of treasury stock
    
    
    (136
    )
    
    
    Proceeds from option and warrant exercises
    
    
    117
    
    
    
    261Net cash (used in) provided by financing activities
    
    
    (19
    )
    
    
    12,261Effects of exchange rate changes on cash and cash equivalents
    
    
    (181
    )
    
    
    22Net (decrease) increase in cash and cash equivalents
    
    
    (4,010
    )
    
    
    2,475Cash and cash equivalents at beginning of period
    
    
    10,339
    
    
    
    4,452Cash and cash equivalents at end of period
    
    $
    6,329
    
    
    $
    6,927Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    3
    
    
    $
    670Cash paid during the period for taxes
    
    $
    141
    
    
    $
    967Supplemental disclosure of non-cash investing and financing activities:Cashless exercise of stock options
    
    $
    
    
    
    $
    14Conversion of convertible notes and accrued interest
    
    $
    
    
    
    $
    12,247
   5




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PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Background and Basis of Presentation
 Description of Business
   Basis of Presentation
  Significant Accounting Policies
  Use of Estimates
   6




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Subsequent Events
  2. Income taxes
  3. Loss Per Share Data
   Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Net loss attributable
to the shareholders of Premier
    
    $
    (5,677
    )
    
    $
    (2,170
    )
    
    $
    (7,345
    )
    
    $
    (8,487
    )Denominator:Basic weighted-average
shares outstanding
    
    
    46,913,601
    
    
    
    41,019,416
    
    
    
    46,873,879
    
    
    
    33,617,577Effect of dilutive stock
options and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted-average
shares outstanding
    
    
    46,913,601
    
    
    
    41,019,416
    
    
    
    46,873,879
    
    
    
    33,617,577Net loss per share:Basic
    
    $
    (0.12
    )
    
    $
    (0.05
    )
    
    $
    (0.16
    )
    
    $
    (0.25
    )Diluted
    
    $
    (0.12
    )
    
    $
    (0.05
    )
    
    $
    (0.16
    )
    
    $
    (0.25
    )
  Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Stock options
    
    
    2,743,115
    
    
    
    3,001,453
    
    
    
    2,796,449
    
    
    
    4,171,453
  7




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4. Total Comprehensive Loss
  Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss attributable to the shareholders of Premier
    
    $
    (5,677
    )
    
    $
    (2,170
    )
    
    $
    (7,345
    )
    
    $
    (8,487
    )Other comprehensive loss:Unrealized loss on marketable securities
    
    
    (10
    )
    
    
    
    
    
    
    (10
    )
    
    
    Net foreign currency translation loss
    
    
    (103
    )
    
    
    (1
    )
    
    
    (181
    )
    
    
    (22
    )Total comprehensive loss
    
    $
    (5,790
    )
    
    $
    (2,171
    )
    
    $
    (7,536
    )
    
    $
    (8,509
    )
 5. 2010 Expedition to Titanic Wreck Site
    Ship charter
costs, underwater
equipment and filming
    
    $
    2,935,211General
management
    
    
    635,270Titanic
Preservation Alliance point of presence
    
    
    316,997Total
historical costs capitalized
    
    $
    3,887,478
   8




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6. Non-controlling Interest
   7. Stock Repurchase
  8. Legal Proceedings and Contingencies
      9




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Status of International Treaty Concerning the Titanic Wreck
   10




