##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the Fiscal Year Ended February 28, 2006                                                 
|          
|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 NO. 000-24452





PREMIER EXHIBITIONS, INC.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Florida                                                            |  | 20-1424922                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

3340 Peachtree Rd., NE, Suite 2250


Atlanta, GA 30326


(Address of principal executive offices)


Registrants telephone number, including area code:
404-842-2600





Securities registered pursuant to Section 12(b) of the
Act: None


Securities registered pursuant to Section 12(g) of the
Act: Common Stock, par value $.0001 per share


o þ


o þ


þ o


S-K 10-K 10-K. o


12b-2


o o þ


12b-2 o þ






10-K.










---

TABLE OF CONTENTS



|                                   |                                                                                                                       |  |  |  |  |  |  | 
|---------------------------------- | --------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I.                           
|                                   | ITEM 1. BUSINESS                                                                                                     
|                                   | ITEM 1A. RISK FACTORS                                                                                                
|                                   | ITEM 1B. UNRESOLVED STAFF COMMENTS                                                                                   
|                                   | ITEM 2. PROPERTIES                                                                                                   
|                                   | ITEM 3. LEGAL PROCEEDINGS                                                                                            
|                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                          
|PART II                           
|                                   | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|                                   | ITEM 6. SELECTED FINANCIAL DATA                                                                                      
|                                   | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        
|                                   | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                  
|                                   | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  
|                                   | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         
|                                   | ITEM 9A. CONTROLS AND PROCEDURES.                                                                                    
|PART III                          
|                                   | ITEM 10. THROUGH ITEM 14.                                                                                            
|PART IV                           
|                                   | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                                     
|EX-10.29 Exhibition Tour Agreement
|EX-21 Subsidiaries                
|EX-31.1 Certification             
|EX-31.2 Certification             
|EX-32 Certification               



---



##### Table of Contents



SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE
PRIVATE


SECURITIES LITIGATION REFORM ACT OF 1995


10-K





PART I.







|        |         
|------- | --------
|ITEM 1. | BUSINESS

Overview of Our Business




salvor-in








1



---



##### Table of Contents







Origins and History of the Company


state-of








2



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MIR-1 MIR-2.




round-the




842-2600.


Exhibitions Operated by the Company




| |                        
| | -----------------------
| | RMS Titanic Exhibitions





| |   |                                                                                      
| | - | -------------------------------------------------------------------------------------
| |  | Whitaker Center, Harrisburg, Pennsylvania (June 4 to
    September 18, 2005);        
|
| |  | Maryland Science Center, Baltimore, Maryland (February 12 to
    September 11, 2005);
|
| |  | COSI Columbus, Columbus, Ohio (March 12 to September 5,
    2005);                   
|
| |  | Tropicana Resort & Casino, Las Vegas, Nevada (March 25
    to January 31, 2006);     
|
| |  | The Zappion, Athens, Greece (October 8 to March 1, 2006);                            
|
| |  | St. Louis Science Center, St. Louis, Missouri
    (November 11 to April 15, 2006);   

3



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##### Table of Contents





| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | The AT Center, Seoul, South Korea (December 3 to
    March 1, 2006);          
|
| |  | Queen Mary, Long Beach, California (December 17 to
    September 4, 2006); and
|
| |  | OshKosh Public Museum, OshKosh, Wisconsin (February 4 to
    April 30, 2006). 





| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | Miami Museum of Science and Planetarium, Miami, Florida
    (March 25 to October 15, 2006);
|
| |  | Science Center of Iowa, Des Moines, Iowa (May 20 to
    August 20, 2006);                  
|
| |  | The Metreon, San Francisco, California (June 10 to January
    2007); and                  
|
| |  | The Tropicana Resort and Casino, Las Vegas, Nevada (opening June
    2006).                





| |                                                                
| | ---------------------------------------------------------------
| | Bodies...The Exhibition and Bodies
    Revealed Exhibitions









| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Bodies Revealed, Samsungs Everland Theme Park,
    Seoul, South Korea (March to November 2005);                                                    
|
| |  | Bodies...The Exhibition, Museum of Science and
    Industry, Tampa, Florida (August 18 to February 26, 2006,
    extended to September 5, 2006); and
|
| |  | Bodies...The Exhibition, South Street Seaport, New
    York, New York (November 19 to December 2006).                                               

4



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##### Table of Contents







| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | Bodies...The Exhibition, Atlanta Civic Center,
    Atlanta, Georgia (March 4 to September 4, 2006);          
|
| |  | Bodies Revealed, Mexico City, Mexico (March 11 to
    September 11, 2006); and                               
|
| |  | Bodies...The Exhibition, Earls Court
    Exhibition Centre, London, England (April 12 to July 30,
    2006).



Co-Production Agreements






Additional Exhibitions




Titanic Donation Initiative




Merchandising




5



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Marketing




Titanic Expeditions


hard-to




Restoration and Conservation of Titanic Artifacts




6



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Science and Archaeology Related to the Titanic








RMS Carpathia




Competition




7



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Environmental Matters




Employees




Directors and Executive Officers




|                |  |     |    |  |             |                                                                              
|--------------- |  | --- | -- |  | ----------- | -----------------------------------------------------------------------------
|Name            |  | Age |    |  | Position(s)
|                |  |     |    |  |            
|Arnie Geller    |  |     | 65 |  |             | President, Chief Executive Officer and Chairman of the Board of
    Directors
|Stephen Couture |  |     | 36 |  |             | Vice President, Chief Financial Officer and Director                         
|N. Nick Cretan  |  |     | 70 |  |             | Director                                                                     
|Douglas Banker  |  |     | 53 |  |             | Director                                                                     
|Alan Reed       |  |     | 48 |  |             | Director                                                                     
|Tom Zaller      |  |     | 34 |  |             | Vice President  Exhibitions                                                 
|Brian Wainger   |  |     | 36 |  |             | Vice President and Chief Legal Counsel                                       



| |                                  
| | ---------------------------------
| | Members of the Board of Directors





| |             
| | ------------
| | Arnie Geller





| |                
| | ---------------
| | Stephen Couture



8



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N. Nick Cretan






| |               
| | --------------
| | Douglas Banker





| |          
| | ---------
| | Alan Reed





| |                                             
| | --------------------------------------------
| | Executive Officers and Significant Employees





| |                                                    
| | ---------------------------------------------------
| | Arnie Geller, President and Chief Executive Officer



9



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| |                                                                
| | ---------------------------------------------------------------
| | Stephen Couture, Vice President and Chief Financial
    Officer





| |                                         
| | ----------------------------------------
| | Tom Zaller, Vice President  Exhibitions





| |                                                                             
| | ----------------------------------------------------------------------------
| | Brian Wainger, Chief Legal Counsel and Vice
    President  Business Affairs



Web Site Information and Other Access to Corporate
Documents


10-Ks, 10-Qs 8-Ks,







|         |             
|-------- | ------------
|ITEM 1A. | RISK FACTORS



Until recently, we have had a history of operating losses,
and there is no assurance that we will continue to achieve
profitability in the future.




Our future operating results will depend on our ability to
successfully implement our new business strategy, which in turn
depends on many factors, some of which are beyond our
control.




10



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##### Table of Contents







| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | our ability to continue to exhibit Titanic artifacts;                         
|
| |  | our ability to develop new exhibitions that the public will
    attend;       
|
| |  | our ability to operate our exhibitions profitably;                            
|
| |  | the continued popularity of and public demand for Titanic
    exhibitions; and
|
| |  | continued public demand for historical and scientific
    exhibitions.        

We may be unable to raise additional capital when needed,
which would have a material adverse effect on our financial
condition and our ability to conduct our operations.




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
Titanic artifacts already under our control.




If we are unable to maintain our
salvor-in-possession
rights to the Titanic wreck and wreck site, we could lose our
exclusivity with respect to exhibiting artifacts recovered from
the Titanic


salvor-in Salvor-in


11



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salvor-in salvor-in salvor-in


Our exhibitions are becoming subject to increasing
competition.


salvor-in




We depend upon third parties to provide us with access to the
Titanic wreck site, as well as to assist us with our recovery
and restoration activities. If we become unable to obtain these
services from such third parties, we would not be able to
conduct future expeditions to the Titanic wreck site and
consequently our ability to produce new Titanic exhibitions
would be severely curtailed.




Because we depend on discretionary spending by consumers to
generate revenue, if consumers have less discretionary income to
spend or decide to attend competing exhibitions rather than
ours, our results of operations would be adversely affected.






12



---



##### Table of Contents





We are subject to currency exchange rate fluctuations, which
negatively affect our results of operations.




Our success depends on the services of our executive officers
and key employees and the loss of their services could have a
material adverse effect on our business.




We may be unable to hire and retain the skilled personnel we
need to expand our operations and, as a result, could lose our
competitive position.




New corporate governance requirements have increased our
costs and make it more difficult to attract qualified
directors.


Lawrence DAddario v.
Arnie Geller, Gerald Couture, Joe Marsh and R.M.S. Titanic,
Inc. Dave Shuttle and Barbara Shuttle v. Arnie
Geller, G. Michael Harris, Gerald Couture, and R.M.S. Titanic,
Inc.







|         |                          
|-------- | -------------------------
|ITEM 1B. | UNRESOLVED STAFF COMMENTS








|        |           
|------- | ----------
|ITEM 2. | PROPERTIES



13



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|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS

Status of International Treaty Concerning the Titanic
Wreck


salvor-in salvor-in




salvor-in


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


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14



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salvor-in




Other Ongoing Litigation


Exhibit Human: The Wonders Within, Inc. v. RMS
Titanic, Inc.


Premier
Exhibitions, Inc. v. Exhibit Human: The Wonders
Within, Inc.


Stefano Arts v. Exhibitions International, LLC,
et.al.


Settled Litigation and Other Concluded Matters


Plastination Company v. Premier Exhibitions,
Inc.


Lawrence DAddario v. Arnie
Geller, Gerald Couture, Joe Marsh and R.M.S. Titanic, Inc.


