U.S. SECURITIES AND EXCHANGE
                                   COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

     [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
EXCHANGE ACT OF 1934

     FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2003

     [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

                For the transition period from_______ to _______

                          Commission File No. 000-24452

                                RMS TITANIC, INC.
                                -----------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           Florida                                     59-2753162
           -------                                     ----------
(State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                    Identification No.)

              3340 Peachtree Rd, NE, Suite 1225, Atlanta, GA 30326
              ----------------------------------------------------
                     Address of principal executive offices

     Issuer'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

         Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [ ] No [ X ]

         Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X].

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant, as of June 3, 2003, was: $2,481,008.

     The number of shares outstanding of each of the registrant's classes of
common stock, as of June 3, 2003 were:
                                                     NUMBER OF SHARES
            TITLE OF EACH CLASS                        OUTSTANDING

            Common Stock, par value $.0001
            per share                                  18,675,047

<PAGE>

              SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE
                    SECURITIES LITIGATION REFORM ACT OF 1995

Except for historical information contained herein, this Annual Report on Form
10-K contains forward-looking statements within the meaning of the Private
Securities Reform Act of 1995 that involves certain risks and uncertainties. The
Company's actual results or outcomes may differ materially from those
anticipated. Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements contained in the Report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, such information should not be
regarded as a representation by the Company that the objectives and plans of the
Company will be achieved. The Company does not have any obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.

ITEM 1.  BUSINESS

BACKGROUND

On May 4, 1993, RMS Titanic, Inc. acquired all the assets and assumed all the
liabilities of TITANIC Ventures Limited Partnership ("TVLP"), a Connecticut
limited partnership (the "Acquisition"). References to the "Company" in this
Report relate to TVLP prior to the Acquisition and the combined entities of TVLP
and RMS Titanic, Inc. after the Acquisition.

The Company was formed in 1987 for the purposes of exploring the wreck and
surrounding oceanic areas of the TITANIC, which sank in 1912, and lies more than
12,500 feet below the surface of the Atlantic Ocean. This location is
approximately 400 miles off the southern coast of Newfoundland. The Company has
obtained oceanic material and scientific data available in various forms that
include still and moving photography and artifacts from the wreck site; and is
utilizing this data and artifacts for historical verification, scientific
education and public awareness. All these activities are directed toward
producing income for the Company resulting in touring exhibitions, television
programs, and the sale of still photographs.

In August 1987, the Company contracted with the Institute of France for the
Research and Exploration of the Sea ("IFREMER"), which is owned by the French
Government, to conduct an expedition and dive to the wreck of the TITANIC. Using
state-of-the-art technology from IFREMER (the world's largest oceanographic
institute), approximately sixty days of research and recovery operations were
performed at the TITANIC wreck site in 1987 through the use of a manned
submersible NAUTILE. Approximately 1,800 objects were recovered during the
course of the thirty-two dives in that expedition.

The recovered objects were conserved and preserved by Electricite de France
("EDF"), the French government-owned utility. In addition to the recovery of
historic objects, the Company's 1987 expedition also produced approximately 140
hours of videotape footage and an estimated 7,000 still photographs from the
wreck site. These artifacts from the 1987 expedition were subsequently granted
to the Company by the government of France.

In June 1993, the Company successfully completed its second expedition to the
TITANIC wreck site, during which it recovered approximately 800 artifacts and
produced approximately 105 hours of videotape footage during the course of
fifteen dives. In July 1994, the Company recovered over 1,000 objects and
produced approximately 125 hours of videotape footage during its third
expedition to the TITANIC wreck site. In August 1996, the Company recovered
numerous objects and produced approximately 125 hours of videotape footage
during its fourth expedition to the TITANIC wreck site. Present management is
reviewing recovery details of the 1996 expedition.

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With the Company's cooperation, Discovery Communications, Inc. produced three
hours of television programming based upon the Company's activities and
scientific studies undertaken during the 1996 expedition. Two hours of this
programming, presented in "TITANIC: Anatomy of A Disaster," was the highest
rated program in the history of The Discovery Channel when it aired in April
1997. In addition to obtaining videotape footage for the television productions,
a substantial portion of the 1996 expedition was devoted to the recovery of a
section of the TITANIC hull, measuring approximately 26 feet by 20 feet and
weighing approximately 20 tons, from the debris field surrounding the wreck.
Although the Company raised the "Big Piece" to within approximately 200 feet of
the surface of the ocean, efforts to recover it were unsuccessful because of
stormy weather conditions and severe ocean turbulence.

