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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 May 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 000-24452
 PREMIER EXHIBITIONS, INC.
  Florida
    
    20-1424922(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)3340 Peachtree Road, NE, Suite 2250, Atlanta, GA
    
    30326(Address of principal executive offices)
    
    (Zip Code)
 (404) 842-2600
 þ o
  o þ o
 o þ




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TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    1Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    8Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    20Item 4. Controls and Procedures
    
    20PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    21Item 6. Exhibits
    
    21Signatures
    
    22Index to Exhibits
    
    23EX-31.1EX-31.2EX-32.1




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PART I  FINANCIAL INFORMATION
 
 ITEM 1.  FINANCIAL STATEMENTS.
  1




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Premier Exhibitions, Inc. and Subsidiaries
Consolidated Balance Sheets
 February 28,
    
    
    May 31,2007
    
    

2007(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    16,811,000
    
    
    $
    19,666,000Marketable securities
    
    
    
    
    
    
    1,031,000Accounts receivable, net of allowance for doubtful accounts
of $252,000 and $327,000, respectively
    
    
    3,050,000
    
    
    
    3,362,000Carpathia receivable, related party
    
    
    2,500,000
    
    
    
    2,500,000Prepaid expenses and other current assets
    
    
    2,309,000
    
    
    
    3,015,000Total current assets
    
    
    24,670,000
    
    
    
    29,574,000Artifacts owned, at cost
    
    
    3,091,000
    
    
    
    3,091,000Salvors lien
    
    
    1,000
    
    
    
    1,000Property and equipment, net of accumulated depreciation
of $3,141,000 and $3,429,000, respectively
    
    
    3,620,000
    
    
    
    4,748,000Exhibition licenses, net of accumulated amortization of $1,407,000 and $1,607,000, respectively
    
    
    3,266,000
    
    
    
    4,366,000Deferred income taxes
    
    
    238,000
    
    
    
    $
    34,886,000
    
    
    $
    41,780,000Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    
    1,450,000
    
    
    
    1,385,000Income taxes payable
    
    
    
    
    
    
    1,548,000Deferred revenue
    
    
    536,000
    
    
    
    849,000Total current liabilities
    
    
    1,986,000
    
    
    
    3,782,000Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common stock; $.0001 par value; authorized 40,000,000 shares;
issued and outstanding 29,004,318 and 29,523,809 shares
at February 28, 2007 and May 31, 2007, respectively
    
    
    3,000
    
    
    
    3,000Common stock payable
    
    
    90,000
    
    
    
    241,000Additional paid-in capital
    
    
    34,252,000
    
    
    
    35,922,000Retained earnings
    
    
    (903,000
    )
    
    
    2,352,000Accumulated other comprehensive income (loss)
    
    
    (129,000
    )
    
    
    (107,000
    )Treasury stock, at cost; 56,641 shares at February 28, 2007 and May 31, 2007
    
    
    (413,000
    )
    
    
    (413,000
    )Total shareholders equity
    
    
    32,900,000
    
    
    
    37,998,000$
    34,886,000
    
    
    $
    41,780,000
  2




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Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
 Three Months Ended May 31,2006
    
    

2007Revenue:Exhibition revenues
    
    $
    5,460,000
    
    
    $
    11,016,000Merchandise and other
    
    
    328,000
    
    
    
    358,000Sale of coal
    
    
    36,000
    
    
    
    32,000Total revenue
    
    
    5,824,000
    
    
    
    11,406,000Cost of revenue:Exhibition costs
    
    
    1,105,000
    
    
    
    3,059,000Cost of merchandise sold
    
    
    56,000
    
    
    
    101,000Cost of coal sold
    
    
    4,000
    
    
    
    7,000Total cost of revenue (exclusive of depreciation and
amortization shown separately below)
    
    
    1,165,000
    
    
    
    3,167,000Gross profit
    
    
    4,659,000
    
    
    
    8,239,000Operating expenses:General and administrative
    
    
    2,198,000
    
    
    
    2,535,000Depreciation and amortization
    
    
    347,000
    
    
    