Dave Shuttle and Barbara
Shuttle v. Arnie Geller, G. Michael


15



---



##### Table of Contents



Harris, Gerald Couture, and R.M.S. Titanic, Inc. DAddario


DAddario Shuttle




| |   |                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our board of directors must be comprised of a majority of
    independent directors.                                                                                                                                                                                                                                                                                                         
|
| |  | We must have an audit committee of the board of directors,
    comprised exclusively of independent directors, which, among
    other things, has oversight responsibility for our internal
    control and corporate compliance.                                                                                                                                                            
|
| |  | We must have a corporate governance committee of the board of
    directors, comprised of a majority of independent directors,
    which, among other things, oversees our implementation of the
    corporate governance plan, reviews all contracts between us and
    our officers, pre-screens director nominees, and reviews the
    compensation of our five most highly paid officers.
|
| |  | Our independent directors must meet at least twice each calendar
    year and have the authority to retain counsel, accountants, or
    other experts.                                                                                                                                                                                                                                       
|
| |  | Our directors must review the compensation paid to them by us
    and make any appropriate changes.                                                                                                                                                                                                                                                                                          
|
| |  | All persons nominated to become a director must satisfy certain
    requirements and possess core competencies.                                                                                                                                                                                                                                                                              
|
| |  | Once a year over the five-year period for which the corporate
    governance plan is applicable, our board of directors must
    submit a written report to counsel representing the former
    plaintiff confirming our compliance with the corporate
    governance plan.                                                                                                                  



DAddario Shuttle DAddario Shuttle out-of







|        |                                                    
|------- | ---------------------------------------------------
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





| |                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. elected Arnie Geller, N. Nick Cretan, and Douglas
    Banker to serve as directors until the 2006 Annual Meeting of
    Stockholders and until their respective successors are elected
    and have been qualified or until their earlier resignation,
    removal or death; and
|
| | 2. ratified the selection of Kempisty & Company,
    Certified Public Accountants, P.C. as our auditors for the
    fiscal year ending February 28, 2006.                                                                                                                          





16



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##### Table of Contents





|               |  |                |            |                |  |  |         | 
|-------------- |  | -------------- | ---------- | -------------- |  |  | ------- | 
|               |  | Votes in Favor |            | Votes Withheld
|               |  |                |            |               
|Arnie Geller   |  |                | 18,681,811 |                |  |  | 505,233 | 
|N. Nick Cretan |  |                | 18,694,944 |                |  |  | 492,100 | 
|Douglas Banker |  |                | 18,694,590 |                |  |  | 492,454 | 



|               |  |  |            | 
|-------------- |  |  | ---------- | 
|Votes in favor |  |  | 18,703,717 | 
|Votes against  |  |  | 470,657    | 
|Abstentions    |  |  | 12,670     | 




PART II







|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
    STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES.

Market Information




over-the


Closing Prices of our Common Stock


on the OTC Bulletin Board


|                                       |  |      |      |  |     |   |      | 
|-------------------------------------- |  | ---- | ---- |  | --- | - | ---- | 
|Fiscal Year 2006                       |  | High |      |  | Low |  
|                                       |  |      |      |  |     |  
|Fourth quarter ended February 28, 2006 |  | $    | 4.52 |  |     | $ | 3.51 | 
|Third quarter ended November 30, 2005  |  |      | 4.39 |  |     |   | 1.78 | 
|Second quarter ended August 31, 2005   |  |      | 2.05 |  |     |   | 1.50 | 
|First quarter ended May 31, 2005       |  |      | 2.39 |  |     |   | 1.14 | 

|                                       |  |   |      |  |  |   |      | 
|-------------------------------------- |  | - | ---- |  |  | - | ---- | 
|Fiscal Year 2006                       | 
|                                       | 
|Fourth quarter ended February 28, 2005 |  | $ | 1.25 |  |  | $ | 0.57 | 
|Third quarter ended November 30, 2004  |  |   | 1.18 |  |  |   | 0.77 | 
|Second quarter ended August 31, 2004   |  |   | 1.48 |  |  |   | 1.02 | 
|First quarter ended May 31, 2004       |  |   | 2.48 |  |  |   | 0.97 | 

Holders




Dividends




17



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##### Table of Contents








|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA



|                   |                                                   |                               |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |        | 
|------------------ | ------------------------------------------------- | ----------------------------- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | 
|                   |                                                   | Years Ended February 28 (29), |  
|                   |                                                   |                               |  
|                   |                                                   | 2001                          |   |        | 2002 |  |   | 2003   |   |  | 2004 |        |   | 2005 |   |        | 2006 | 
|                   |                                                   |                               |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      | 
|                   |                                                   | (In thousands)                |  
|Operating Results  |                                                   |                               |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |       
|                   | Revenues                                          |                               | $ | 5,699  |      |  | $ | 2,768  |   |  | $    | 2,861  |   |      | $ | 2,864  |      |  | $ | 6,857  |   |  | $ | 13,041 | 
|                   | Total Operating Expenses                          |                               | $ | 5,739  |      |  | $ | 10,036 |   |  | $    | 3,986  |   |      | $ | 3,961  |      |  | $ | 8,288  |   |  | $ | 10,399 | 
|                   | Income (Loss) From Operations                     |                               | $ | (40    | )    |  | $ | (7,268 | ) |  | $    | (1,125 | ) |      | $ | (1,097 | )    |  | $ | (1,431 | ) |  | $ | 2,642  | 
|                   | Net Income (Loss)                                 |                               | $ | (21    | )    |  | $ | (6,784 | ) |  | $    | (827   | ) |      | $ | (1,088 | )    |  | $ | (1,475 | ) |  | $ | 4,948  | 
|                   | Cash Flows From Operations                        |                               | $ | 472    |      |  | $ | (441   | ) |  | $    | 2,526  |   |      | $ | (1,377 | )    |  | $ | 595    |   |  | $ | 2,130  | 
|                  
|Common Stock Data  |                                                   |                               |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |       
|                   | Diluted Income (Loss) per Common Share            |                               | $ |       |      |  | $ | (0.38  | ) |  | $    | (0.04  | ) |      | $ | (0.06  | )    |  | $ | (0.07  | ) |  | $ | 0.18   | 
|                   | Diluted Average Shares Outstanding (in thousands) |                               |   | 16,733 |      |  |   | 18,059 |   |  |      | 18,615 |   |      |   | 18,960 |      |  |   | 20,819 |   |  |   | 28,231 | 
|                  
|Financial Position |                                                   |                               |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |       
|                   | Cash and Marketable Securities                    |                               | $ | 610    |      |  | $ | 146    |   |  | $    | 1,945  |   |      | $ | 547    |      |  | $ | 1,258  |   |  | $ | 4,699  | 
|                   | Working Capital                                   |                               | $ | (367   | )    |  | $ | 2,241  |   |  | $    | 1,042  |   |      | $ | 13     |      |  | $ | 857    |   |  | $ | 7,054  | 
|                   | Total Assets                                      |                               | $ | 15,002 |      |  | $ | 8,839  |   |  | $    | 8,399  |   |      | $ | 7,253  |      |  | $ | 10,764 |   |  | $ | 22,970 | 
|                   | Total Debt                                        |                               | $ |       |      |  | $ |       |   |  | $    |       |   |      | $ |       |      |  | $ | 425    |   |  | $ | 1,350  | 
|                   | Stockholders Equity                              |                               | $ | 12,751 |      |  | $ | 7,342  |   |  | $    | 6,550  |   |      | $ | 6,004  |      |  | $ | 7,679  |   |  | $ | 20,282 | 
|                   | Capital Expenditures                              |                               | $ | 776    |      |  | $ | 23     |   |  | $    | 727    |   |      | $ | 21     |      |  | $ | 964    |   |  | $ | 1,774  | 
|                  
|Financial Ratios   |                                                   |                               |   |        |      |  |   |        |   |  |      |        |   |      |   |        |      |  |   |        |   |  |   |       
|                   | Current Ratio                                     |                               |   | 0.84   |      |  |   | 2.50   |   |  |      | 1.56   |   |      |   | 1.01   |      |  |   | 1.28   |   |  |   | 3.62   | 






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS

Introduction






| |   |                                
| | - | -------------------------------
| |  | Overview of our business       
|
| |  | Key Exhibitions                
|
| |  | Results of Operations          
|
| |  | Liquidity and Capital Resources
|
| |  | Off-Balance Sheet Arrangements 
|
| |  | Critical Accounting Policies   

18



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| |   |                                 
| | - | --------------------------------
| |  | Contractual Obligations         
|
| |  | Related Parties                 
|
| |  | Recent Accounting Pronouncements

Overview










19



---



##### Table of Contents





| |                    
| | -------------------
| | Performance Summary











20



---



##### Table of Contents



Key Exhibitions




| |                    
| | -------------------
| | Titanic Exhibitions







| |                                                                
| | ---------------------------------------------------------------
| | Bodies...The Exhibition and Bodies
    Revealed Exhibitions







Co-Production Agreements




21



---



##### Table of Contents





Results of Operations




| |                                                                             
| | ----------------------------------------------------------------------------
| | Year Ended February 28, 2006 as Compared to Year
    Ended February 28, 2005



















22



---



##### Table of Contents













| |                                                                             
| | ----------------------------------------------------------------------------
| | Year Ended February 28, 2005 as Compared To Year
    Ended February 29, 2004















23



---



##### Table of Contents











| |                                                                             
| | ----------------------------------------------------------------------------
| | Year Ended February 29, 2004 as Compared to Year
    Ended February 28, 2003

















24



---



##### Table of Contents







Liquidity and Capital Resources














25



---



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salvor-in


salvor-in salvor-in salvor-in




| |                        
| | -----------------------
| | Contractual Obligations







26



---



##### Table of Contents







|                                                               |  |                        |            |           |        |   |           |           |           |   |            |  |  |         |           |  |  |   |   | 
|-------------------------------------------------------------- |  | ---------------------- | ---------- | --------- | ------ | - | --------- | --------- | --------- | - | ---------- |  |  | ------- | --------- |  |  | - | - | 
|                                                               |  | Payments Due by Period
|                                                               |  |                       
|                                                               |  |                        |            | Less than |        |   |           |           | More than
|Contractual Obligations                                        |  | Total                  |            |           | 1 Year |   |           | 1-3 Years |           |   | 3-5 Years  |  |  | 5 Years
|                                                               |  |                        |            |           |        |   |           |           |           |   |            |  |  |        
|Specimen fixed rentals                                         |  | $                      | 23,000,000 |           |        | $ | 4,000,000 |           |           | $ | 10,000,000 |  |  | $       | 9,000,000 |  |  | $ |  | 
|Real estate operating lease                                    |  |                        | 881,000    |           |        |   | 306,000   |           |           |   | 575,000    |  |  |         |          |  |  |   |  | 
|Contractual commitment  Clear Channel Entertainment,
    Inc. |  |                        | 500,000    |           |        |   | 500,000   |           |           |   |           |  |  |         |          |  |  |   |  | 
|Note payable  SAM Tour (USA), Inc.                            |  |                        | 500,000    |           |        |   | 500,000   |           |           |   |           |  |  |         |          |  |  |   |  | 
|Note payable  shareholder                                     |  |                        | 350,000    |           |        |   | 350,000   |           |           |   |           |  |  |         |          |  |  |   |  | 
|                                                               |  |                        |            |           |        |   |           |           |           |   |            |  |  |         |          
|Total                                                          |  | $                      | 25,231,000 |           |        | $ | 5,656,000 |           |           | $ | 10,575,000 |  |  | $       | 9,000,000 |  |  | $ |  | 
|                                                               |  |                        |            |           |        |   |           |           |           |   |            |  |  |         |          





Off-Balance Sheet Arrangements




27



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##### Table of Contents



Critical Accounting Policies








| |   |                                                
| | - | -----------------------------------------------
| |  | Revenue recognition;                           
|
| |  | Accounts receivables;                          
|
| |  | 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.                                                                  







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##### Table of Contents



Audio Tour Revenue.


