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, 2008
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
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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
    
    
    10Item 3. Quantitative And Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls And Procedures
    
    
    19Part II. Other InformationItem 1. Legal Proceedings
    
    
    20Item 6. Exhibits
    
    
    20




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  3




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
 February 29,
    
    
    May 31,2008
    
    
    2008(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    16,426,000
    
    
    $
    13,472,000Marketable securities
    
    
    1,055,000
    
    
    
    1,052,000Accounts receivable, net of allowance for
doubtful accounts of $378,000, at
February 29, 2008
and May 31, 2008
    
    
    3,590,000
    
    
    
    4,622,000Carpathia receivable, related party
    
    
    2,500,000
    
    
    
    Current income tax benefit
    
    
    
    
    
    
    2,893,000Prepaid expenses and other current assets
    
    
    3,973,000
    
    
    
    4,471,000Total current assets
    
    
    27,544,000
    
    
    
    26,510,000Artifacts owned, at cost
    
    
    3,088,000
    
    
    
    3,088,000Salvors lien
    
    
    1,000
    
    
    
    1,000Property and equipment, net of accumulated
depreciation of $4,707,000 and
$5,379,000,
respectively
    
    
    7,308,000
    
    
    
    7,766,000Exhibition licenses, net of accumulated
amortization of $2,752,000 and
$3,415,000,
respectively
    
    
    8,450,000
    
    
    
    9,668,000Goodwill
    
    
    1,377,000
    
    
    
    2,191,000Deferred income taxes
    
    
    1,660,000
    
    
    
    1,789,000Other assets
    
    
    1,233,000
    
    
    
    250,000$
    50,661,000
    
    
    $
    51,263,000Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    
    3,565,000
    
    
    
    3,356,000Notes payable
    
    
    
    
    
    
    107,000Total current liabilities
    
    
    3,565,000
    
    
    
    3,463,000Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common stock; $.0001 par value; authorized
40,000,000 shares;
issued and
outstanding
30,166,614 shares
at February 29, 2008 and May 31, 2008,
respectively
    
    
    3,000
    
    
    
    3,000Additional paid-in capital
    
    
    43,147,000
    
    
    
    44,763,000Retained earnings
    
    
    11,406,000
    
    
    
    10,494,000Accumulated
other comprehensive income (loss)
    
    
    (270,000
    )
    
    
    (270,000
    )Treasury stock, at cost; 1,066,449 shares
at February 29, 2008
and May 31, 2008
    
    
    (7,190,000
    )
    
    
    (7,190,000
    )Total shareholders equity
    
    
    47,096,000
    
    
    
    47,800,000$
    50,661,000
    
    
    $
    51,263,000
  4




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
 Three Months Ended May 31,2007
    
    
    2008Revenue:Exhibition revenues
    
    $
    11,016,000
    
    
    $
    13,259,000Merchandise and other
    
    
    358,000
    
    
    
    1,965,000Sale of coal
    
    
    32,000
    
    
    
    6,000Total revenue
    
    
    11,406,000
    
    
    
    15,230,000Cost of revenue:Exhibition costs
    
    
    3,059,000
    
    
    
    6,359,000Cost of merchandise sold
    
    
    101,000
    
    
    
    973,000Cost of coal sold
    
    
    7,000
    
    
    
    1,000Total cost of revenue (exclusive of depreciation and amortization
shown separately below)
    
    
    3,167,000
    
    
    
    7,333,000Gross profit
    
    
    8,239,000
    
    
    
    7,897,000Operating expenses:General and administrative
    
    
    2,535,000
    
    
    
    8,018,000Depreciation and amortization
    
    
    488,000
    
    
    
    1,294,000Loss on sale of fixed asset
    
    
    
    
    
    
    5,000Total operating expenses
    
    
    3,023,000
    
    
    
    9,317,000Income (loss) from operations
    
    
    5,216,000
    
    
    
    (1,420,000
    )Other income and expenses:Interest income
    
    
    199,000
    
    
    
    97,000Interest expense
    
    
    
    
    
    
    (1,000
    )Other income (expense)
    
    
    10,000
    
    
    
    (15,000
    )Total other income and expenses
    
    
    209,000
    
    
    
    81,000Income (loss) before provision for income taxes
    
    
    5,425,000
    
    
    
