##### 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, 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 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 þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




---



##### 



PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES
 QUARTERLY PERIOD ENDED NOVEMBER 30, 2009
 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
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    22PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    23Item 6. Exhibits
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32.1




---



##### 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 28,2009
    
    
    2009(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    6,927
    
    
    $
    4,452Marketable securities
    
    
    3,300
    
    
    
    1,277Accounts receivable, net of allowance for doubtful accounts of $543 and $1,193,
respectively
    
    
    3,060
    
    
    
    5,009Merchandise inventory, net of reserve of $233 and $143, respectively
    
    
    749
    
    
    
    431Income taxes receivable
    
    
    6,710
    
    
    
    3,806Deferred income taxes
    
    
    2,087
    
    
    
    1,408Prepaid expenses and other current assets
    
    
    3,737
    
    
    
    4,981Total current assets
    
    
    26,570
    
    
    
    21,364Artifacts owned, at cost
    
    
    3,056
    
    
    
    3,081Salvors lien
    
    
    1
    
    
    
    1Property and equipment, net of accumulated depreciation of $10,280 and
$7,503, respectively
    
    
    14,415
    
    
    
    15,706Exhibition licenses, net of accumulated amortization of $4,532 and
$4,806, respectively
    
    
    3,715
    
    
    
    7,225Goodwill
    
    
    
    
    
    
    2,567Deferred income taxes
    
    
    1,973
    
    
    
    2,685Note receivable
    
    
    563
    
    
    
    625Other assets
    
    
    250
    
    
    
    521$
    50,543
    
    
    $
    53,775Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    4,313
    
    
    $
    11,712Deferred revenue
    
    
    1,941
    
    
    
    2,340Total current liabilities
    
    
    6,254
    
    
    
    14,052Long-term liabilities:Income taxes payable
    
    
    1,191
    
    
    
    1,166Total long-term liabilities
    
    
    1,191
    
    
    
    1,166Shareholders equity:Common stock; $.0001 par value; authorized 65,000,000 shares; issued 47,648,483
and 31,265,415 shares, respectively outstanding 46,582,034 and 29,414,919, respectively
    
    
    5
    
    
    
    3Additional paid-in capital
    
    
    57,695
    
    
    
    44,691(Accumulated deficit) retained earnings
    
    
    (7,103
    )
    
    
    1,384Accumulated other comprehensive loss
    
    
    (309
    )
    
    
    (331
    )Treasury stock, at cost; 1,066,449 shares
    
    
    (7,190
    )
    
    
    (7,190
    )Total shareholders equity
    
    
    43,098
    
    
    
    38,557$
    50,543
    
    
    $
    53,775
   3




---



##### Table of Contents



Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
 Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue:Exhibition revenue
    
    $
    7,949
    
    
    $
    11,285
    
    
    $
    30,302
    
    
    $
    37,180Merchandise and other
    
    
    753
    
    
    
    2,171
    
    
    
    2,777
    
    
    
    6,609Total revenue
    
    
    8,702
    
    
    
    13,456
    
    
    
    33,079
    
    
    
    43,789Cost of revenue:Exhibition costs
    
    
    5,719
    
    
    
    7,348
    
    
    
    15,661
    
    
    
    21,146Cost of merchandise sold
    
    
    340
    
    
    
    1,252
    
    
    
    805
    
    
    
    2,748Total cost of revenue (exclusive of
depreciation
and amortization shown separately below)
    
    
    6,059
    
    
    
    8,600
    
    
    
    16,466
    
    
    
    23,894Gross profit
    
    
    2,643
    
    
    
    4,856
    
    
    
    16,613
    
    
    
    19,895Operating expenses:General and administrative
    
    
    4,660
    
    
    
    6,429
    
    
    
    23,945
    
    
    
    19,164Depreciation and amortization
    
    
    1,412
    
    
    
    1,273
    
    
    
    4,357
    
    
    
    3,696Total operating expenses
    
    
    6,072
    
    
    
    7,702
    
    
    
    28,302
    
    
    
    22,860Loss from operations
    
    
    (3,429
    )
    
    
    (2,846
    )
    
    
    (11,689
    )
    
    
    (2,965
    )Other (expense) income
    
    
    (46
    )
    
    
    139
    
    
    
    (255
    )
    
    
    299Loss before provision for income taxes
    
    
    (3,475
    )
    
    
    (2,707
    )
    
    
    (11,944
    )
    
    
    (2,666
    )Benefit from income taxes
    
    
    1,305
    
    
    
    865
    
    
    
    3,457
    
    
    
    851Net loss
    
    $
    (2,170
    )
    
    $
    (1,842
    )
    
    $
    (8,487
    )
    