Merchandise Revenue.


Sponsorship Revenue.


Licensing Revenue.




| |                    
| | -------------------
| | Accounts Receivable





| |             
| | ------------
| | Income Taxes



29



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| |                    
| | -------------------
| | Legal Contingencies





| |                       
| | ----------------------
| | Property and Equipment





| |                                                          
| | ---------------------------------------------------------
| | Impairment of Long-Lived Assets and Other
    Intangibles













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Recent Accounting Pronouncements














31



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##### Table of Contents





05-06, 05-06 05-06 05-06 05-06


13-1, 13-1







|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
    RISK



Interest Rate Risk




Foreign Currency Risk




32



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|        |                                            
|------- | -------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                                                                         |  |      |    | 
|-------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                         |  | Page |   
|                                                                                                         |  |      |   
|Report of Independent Registered Public Accounting Firm                                                  |  |      | 34 | 
|Consolidated Balance Sheets at February 28, 2005 and
    February 28, 2006                               |  |      | 35 | 
|Consolidated Statements of Operations for the years ended
    February 29, 2004, 2005 and 2006           |  |      | 36 | 
|Consolidated Statements of Stockholders Equity for the
    years ended February 29, 2004, 2005 and 2006 |  |      | 37 | 
|Consolidated Statements of Cash Flows for the years ended
    February 29, 2004, 2005 and 2006           |  |      | 38 | 
|Notes to Consolidated Financial Statements                                                               |  |      | 39 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




















34



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##### Table of Contents



Premier Exhibitions, Inc. and Subsidiaries


Consolidated Balance Sheets


|                                     |                                                                                                                                                                               |              |            |             |              |   |            |            |  
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ---------- | ----------- | ------------ | - | ---------- | ---------- | -
|                                     |                                                                                                                                                                               | February 28, |            |             | February 28, |  
|                                     |                                                                                                                                                                               | 2005         |            |             | 2006         |  
|                                     |                                                                                                                                                                               |              |            |             |              |  
|ASSETS                              
|Current assets:                      |                                                                                                                                                                               |              |            |             |              |   |            |           
|                                     | Cash and cash equivalents (Note 3)                                                                                                                                            |              | $          | 1,258,000   |              |   | $          | 4,129,000  |  
|                                     | Marketable securities (Note 3)                                                                                                                                                |              |            |            |              |   |            | 570,000    |  
|                                     | Accounts receivable                                                                                                                                                           |              |            | 1,057,000   |              |   |            | 1,585,000  |  
|                                     | Prepaid and refundable taxes                                                                                                                                                  |              |            | 222,000     |              |   |            |           |  
|                                     | Prepaid expenses and other current assets (Note 3)                                                                                                                            |              |            | 1,405,000   |              |   |            | 3,458,000  |  
|                                     |                                                                                                                                                                               |              |            |             |              |  
|Total current assets                 |                                                                                                                                                                               |              | 3,942,000  |             |              |   | 9,742,000  |           
|                                     | Artifacts owned, at cost (Note 2)                                                                                                                                             |              |            | 4,476,000   |              |   |            | 4,476,000  |  
|                                     | Salvors lien (Note 2)                                                                                                                                                        |              |            | 1,000       |              |   |            | 1,000      |  
|                                     | Salvor-in-possession rights (Note 2)                                                                                                                                          |              |            | 879,000     |              |   |            | 879,000    |  
|                                     | Property and equipment, net (Note 3)                                                                                                                                          |              |            | 738,000     |              |   |            | 2,033,000  |  
|                                     | Exhibition licenses, net (Note 3)                                                                                                                                             |              |            |            |              |   |            | 3,607,000  |  
|                                     | Deferred income taxes (Note 4)                                                                                                                                                |              |            |            |              |   |            | 2,100,000  |  
|                                     | Other assets                                                                                                                                                                  |              |            | 43,000      |              |   |            | 132,000    |  
|                                     |                                                                                                                                                                               |              |            |             |              |  
|                                     |                                                                                                                                                                               | $            | 10,764,000 |             |              | $ | 22,970,000 |           
|                                     |                                                                                                                                                                               |              |            |             |              |  
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities:                 |                                                                                                                                                                               |              |            |             |              |   |            |           
|                                     | Accounts payable and accrued liabilities (Note 3)                                                                                                                             |              |            | 1,660,000   |              |   |            | 1,038,000  |  
|                                     | Deferred revenue                                                                                                                                                              |              |            | 1,000,000   |              |   |            | 300,000    |  
|                                     | Notes payable                                                                                                                                                                 |              |            | 425,000     |              |   |            | 1,350,000  |  
|                                     |                                                                                                                                                                               |              |            |             |              |  
|Total current liabilities            |                                                                                                                                                                               |              | 3,085,000  |             |              |   | 2,688,000  |           
|Commitments and contingencies        |                                                                                                                                                                               |              |           |             |              |   |           |           
|Stockholders equity:                |                                                                                                                                                                               |              |            |             |              |   |            |           
|                                     | Common stock; $.0001 par value; authorized
    40,000,000 shares; issued and outstanding 22,299,939 and
    26,062,089 shares at February 28, 2005 and 2006,
    respectively |              |            | 2,000       |              |   |            | 3,000      |  
|                                     | Common stock payable                                                                                                                                                          |              |            |            |              |   |            | 920,000    |  
|                                     | Additional paid-in capital                                                                                                                                                    |              |            | 20,316,000  |              |   |            | 27,178,000 |  
|                                     | Accumulated deficit                                                                                                                                                           |              |            | (12,665,000 | )            |   |            | (7,717,000 | )
|                                     | Accumulated other comprehensive income (loss)                                                                                                                                 |              |            | 26,000      |              |   |            | (102,000   | )
|                                     |                                                                                                                                                                               |              |            |             |              |  
|Total stockholders equity           |                                                                                                                                                                               |              | 7,679,000  |             |              |   | 20,282,000 |           
|                                     |                                                                                                                                                                               |              |            |             |              |  
|                                     |                                                                                                                                                                               | $            | 10,764,000 |             |              | $ | 22,970,000 |           
|                                     |                                                                                                                                                                               |              |            |             |              |  



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Premier Exhibitions, Inc. and Subsidiaries


Consolidated Statements of Operations


|                                                |                                        |              |            |           |              |   |            |              |   |   |            |            |  
|----------------------------------------------- | -------------------------------------- | ------------ | ---------- | --------- | ------------ | - | ---------- | ------------ | - | - | ---------- | ---------- | -
|                                                |                                        | Year Ended   |            |           | Year Ended   |   |            | Year Ended   |  
|                                                |                                        | February 29, |            |           | February 28, |   |            | February 28, |  
|                                                |                                        |              |            |           |              |   |            |              |  
|                                                |                                        | 2004         |            |           | 2005         |   |            | 2006         |  
|                                                |                                        |              |            |           |              |   |            |              |  
|Revenue:                                        |                                        |              |            |           |              |   |            |              |   |   |            |           
|                                                | Exhibition revenues                    |              | $          | 2,677,000 |              |   | $          | 6,320,000    |   |   | $          | 12,217,000 |  
|                                                | Merchandise and other                  |              |            | 119,000   |              |   |            | 507,000      |   |   |            | 722,000    |  
|                                                | Sale of coal                           |              |            | 68,000    |              |   |            | 30,000       |   |   |            | 102,000    |  
|                                                |                                        |              |            |           |              |   |            |              |  
|Total revenue                                   |                                        |              | 2,864,000  |           |              |   | 6,857,000  |              |   |   | 13,041,000 |           
|Expenses:                                       |                                        |              |            |           |              |   |            |              |   |   |            |           
|                                                | General and administrative             |              |            | 3,402,000 |              |   |            | 4,397,000    |   |   |            | 6,620,000  |  
|                                                | Depreciation and amortization          |              |            | 253,000   |              |   |            | 378,000      |   |   |            | 911,000    |  
|                                                | Exhibition costs                       |              |            |          |              |   |            | 2,891,000    |   |   |            | 2,672,000  |  
|                                                | Cost of merchandise sold               |              |            | 110,000   |              |   |            | 257,000      |   |   |            | 102,000    |  
|                                                | Cost of coal sold                      |              |            | 21,000    |              |   |            | 9,000        |   |   |            | 10,000     |  
|                                                | Litigation settlement                  |              |            | 175,000   |              |   |            |             |   |   |            |           |  
|                                                | Loss on sale of fixed assets           |              |            |          |              |   |            | 356,000      |   |   |            | 84,000     |  
|                                                |                                        |              |            |           |              |   |            |              |  
|Total expenses                                  |                                        |              | 3,961,000  |           |              |   | 8,288,000  |              |   |   | 10,399,000 |           
|                                                |                                        |              |            |           |              |   |            |              |  
|Income (loss) from operations                   |                                        |              | (1,097,000 | )         |              |   | (1,431,000 | )            |   |   | 2,642,000  |           
|Other income and expenses:                      |                                        |              |            |           |              |   |            |              |   |   |            |           
|                                                | Interest income                        |              |            | 9,000     |              |   |            | 2,000        |   |   |            | 85,000     |  
|                                                | Interest expense                       |              |            |          |              |   |            | (46,000      | ) |   |            | (47,000    | )
|                                                | Other income                           |              |            |          |              |   |            |             |   |   |            | 168,000    |  
|                                                |                                        |              |            |           |              |   |            |              |  
|Total other income and expenses                 |                                        |              | 9,000      |           |              |   | (44,000    | )            |   |   | 206,000    |           
|Income (loss) before provision for income taxes |                                        |              | (1,088,000 | )         |              |   | (1,475,000 | )            |   |   | 2,848,000  |           
|Provision (benefit) for income taxes            |                                        |              |           |           |              |   |           |              |   |   | (2,100,000 | )         
|Net income (loss)                               |                                        | $            | (1,088,000 | )         |              | $ | (1,475,000 | )            |   | $ | 4,948,000  |           
|                                                |                                        |              |            |           |              |   |            |              |  
|Net income (loss) per share:                    |                                        |              |            |           |              |   |            |              |   |   |            |           
|                                                | Basic income (loss) per common share   |              | $          | (0.06     | )            |   | $          | (0.07        | ) |   | $          | 0.21       |  
|                                                |                                        |              |            |           |              |   |            |              |  
|                                                | Diluted income (loss) per common share |              | $          | (0.06     | )            |   | $          | (0.07        | ) |   | $          | 0.18       |  
|                                                |                                        |              |            |           |              |   |            |              |  
|Shares used in basic per share calculations     |                                        |              | 18,960,047 |           |              |   | 20,818,898 |              |   |   | 24,081,186 |           
|                                                |                                        |              |            |           |              |   |            |              |  
|Shares used in diluted per share calculations   |                                        |              | 18,960,047 |           |              |   | 20,818,898 |              |   |   | 28,230,491 |           
|                                                |                                        |              |            |           |              |   |            |              |  