    (1,339,000
    )Provision for income taxes
    
    
    2,170,000
    
    
    
    (427,000
    )Net income (loss)
    
    $
    3,255,000
    
    
    $
    (912,000
    )Net income (loss) per share:Basic income (loss) per common share
    
    $
    0.11
    
    
    $
    (0.03
    )Diluted income (loss) per common share
    
    $
    0.10
    
    
    $
    (0.03
    )Shares used in basic per share calculations
    
    
    29,261,380
    
    
    
    30,041,614Shares used in diluted per share calculations
    
    
    33,121,190
    
    
    
    32,452,313
  5




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Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
 Three Months Ended May 31,2007
    
    
    2008Cash flows from operating activities:Net income (loss)
    
    $
    3,255,000
    
    
    $
    (912,000
    )Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    488,000
    
    
    
    1,180,000Stock based compensation
    
    
    459,000
    
    
    
    1,616,000Provision for doubtful accounts
    
    
    75,000
    
    
    
    Changes in operating assets and
liabilities:(Increase) in
accounts receivable
    
    
    (387,000
    )
    
    
    (41,000
    )Decrease (increase)
in deferred income
taxes
    
    
    238,000
    
    
    
    (58,000
    )(Increase) decrease
in prepaid expenses
and other current
assets
    
    
    (706,000
    )
    
    
    485,000Decrease in
Carpathia
receivable
    
    
   
    
    
    
    2,500,000(Increase) in
income tax benefit
    
    
    
    
    
    
    (2,893,000
    )Increase in
deferred revenue
    
    
    313,000
    
    
    
    (Decrease) in
accounts payable
and accrued
liabilities
    
    
    (65,000
    )
    
    
    (650,000
    )Increase in income
taxes payable
    
    
    1,548,000
    
    
    
    Total adjustments
    
    
    1,963,000
    
    
    
    2,139,000Net cash provided by operating activities
    
    
    5,218,000
    
    
    
    1,227,000Cash flows used by investing activities:Purchases of property and equipment
    
    
    (1,416,000
    )
    
    
    (806,000
    )Purchase of exhibition licenses
    
    
    (1,300,000
    )
    
    
    (1,278,000
    )Acquisition, net of cash received
    
    
    
    
    
    
    (2,101,000
    )Purchase of marketable security
    
    
    (11,000
    )
    
    
    Purchase of certificate of deposit
    
    
    (1,000,000
    )
    
    
    Net cash used by investing activities
    
    
    (3,727,000
    )
    
    
    (4,185,000
    )Cash flows from financing activities:Proceeds from option and warrant exercises
    
    
    1,362,000
    
    
    
    Net cash provided by financing activities
    
    
    1,362,000
    
    
    
    Effects of exchange rate changes on cash and cash equivalents
    
    
    2,000
    
    
    
    4,000Net increase (decrease) in cash and cash equivalents
    
    
    2,855,000
    
    
    
    (2,954,000
    )Cash and cash equivalents at beginning of year
    
    
    16,811,000
    
    
    
    16,426,000Cash and
cash equivalents at end of period
    
    $
    19,666,000
    
    
    $
    13,472,000Supplemental disclosure of cash flow information:Cash paid during the period for taxes
    
    $
    
    
    
    $
    1,537,000Supplemental disclosure of non-cash investing and financing activities:Unrealized loss on marketable securities
    
    $
    (20,000
    )
    
    $
    
  6




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PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
    2. Recent Accounting Pronouncements
     7




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3. Earnings Per Share Data
   8




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Three Months Ended May 31,2007
    
    
    2008Numerator:Net income (loss)
    
    $
    3,255,000
    
    
    $
    (912,000
    )Denominator:Basic weighted-average shares outstanding
    
    
    29,261,380
    
    
    
    30,041,614Effect of dilutive stock options and warrants
    
    
    3,859,810
    
    
    
    2,410,699Diluted weighted-average shares outstanding
    
    
    33,121,190
    
    
    
    32,452,313Net income (loss) per share:Basic
    
    $
    0.11
    
    
    $
    (0.03
    )Diluted
    
    $
    0.10
    
    
    $
    (0.03
    )
 4. Equity Transactions
    5. Legal Proceedings
 R.M.S. Titanic, Inc. v.
The Wrecked and Abandoned Vessel, et al., in rem amicus curiae in specie
 in specie amicus
curie
 in specie
 9