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Other Litigation
    11




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Proposed Legislation and Government Inquiries
   IRS Exams
    9.
Subsequent Events
    12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 This report contains information that may constitute forward-looking statements. Generally,
the words believe, expect, intend, estimate, anticipate, project, will and similar
expressions identify forward-looking statements, which generally are not historical in nature.
However, the absence of these words or similar expressions does not mean that a statement is not
forward-looking. All statements that address operating performance, events or developments that we
expect or anticipate will occur in the future  including statements relating to volume growth,
share of sales and earnings per share growth, and statements expressing general views about future
operating results  are forward-looking statements. Management believes that these
forward-looking statements are reasonable as and when made. However, such statements are dependent
upon, and can be influenced by, a number of external variables over which management has little or
no control, including but not limited to, general economic conditions, public tastes and demand,
competition, the availability of venues, the results of certain legal matters described herein,
governmental regulation and the efforts of co-sponsors and joint venture participants. As a
result, caution should be taken not to place undue reliance on any such forward-looking statements.
Our Company undertakes no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by law.
Forward-looking statements should not be relied upon as a guarantee of future performance or
results, nor will they necessarily prove to be accurate indications of the performance that is
ultimately achieved. As a result, actual outcomes and results may differ materially from those
expressed in forward-looking statements.
   Overview
   Stationary
    
    
    Touring
    
    
    TotalBodies...The Exhibition and Bodies Revealed
    
    
    3
    
    
    
    11
    
    
    
    14Titanic: The Artifact Exhibiton
    
    
    1
    
    
    
    6
    
    
    
    7Dialog in the Dark
    
    
    1
    
    
    
    0
    
    
    
    1Total Exhibitions
    
    
    5
    
    
    
    17
    
    
    
    22
  13




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14




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15




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Our Exhibitions
 Titanic: The Artifact Exhibition
   16




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Titanic Expeditions
   2010 Expedition to Titanic Wreck Site
    Ship charter
costs, underwater
equipment and filming
    
    $
    2,935,211General
management
    
    
    635,270Titanic
Preservation Alliance point of presence
    
    
    316,997Total
historical costs capitalized
    
    $
    3,887,478
    17




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Bodies...The Exhibition and Bodies Revealed
    Dialog in the Dark
  Other Exhibitions
  Merchandising
   18




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Information Regarding Exhibitions Outside the United States
  The Quarter Ended November 30, 2010 Compared to the Quarter Ended November 30, 2009
 Revenue.
   Three Months EndedNovember 30,2010
    
    
    2009Exhibition revenueAdmissions revenue
    
    $
    8.3
    
    
    $
    6.9Non-refundable license fees for current exhibitions
    
    
    0.6
    
    
    
    1.0Total exhibition revenues
    
    
    8.9
    
    
    
    7.9Merchandise and other
    
    
    1.3
    
    
    
    0.8Total revenue
    
    $
    10.2
    
    
    $
    8.7Key non-financial measuresNumber of venues presented
    
    
    31
    
    
    
    26Operating days
    
    
    1,613
    
    
    
    1,361Attendance (in thousands)
    
    
    973
    
    
    
    820Average attendance per operating day
    
    
    603
    
    
    
    602
 Cost of revenue.
  19




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Gross (loss) profit.
  Operating expenses.
  Loss from operations.
 Benefit from income taxes.
 Net loss.
 Loss per share
 The Nine Months Ended November 30, 2010 Compared to the Nine Months Ended November 30, 2009
 Revenue.
  20




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Nine Months EndedNovember 30,2010
    
    
    2009Exhibition revenueAdmissions revenue
    
    $
    28.4
    
    
    $
    25.6Non-refundable license fees for current exhibitions
    
    
    3.3
    
    
    
    4.7Total exhibition revenues
    
    
    31.7
    
    
    
    30.3Merchandise and other
    
    
    3.3
    
    
    
    2.8Total revenue
    
    $
    35.0
    
    
    $
    33.1Key non-financial measuresNumber of venues presented
    
    
    31
    
    
    
    36Operating days
    
    
    4,684
    
    
    
    4,624Attendance (in thousands)
    
    
    2,903
    
    
    
    3,307Average attendance per operating day
    
    
    620
    
    
    
    715
 Cost of revenue.
  Gross profit.
  Operating expenses.
   21




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Loss from operations.
 Benefit from income taxes.
 Net loss.
 Loss per share
 Liquidity and Capital Resources
  Selected cash flow information:
 As ofNine Months Ended November 30,2010
    