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Premier Exhibitions, Inc. and Subsidiaries


Consolidated Statements of Stockholders Equity and
Comprehensive Loss


Years ended February 29, 2004, February 28, 2005,
and February 28, 2006


|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        |  |   |          |   |  |   |            |  
|--------------------------------------------------------- |  | ------------ | ---------- |  | ------ | - | ----- | ---------- |  | ------- | ----------- |  | ----------- | ------- | ---------- | ------------- | ------------- | - | ------------- | ------ |  | - | -------- | - |  | - | ---------- | -
|                                                          |  | Common Stock |            |  |        |   |       |            |  |         | Accumulated |  |             |        
|                                                          |  |              |            |  | Common |   |       | Additional |  |         |             |  | Other       |         |            |              
|                                                          |  | Number of    |            |  |        |   | Stock |            |  | Paid-In |             |  | Accumulated |         |            | Comprehensive |               |   | Stockholders |       
|                                                          |  | Shares       |            |  | Amount |   |       | Payable    |  |         | Capital     |  |             | Deficit |            |               | Income (Loss) |   |               | Equity | 
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 
|Balance, February 28, 2003                                |  |              | 18,675,047 |  |        | $ | 2,000 |            |  | $       |             |  |             | $       | 16,650,000 |               |               | $ | (10,102,000   | )      |  | $ |         |   |  | $ | 6,550,000  |  
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        |  |   |          |   |  |   |           |  
|Common stock issued for services                          |  |              | 450,000    |  |        |   |      |            |  |         |             |  |             |         | 108,000    |               |               |   |              |        |  |   |         |   |  |   | 108,000    |  
|Issuance of compensatory stock options                    |  |              |           |  |        |   |      |            |  |         |             |  |             |         | 434,000    |               |               |   |              |        |  |   |         |   |  |   | 434,000    |  
|Net loss                                                  |  |              |           |  |        |   |      |            |  |         |             |  |             |         |           |               |               |   | (1,088,000    | )      |  |   |         |   |  |   | (1,088,000 | )
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 
|Balance, February 29, 2004                                |  |              | 19,125,047 |  |        | $ | 2,000 |            |  | $       |            |  |             | $       | 17,192,000 |               |               | $ | (11,190,000   | )      |  | $ |         |   |  | $ | 6,004,000  |  
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 
|Common stock issued for services                          |  |              | 805,000    |  |        |   |      |            |  |         |             |  |             |         | 277,000    |               |               |   |              |        |  |   |         |   |  |   | 277,000    |  
|Issuance of common stock in exchange for options          |  |              | 900,000    |  |        |   |      |            |  |         |             |  |             |         | 1,569,000  |               |               |   |              |        |  |   |         |   |  |   | 1,569,000  |  
|Issuance of common stock in equity raise                  |  |              | 1,469,892  |  |        |   |      |            |  |         |             |  |             |         | 1,278,000  |               |               |   |              |        |  |   |         |   |  |   | 1,278,000  |  
|Net loss                                                  |  |              |           |  |        |   |      |            |  |         |             |  |             |         |           |               |               |   | (1,475,000    | )      |  |   |         |   |  |   | (1,475,000 | )
|Foreign currency translation gain                         |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        |  |   | 26,000   |   |  |   | 26,000     |  
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 
|Balance, February 28, 2005                                |  |              | 22,299,939 |  |        | $ | 2,000 |            |  | $       |            |  |             | $       | 20,316,000 |               |               | $ | (12,665,000   | )      |  | $ | 26,000   |   |  | $ | 7,679,000  |  
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 
|Common stock issued for exercise of warrants and options  |  |              | 81,000     |  |        |   |      |            |  |         | 97,000      |  |             |         | 69,000     |               |               |   |              |        |  |   |         |   |  |   | 166,000    |  
|Common stock issued for equity investment                 |  |              | 300,000    |  |        |   |      |            |  |         |             |  |             |         | 500,000    |               |               |   |              |        |  |   |         |   |  |   | 500,000    |  
|Common stock and warrants issued for acquisition          |  |              | 200,000    |  |        |   |      |            |  |         |             |  |             |         | 608,000    |               |               |   |              |        |  |   |         |   |  |   | 608,000    |  
|Common Stock issued in exchange for surrender of warrants |  |              | 200,000    |  |        |   |      |            |  |         |             |  |             |         |           |               |               |   |              |        |  |   |         |   |  |   |           |  
|Common Stock and warrants issued for private placement    |  |              | 2,975,136  |  |        |   |      |            |  |         |             |  |             |         | 4,968,000  |               |               |   |              |        |  |   |         |   |  |   | 4,968,000  |  
|Issuance of employee stock options                        |  |              |           |  |        |   |      |            |  |         |             |  |             |         | 256,000    |               |               |   |              |        |  |   |         |   |  |   | 256,000    |  
|Issuance of consulting warrants                           |  |              |           |  |        |   |      |            |  |         |             |  |             |         | 462,000    |               |               |   |              |        |  |   |         |   |  |   | 462,000    |  
|Issuance of consulting stock for services                 |  |              |            |  |        |   |      |            |  |         | 823,000     |  |             |         |           |               |               |   |              |        |  |   |         |   |  |   | 823,000    |  
|Net income                                                |  |              |           |  |        |   |      |            |  |         |             |  |             |         |           |               |               |   | 4,948,000     |        |  |   |         |   |  |   | 4,948,000  |  
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        |  |   |          |   |  |   |           |  
|Other comprehensive loss:                                 |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        |  |   |          |   |  |   |           |  
|Unrealized loss on marketable securities                  |  |              |           |  |        |   |      |            |  |         |            |  |             |         |           |               |               |   |              |        |  |   | (98,000  | ) |  |   | (98,000    | )
|Foreign currency translation loss                         |  |              |           |  |        |   |      |            |  |         |            |  |             |         |           |               |               |   |              |        |  |   | (30,000  | ) |  |   | (30,000    | )
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 
|Total other comprehensive loss                            |  |              |           |  |        |   |      |            |  |         |            |  |             |         |           |               |               |   |              |        |  |   | (128,000 | ) |  |   | (128,000   | )
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 
|Balance, February 28, 2006                                |  |              | 26,056,075 |  |        | $ | 3,000 |            |  | $       | 920,000     |  |             | $       | 27,179,000 |               |               | $ | (7,717,000    | )      |  | $ | (102,000 | ) |  | $ | 20,282,000 |  
|                                                          |  |              |            |  |        |   |       |            |  |         |             |  |             |         |            |               |               |   |               |        | 



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Premier Exhibitions, Inc. and Subsidiaries