    488,000Litigation settlement
    
    
    350,000
    
    
    
    Total operating expenses
    
    
    2,895,000
    
    
    
    3,023,000Income from operations
    
    
    1,764,000
    
    
    
    5,216,000Other income and expenses:Interest income
    
    
    32,000
    
    
    
    199,000Interest expense
    
    
    (34,000
    )
    
    
    Other income
    
    
    11,000
    
    
    
    10,000Total other income and expenses
    
    
    9,000
    
    
    
    209,000Income before provision for income taxes
    
    
    1,773,000
    
    
    
    5,425,000Provision for income taxes
    
    
    709,000
    
    
    
    2,170,000Net income
    
    $
    1,064,000
    
    
    $
    3,255,000Net income per share:Basic income per common share
    
    $
    0.04
    
    
    $
    0.11Diluted income per common share
    
    $
    0.03
    
    
    $
    0.10Shares used in basic per share calculations
    
    
    26,344,856
    
    
    
    29,261,380Shares used in diluted per share calculations
    
    
    30,465,215
    
    
    
    33,121,190
  3




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Premier Exhibitions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
 Three Months Ended May 31,2006
    
    

2007Cash flows from operating activities:Net income
    
    $
    1,064,000
    
    
    $
    3,255,000Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    347,000
    
    
    
    488,000Stock based compensation
    
    
    412,000
    
    
    
    459,000Provision for doubtful accounts
    
    
    
    
    
    
    75,000Changes in operating assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (2,974,000
    )
    
    
    (387,000
    )(Increase) decrease in deferred income taxes
    
    
    709,000
    
    
    
    238,000(Increase) decrease in prepaid expenses and
other current assets
    
    
    (806,000
    )
    
    
    (706,000
    )(Increase) decrease in other assets
    
    
    21,000
    
    
    
    Increase (decrease) in deferred revenue
    
    
    (300,000
    )
    
    
    313,000Increase (decrease) in accounts payable and
accrued liabilities
    
    
    622,000
    
    
    
    (65,000
    )Increase (decrease) in income taxes payable
    
    
    
    
    
    
    1,548,000Total adjustments
    
    
    (1,969,000
    )
    
    
    1,963,000Net cash provided (used) by operating activities
    
    
    (905,000
    )
    
    
    5,218,000Cash flows used by investing activities:Purchases of property and equipment
    
    
    (1,070,000
    )
    
    
    (1,416,000
    )Purchase of exhibition licenses
    
    
    
    
    
    
    (1,300,000
    )Net decrease (increase) in marketable securities
    
    
    
    
    
    
    (11,000
    )Purchase of certificate of deposit
    
    
    
    
    
    
    (1,000,000
    )Net cash used by investing activities
    
    
    (1,070,000
    )
    
    
    (3,727,000
    )Cash flows from financing activities:Proceeds from notes payable
    
    
    342,000
    
    
    
    Principal payments on notes payable
    
    
    (333,000
    )
    
    
    Proceeds from option and warrant exercises
    
    
    296,000
    
    
    
    1,362,000Net cash provided by financing activities
    
    
    305,000
    
    
    
    1,362,000Effects of exchange rate changes on cash and cash equivalents
    
    
    6,000
    
    
    
    2,000Net increase (decrease) in cash and cash equivalents
    
    
    (1,664,000
    )
    
    
    2,855,000Cash and cash equivalents at beginning of year
    
    
    4,129,000
    
    
    
    16,811,000Cash and cash equivalents at end of year
    
    $
    2,465,000
    
    
    $
    19,666,000Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    10,000
    
    
    $
    Supplemental
disclosure of non-cash investing and financing activities:Unrealized
(gain) loss on marketable securities
    
    $
    
    
    
    $
    (20,000
    )
  4




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PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
     2. Earnings Per Share Data
   5




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Three Months Ended May 31,2006
    
    2007Numerator:Net income
    
    $
    1,064,000
    
    
    $
    3,255,000Denominator:Basic weighted-average shares outstanding
    
    
    26,344,856
    
    
    