In August 1998, the Company recovered numerous objects and produced
approximately 350 hours of videotape footage during its fifth expedition to the
TITANIC wreck site. This expedition, again undertaken in cooperation with
Discovery Communications, Inc., produced five hours of television programming
about the expedition, including the first-ever live broadcast from the TITANIC
wreck site and a one hour Dateline NBC special broadcast. Among the highlights
of the 1998 expedition was the successful recovery of the "Big Piece" and
extensive mapping of the TITANIC and portions of the wreck site through the
capture of thousands of high-resolution color digital photographs.

The Company's 1987, 1993, 1994, 1996, and 1998 TITANIC expeditions were
completed by charter agreements with IFREMER. The objects recovered from those
expeditions were ultimately transported to a privately-owned conservation
laboratory in France for restoration and preservation processes in preparation
for exhibition, except for several objects conserved by EDF that were recovered
in 1987 and the "Big Piece", which went through its conservation process in the
United States.

During the summer of 2000, the Company conducted its most recent expedition
("Expedition 2000") to the TITANIC wreck site in the North Atlantic. During this
expedition, the Company utilized the services of the P.P. Shirshov Institute of
Oceanology of Moscow, Russia, which provided the research vessel "AKADEMIK
MSTISLAV KELDYSH" and two manned submersibles- the "MIR-1" and "MIR-2. The
expedition resulted in a total of twenty-eight dives over a four week period
that resulted in the recovery of more than 900 objects from the wreck site and
the discovery of a new debris field. Among the artifacts recovered in this
expedition were the ship's wheel and stand, whistle control timer from the
navigation bridge, the main telegraph base and the docking bridge telephone.
Among personal items recovered were binoculars, a pair of opera glasses,
sixty-five intact perfume ampoules, a camera, bowler hat, first class demitasse
and dinner plate. A base for a cherub, likely from the Grand Staircase, as well
as gilded wood from a balustrade were also recovered. The nine leather bags
provided more than one hundred additional objects. Some medicinal items were
recovered that included a cobalt blue bottle that reads: BROMOSELTZER EMERSON
DRUG CO. BALTIMORE MARYLAND. For the first time, two toilets, a wok, an intact
deck light, circulating fans, thermometers, four eggcups, and a metal megaphone
were recovered. These items will further provide a clearer picture of the
workings of the TITANIC at that time period, and will further enhance exhibition
presentations. This expedition was conducted during the months of July and
August 2000.

In June 2000, the Company established a wholly owned United Kingdom subsidiary,
Danepath Ltd., for the purpose of purchasing the research vessel, RRS
Challenger, a 178 foot- 1050 ton ship that was to be utilized in the expedition
to the TITANIC wreck site during that summer. This vessel was acquired on June
30, 2000 from the Natural Environment Research Council, a British governmental
agency. The name of the vessel was changed to the SV EXPLORER. On April 2, 2002,
the Company sold its Danepath subsidiary to Argosy International Ltd., an
affiliated party. In January 2003, in order to avoid a costly international
foreclosure process, the Company entered into a settlement of the outstanding
obligation from Argosy from this Danepath transaction that included acquiring
the vessel, SV EXPLORER, and related marine equipment in its new wholly owned
United Kingdom subsidiary - Seatron Limited

In May 2001, the Company acquired ownership of the RMS CARPATHIA that was sunk
in 1918 off the coast of the United Kingdom. This ship rescued the survivors of
the TITANIC. This shipwreck will play a role in the Company's future business
plan.