Consolidated Statements of Cash Flows


|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |           |            |   |            |           |            |  
|---------------------------------------- | --------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ---------------------------------------------------------------- | ---------- | ------------ | -------- | - | ------------ | --------- | ---------- | - | ---------- | --------- | ---------- | -
|                                         |                                                                                                     | Year Ended                                           |                                                                  |            | Year Ended   |          |   | Year Ended   |          
|                                         |                                                                                                     | February 29,                                         |                                                                  |            | February 28, |          |   | February 28, |          
|                                         |                                                                                                     | 2004                                                 |                                                                  |            | 2005         |          |   | 2006         |          
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|Cash flows from operating activities:    |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |           |            |   |           
|                                         | Net income (loss)                                                                                   |                                                      | $                                                                | (1,088,000 | )            |          | $ | (1,475,000   | )         |            | $ | 4,948,000  |          
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         | Adjustments to reconcile net income (loss) to net cash provided
    (used) by operating activities: |                                                      |                                                                  |            |              |          |   |              |           |            |   |            |          
|                                         |                                                                                                     | Depreciation and amortization                        |                                                                  |            | 253,000      |          |   |              | 378,000   |            |   |            | 911,000   |           
|                                         |                                                                                                     | Issuance of common stock for interest expense        |                                                                  |            |             |          |   |              | 6,000     |            |   |            |          |           
|                                         |                                                                                                     | Issuance of common stock in exchange for options     |                                                                  |            |             |          |   |              | 1,569,000 |            |   |            |          |           
|                                         |                                                                                                     | Issuance of common stock and warrants for services   |                                                                  |            | 108,000      |          |   |              | 277,000   |            |   |            | 1,285,000 |           
|                                         |                                                                                                     | Issuance of compensatory stock options               |                                                                  |            | 434,000      |          |   |              |          |            |   |            | 256,000   |           
|                                         |                                                                                                     | (Increase) decrease in cost of artifacts             |                                                                  |            |             |          |   |              | 3,000     |            |   |            | (1,000    | )         
|                                         |                                                                                                     | Loss on disposal of fixed assets                     |                                                                  |            |             |          |   |              | 356,000   |            |   |            | 84,000    |           
|                                         |                                                                                                     | Other income from default on sale of Carpathia       |                                                                  |            |             |          |   |              |          |            |   |            | (168,000  | )         
|                                         |                                                                                                     | Changes in operating assets and liabilities:         |                                                                  |            |              |          |   |              |           |            |   |            |           |           
|                                         |                                                                                                     |                                                      | (Increase) decrease in accounts receivable                       |            |              | (225,000 | ) |              |           | (704,000   | ) |            |           | (528,000   | )
|                                         |                                                                                                     |                                                      | (Increase) decrease in deferred income taxes                     |            |              |         |   |              |           |           |   |            |           | (2,100,000 | )
|                                         |                                                                                                     |                                                      | (Increase) decrease in prepaid and refundable taxes              |            |              | 290,000  |   |              |           | (1,000     | ) |            |           | 222,000    |  
|                                         |                                                                                                     |                                                      | (Increase) decrease in prepaid expenses and other current assets |            |              | 166,000  |   |              |           | (1,264,000 | ) |            |           | (2,053,000 | )
|                                         |                                                                                                     |                                                      | (Increase) decrease in other assets                              |            |              | (715,000 | ) |              |           | 39,000     |   |            |           | 596,000    |  
|                                         |                                                                                                     |                                                      | Increase (decrease) in deferred revenue                          |            |              | (735,000 | ) |              |           | 1,000,000  |   |            |           | (700,000   | )
|                                         |                                                                                                     |                                                      | Increase (decrease) in accounts payable and accrued liabilities  |            |              | 135,000  |   |              |           | 411,000    |   |            |           | (622,000   | )
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         | Total adjustments                                                                                   |                                                      |                                                                  | (289,000   | )            |          |   | 2,070,000    |           |            |   | (2,818,000 | )        
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         | Net cash provided by operating activities                                                           |                                                      |                                                                  | (1,377,000 | )            |          |   | 595,000      |           |            |   | 2,130,000  |          
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|Cash flows used by investing activities: |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |           |            |   |           
|                                         | Purchases of property and equipment                                                                 |                                                      |                                                                  | (21,000    | )            |          |   | (964,000     | )         |            |   | (1,774,000 | )        
|                                         | Investment in salvor-in-possession rights                                                           |                                                      |                                                                  |           |              |          |   | (879,000     | )         |            |   |           |          
|                                         | Purchase of exhibition license                                                                      |                                                      |                                                                  |           |              |          |   |             |           |            |   | (2,082,000 | )        
|                                         | Proceeds from sale of fixed assets                                                                  |                                                      |                                                                  |           |              |          |   | 230,000      |           |            |   |           |          
|                                         | Purchase of certificate of deposit                                                                  |                                                      |                                                                  |           |              |          |   |             |           |            |   | (500,000   | )        
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         | Net cash used by investing activities                                                               |                                                      |                                                                  | (21,000    | )            |          |   | (1,613,000   | )         |            |   | (4,356,000 | )        
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|Cash flows from financing activities:    |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |           |            |   |           
|                                         | Proceeds from notes payable                                                                         |                                                      |                                                                  |           |              |          |   | 500,000      |           |            |   | 2,425,000  |          
|                                         | Principal payments on notes payable                                                                 |                                                      |                                                                  |           |              |          |   | (75,000      | )         |            |   | (2,932,000 | )        
|                                         | Proceeds from option and warrant exercises                                                          |                                                      |                                                                  |           |              |          |   |             |           |            |   | 166,000    |          
|                                         | Proceeds from sale of common stock                                                                  |                                                      |                                                                  |           |              |          |   | 1,278,000    |           |            |   | 5,468,000  |          
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         | Net cash provided by financing activities                                                           |                                                      |                                                                  |           |              |          |   | 1,703,000    |           |            |   | 5,127,000  |          
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         | Effects of exchange rate changes on cash and cash equivalents                                       |                                                      |                                                                  |           |              |          |   | 26,000       |           |            |   | (30,000    | )        
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         |                                                                                                     | Net increase (decrease) in cash and cash equivalents |                                                                  |            | (1,398,000   | )        |   |              | 685,000   |            |   |            | 2,901,000 |           
|                                         |                                                                                                     | Cash and cash equivalents at beginning of year       |                                                                  |            | 1,945,000    |          |   |              | 547,000   |            |   |            | 1,258,000 |           
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         |                                                                                                     | Cash and cash equivalents at end of year             |                                                                  | $          | 547,000      |          |   | $            | 1,258,000 |            |   | $          | 4,129,000 |           
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          
|                                         | Supplemental disclosure of cash flow information:                                                   |                                                      |                                                                  |            |              |          |   |              |           |            |   |            |          
|                                         |                                                                                                     | Cash paid during the period for interest             |                                                                  | $          |             |          |   | $            | 40,000    |            |   | $          | 39,000    |           
|                                         |                                                                                                     |                                                      |                                                                  |            |              |          |   |              |          







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PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|        |                                                                                              
|------- | ---------------------------------------------------------------------------------------------
|Note 1. | Business, Summary of Significant Accounting Policies and
    Recent Accounting Pronouncements

















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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




salvor-in R.M.S. Titanic,
Inc. v. The Wrecked and Abandoned Vessel salvor-in


salvor-in The Blackwall, 77. U.S. (10 Wall.) 1,14 (1869)


salvor-in


40



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


salvor-in
























41



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                  







|                       |  |  |          | 
|---------------------- |  |  | -------- | 
|Exhibitry equipment    |  |  | 5 years  | 
|Marine equipment       |  |  | 10 years | 
|Office equipment       |  |  | 5 years  | 
|Furniture and fixtures |  |  | 5 years  | 

out-of






42



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Recent Accounting Pronouncements








123(R)-3,






43



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




05-06, 05-06 05-06 05-06 05-06


13-1, 13-1




|        |          
|------- | ---------
|Note 2. | Artifacts





|                             |  |                   |           |  |                   |   |           | 
|---------------------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | 
|                             |  | February 28, 2005 |           |  | February 28, 2006 |  
|                             |  |                   |           |  |                   |  
|Artifacts recovered, Titanic |  | $                 | 3,105,000 |  |                   | $ | 3,102,000 | 
|Artifacts, Carpathia         |  |                   | 1,374,000 |  |                   |   | 1,374,000 | 
|                             |  |                   |           |  |                   |  
|                             |  | $                 | 4,479,000 |  |                   | $ | 4,476,000 | 
|                             |  |                   |           |  |                   |  



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


salvor-in The Blackwall, 77. U.S. (10 Wall.) 1,14 (1869)


salvor-in salvor-in






45



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|        |                      
|------- | ---------------------
|Note 3. | Balance Sheet Details



|                          |  |                   |           |  |                   |   |           | 
|------------------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | 
|                          |  | February 28, 2005 |           |  | February 28, 2006 |  
|                          |  |                   |           |  |                   |  
|Cash                      |  | $                 | 1,258,000 |  |                   | $ | 729,000   | 
|Money market mutual funds |  |                   |          |  |                   |   | 3,400,000 | 
|Total                     |  |                   | 1,258,000 |  |                   |   | 4,129,000 | 
|                          |  |                   |           |  |                   |  
|                         
|Certificate of deposit    |  |                   |          |  |                   |   | 500,000   | 
|Securities                |  |                   |          |  |                   |   | 70,000    | 
|                          |  |                   |           |  |                   |  
|Total                     |  | $                 |          |  |                   | $ | 570,000   | 



|                                    |  |                   |           |  |                   |   |           | 
|----------------------------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | 
|                                    |  | February 28, 2005 |           |  | February 28, 2006 |  
|                                    |  |                   |           |  |                   |  
|Deposits                            |  | $                 | 5,000     |  |                   | $ | 6,000     | 
|Prepaid insurance                   |  |                   | 118,000   |  |                   |   | 38,000    | 
|Prepaid commissions                 |  |                   | 60,000    |  |                   |   | 60,000    | 
|Reimbursable expenses  exhibitions |  |                   | 109,000   |  |                   |   | 1,165,000 | 
|Prepaid lease payments              |  |                   |          |  |                   |   | 921,000   | 
|Prepaid services                    |  |                   | 1,079,000 |  |                   |   | 1,242,000 | 
|Deferred financing costs            |  |                   | 34,000    |  |                   |   | 26,000    | 
|                                    |  |                   |           |  |                   |  
|Total                               |  | $                 | 1,405,000 |  |                   | $ | 3,458,000 | 



|                              |  |                   |           |  |                   |   |           | 
|----------------------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | 
|                              |  | February 28, 2005 |           |  | February 28, 2006 |  
|                              |  |                   |           |  |                   |  
|Exhibitry equipment           |  | $                 | 2,323,000 |  |                   | $ | 3,955,000 | 
|Office equipment              |  |                   | 227,000   |  |                   |   | 276,000   | 
|Furniture and fixtures        |  |                   | 164,000   |  |                   |   | 173,000   | 
|                              |  |                   |           |  |                   |  
|                              |  |                   | 2,714,000 |  |                   |   | 4,404,000 | 
|Less accumulated depreciation |  |                   | 1,976,000 |  |                   |   | 2,371,000 | 
|                              |  |                   |           |  |                   |  
|Total                         |  | $                 | 738,000   |  |                   | $ | 2,033,000 | 
|                              |  |                   |           |  |                   |  

46



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                |  |                   |         |  |                   |   |           | 
|------------------------------- |  | ----------------- | ------- |  | ----------------- | - | --------- | 
|                                |  | February 28, 2005 |         |  | February 28, 2006 |  
|                                |  |                   |         |  |                   |  
|Exhibition License (April 2004) |  | $                 | 685,000 |  |                   | $ | 685,000   | 
|Exhibition License (May 2005)   |  |                   |        |  |                   |   | 3,438,000 | 
|                                |  |                   |         |  |                   |  
|                                |  |                   | 685,000 |  |                   |   | 4,123,000 | 
|Less accumulated amortization   |  |                   |        |  |                   |   | 516,000   | 
|                                |  |                   |         |  |                   |  
|Total                           |  | $                 | 685,000 |  |                   | $ | 3,607,000 | 
|                                |  |                   |         |  |                   |  









|                                         |  |                   |           |  |                   |   |           | 
|---------------------------------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | 
|                                         |  | February 28, 2005 |           |  | February 28, 2006 |  
|                                         |  |                   |           |  |                   |  
|Professional and consulting fees payable |  | $                 | 1,231,000 |  |                   | $ | 280,000   | 
|Settlement accruals                      |  |                   | 107,000   |  |                   |   | 599,000   | 
|Other                                    |  |                   | 322,000   |  |                   |   | 159,000   | 
|                                         |  |                   |           |  |                   |  
|                                         |  | $                 | 1,660,000 |  |                   | $ | 1,038,000 | 