    $
    (1,815
    )Net loss per share:Basic loss per common share
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.25
    )
    
    $
    (0.06
    )Diluted loss per common share
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.25
    )
    
    $
    (0.06
    )Shares used in basic per share calculations
    
    
    41,019,416
    
    
    
    29,291,666
    
    
    
    33,617,577
    
    
    
    29,253,863Shares used in diluted per share calculations
    
    
    41,019,416
    
    
    
    29,291,666
    
    
    
    33,617,577
    
    
    
    29,253,863
   4




---



##### Table of Contents



Premier Exhibitions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
 Nine Months EndedNovember 30,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (8,487
    )
    
    $
    (1,815
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depreciation and amortization
    
    
    4,357
    
    
    
    3,696Stock based compensation
    
    
    468
    
    
    
    (400
    )Stock issued in settlement of lawsuit
    
    
    50
    
    
    
    Provision for doubtful accounts
    
    
    (588
    )
    
    
    476Impairment of goodwill and intangible assets
    
    
    4,512
    
    
    
    Excess of tax (benefit) expense on exercise of stock options
    
    
    
    
    
    
    30Accrued interest converted into common stock
    
    
    247
    
    
    
    Changes in operating assets and liabilities:Decrease (increase) in accounts receivable
    
    
    2,599
    
    
    
    (4,106
    )Increase in merchandise inventories
    
    
    (318
    )
    
    
    (1,357
    )Decrease (increase) in deferred income taxes
    
    
    36
    
    
    
    (122
    )Decrease in prepaid expenses and other assets
    
    
    1,526
    
    
    
    655Increase in income tax receivable
    
    
    (2,904
    )
    
    
    (3,271
    )(Decrease) increase in deferred revenue
    
    
    (399
    )
    
    
    685(Decrease) increase in accounts payable and accrued liabilities
    
    
    (7,398
    )
    
    
    3,938Total adjustments
    
    
    2,188
    
    
    
    224Net cash used in operating activities
    
    
    (6,299
    )
    
    
    (1,591
    )Cash flows used in investing activities:Proceeds from Carpathia receivable
    
    
    
    
    
    
    2,500Purchases of property and equipment
    
    
    (1,486
    )
    
    
    (8,974
    )Purchase of exhibition licenses
    
    
    
    
    
    
    (1,908
    )Acquisition, net of cash received
    
    
    
    
    
    
    (2,101
    )Purchase of marketable securities
    
    
    (2,023
    )
    
    
    (218
    )Net cash used in investing activities
    
    
    (3,509
    )
    
    
    (10,701
    )Cash flows from financing activities:Proceeds from convertible notes
    
    
    12,000
    
    
    
    Proceeds from revolving line of credit
    
    
    
    
    
    
    3,969Payments on revolving line of credit
    
    
    
    
    
    
    (3,542
    )Proceeds from option and warrant exercises
    
    
    261
    
    
    
    229Excess tax benefit (expense) on exercise of stock options
    
    
    
    
    
    
    (30
    )Net cash provided by financing activities
    
    
    12,261
    
    
    
    626Effects of exchange rate changes on cash and cash equivalents
    
    
    22
    
    
    
    (51
    )Net increase (decrease) in cash and cash equivalents
    
    
    2,475
    
    
    
    (11,717
    )Cash and cash equivalents at beginning of period
    
    
    4,452
    
    
    
    16,426Cash and cash equivalents at end of period
    
    $
    6,927
    
    
    $
    4,709Supplemental disclosure of cash flow information:Cash paid during the period for taxes
    
    $
    
    
    
    $
    1,529Supplemental disclosure of non-cash investing and financing activities:Cashless exercise of stock options
    
    $
    14
    
    
    $
    Conversion of convertible notes and accrued interest
    
    $
    12,247
    
    
    $
    
   5




---



##### Table of Contents



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




---



##### Table of Contents



3. Recent Accounting Pronouncements
     4. Goodwill and Other Intangible Assets
   GoodwillBalance as of February 28, 2009
    