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SALVAGE RIGHTS

Pursuant to the judgment entered in the United States District Court for the
Eastern District of Virginia ("District Court") on June 7, 1994, the Company was
declared salvor-in-possession of the wreck and wreck site of the TITANIC, the
sole and exclusive owner of any items recovered from the TITANIC and, so long as
the Company is salvor-in-possession, the sole and exclusive owner of all items
recovered from the TITANIC in the future. The District Court's judgment
includes, without limitation, the contents, cargo, hull, machinery, engine,
tackle, apparel, and appurtenances of the TITANIC, and provides that all
potential claimants are barred and precluded from filing claims so long as the
Company is salvor-in-possession. No other entity has the right to salvage the
TITANIC while the Company is salvor-in-possession. To maintain
salvor-in-possession status, the Company, among other things must maintain a
reasonable presence at the wreck through periodic expeditions and continue
salvage efforts and the preservation of artifacts during the period between
salvage expeditions.

In February 1996, a third-party instituted a motion in the District Court
seeking rescission of the June 7, 1994 order awarding salvor-in-possession
status to the Company. By an order dated May 10, 1996, the motion was denied.
The Court also modified its June 1994 order to require the Company to file more
frequent reports about its activities. In August 1996, the Court amended the May
1996 order to include an award to the Company of exclusive rights to photograph
and video the TITANIC within the award of salvor-in-possession status, and
enjoined third parties from entering the wreck site for purposes of obtaining
photography or video footage or for other purposes.

An unrelated entity announced the intention of conducting a photographic
expedition, known as Operation TITANIC, to the TITANIC wreck site during August
1998, when the Company intended to conduct its 1998 expedition. The Company
commenced legal proceedings and obtained an injunction prohibiting such
photographic expedition during August 1998 or at any other time so long as the
Company is salvor-in-possession of the wreck and wreck site of the TITANIC.
Notwithstanding such injunction, the Operation TITANIC photographic expedition
occurred in September 1998. In March 1999, the District Court's granting of an
injunction prohibiting the photographic expedition was reversed by the United
States Court of Appeals for the Fourth Circuit (the "Fourth Circuit"). The
Company appealed the reversal of the District Court's determination to the
United States Supreme Court. The Supreme Court declined to review this matter in
October 1999. As a result, the Company has not enjoyed exclusive photographic
and video rights to the TITANIC since that time. The loss of exclusive
photographic rights could continue to have a materially adverse affect upon the
Company's ability to generate revenues from ancillary activities, such as
television productions, or passenger cruises accompanying research and recovery
expeditions There was not a television or video contract for the Company's last
TITANIC expedition in 2000.

On April 12, 2002, the Fourth Circuit affirmed two orders of the District Court
in which the Company is a party ("R.M.S. Titanic, Inc. v. The Wrecked and
Abandoned Vessel . . ."). These orders, dated September 26, 2001 and October 19,
2001, restricted the sale of artifacts recovered by the Company from the RMS
Titanic wreck site. In its opinion, the Fourth Circuit reviewed and declared
ambiguous the June 7, 1994 order of the District Court that had awarded
ownership to the Company of all items then salvaged from the wreck of the
TITANIC as well as all items to be salvaged in the future by the Company so long
as the Company remained salvor-in-possession of the TITANIC. Having found the
June 7, 1994 order ambiguous, the Fourth Circuit reinterpreted the order to
convey only possession, and a salvor's lien, but not title, pending
determination of a salvage award. This opinion conflicts with previous rulings
that were rendered by both the Fourth Circuit in "R.M.S. Titanic, Inc. v. Haver,
et al" and the District Court all of which rulings the Company relied upon in
the conduct of its business. Furthermore, based on the June 7th 1994 Order of
the District Court, the Company believed it was the exclusive owner of the
artifacts. The Company petitioned the Supreme Court to hear its appeal of the
April 12, 2002 decision of the Fourth Circuit. However, the Company's Petition
for Certiorari was denied on October 7, 2002.

In its April 12, 2002 Opinion, the Fourth Circuit indicated that the Company, as
salvor, has a lien in the previously recovered artifacts and that it is
necessary for the District Court to determine the Company's salvage award and
satisfy the award with the proceeds from a sale of the artifacts. Should it
become apparent to the District Court that the proceeds of any sale would


                                       4
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clearly be inadequate to pay the salvor its full reward, then the court might,
as a matter of discretion, award the salvor title to the property in lieu of the
proceeds of sale, thus saving the costs of sale. The salvor does not have a
direct right, however, to title in the property. As a result of the Fourth
Circuit's opinion, the Company does not own the artifacts under the jurisdiction
of the United States District Court for the Eastern District of Virginia,
Norfolk Division but instead has a salvor's lien and possession.