47



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |             
|------- | ------------
|Note 4. | Income Taxes



|                                        |  |                   |       |    |      |  |       |      |  |  |       |   
|--------------------------------------- |  | ----------------- | ----- | -- | ---- |  | ----- | ---- |  |  | ----- | --
|                                        |  | Year Ended        |      
|                                        |  | February 28 (29), |      
|                                        |  |                   |      
|                                        |  | 2004              |       |    | 2005 |  |       | 2006 | 
|                                        |  |                   |       |    |      |  |       |      | 
|Current:                                |  |                   |       |    |      |  |       |      |  |  |       |   
|Statutory federal income tax rate       |  |                   | (34.0 | )% |      |  | (34.0 | )%   |  |  | 34.0  | % 
|State and local net of federal deferred |  |                   | (6.0  | )% |      |  | (6.0  | )%   |  |  | 6.0   | % 
|Net operating loss carry-forward        |  |                   | 40.0  | %  |      |  | 40.0  | %    |  |  | (40.0 | )%
|Reverse of valuation allowance          |  |                   |      |    |      |  |      |      |  |  | (74.0 | ) 
|                                        |  |                   |       |    |      |  |       |      | 
|Effective income tax rate               |  |                   | 0.0   | %  |      |  | 0.0   | %    |  |  | (74.0 | )%



|                                                       |  |                         |            |   |      |   |           | 
|------------------------------------------------------ |  | ----------------------- | ---------- | - | ---- | - | --------- | 
|                                                       |  | Year Ended February 28, |           
|                                                       |  |                         |           
|                                                       |  | 2005                    |            |   | 2006 |  
|                                                       |  |                         |            |   |      |  
|Net operating loss carry-forward                       |  | $                       | 2,800,000  |   |      | $ | 2,100,000 | 
|Deferred tax asset  expenses not currently deductible |  |                         |           |   |      |   |          | 
|Valuation allowance for doubtful tax assets            |  |                         | (2,800,000 | ) |      |   |          | 
|                                                       |  |                         |            |   |      |  
|                                                       |  | $                       |           |   |      | $ | 2,100,000 | 





48



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                     
|------- | --------------------
|Note 5. | Stockholders Equity



| |                        
| | -----------------------
| | Income (Loss) Per Share







|                             |         |                                             |   |       |            |   |   |       |            |   |   |      |            | 
|---------------------------- | ------- | ------------------------------------------- | - | ----- | ---------- | - | - | ----- | ---------- | - | - | ---- | ---------- | 
|                             |         | Year Ended February 28 (29),                |  
|                             |         |                                             |  
|                             |         | 2004                                        |   |       | 2005       |   |   | 2006  |           
|                             |         |                                             |   |       |            |   |   |       |           
|Numerator:                   |         |                                             |   |       |            |   |   |       |            |   |   |     
|                             |         | Net income (loss)                           |   | $     | (1,088,000 | ) |   | $     | (1,475,000 | ) |   | $    | 4,948,000  | 
|Denominator:                 |         |                                             |   |       |            |   |   |       |            |   |   |     
|                             |         | Basic weighted-average shares outstanding   |   |       | 18,960,047 |   |   |       | 20,818,898 |   |   |      | 24,081,186 | 
|                             |         | Effect of dilutive stock options & warrants |   |       |           |   |   |       |           |   |   |      | 4,149,305  | 
|                             |         |                                             |   |       |            |   |   |       |           
|                             |         | Diluted weighted-average shares outstanding |   |       | 18,960,047 |   |   |       | 20,818,898 |   |   |      | 28,230,491 | 
|                             |         |                                             |   |       |            |   |   |       |           
|Net income (loss) per share: |         |                                             |   |       |            |   |   |       |            |   |   |     
|                             | Basic   |                                             | $ | (0.06 | )          |   | $ | (0.07 | )          |   | $ | 0.21 |           
|                             |         |                                             |   |       |            |   |   |       |           
|                             | Diluted |                                             | $ | (0.06 | )          |   | $ | (0.07 | )          |   | $ | 0.18 |           
|                             |         |                                             |   |       |            |   |   |       |           



| |                                  
| | ---------------------------------
| | Other Comprehensive (Loss) Income



|                                         |  |                   |        |  |                   |   |          |  
|---------------------------------------- |  | ----------------- | ------ |  | ----------------- | - | -------- | -
|                                         |  | February 28, 2005 |        |  | February 28, 2006 |  
|                                         |  |                   |        |  |                   |  
|Foreign currency translation adjustments |  | $                 | 26,000 |  |                   | $ | (30,000  | )
|Unrealized loss on marketable securities |  |                   |       |  |                   |   | (98,000  | )
|                                         |  |                   |        |  |                   |  
|                                         |  | $                 | 26,000 |  |                   | $ | (128,000 | )



| |                       
| | ----------------------
| | Common Stock Issuances









49



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PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|        |              
|------- | -------------
|Note 6. | Stock Options





50



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                 |  |                   |           |          |                   |   |      |                   |          |  |            |   |  |             |      |  |          |  |           |   |  |   |      | 
|-------------------------------- |  | ----------------- | --------- | -------- | ----------------- | - | ---- | ----------------- | -------- |  | ---------- | - |  | ----------- | ---- |  | -------- |  | --------- | - |  | - | ---- | 
|                                 |  | February 28, 2004 |           |          | February 28, 2005 |   |      | February 28, 2006 |         
|                                 |  |                   |           |          |                   |   |      |                   |         
|                                 |  |                   |           | Weighted |                   |   |      |                   | Weighted |  |            |   |  | Weighted    |     
|                                 |  | Number of         |           |          | Average           |   |      | Number of         |          |  | Average    |   |  | Number of   |      |  | Average  | 
|                                 |  | Unexercised       |           |          | Exercise          |   |      | Unexercised       |          |  | Exercise   |   |  | Unexercised |      |  | Exercise | 
|                                 |  | Options           |           |          | Price             |   |      | Options           |          |  | Price      |   |  | Options     |      |  | Price    | 
|                                 |  |                   |           |          |                   |   |      |                   |          |  |            |   |  |             |      |  |          | 
|Outstanding at beginning of year |  |                   | 3,750,000 |          |                   | $ | 1.24 |                   |          |  | 4,450,000  |   |  | $           | 0.89 |  |          |  | 2,350,000 |   |  | $ | 0.36 | 
|Granted                          |  |                   | 950,000   |          |                   |   | 0.31 |                   |          |  | 700,000    |   |  |             | 1.64 |  |          |  | 1,503,846 |   |  |   | 2.04 | 
|Exercised                        |  |                   |          |          |                   |   |      |                   |          |  |           |   |  |             |      |  |          |  | (224,174  | ) |  |   | 0.73 | 
|Cancelled                        |  |                   | (250,000  | )        |                   |   | 4.00 |                   |          |  | (2,800,000 | ) |  |             | 1.90 |  |          |  | (83,000   | ) |  |   | 0.32 | 
|                                 |  |                   |           |          |                   |   |      |                   |          |  |            |   |  |             |      |  |          | 
|Outstanding at end of year       |  |                   | 4,450,000 |          |                   | $ | 0.89 |                   |          |  | 2,350,000  |   |  | $           | 0.36 |  |          |  | 3,546,672 |   |  | $ | 1.05 | 
|                                 |  |                   |           |          |                   |   |      |                   |          |  |            |   |  |             |      |  |          | 

5-year


10-year


10-year






10-year


10-year


10-year


51



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |  |                     |           |          |                     |  |      |           |  |         |              |  |  |           |           |  |  |   |      | 
|------------------------ |  | ------------------- | --------- | -------- | ------------------- |  | ---- | --------- |  | ------- | ------------ |  |  | --------- | --------- |  |  | - | ---- | 
|                         |  | Options Outstanding |           |          |                    
|                         |  |                     |           |          | Options Exercisable | 
|                         |  |                     |           | Weighted |                     |  |      |           |  |        
|                         |  | Options             |           |          | Average             |  |      |           |  | Options |              |  | 
|                         |  | Outstanding         |           |          | Remaining           |  |      | Weighted- |  |         | Exercisable  |  |  | Weighted- |          
|                         |  | at                  |           |          | Contractual         |  |      | Average   |  |         | at           |  |  | Average   |          
|                         |  | February 28,        |           |          | Life                |  |      | Exercise  |  |         | February 28, |  |  | Exercise  |          
|Range of Exercise Prices |  | 2006                |           |          | (Years)             |  |      | Price     |  |         | 2006         |  |  | Price     |          
|                         |  |                     |           |          |                     |  |      |           |  |         |              |  |  |           |          
|$.28 to $.32             |  |                     | 825,000   |          |                     |  | 7.78 |           |  | $       | 0.31         |  |  |           | 825,000   |  |  | $ | 0.31 | 
|$.40 to $.65             |  |                     | 1,410,000 |          |                     |  | 4.93 |           |  | $       | 0.40         |  |  |           | 1,410,000 |  |  | $ | 0.40 | 
|$.85 to $3.65            |  |                     | 1,311,672 |          |                     |  | 9.43 |           |  | $       | 2.20         |  |  |           | 240,396   |  |  | $ | 1.02 | 
|                         |  |                     |           |          |                     |  |      |           |  |         |              |  |  |           |          
|                         |  |                     | 3,546,672 |          |                     |  |      |           |  |         |              |  |  |           | 2,475,396 |  |  |   |      | 
|                         |  |                     |           |          |                     |  |      |           |  |         |              |  |  |           |          







|        |                                   
|------- | ----------------------------------
|Note 7. | Litigation and Other Legal Matters



| |                                                                
| | ---------------------------------------------------------------
| | Status of International Treaty Concerning the Titanic
    Wreck

salvor-in salvor-in


52



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PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






salvor-in




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

salvor-in salvor-in


salvor-in




53



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PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Other Ongoing Litigation







| |                                               
| | ----------------------------------------------
| | Settled Litigation and Other Concluded Matters

Plastination Company v. Premier
Exhibitions, Inc.


Lawrence DAddario v. Arnie
Geller, Gerald Couture, Joe Marsh and R.M.S. Titanic, Inc.