    29,261,380Effect of dilutive stock options and warrants
    
    
    4,120,359
    
    
    
    3,859,810Diluted weighted-average shares outstanding
    
    
    30,465,215
    
    
    
    33,121,190Net income per share:Basic
    
    $
    0.04
    
    
    $
    0.11Diluted
    
    $
    0.03
    
    
    $
    0.10
 3. Equity Transactions
    4. Legal Proceedings
 Exhibit Human: The Wonders Within, Inc. and RMS Titanic, Inc. Premier Exhibitions, Inc. v. Exhibit Human: The Wonders Within, Inc.
 6




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5. Exhibition License Agreements
  
 7




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
  Overview
      8




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Exhibitions Operated by the Company
 Titanic Exhibitions
  
    
    The Tropicana Resort and Casino, Las Vegas, Nevada (June 1, 2006 to an undetermined
date);
    
    Cincinnati Museum Center at Union Terminal, Cincinnati, Ohio (November 4, 2006
to May 13, 2007);
    
    Atlanta Civic Center, Atlanta, Georgia (November 11, 2006 to May 6, 2007);
    
    Turtle Bay Exploration Park, Redding, California (February 24, 2007 to May 28,
2007);
    
    Exploration Place, Wichita, Kansas (January 13, 2007 to March 25, 2007);
    
    Royal BC Museum, Victoria, British Columbia, Canada (April 14, 2007 to October 14,
2007);
    
    Visual Arts Center of Northwest Florida, Panama City, Florida (May 25, 2007 to
September 3, 2007); and
    
    Royal BC Museum, Victoria, British Columbia, Canada (April 14, 2007 to October 14,
2007).
  
    
    Denver Museum of Nature & Science, Denver, Colorado (June 22, 2007 to January 6,
2008);
    
    Ontario Science Centre, Toronto, Canada (June 2, 2007 to January 6, 2008); and
    
    Three city European tour beginning in Kiel, Germany (June 16, 2007 to an
undetermined date).
  Bodies...The Exhibition and Bodies Revealed Exhibitions
  9




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
    
    Bodies...The Exhibition, South Street Seaport, New York, New York (November 19,
2005 to an undetermined date);
    
    Bodies...The Exhibition, The Tropicana Resort and Casino, Las Vegas, Nevada (June
23, 2006 to an undetermined date);
    
    Bodies...The Exhibition, The Shops at Sunset Place, Miami, Florida (September 22,
2006 to March 25, 2007);
    
    Bodies...The Exhibition, 800 Pike Street (across from the Washington State
Convention Center), Seattle, Washington (September 30, 2006 to April 29, 2007);
    
    Bodies...The Exhibition, Beurs van Berlage Concert and Conference Hall,
Amsterdam, The Netherlands (November 25, 2006 to April 14, 2007);
    
    Bodies Revealed, OCA Ibirapuera Park, Sao Paulo, Brazil (February 28, 2007 to
July 29, 2007);
    
    Bodies...The Exhibition, The Streets at Southpoint, Durham, North Carolina (April
5, 2007 to an undetermined date);
    
    Bodies...The Exhibition, 1101 Wilson Boulevard (the former Newseum site),
Arlington, Virginia (Washington, D.C. Metro Area) (April 14, 2007 to an undetermined
date);
    
    Bodies...The Exhibition, Westfield UTC, San Diego, California (May 12, 2007 to an
undetermined date);
    
    Bodies...The Exhibition, Palacio dos Condes do Restelo, Lisbon, Portugal (May 5,
2007 to an undetermined date); and
    
    Bodies...The Exhibition, Lucerna, Prague, Czech Republic (May 5, 2007 to an
undetermined date).
  