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in specie
  
 6. Goodwill and Other Intangible Assets
   Balance as of February 29, 2008
    
    $
    1,377,000Goodwill acquired
    
    
    814,000Balance as of May 31, 2008
    
    $
    2,191,000
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  10




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Overview
    Our Exhibitions
  
    
    Titanic: The Artifact Exhibition, Titanic Aquatic, and Titanic: Treasures from the Deep;
    
    Bodies...The Exhibition, Bodies Revealed and Our Body: The Universe Within;
    
    Sports Immortals, The Traveling Exhibition;
    
    Dialog in the Dark; and
    
    Star Trek The Exhibition.
 Titanic
  Bodies...The Exhibition, Bodies Revealed and Our Body: The Universe Within
   11




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Dialog in the Dark
  Sports Immortals, The Traveling Exhibition
  
 Star Trek The Exhibition
  Additional Exhibitions
  Lease Agreement with the Luxor Hotel and Casino
   12




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Merchandising Strategy
   Information Regarding Exhibitions Outside the United States
  13




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Results of Operations
  Three Months Ended May 31,2007
    
    2008Revenue:Exhibition revenues
    
    
    97
    %
    
    
    87
    %Merchandise and other
    
    
    3
    %
    
    
    13
    %Sale of coal
    
    
    0
    %
    
    
    0
    %Total revenue
    
    
    100
    %
    
    
    100
    %Cost of revenue:Exhibition costs
    
    
    27
    %
    
    
    42
    %Cost of merchandise sold
    
    
    1
    %
    
    
    6
    %Cost of coal sold
    
    
    0
    %
    
    
    0
    %Total cost of revenue (exclusive of depreciation and
amortization shown separately below)
    
    
    28
    %
    
    
    48
    %Gross profit
    
    
    72
    %
    
    
    52
    %Operating expenses:General and administrative
    
    
    22
    %
    
    
    53
    %Depreciation and amortization
    
    
    4
    %
    
    
    8
    %Loss on sale of fixed asset
    
    
    0
    %
    
    
    0
    %Total operating expenses
    
    
    26
    %
    
    
    61
    %Income from operations
    
    
    46
    %
    
    
    -9
    %Other income and expenses:Interest income
    
    
    2
    %
    
    
    1
    %Interest expense
    
    
    0
    %
    
    
    0
    %Other income
    
    
    0
    %
    
    
    0
    %Total other income and expenses
    
    
    2
    %
    
    
    1
    %Income before provision for income taxes
    
    
    48
    %
    
    
    -9
    %Provision for income taxes
    
    
    19
    %
    
    
    -3
    %Net income
    
    
    29
    %
    
    
    -6
    %
 The Quarter Ended May 31, 2008 Compared to the Quarter Ended May 31, 2007
  14




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15




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Liquidity and Capital Resources
 Cash flows from operating activities
   As of February 29,
    
    As of May 31,2008
    
    2008(unaudited)Working Capital
    
    $
    23,979,000
    
    
    $
    23,047,000Current Ratio
    
    
    7.73
    
    
    
    7.66
  Cash flows from investing activities
  Cash flows from financing activities
    16




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Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Contractual Obligations
  Recent Accounting Pronouncements
      17




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Forward-Looking Statements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Interest Rate Risk
  Foreign Currency Risk
  18




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ITEM 4. CONTROLS AND PROCEDURES
  
 19




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
 R.M.S. Titanic, Inc. v.
The Wrecked and Abandoned Vessel, et al., in rem amicus curiae in specie
 in specie amicus
curie
 in specie
 in specie
   
 ITEM 6. EXHIBITS.
  20




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SIGNATURES
   Dated: July 9, 2008
    
    By:
    
    /s/ Bruce D. EskowitzBruce D. Eskowitz, President andChief Executive Officer(Principal Executive Officer)Dated: July 9, 2008
    
    By:
    
    /s/ Harold W. IngallsHarold W. Ingalls, Chief Financial Officer(Principal Financial Officer)
 21




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INDEX TO EXHIBITS
 Exhibit
    
    
    
    Location31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of President and
Chief Executive Officer
    
    Filed herewith31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Vice President
and Chief Financial Officer
    
    Filed herewith32.1
    
    Section 1350 Certifications.
    
    Filed herewith
 22