##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period endedMay 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 000-24452
 PREMIER EXHIBITIONS, INC.
  Florida
    
    20-1424922(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 3340 Peachtree Road, NE, Suite 2250, Atlanta, GA
    
    30326(Address of principal executive offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting Company o(Do not check if a smaller reporting company)
 o þ




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##### 



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 QUARTERLY PERIOD ENDED MAY 31, 2009
 TABLE OF CONTENTS
 PagePART I.  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    17PART II.  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 6. Exhibits
    
    
    17EX-10.6EX-31.1EX-31.2EX-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)
 May 31,2009
    
    
    February 28,(unaudited)
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    7,803
    
    
    $
    4,452Marketable securities
    
    
    1,268
    
    
    
    1,277Accounts receivable, net of allowance for doubtful accounts
of $754 and $1,193, respectively
    
    
    4,348
    
    
    
    5,009Merchandise inventory, net of reserve of $147 and $143, respectively
    
    
    441
    
    
    
    431Income taxes receivable
    
    
    4,158
    
    
    
    3,806Deferred income taxes
    
    
    1,560
    
    
    
    1,408Prepaid expenses and other current assets
    
    
    4,407
    
    
    
    4,981Total current assets
    
    
    23,985
    
    
    
    21,364Artifacts owned, at cost
    
    
    3,074
    
    
    
    3,081Salvors lien
    
    
    1
    
    
    
    1Property and equipment, net of accumulated depreciation
of $8,518 and $7,503, respectively
    
    
    15,333
    
    
    
    15,706Exhibition licenses, net of accumulated amortization
of $4,427 and $4,846, respectively
    
    
    4,668
    
    
    
    7,225Goodwill
    
    
    
    
    
    
    2,567Deferred income taxes
    
    
    3,506
    
    
    
    2,685Note receivable
    
    
    625
    
    
    
    625Other assets
    
    
    250
    
    
    
    521$
    51,442
    
    
    $
    53,775Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    9,112
    
    
    $
    11,712Convertible promissory notes
    
    
    6,000
    
    
    
    Deferred revenue
    
    
    1,905
    
    
    
    2,340Total current liabilities
    
    
    17,017
    
    
    
    14,052Long-term liabilities:Income taxes payable
    
    
    1,179
    
    
    
    1,166Total long-term liabilities
    
    
    1,179
    
    
    
    1,166Shareholders equity:Common
stock; $.0001 par value; authorized 40,000,000 shares;
issued 31,265,415 and 30,481,448 shares, respectively; outstanding
30,198,966 and 29,414,999 shares, respectively
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    45,180
    
    
    
    44,691(Accumulated deficit) retained earnings
    
    
    (4,422
    )
    
    
    1,384Accumulated other comprehensive loss
    
    
    (325
    )
    
    
    (331
    )Treasury stock, at cost; 1,066,449 shares
    
    
    (7,190
    )
    
    
    (7,190
    )Total shareholders equity
    
    
    33,246
    
    
    
    38,557$
    51,442
    
    
    $
    53,775
  3




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
 Three Months Ended May 31,2009
    
    
    2008Revenue:Exhibition revenues
    
    $
    9,850
    
    
    $
    13,259Merchandise and other
    
    
    1,087
    
    
    
    1,971Total revenue
    
    
    10,937
    
    
    
    15,230Cost of revenue:Exhibition costs
    
    
    4,890
    
    
    
    6,359Cost of merchandise sold
    
    
    252
    
    
    
    974Total cost of revenue (exclusive of depreciation and
amortization shown separately below)
    
    
    5,142
    
    
    
    7,333Gross profit
    
    
    5,795
    
    
    
    7,897Operating expenses:General and administrative
    
    
    7,324
    
    
    
    8,023Depreciation and amortization
    
    
    1,627
    
    
    
    1,294Impairment of goodwill and intangible assets
    
    
    4,512
    
    
    
    Total operating expenses
    
    
    13,463
    
    
    
    9,317Loss from operations
    
    
    (7,668
    )
    
    
    (1,420
    )Other (expense) income
    
    
    (39
    )
    
    
    81Loss before benefit from income taxes
    
    
    (7,707
    )
    
    
    (1,339
    )Benefit from income taxes
    
    
    1,902
    
    
    
    427Net loss
    
    $
    (5,805
    )
    
    $
    (912
    )Net loss per share:Basic loss per common share
    
    $
    (0.20
    )
    
    $
    (0.03
    )Diluted loss per common share
    
    $
    (0.20
    )
    