    
    Bodies...The Exhibition, Carnegie Science Center, Pittsburgh, Pennsylvania
(October 1, 2007 to an undetermined date);
    
    Bodies...The Exhibition, 9 Treasure Lake Drive, adjacent to the IMAX
Entertainment Complex, Branson, Missouri (June 30, 2007 to an undetermined date); and
    
    Bodies...The Exhibition, Easton Market, Columbus, Ohio (June 30, 2007 to an
undetermined date).
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Co-Presentation Agreement
   Additional Exhibitions
  11




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Results of Operations
  Three Months Ended May 31,2006
    

2007Revenue:Exhibition revenues
    
    
    94
    %
    
    
    97
    %Merchandise and other
    
    
    5
    %
    
    
    3
    %Sale of coal
    
    
    1
    %
    
    
    0
    %Total revenue
    
    
    100
    %
    
    
    100
    %Cost of revenue:Exhibition costs
    
    
    19
    %
    
    
    27
    %Cost of merchandise sold
    
    
    1
    %
    
    
    1
    %Cost of coal sold
    
    
    0
    %
    
    
    0
    %Total cost of revenue (exclusive of depreciation and
amortization shown separately below)
    
    
    20
    %
    
    
    28
    %Gross profit
    
    
    80
    %
    
    
    72
    %Operating expenses:General and administrative
    
    
    38
    %
    
    
    22
    %Depreciation and amortization
    
    
    6
    %
    
    
    4
    %Litigation settlement
    
    
    6
    %
    
    
    0
    %Total operating expenses
    
    
    50
    %
    
    
    26
    %Income from operations
    
    
    30
    %
    
    
    46
    %Other income and expenses:Interest income
    
    
    1
    %
    
    
    2
    %Interest expense
    
    
    -1
    %
    
    
    0
    %Other income
    
    
    0
    %
    
    
    0
    %Total other income and expenses
    
    
    0
    %
    
    
    2
    %Income before provision for income taxes
    
    
    30
    %
    
    
    48
    %Provision for income taxes
    
    
    12
    %
    
    
    19
    %Net income
    
    
    18
    %
    
    
    29
    %
 The Quarter Ended May 31, 2007 Compared to the Quarter Ended May 31, 2006
  12




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13




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Liquidity and Capital Resources
 Cash flows from operating activities
  14




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As of February 28,
    
    As of May 31,2007
    
    2007(unaudited)Working Capital (in thousands)
    
    $
    22,684
    
    
    $
    25,792Current Ratio
    
    
    12.42
    
    
    
    7.82
  Cash flows from investing activities
  Cash flows from financing activities
    15




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Off-Balance Sheet Arrangements
  Critical Accounting Policies
  
    
    Revenue recognition;
    
    Accounts receivable;
    
    Income taxes;
    
    Legal contingencies;
    
    Property and equipment; and
    
    Impairment of long-lived and intangible assets.
 Revenue Recognition
 Exhibition Revenue.
 
    
    persuasive evidence of an exhibition arrangement with a customer exists;
    
    the exhibit is complete and, in accordance with the terms of the arrangement, has
been delivered;
    
    the exhibition period of the arrangement has begun and/or the customer can begin
its exploitation, exhibition or sale;
    
    the arrangement fee is fixed or determinable; and
    
    collection of the arrangement fee is reasonably assured.
   16




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Audio Tour Revenue.
 Merchandise Revenue.
 Sponsorship Revenue.
 Licensing Revenue.
 Accounts Receivable
  Income Taxes
  Legal Contingencies
  17




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Property and Equipment
  Impairment of Long-Lived Assets and Other Intangibles
     Recent Accounting Pronouncements
   18




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Forward-Looking Statements
  19




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Interest Rate Risk
  Foreign Currency Risk
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
  Form 10-Q that
 20




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PART II
 OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS.
 Exhibit Human: The Wonders Within, Inc. and RMS Titanic, Inc. Premier Exhibitions, Inc. v. Exhibit Human: The Wonders Within, Inc.
  
 ITEM 6.
    
    EXHIBITS.
  21




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SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: July 2, 2007
    
    By:
    
    /s/ Arnie GellerArnie Geller, Presidentand Chief Executive OfficerDated: July 2, 2007
    
    By:
    
    /s/ Stephen CoutureStephen Couture, Vice Presidentand Chief Financial Officer(Principal Financial Officer)
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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
 23