Dave Shuttle and Barbara
Shuttle v. Arnie Geller, G. Michael Harris, Gerald Couture,
and R.M.S. Titanic, Inc. DAddario


DAddario Shuttle




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Companys board of directors must be comprised of a
    majority of independent directors.                                                                                                                                                                                                                                                                                                                               
|
| |  | The Company must have an audit committee of the board of
    directors, comprised exclusively of independent directors,
    which, among other things, has oversight responsibility for the
    Companys internal control and corporate compliance.                                                                                                                                                                         
|
| |  | The Company must have a corporate governance committee of the
    board of directors, comprised of a majority of independent
    directors, which, among other things, oversees the
    Companys implementation of the corporate governance plan,
    reviews all contracts between the Company and its officers,
    pre-screens director nominees, and reviews the compensation of
    its five most highly paid officers.
|
| |  | The Companys independent directors must meet at least
    twice each calendar year and have the authority to retain
    counsel, accountants, or other experts.                                                                                                                                                                                                                                                             
|
| |  | The Companys directors must review the compensation paid
    to them by the Company and make any appropriate changes.                                                                                                                                                                                                                                                                                                       

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PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | All persons nominated to become a director must satisfy certain
    requirements and possess core competencies.                                                                                                                                                                      
|
| |  | Once a year over the five-year period for which the corporate
    governance plan is applicable, the Companys board of
    directors must submit a written report to counsel representing
    the former plaintiff confirming our compliance with the
    corporate governance plan.



DAddario Shuttle DAddario Shuttle out-of




|        |                                 
|------- | --------------------------------
|Note 8. | Notes Payable and Long-Term Debt









55



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|        |                              
|------- | -----------------------------
|Note 9. | Commitments and Contingencies















| |                   
| | ------------------
| | Lease Arrangements





56



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##### Table of Contents



PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                          |  |                              |        |  |      |   |         |      |  |   |           | 
|------------------------- |  | ---------------------------- | ------ |  | ---- | - | ------- | ---- |  | - | --------- | 
|                          |  | Year Ended February 28 (29), |       
|                          |  |                              |       
|                          |  | 2004                         |        |  | 2005 |   |         | 2006 | 
|                          |  |                              |        |  |      |   |         |      | 
|Real estate fixed rentals |  | $                            | 94,000 |  |      | $ | 124,000 |      |  | $ | 207,000   | 
|Specimen fixed rentals    |  |                              |       |  |      |   |        |      |  |   | 1,250,000 | 
|                          |  |                              |        |  |      |   |         |      | 
|                          |  | $                            | 94,000 |  |      | $ | 124,000 |      |  | $ | 1,457,000 | 



|            |  |   |            | 
|----------- |  | - | ---------- | 
|Fiscal Year |  |  
|            |  |  
|2007        |  | $ | 4,306,000  | 
|2008        |  |   | 5,320,000  | 
|2009        |  |   | 5,255,000  | 
|2010        |  |   | 5,000,000  | 
|2011        |  |   | 4,000,000  | 
|Thereafter  |  |   |           | 
|            |  |   |           
|            |  | $ | 23,881,000 | 
|            |  |   |           



|         |                           
|-------- | --------------------------
|Note 10. | Related Party Transactions









|         |             
|-------- | ------------
|Note 11. | Acquisitions



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PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                          |  |  |         |  
|------------------------- |  |  | ------- | -
|Expected life of options: |  |  | 2 years |  
|Risk-free interest rate:  |  |  | 4.75    | %
|Expected volatility:      |  |  | 100.0   | %
|Expected dividend yield:  |  |  | $-0-    |  





|         |                       
|-------- | ----------------------
|Note 12. | Employee Savings Plans





|         |                                     
|-------- | ------------------------------------
|Note 13. | Quarterly Financial Data (Unaudited)

|                                |  |               |           |  |            |   |           |              |  |   |              |  |  |   |           | 
|------------------------------- |  | ------------- | --------- |  | ---------- | - | --------- | ------------ |  | - | ------------ |  |  | - | --------- | 
|                                |  | Quarter Ended |          
|                                |  |               |          
|                                |  | May 31,       |           |  | August 31, |   |           | November 30, |  |   | February 28, | 
|Fiscal 2006                     |  | 2005          |           |  | 2005       |   |           | 2005         |  |   | 2006         | 
|                                |  |               |           |  |            |   |           |              |  |   |              | 
|Revenues                        |  | $             | 2,532,000 |  |            | $ | 3,734,000 |              |  | $ | 2,772,000    |  |  | $ | 4,003,000 | 
|Expenses                        |  |               | 2,064,000 |  |            |   | 2,197,000 |              |  |   | 2,852,000    |  |  |   | 3,287,000 | 
|Net income                      |  |               | 455,000   |  |            |   | 1,503,000 |              |  |   | 107,000      |  |  |   | 2,883,000 | 
|Basic income per common share   |  |               | 0.02      |  |            |   | 0.07      |              |  |   | 0.00         |  |  |   | 0.11      | 
|Diluted income per common share |  |               | 0.02      |  |            |   | 0.06      |              |  |   | 0.00         |  |  |   | 0.10      | 

|                                       |  |               |           |   |            |   |           |              |  |   |              |  |  |   |           |  
|-------------------------------------- |  | ------------- | --------- | - | ---------- | - | --------- | ------------ |  | - | ------------ |  |  | - | --------- | -
|                                       |  | Quarter Ended |          
|                                       |  |               |          
|                                       |  | May 31,       |           |   | August 31, |   |           | November 30, |  |   | February 28, | 
|Fiscal 2005                            |  | 2004          |           |   | 2004       |   |           | 2004         |  |   | 2005         | 
|                                       |  |               |           |   |            |   |           |              |  |   |              | 
|Revenues                               |  | $             | 391,000   |   |            | $ | 2,381,000 |              |  | $ | 2,432,000    |  |  | $ | 1,653,000 |  
|Expenses                               |  |               | 1,263,000 |   |            |   | 2,232,000 |              |  |   | 2,178,000    |  |  |   | 2,263,000 |  
|Net income (loss)                      |  |               | (875,000  | ) |            |   | 134,000   |              |  |   | 240,000      |  |  |   | (974,000  | )
|Basic income (loss) per common share   |  |               | (0.05     | ) |            |   | 0.01      |              |  |   | 0.01         |  |  |   | (0.04     | )
|Diluted income (loss) per common share |  |               | (0.05     | ) |            |   | 0.01      |              |  |   | 0.01         |  |  |   | (0.04     | )

58



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PREMIER EXHIBITIONS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                  
|-------- | -----------------
|Note 14. | Subsequent Events







Plastination Company v. Premier
Exhibitions, Inc.








59



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##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE








|         |                         
|-------- | ------------------------
|ITEM 9A. | CONTROLS AND PROCEDURES.



13a-15(f)




|         |                  
|-------- | -----------------
|ITEM 9B. | OTHER INFORMATION








PART III







|         |                 
|-------- | ----------------
|ITEM 10. | THROUGH ITEM 14.






PART IV







|         |                                        
|-------- | ---------------------------------------
|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES



(a) Financial Statements.




|                                                                                                             |  |      
|------------------------------------------------------------------------------------------------------------ |  | -----
|Report of Independent Registered Public Accounting Firm                                                      |  | p. 34
|                                                                                                            
|Consolidated Balance Sheets at February 29, 2005 and
    February 28, 2006                                   |  | p. 35
|                                                                                                            
|Consolidated Statements of Operations for the years ended
    February 28(29), 2004, 2005 and 2006           |  | p. 36
|                                                                                                            
|Consolidated Statements of Stockholders Equity for the
    years ended February 28(29), 2004, 2005 and 2006 |  | p. 37
|                                                                                                            
|Consolidated Statements of Cash Flows for the years ended
    February 28(29), 2004, 2005 and 2006           |  | p. 38
|                                                                                                            
|Notes to Consolidated Financial Statements                                                                   |  | p. 39

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##### Table of Contents



(b) Exhibits.