    $
    (0.03
    )Shares used in basic per share calculations
    
    
    29,696,954
    
    
    
    30,041,614Shares used in diluted per share calculations
    
    
    29,696,954
    
    
    
    30,041,614
  4




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Three Months Ended May 31,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (5,805
    )
    
    $
    (912
    )Adjustments
to reconcile net loss to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    1,627
    
    
    
    1,180Stock based compensation
    
    
    212
    
    
    
    1,616Allowance for doubtful accounts
    
    
    (439
    )
    
    
    Impairment of goodwill and intangible assets
    
    
    4,512
    
    
    
    Stock issued in connection with lawsuit settlement
    
    
    50
    
    
    
    Changes in operating assets and liabilities:Decrease (increase) in accounts receivable
    
    
    1,100
    
    
    
    (41
    )Increase in deferred income taxes
    
    
    (983
    )
    
    
    (58
    )Decrease in prepaid expenses and other current assets
    
    
    851
    
    
    
    485Decrease in Carpathia receivable
    
    
    
    
    
    
    2,500Increase in income tax receivable
    
    
    (364
    )
    
    
    (2,893
    )Decrease in deferred revenue
    
    
    (435
    )
    
    
    Decrease in accounts payable and accrued liabilities
    
    
    (2,600
    )
    
    
    (650
    )Total adjustments
    
    
    3,531
    
    
    
    2,139Net cash (used in) provided by operating activities
    
    
    (2,274
    )
    
    
    1,227Cash flows used by investing activities:Purchases of property and equipment
    
    
    (642
    )
    
    
    (806
    )Purchase of exhibition licenses
    
    
    
    
    
    
    (1,278
    )Acquisition, net of cash received
    
    
    
    
    
    
    (2,101
    )Net cash used by investing activities
    
    
    (642
    )
    
    
    (4,185
    )Cash flows from financing activities:Proceeds from issuance of convertible notes
    
    
    6,000
    
    
    
    Proceeds from option exercises
    
    
    261
    
    
    
    Net cash provided by financing activities
    
    
    6,261
    
    
    
    Effects of exchange rate changes on cash and cash equivalents
    
    
    6
    
    
    
    4Net increase (decrease) in cash and cash equivalents
    
    
    3,351
    
    
    
    (2,954
    )Cash and cash equivalents at beginning of year
    
    
    4,452
    
    
    
    16,426Cash and cash equivalents at end of period
    
    $
    7,803
    
    
    $
    13,472Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    48
    
    
    $
    1Cash paid during the period for taxes
    
    
    
    
    
    $
    1,537Supplemental disclosure of non-cash investing and financing activities:Cashless exercise of stock options
    
    $
    14
    
    
    
    
  5




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




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3. Goodwill and Other Intangible Assets
   GoodwillBalance as
of February 28, 2009
    
    $
    2,567Impairment charge
    
    
    (2,567
    )Balance as of May 31, 2009
    
    $
    Intangible AssetsBalance as of February 28, 2009
    
    $
    7,225Amortization during the period
    
    
    (612
    )Impairment charge
    
    
    (1,945
    )Balance as of May 31, 2009
    
    $
    4,668
 7




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4. Shareholders Equity
       5. Debt
   8




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6. Loss Per Share Data
  Three Months Ended May 31,2009
    
    
    2008(in thousands, except per share data)Numerator:Net loss
    
    $
    (5,805
    )
    
    $
    (912
    )Denominator:Basic weighted-average shares outstanding
    
    
    29,696,954
    
    
    
    30,041,614Effect of dilutive stock options and warrants
    
    
    
    
    
    
    Diluted weighted-average shares outstanding
    
    
    29,696,954
    
    
    
    30,041,614Net loss per share:Basic
    
    $
    (0.20
    )
    
    $
    (0.03
    )Diluted
    
    $
    (0.20
    )
    
    $
    (0.03
    )
  9




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7. Post Employment Benefits
  8. Legal Proceedings and Contingencies
 Status of International Treaty Concerning the Titanic Wreck
   in specie
 Status of Salvor-in-Possession and Interim Salvage Award Proceedings
 R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel, et al.,
in rem
   amicus curiae in specie
 10




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in specie
 in specie in specie
 in specie
  Other Litigation
 Arnie Geller v. Premier Exhibitions Inc.
    Proposed Legislation and Government Inquiries
    11




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
   Overview
   Titanic
  Bodies
  12