SALVAGE AWARD

The process to determine what award should be granted to the Company for its
efforts, undertaken in the salvage of artifacts from the TITANIC is left to the
discretion of the District Court. In this process of determining the appropriate
award, courts generally rely on the six factors set out in The Blackwall, 77.
U.S. (10 Wall.) 1,14 (1869) that includes: (1) the labor expended by salvors in
rendering the salvage service; (2) the promptitude, skill, and energy displayed
in rendering the service and saving the property; (3) the value of the property
employed by salvors in rendering the service, and the danger to which such
property was exposed; (4) the risk incurred by salvors in securing the property
from the impending peril; (5) the value of the property saved; and (6) the
degree of danger from which the property was rescued.

Although the method for obtaining a salvage award is established in the federal
court system, any amount awarded is subject to considerable latitude by the
judge presiding over the case. The Company in its salvor in possession
proceedings has been subject to the jurisdiction of the Federal Court in Norfolk
since 1994. During this period, representations have been made regarding keeping
the artifacts recovered from RMS TITANIC wreck site together for the benefit of
the viewing public.

What could be awarded the Company for its salvor efforts? The court will grant
an award based upon the Blackwall factors, in accordance with the Fourth
Circuit's opinion. Such an award may vary from a monetary award to complete
ownership of the artifacts. There could be a substantial variance in the value
of an award because a District Court judge has substantial discretion as to what
is an appropriate award when weighing and evaluating the Blackwall factors. It
is impossible for management to anticipate what value the court will determine
for an award. The Court and the Company are of a single mind that the artifact
collection should be kept together in the public interest. Management believes,
under these circumstances, it may be a prudent decision to donate the TITANIC
artifact collection to a nationally recognized museum in order to preserve
status quo of the collection and to preserve the business exhibition opportunity
for the Company. Such an undertaking will provide long-term benefit to the
shareholders.


PRESENT OPERATIONS

The TITANIC continues to captivate the thoughts and imagination of millions of
people throughout the world since 1912, when it struck an iceberg and sank in
the North Atlantic, causing the loss of more than 1,500 of the 2,228 lives on
board. The depth of this international interest in the TITANIC has been
continuous since sinking more than ninety years ago. The December 1997 release
of the highest grossing motion picture of all time, "TITANIC," as well as a
prodigious volume of works that have been published about all facets of its
story, the production of other feature length movies and plays about its tragic
voyage, and the broadcast of television programs about its 1985 discovery and
scientific examinations of the wreck approximately two and one-half miles below
the surface of the ocean attests to the public's continuing fascination with the
TITANIC. As the only enterprise that has recovered and conserved items from the
TITANIC, the Company is in a unique position to present exhibitions of TITANIC
artifacts for viewing by the public. Management intends to continue to present
exhibitions throughout the world as demand warrants. Management will also
continue to conduct these exhibitions in an enlightening and dignified manner
that embodies respect for those who lost their lives in the disaster.

The principal sources of revenue of the Company up to the present time have been
guaranteed payments and applicable overage payments for ticket sales of
admission to exhibitions, merchandising revenues, and sponsorship revenues.
Additional revenues include other merchandise and licensing income.

                                       5
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RECENT DISTRICT COURT PROCEEDINGS

On April 14, 2003, the Company appeared before the District Court that has
jurisdiction over the Company's salvage case and its status as
salvor-in-possession of the wreck of the RMS TITANIC, to present its latest
Periodic Report of Salvor. At that time, the Company informed the Court that it
has begun initial discussions with the United States government regarding the
potential donation of the Company's salvor-in-possession status to the federal
government. As the Company indicated, such a donation, if accepted, would be
subject to approvals of both the shareholders and the District Court.