|        |    |                     |  |                                                                                                                                                                                                            |  |                           |  |         |  |             |  |         |  |  |          | 
|------- | -- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | ------- |  | ----------- |  | ------- |  |  | -------- | 
|        |    |                     |  |                                                                                                                                                                                                            |  | Incorporated by Reference
|Exhibit |    |                     |  | Filed                                                                                                                                                                                                      |  |                          
|No.     |    | Exhibit Description |  | Herewith                                                                                                                                                                                                   |  | Form                      |  | Exhibit |  | Filing Date
|        |    |                     |  |                                                                                                                                                                                                            |  |                           |  |         |  |            
|        | 2  | .1                  |  | Agreement and Plan of Merger, dated October 13, 2004, among
    the Registrant, RMS Titanic, Inc. and RMST Mergersub, Inc.                                                                                 |  |                           |  |         |  | 8-K         |  | 2.3     |  |  | 10-20-04 | 
|        | 3  | .1                  |  | Articles of Incorporation of the Registrant                                                                                                                                                                |  |                           |  |         |  | 8-K         |  | 3.1     |  |  | 10-20-04 | 
|        | 3  | .2                  |  | Amendment to Articles of Incorporation                                                                                                                                                                     |  |                           |  |         |  | SB-2        |  | 3.2     |  |  | 01-05-06 | 
|        | 3  | .3                  |  | Bylaws of the Registrant                                                                                                                                                                                   |  |                           |  |         |  | 8-K         |  | 3.2     |  |  | 10-20-04 | 
|        | 4  | .1                  |  | Form of the Registrants Common Stock Certificate                                                                                                                                                          |  |                           |  |         |  | 8-K/A       |  | 4.1     |  |  | 11-01-04 | 
|        | 4  | .2#                 |  | Registrants 2004 Stock Option Plan and Form of Stock Option                                                                                                                                               |  |                           |  |         |  | 8-K         |  | 10.2    |  |  | 10-20-04 | 
|        | 4  | .3#                 |  | Registrants 2000 Stock Option Plan and Form of Stock Option                                                                                                                                               |  |                           |  |         |  | 8-K         |  | 10.1    |  |  | 10-20-04 | 
|        | 10 | .1                  |  | Lease dated March 27, 2000 for offices in Atlanta, Georgia                                                                                                                                                 |  |                           |  |         |  | 10-K        |  | 10.25   |  |  | 06-13-00 | 
|        | 10 | .2#                 |  | Employment Agreement dated February 4, 2002 between the
    Registrant and Arnie Geller                                                                                                                    |  |                           |  |         |  | 10-K        |  | 10.23.8 |  |  | 06-18-02 | 
|        | 10 | .3                  |  | Form of Lease dated October 16, 2001 for the
    Registrants offices and warehouse in Atlanta, Georgia                                                                                                    |  |                           |  |         |  | 10-K        |  | 10.34   |  |  | 06-18-02 | 
|        | 10 | .4                  |  | United States Court of Appeals R.M.S. Titanic, Inc. v. The
    Wrecked and Abandoned Vessel. Opinion No. 01-2227                                                                                           |  |                           |  |         |  | 8-K         |  | 10.1    |  |  | 04-30-02 | 
|        | 10 | .5                  |  | Lease Amendment dated August 8, 2003 for the
    Registrants offices in Atlanta, Georgia                                                                                                                  |  |                           |  |         |  | 10-K        |  | 10.49   |  |  | 06-15-04 | 
|        | 10 | .6#                 |  | First Amendment, dated April 10, 2004, to Employment
    Agreement between the Registrant and Arnie Geller                                                                                                 |  |                           |  |         |  | 10-K        |  | 10.50   |  |  | 06-15-04 | 
|        | 10 | .7#                 |  | Employment Agreement dated August 4, 2003 between the
    Registrant and Tom Zaller                                                                                                                        |  |                           |  |         |  | 10-K        |  | 10.54   |  |  | 06-15-04 | 
|        | 10 | .8                  |  | Registration Rights Agreement, dated August 18, 2004, among
    the Registrant, Laidlaw & Company (UK) Ltd. (f/k/a
    Sands Brothers International Limited) and certain purchasers
    identified therein |  |                           |  |         |  | 10-Q        |  | 10.57   |  |  | 10-13-04 | 
|        | 10 | .9                  |  | Assumption Agreement, dated October 13, 2004, between the
    Registrant and RMS Titanic, Inc.                                                                                                             |  |                           |  |         |  | 8-K         |  | 99.1    |  |  | 10-20-04 | 
|        | 10 | .10                 |  | Form of Registration Rights Agreement from October 2005 private
    placement                                                                                                                              |  |                           |  |         |  | SB-2        |  | 10.10   |  |  | 01-05-06 | 
|        | 10 | .11                 |  | October 2004 Lease Amendment re warehouse space                                                                                                                                                            |  |                           |  |         |  | S-1         |  | 10.11   |  |  | 04-07-06 | 
|        | 10 | .12                 |  | November 2005 Lease Amendment to lease for offices in Atlanta,
    Georgia                                                                                                                                 |  |                           |  |         |  | 10-Q        |  | 10.2    |  |  | 01-17-06 | 
|        | 10 | .13                 |  | Acquisition Letter Agreement among Premier Acquisitions, Inc.
    and Exhibitions International, LLC, et al. dated
    March 7, 2005                                                                       |  |                           |  |         |  | 10-Q        |  | 10.1    |  |  | 7-14-05  | 
|        | 10 | .14                 |  | Form of $500,000 Promissory Note dated June 2004 from RMS
    Titanic, Inc. payable to Joseph Marsh and William Marino                                                                                     |  |                           |  |         |  | SB-2        |  | 10.14   |  |  | 01-05-06 | 

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|        |    |                     |  |                                                                                                                                                                                                                                                                               |  |                           |   |         |  |             |  |       |  |  |          | 
|------- | -- | ------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | - | ------- |  | ----------- |  | ----- |  |  | -------- | 
|        |    |                     |  |                                                                                                                                                                                                                                                                               |  | Incorporated by Reference
|Exhibit |    |                     |  | Filed                                                                                                                                                                                                                                                                         |  |                          
|No.     |    | Exhibit Description |  | Herewith                                                                                                                                                                                                                                                                      |  | Form                      |   | Exhibit |  | Filing Date
|        |    |                     |  |                                                                                                                                                                                                                                                                               |  |                           |   |         |  |            
|        | 10 | .15                 |  | Joint Venture Agreement between the Registrant and SAM Tour
    (USA), Inc. dated April 13, 2005, and as amended
    August 19, 2005                                                                                                                                          |  |                           |   |         |  | SB-2        |  | 10.15 |  |  | 01-05-06 | 
|        | 10 | .16                 |  | $2,425,000 Promissory Note dated April 13, 2005 between
    Registrant as Maker and SAM Tour (USA), Inc. as Payee                                                                                                                                                             |  |                           |   |         |  | SB-2        |  | 10.16 |  |  | 01-05-06 | 
|        | 10 | .17                 |  | Form of Security Agreement between Registrant as debtor and SAM
    Tour (USA), Inc. as secured party, dated as of May 11, 2005                                                                                                                                               |  |                           |   |         |  | SB-2        |  | 10.17 |  |  | 01-05-06 | 
|        | 10 | .18                 |  | Form of Security Agreement between RMS Titanic, Inc. as debtor
    and SAM Tour (USA), Inc. as secured party, dated as of
    May 11, 2005                                                                                                                                    |  |                           |   |         |  | SB-2        |  | 10.18 |  |  | 01-05-06 | 
|        | 10 | .19                 |  | Revised Term Sheet between RMS Titanic, Inc. and Legal Access
    Technologies, Inc. dated November 30, 2005                                                                                                                                                                  |  |                           |   |         |  | 10-Q        |  | 10.3  |  |  | 1-17-06  | 
|        | 10 | .20                 |  | Promissory Note dated December 14, 2005 executed by the
    Company in favor of Bank of America, N.A.                                                                                                                                                                         |  |                           |   |         |  | 8-K         |  | 99.1  |  |  | 1-13-06  | 
|        | 10 | .21                 |  | Commercial Security Agreement dated December 14, 2005
    between the Company and Bank of America, N.A.                                                                                                                                                                       |  |                           |   |         |  | 8-K         |  | 99.2  |  |  | 1-13-06  | 
|        | 10 | .22                 |  | UCC Lien Subordination Agreement dated January 9, 2006
    between Bank of America, Inc. and Sam Tour (USA), Inc.                                                                                                                                                             |  |                           |   |         |  | 8-K         |  | 99.3  |  |  | 1-13-06  | 
|        | 10 | .23                 |  | Settlement Agreement dated January 30, 2006 and approved by
    the United States District Court for the Eastern District of
    Virginia in connection with the settlement of Lawrence
    DAddario v. Arnie Geller, Gerald Couture, Joe Marsh
    and R.M.S. Titanic, Inc. |  |                           |   |         |  | S-1         |  | 10.25 |  |  | 04-07-06 | 
|        | 10 | .24#                |  | Employment Agreement dated February 21, 2006 between the
    Registrant and Stephen Couture                                                                                                                                                                                   |  |                           |   |         |  | 8-K         |  | 99.1  |  |  | 02-24-06 | 
|        | 10 | .25#                |  | Employment Agreement dated March 14, 2006 between the
    Registrant and Brian Wainger                                                                                                                                                                                        |  |                           |   |         |  | 8-K         |  | 99.1  |  |  | 03-20-06 | 
|        | 10 | .26#                |  | First Amendment, dated March 14, 2006, to Employment
    Agreement between the Registrant and Tom Zaller                                                                                                                                                                      |  |                           |   |         |  | 8-K         |  | 99.2  |  |  | 03-20-06 | 
|        | 10 | .27#                |  | Second Amendment, dated March 14, 2006, to Employment
    Agreement between the Registrant and Arnie Geller                                                                                                                                                                   |  |                           |   |         |  | 8-K         |  | 99.3  |  |  | 03-20-06 | 
|        | 10 | .28#                |  | Third Amendment, dated March 21, 2006, to Employment
    Agreement between the Registrant and Arnie Geller                                                                                                                                                                    |  |                           |   |         |  | 8-K         |  | 99.1  |  |  | 03-21-06 | 
|        | 10 | .29                 |  | Form of Exhibition Tour Agreement between the Company and
    Dr. Hong-Jin Sui and Dr. Shuyan Wang President of
    Dalian Hoffen Bio Technique Company Limited                                                                                                               |  |                           | X |         |  |             |  |       |  |  |          | 
|        | 11 | .1                  |  | Computation of Earnings Per Share (See Notes to Financial
    Statements)                                                                                                                                                                                                     |  |                           | X |         |  |             |  |       |  |  |          | 

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|        |    |                     |  |                                                                                                                                         |  |                           |   |         |  |             |  |  |  |  |  | 
|------- | -- | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | - | ------- |  | ----------- |  |  |  |  |  | 
|        |    |                     |  |                                                                                                                                         |  | Incorporated by Reference
|Exhibit |    |                     |  | Filed                                                                                                                                   |  |                          
|No.     |    | Exhibit Description |  | Herewith                                                                                                                                |  | Form                      |   | Exhibit |  | Filing Date
|        |    |                     |  |                                                                                                                                         |  |                           |   |         |  |            
|        | 21 | .1                  |  | Subsidiaries of the Registrant                                                                                                          |  |                           | X |         |  |             |  |  |  |  |  | 
|        | 31 | .1                  |  | Certification of Chief Executive Officer, pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                 |  |                           | X |         |  |             |  |  |  |  |  | 
|        | 31 | .2                  |  | Certification of Chief Financial Officer, pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                 |  |                           | X |         |  |             |  |  |  |  |  | 
|        | 32 | .1                  |  | Certification of Chief Executive Officer and Chief Financial
    Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 |  |                           | X |         |  |             |  |  |  |  |  | 






|  |                                                         
|- | --------------------------------------------------------
|# | Management contract or compensatory plan or arrangement.

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SIGNATURES






| |                          
| | -------------------------
| | Premier Exhibitions, Inc.

|                                                                                |  |              |  | 
|------------------------------------------------------------------------------- |  | ------------ |  | 
|                                                                               
|By: /s/ Arnie GellerArnie
    Geller,
    President and Chief Executive Officer |  | May 31, 2006



|                                                                                                                                                                        |  |              |  | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | 
|                                                                                                                                                                       
|/s/ Arnie GellerArnie
    Geller, President,
    Chief Executive Officer,
    Chairman of the Board
    (Principal Executive Officer)                                   |  | May 31, 2006
|                                                                                                                                                                       
|/s/ Stephen CoutureStephen
    Couture, Vice President and
    Chief Financial Officer, Director
    (Principal Financial Officer and
    Principal Accounting Officer) |  | May 31, 2006
|                                                                                                                                                                       
|/s/ N. Nick CretanN.
    Nick Cretan, Director                                                                                                                          |  | May 31, 2006
|                                                                                                                                                                       
|/s/ Doug BankerDoug
    Banker, Director                                                                                                                                |  | May 31, 2006
|                                                                                                                                                                       
|/s/ Alan ReedAlan
    Reed, Director                                                                                                                                    |  | May 31, 2006

64