    
    2009Net cash (used in) provided by operating activities
    
    $
    (898
    )
    
    $
    (6,299
    )Net cash used in investing activities
    
    
    (2,912
    )
    
    
    (3,509
    )Net cash (used in) provided by financing activities
    
    
    (19
    )
    
    
    12,261Effects of exchange rate changes on cash and cash equivalents
    
    
    (181
    )
    
    
    22Net (decrease) increase in cash and cash equivalents
    
    $
    (4,010
    )
    
    $
    2,475
 Selected balance sheet data:
 As ofNovember 30,
    
    
    February 28,2010
    
    
    2010Cash and cash equivalents
    
    $
    6,329
    
    
    $
    10,339Marketable securities
    
    
    803
    
    
    
    3,308Working capital
    
    
    5,176
    
    
    
    14,909Total assets
    
    
    37,296
    
    
    
    43,751Total shareholders equity
    
    
    24,511
    
    
    
    31,648
  22




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Operating Activities.
   As ofNovember 30,
    
    
    February 28,2010
    
    
    2010Working Capital (in millions)
    
    $
    5.2
    
    
    $
    14.9Current Ratio
    
    
    1.55
    
    
    
    3.06
 Investing Activities.
 Financing Activities.
 Capital requirements.
 Off-Balance Sheet Arrangements
  Contractual Obligations
  Critical Accounting Policies
  Contractual Obligations
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   23




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Interest Rate Risk
  Foreign Currency Risk
  
 Item 4. Controls and Procedures.
   
 PART II  OTHER INFORMATION
  
 Item 1. Legal Proceedings.
   24




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Item 1A. Risk Factors.
   25




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The plans of our largest shareholder to sell his block of common stock could have an effect on
our stock price and could result in changes to the strategic direction of the Company.
    We may not be granted a salvage award that is commensurate with the efforts we have expended
to recover items from the Titanic wreck site or may be prohibited from exhibiting certain of the
Titanic artifacts already under our control.
   26




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities
 Maximum number(or approximateTotal number of
    
    
    dollar value) ofshares (or units)
    
    
    shares (or units) thatTotal number of
    
    
    
    
    
    
    purchased as part of
    
    
    may yet beshares (or units)
    
    
    Average price paid
    
    
    publicly announced
    
    
    purchased under thePeriod
    
    purchased
    
    
    per share (or unit)
    
    
    plans or programs(1)
    
    
    plans or programs(1)(a)
    
    
    (b)
    
    
    (c)
    
    
    (d)July 1, 2010 through July 31, 2010
    
    
    14,367
    
    
    $
    1.18
    
    
    
    14,367
    
    
    
    985,633August 1, 2010 through August 31, 2010
    
    
    100,714
    
    
    $
    1.15
    
    
    
    100,714
    
    
    
    884,919Total
    
    
    115,081
    
    
    
    
    
    
    
    115,081
 
 (1)
    
    On July 29, 2010, the Company announced the share repurchase program, pursuant to which up to 1
million shares of common stock can be repurchased through July 28, 2011. 
 Item 6. Exhibits.
   27




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##### Table of Contents



SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: January 14, 2011
    By:
    /s/ Christopher J. DavinoChristopher J. Davino,President and Chief Executive Officer
(Principal Executive Officer)Dated: January 14, 2011
    By:
    /s/ John A. StoneJohn A. Stone,Chief Financial Officer
(Principal Financial Officer)  28




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceNo.
    
    Exhibit Description
    
    Herewith
    
    Form
    
    Exhibit
    
    Filing Date10.1
    
    
    Premier Exhibitions, Inc. Annual Incentive Plan
    
    
    
    8-K
    
    10.1
    
    11/23/201031.1
    
    
    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
    
    X32.1
    
    
    Section 1350 Certifications
    
    X
  29