The Company further informed the Court that it has begun preliminary discussions
with the Mariners' Museum of Newport News, Virginia, regarding the potential
donation of the Company's TITANIC artifact collection to the Museum. As the
Company indicated, the donation of the artifact collection to the Museum would
involve a long-term agreement allowing the Company to retain rights to exhibit
the artifact collection. As the Company further indicated, the donation to the
Museum is subject to approvals of both the shareholders and the District Court.

While both, the potential donation of the Company's salvor-in-possession status
and the potential donation of the Company's artifact collection, are at an early
stage of development, the Company's Board of Directors endorsed both donation
initiatives. Prior to the April 14, 2003 hearing, the Board of Directors
unanimously agreed to revoke, rescind and void the Board's prior resolution
regarding the unilateral relinquishment of the Company's salvor-in-possession
status.

EXHIBITIONS

The Company has presented exhibitions in association with third parties
throughout the world and nearly twelve million people have attended these
exhibits. The Company plans to continue to present exhibitions of TITANIC
artifacts.

Agreement  with  Subsidiary  of  Clear  Channel  Communications,  (formerly  SFX
Entertainment, Inc.)

In March 1999, the Company entered into an agreement with Magicworks
Entertainment, Inc., a direct subsidiary of PACE Entertainment, Inc. and an
indirect subsidiary of SFX Entertainment, Inc. (collectively "SFX"), in which
SFX was granted an exclusive worldwide license to exhibit TITANIC artifacts for
the payment of at least $8.5 million annually. This license agreement had an
initial term of one year, commencing September 15, 1999, with SFX having the
option to extend the term for up to four additional one-year periods. All
obligations of Magicworks Entertainment, Inc. under this license agreement were
guaranteed by SFX Entertainment, Inc. The original agreement was amended on
September 18, 2000 between the Company and SFX Family Entertainment, Inc.,
successor to Magicworks Entertainment, Inc. Furthermore, the last agreement now
extends the license until December 31, 2003. Each amendment required a
guaranteed minimum annual payment of $2,000,000. For the two amendment periods
ended November 31, 2001 and January 3, 2003, the Company received payments of
$616,000 and $683,242, respectively, over the guaranteed minimum annual payments
pursuant to the revenue sharing provisions of the agreement. The most recent two
amendments were with Clear Channel Exhibitions, Inc. ("CCE"), formerly known as
SFX Family Entertainment, Inc.

From 1997 through the present time, exhibitions of objects recovered from the
TITANIC were presented in association with the Company in the following cities
and countries: Norfolk, Virginia from November 1996 until March 1997; Memphis,
Tennessee from April 1997 to September 1997; Hamburg, Germany from May 1997 to
September 1998; at the Queen Mary in Long Beach, California from May 1997 to
March 1999; in St. Petersburg, Florida from November 1997 to May 1998; in
Boston, Massachusetts from July 1998 through November 1998; in Zurich,
Switzerland from November 1998 through May 1999; in St. Paul, Minnesota from
January through May 1999; a tour of several cities in Japan from July 1998
through July 1999; Atlantic City, New Jersey from May until September 1999; Las
Vegas, Nevada from January 1999 through October 2000; Chicago, Illinois from
February through October 2000; Dallas, Texas from March through June 2000;


                                       6
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Cincinnati, Ohio from November 2000 through March 2001; in Seattle, Washington
from March to October 2001; Kansas City, Missouri from April to September 2001;
Baltimore, Maryland from April 2001 to February 2002; Nashville, Tennessee from
May to September 2001; St. Louis, Missouri from December 2001 to April 2002; a
South American tour included Buenos Aires, Argentina from April to June 2001 and
Santiago, Chile from August to December 2001; in Phoenix, Arizona from December
2001 to June 2002; Norwalk, Connecticut from January to September 2002,
Cleveland, Ohio from March to September 2002; Houston, Texas from May 2002 to
January 2003; in Chicago, Illinois, a second time, from July 2002 to January
2003; Richmond, Virginia from October 2002 to January 2003; and Lafayette,
Louisiana from February to May, 2003.

Current Exhibitions

CCE is presenting TITANIC exhibits in association with the Company in Oklahoma
City, Oklahoma; Detroit, Michigan; Los Angeles, California; London, England and
Paris, France. An exhibition is also being presented in association with the
Maryland Science Center at the Children's Museum of Indianapolis, Indianapolis,
Indiana.