    $
    2,567Impairment charge
    
    
    (2,567
    )Balance as of November 30, 2009
    
    $
    
 Intangible AssetsBalance as of February 28, 2009
    
    $
    7,225Amortization during the period
    
    
    (1,565
    )Impairment charge
    
    
    (1,945
    )Balance as of November 30, 2009
    
    $
    3,715
  7




---



##### Table of Contents



5. Debt and Debt Conversion to Common Stock
    6. Shareholders Equity
 Authorized Shares
  Equity Incentive Plan
    8




---



##### Table of Contents




    
    the maximum aggregate number of shares that may be subject to stock options or
SARs granted in any calendar year to any one participant is 1,200,000 shares;
 
    
    the maximum aggregate number of shares of restricted stock and shares subject
to restricted stock units and other stock based awards granted in any calendar
year to any one participant is 600,000 shares;
 
    
    the maximum aggregate number of shares deliverable under performance shares
granted in any calendar year to any one participant is 750,000 shares;
 
    
    the maximum aggregate compensation that can be paid pursuant to performance
units or other cash-based awards granted in any calendar year to any one
participant is $1.2 million or a number of shares having an aggregate fair market
value not in excess of such amount; and
 
    
    the maximum dividend equivalent that may be paid in any calendar year to any
one participant is $0.3 million.
  Share Repurchase
  Stock Based Compensation
      9




---



##### Table of Contents



7. Income taxes
  8. Loss Per Share Data
  Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net income (loss)
    
    $
    (2,170
    )
    
    $
    (1,842
    )
    
    $
    (8,487
    )
    
    $
    (1,815
    )Denominator:Basic weighted-average
shares outstanding
    
    
    41,019,416
    
    
    
    29,291,666
    
    
    
    33,617,577
    
    
    
    29,253,863Effect of dilutive stock
options and
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted-average
shares outstanding
    
    
    41,019,416
    
    
    
    29,291,666
    
    
    
    33,617,577
    
    
    
    29,253,863Net income (loss) per share:Basic
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.25
    )
    
    $
    (0.06
    )Diluted
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.25
    )
    
    $
    (0.06
    )
   10




---



##### Table of Contents



9. Other Comprehensive Income
  Three Months Ended November 30,
    
    
    Nine Months Ended November 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net loss
    
    $
    (2,170
    )
    
    $
    (1,842
    )
    
    $
    (8,487
    )
    
    $
    (1,815
    )Other comprehensive income (loss):Net foreign currency
translation gain (loss)
    
    
    (1
    )
    
    
    33
    
    
    
    (22
    )
    
    
    51Total comprehensive loss
    
    $
    (2,171
    )
    
    $
    (1,809
    )
    
    $
    (8,509
    )
    
    $
    (1,764
    )
 10. Post Employment Benefits
   11. Legal Proceedings and Contingencies
 Status of International Treaty Concerning the Titanic Wreck
   11




---



##### Table of Contents



Status of Salvor-in-Possession and Interim Salvage Award Proceedings
      12




---



##### Table of Contents



Other Litigation
 Arnie Geller v. Premier
Exhibitions Inc.
   Contingencies
    13




---



##### Table of Contents



12. Subsequent Events
   14




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
   Overview
  Exhibitions
  Titanic
  Bodies
    15




---



##### Table of Contents



Dialog in the Dark
  Merchandise
  Information Regarding Exhibitions Outside the United States
  Exhibition Revenue Summary for Last Eleven Quarters During the first quarter of fiscal 2010, we entered into an amendment to an existing multiple element agreement
with promoters that modified certain of the terms and conditions of the agreement.  Although these modifications had no
impact on revenue recognized in this fiscal year or prior periods, the amendments modify our analysis and computation
of the fair value of the undelivered elements in such a way that we will no longer be able to support the fair value of
the undelivered elements in a multiple element arrangement as required by U.S. GAAP. As a result, in the future we
will no longer recognize payment of non-refundable exhibition license revenue upon execution of an agreement or upon
cash collection as a separate deliverable, but rather will defer such amounts until the time that the exhibition
occurs, or the allowed time period for such an exhibition has passed and no remaining obligation to host such
exhibition exists.  This first quarter modification had no impact on revenue recognized in prior periods, including
non-refundable exhibition license revenue that was recognized. Our exhibition revenue for the last eleven quarters may be summarized as follows (in millions): Non-refundable
    
    
    Non-refundableLicense Fee For
    
    
    License Fee For
    
    
    TotalAdmissions
    
    
    Future
    
    
    Current
    
    
    ExhibitionQuarter Ended
    
    Revenue
    
    
    Exhibitions
    
    
    Exhibitions
    
    
    RevenueNovember 30, 2009
    
    $
    6.9
    
    
    
    
    
    
    $
    1.0
    
    
    $
    7.9August 31, 2009
    
    $
    10.8
    
    
    
    
    
    
    $
    1.7
    
    
    $
    12.5May 31, 2009
    
    $
    7.9
    
    
    
    
    
    
    $
    1.9
    
    
    $
    9.8February 28, 2009
    
    $
    8.7
    
    
    
    
    