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Dialog in the Dark
  Star Trek
  Merchandise
  Information Regarding Exhibitions Outside the United States
  The Quarter Ended May 31, 2009 Compared to the Quarter Ended May 31, 2008
 Revenue.
  Cost of revenue.
  13




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Gross profit.
 Operating expenses.
   Loss from operations.
 Loss before benefit from income taxes.
 Benefit from income taxes.
 Net loss.
 Loss per share
 14




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Liquidity and Capital Resources
  Selected cash flow information:
 As ofThree Months Ended May 31,2009
    
    
    2008Net cash (used by) provided by operating activities
    
    $
    (2,274
    )
    
    $
    1,227Net cash used by investing activities
    
    
    (642
    )
    
    
    (4,185
    )Net cash provided by financing activities
    
    
    6,261
    
    
    
    Effects of exchange rate changes on cash and cash equivalents
    
    
    6
    
    
    
    4Net increase (decrease ) in cash and cash equivalents
    
    $
    3,351
    
    
    $
    (2,954
    )
 Selected balance sheet data:
 As ofMay 31, 2009
    
    February 28, 2009Cash and cash equivalents
    
    $
    7,803
    
    
    $
    4,452Marketable securities
    
    
    1,268
    
    
    
    1,277Working capital
    
    
    6,968
    
    
    
    7,312Total assets
    
    
    51,442
    
    
    
    53,775Total stockholders equity
    
    
    33,246
    
    
    
    38,557
 Operating Activities.
 
    
    Our net loss of $5.8 million
    
    Depreciation and amortization expense of $1.6 million
    
    Stock based compensation of $0.2 million
    
    Impairment of goodwill and intangible assets of $4.5 million
    
    Stock issued in connection with the settlement of a lawsuit of $0.1 million
    
    Accounts receivable of $1.1 million
    
    Deferred income taxes of $(1.0) million
    
    Prepaid and other current assets of $0.9 million
    
    Deferred revenue of $0.4 million
    
    Accounts payable and accrued liabilities of $(2.6) million
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Investing Activities.
 Financing Activities.
      Capital requirements. Financing Activities
 Off-Balance Sheet Arrangements
  16




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Critical Accounting Policies
   Contractual Obligations
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
  Foreign Currency Risk
  17




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Item 4. Controls and Procedures.
   
 PART II  OTHER INFORMATION
  
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 
 Item 6. Exhibits.
  18




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SIGNATURES
   Dated:
July 10, 2009
    
    By:
    
    /s/ Christopher J. DavinoChristopher J. Davino, Interim President andChief Executive Officer(Principal Executive Officer)Dated:
July 10, 2009
    
    By:
    
    /s/ John A. StoneJohn A. Stone, Chief Financial Officer(Principal Financial Officer)
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INDEX TO EXHIBITS
 Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceNo.
    
    Exhibit Description
    
    Herewith
    
    Form
    
    Exhibit
    
    Filing Date3.2
    
    Amended and Restated Bylaws of Premier Exhibitions, Inc.
    
    
    
    8-K
    
    3.2
    
    
    06-16-200910.1
    
    Convertible Note Purchase Agreement, dated May 6, 2009, by and
between Premier Exhibitions, Inc. and Sellers Capital Master
Fund, Ltd
    
    
    
    8-K
    
    10         .      1
    
    
    05-13-200910.2
    
    Letter Agreement, dated May 6, 2009, by and between Premier
Exhibitions, Inc. and Sellers Capital Master Fund, Ltd.
    
    
    
    8-K
    
    10         .      2
    
    
    05-13-200910.3
    
    Form of Convertible Note issued by Premier Exhibitions, Inc. to
Sellers Capital Master Fund, Ltd
    
    
    
    8-K
    
    10         .      3
    
    
    05-13-200910.4
    
    Form of Warrant issued by Premier Exhibitions, Inc. to Sellers
Capital Master Fund, Ltd
    
    
    
    8-K
    
    10         .      4
    
    
    05-13-200910.5
    
    Form of Registration Rights Agreement by and between Premier
Exhibitions, Inc. and Sellers Capital Master Fund, Ltd
    
    
    
    8-K
    
    10         .      5
    
    
    05-13-200910.6
    
    Consulting Agreement, dated February 2, 2009, by and among
Premier Exhibitions, Inc., Foxdale Management, LLC, and Samuel
S. Weiser
    
    X31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Interim President and
Chief Executive Officer
    
    X31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
    
    X32.1
    
    Section 1350 Certification
    
    X
 20