Exhibition Plan

A plan has been undertaken to have the Company conduct its own TITANIC
exhibitions beginning at the end of the present license agreement with CCE. This
plan would require the Company to expand to efficiently and effectively manage
exhibition projects beginning after that date. The intent is to continue the
TITANIC exhibits in both international and domestic venues. The Company's sole
control of all aspects of the TITANIC exhibitions would provide an opportunity
for that business to be expanded to other formidable presentations of similar
quality and substance.

MERCHANDISING

The Company has an ongoing arrangement with Events Management, Inc. (the gift
shop operator at all domestic Exhibits) and receives monthly payments for
certain items that are sold in the Exhibit gift shops, on their web-site and
marketed through other channels of distribution. These payments equal ten
percent of gross revenue received from sales to third parties and an amount
equal to five percent of the retail price on products bearing the Company's
logos or incorporating those proprietary rights. The Company participates in all
other income from gift shop sales through its contract with CCE. Certain items
such as coal recovered from the TITANIC wreck site are sold directly by the
Company to third parties including Events Management Inc. An exhibit catalog is
published by the Company and the profits from sales at exhibits are presently
shared equally between CCE, Events Management Inc., and the Company.

MARKETING

The Company has developed several retail products utilizing coal from the
TITANIC that have been incorporated into jewelry and necklaces. The Company
intends to continue developing such products to increase its merchandizing
revenues. The Company also intends to pursue the direct marketing of merchandise
and archive through its web site (http://www.rmsTITANIC.net) and through third
parties.

The marketing and promotion of TITANIC Exhibitions is handled and paid for by
CCE and other third parties involved with the presentation of exhibits.

EXPEDITIONS TO THE TITANIC

With the depth of the TITANIC wreck approximately two and one-half miles below
the surface of the ocean in the North Atlantic, the Company is dependent upon
chartering vessels outfitted with highly advanced deep sea technology in order
to conduct expeditions to the site. In its 1987, 1993, 1994, 1996, and 1998
expeditions, the Company entered into charter agreements with IFREMER, pursuant
to which IFREMER supplied the crew and equipment necessary to conduct research


                                       7
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and recovery efforts. In addition to utilization of the research vessel NADIR,
recovery efforts were undertaken through the manned submersible NAUTILE. Small,
hard-to-reach areas necessary for visual reconnaissance efforts were accessed by
a small robot, known as ROBIN, controlled by crewmen on board the NAUTILE. The
dive team had the capability of retrieving heavy objects, such as a lifeboat
davit weighing approximately 4,000 lbs. to fragile objects weighing but a few
ounces. Because of the immense pressure of approximately 6,000 pounds per square
inch at the wreck site, it is impossible for a dive team to reach such depths
and explore the wreck site through any means other than a submersible. The
NAUTILE and ROBIN were each equipped with video and still cameras that recorded
all recovery and exploration efforts. In connection with its 1987, 1993, 1994,
1996, 1998, and 2000 expeditions to the wreck site, the Company engaged maritime
scientists and other professional experts to assist in the exploration and
recovery efforts.

In its most recent recovery operation in Expedition 2000, the Company conducted
twenty-eight dives over a four-week period that recovered more than 900 items
from the wreck site, which included the discovery of a new debris field. Among
the artifacts recovered in this expedition, were: the ship's Wheel and Stand,
whistle control timer from the navigation bridge, the main telegraph base and
the docking bridge telephone. Personal items recovered included binoculars, a
pair of opera glasses, sixty-five intact perfume ampoules, a camera, bowler hat,
first class demitasse and dinner plate. A base for a bronze cherub likely from
the Grand Staircase was recovered as well as gilded wood from a balustrade. The
nine leather bags found provided more than one hundred items. Some medicinal
items were recovered that included a cobalt blue bottle that reads: BROMOSELTZER
EMERSON DRUG CO. BALTIMORE MARYLAND. For the first time, two toilets, a wok, an
intact deck light, circulating fans, thermometers, four eggcups, and a metal
megaphone were recovered.