    
    $
    0.8
    
    
    $
    9.5November 30, 2008
    
    $
    6.0
    
    
    $
    4.5
    
    
    $
    0.7
    
    
    $
    11.2August 31, 2008
    
    $
    11.8
    
    
    $
    0.4
    
    
    $
    0.4
    
    
    $
    12.6May 31, 2008
    
    $
    10.7
    
    
    $
    1.4
    
    
    $
    1.2
    
    
    $
    13.3February 29, 2008
    
    $
    14.9
    
    
    $
    0.5
    
    
    $
    1.0
    
    
    $
    16.4November 30, 2007
    
    $
    9.0
    
    
    $
    6.2
    
    
    $
    1.1
    
    
    $
    16.3August 31, 2007
    
    $
    11.7
    
    
    $
    2.7
    
    
    $
    1.1
    
    
    $
    15.5May 31, 2007
    
    $
    9.5
    
    
    $
    0.6
    
    
    $
    0.9
    
    
    $
    11.0
 Results of Operations
 The Quarter Ended November 30, 2009 Compared to the Quarter Ended November 30, 2008
 Revenue.
   Quarters Ended November 30,2009
    
    
    2008Admissions revenue
    
    $
    6.9
    
    
    $
    6.0Non-refundable license fees for future exhibitions
    
    
    
    
    
    
    4.5Non-refundable license fees for current exhibitions
    
    
    1.0
    
    
    
    0.7Total exhibition revenues
    
    $
    7.9
    
    
    $
    11.2
  16




---



##### Table of Contents



Quarter Ended November 30,2009
    
    
    2008Operating days
    
    
    1,361
    
    
    
    1,641Attendance
    
    
    819,941
    
    
    
    967,358Average attendance per operating day
    
    
    602
    
    
    
    589
   Cost of revenue.
   Gross profit.
   Operating
expenses.
  Loss from operations.
 Benefit from income taxes.
 Net loss.
  17




---



##### Table of Contents



Loss per share
 The Nine Months Ended November 30, 2009 Compared to the Nine Months Ended November 30, 2008
 Revenue.
 Operating Expenses
  Nine Months Ended November 30,2009
    
    
    2008Admissions revenue
    
    $
    25.6
    
    
    $
    28.5Non-refundable license fees for future exhibitions
    
    
    
    
    
    
    6.3Non-refundable license fees for current exhibitions
    
    
    4.7
    
    
    
    2.3Total exhibition revenues
    
    $
    30.3
    
    
    $
    37.1
  Nine Months Ended November 30,2009
    
    
    2008Operating days
    
    
    4,624
    
    
    
    5,192Attendance
    
    
    3,306,979
    
    
    
    3,853,860Average attendance per operating day
    
    
    715
    
    
    
    742
   Cost of revenue.
   Gross profit.
   Operating expenses.
   18




---



##### Table of Contents



Loss
from operations.
 Benefit from income taxes.
 Net
loss.
 Loss per share
 Changes in Financial Condition
 Cash flows from operating activities
   As ofNovember 30,
    
    
    February 28,2009
    
    
    2009Working Capital (in millions)
    
    $
    20.3
    
    
    $
    7.3Current Ratio
    
    
    4.25
    
    
    
    1.52
 Cash flows from financing activities
  19




---



##### Table of Contents



Cash flows from investing activities
  Cash flows from financing activities
  Liquidity
   Capital Resources
    20




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Critical Accounting Policies
 Form 10-K
 Contractual Obligations
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Interest Rate Risk
  Foreign Currency Risk
   21




---



##### Table of Contents



Item 4. Controls and Procedures.
   
 PART II  OTHER INFORMATION
  
 Item 1. Legal Proceedings.
  Arnie Geller v. Premier
Exhibitions Inc.
   22




---



##### Table of Contents



Item 1A.
    
    Risk Factors.
  
 Item 6. Exhibits.
   23




---



##### Table of Contents



SIGNATURES
  PREMIER EXHIBITIONS, INC.Dated: January 8, 2010
    By:
    /s/ Christopher J. DavinoChristopher J. Davino,President and Chief Executive Officer
(Principal Executive Officer)Dated: January 8, 2010
    By:
    /s/ John A. StoneJohn A. Stone,Chief Financial Officer
(Principal Financial Officer)  24




---



##### Table of Contents



INDEX
TO EXHIBITS
 Exhibit
    
    
    
    Filed
    
    Incorporated by ReferenceNo.
    
    Exhibit Description
    
    Herewith
    
    Form
    
    Exhibit
    
    Filing Date10.1
    
    
    Resolution to Create a Trust and Reserve Fund
    
    
    
    8-K
    
    
    
    10/29/200910.2
    
    
    Robert A. Brandon Appointed General Counsel and Vice
President of Business Affairs
    
    
    
    8-K
    
    
    
    10/30/200931.1
    
    
    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
  25