The Company's ability to conduct expeditions to the TITANIC has been subject to
the availability of necessary research and recovery vessels and equipment for
chartering by the Company during the months between June and September, which is
the "open weather window" for such activities. Research and recovery efforts
with a manned submersible are presently limited to the availability and the
co-operation with: NAUTILE through charter arrangements with IFREMER and MIR I
and MIR II using charter arrangements with P.P. Shirshov Institute of
Oceanology. To the Company's knowledge, no other submersible with the capability
of reaching the depth of the TITANIC is presently commercially available or
acceptable to the Company for such chartering.

On September 14, 2002, the Board of Directors of the Corporation unanimously
adopted a Corporate Resolution providing that the Company has completed the
salvage service that it intends to perform on the wreck of the TITANIC; the
Company shall voluntarily surrender its status as salvor-in-possession of the
wreck of the TITANIC; the Company shall proceed to move the District Court for
the entry of a full and final salvage award pursuant to the ruling of the Fourth
Circuit.

Among the considerations that were reviewed prior to the decision of the Board
of Directors of the Company were the opinion of the Fourth Circuit on April 12,
2002 that the Company does not own any of the artifacts that it has recovered
from the wreck of the TITANIC, but, instead, holds only an inchoate lien in said
artifacts; and that, unless the Company intends to seek periodic awards, it
cannot seek to enforce its lien against the artifacts until it has completed all
of the salvage service that it intends to perform and its salvage award has been
determined by the District Court; and that the Company can only obtain title to
the artifacts it has recovered if, in the discretion of the District Court, the
salvage award due the Company cannot be satisfied by sale of the artifacts; and
the District Court has expressly forbidden the Company from cutting into the
wreck or detaching any part of the wreck since July 28, 2000; and further there
is an international convention pending that will designate the TITANIC an
international maritime memorial and restrict all future salvage of the wreck. At
the present time, the Company has a representative sample of artifacts from the
TITANIC debris field and furthermore, has more artifacts than are required for
exhibitions. In addition, the maintenance of the Company's salvor-in-possession
status requires periodic expeditions to the TITANIC wreck site that would
require substantial further investment on behalf of the Company and
uncertainties surround what the District Court may decide is an appropriate
financial return for the Company for any future expenditures. Subsequently, on
April 5, 2003 the Board of Director's rescinded the unilateral relinquishment of
the Company's salvor-in-possession status and instead endorsed an initiative to
explore donating the Salvor status to the United States Government. No
additional action has been taken on this matter since then.

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EXPEDITION TO THE CARPATHIA

The Company plans a recovery operation to the RMS CARPATHIA wreck location to
recover objects that the Company owns as a result of its purchase of ownership
rights for that vessel. At the present time, no definitive schedule has been set
for this endeavor.

RESTORATION AND CONSERVATION

Upon recovery from the TITANIC wreck site, artifacts are in varying states of
deterioration and fragility. Having been submerged in the depths of the ocean
for more than 90 years, objects have been subjected to the corrosive effects of
chlorides present in seawater. The restoration of many of the metal, leather,
and paper artifacts requires the application of sophisticated electrolysis and
other electrochemical techniques. Some of the artifacts recovered from the 1987
expedition were restored and conserved by the laboratories of Electricite de
France, the French government-owned utility. Except for un-restored artifacts
that are currently being exhibited, many of the artifacts recovered from the
1987,1993, 1994, 1996 and 1998 expeditions have undergone conservation processes
at LP3, a privately-owned conservation laboratory in Semur-en-Auxois, France.

Essentially all TITANIC artifacts that are not being exhibited as part of the
present Exhibition Tour Agreement are presently housed in the Company's
conservation and warehouse facility located in Atlanta, Georgia.

SCIENCE AND ARCHAEOLOGY

TITANIC was a great luxury liner that bequeathed to the world a classic story of
tragedy at sea. Today, this shipwreck is treated as an archaeological site,
historic structure, attraction for adventure tourism, ecological phenomenon,
international memorial, and as valuable property to be recovered and shared with
humanity. The Company as salvor-in-possession of the TITANIC shipwreck believes
that all of these purposes are legitimate and beneficial to society. The Company
also believes that the multiple values of TITANIC and its status as a
social-cultural icon demand the perspectives of many experts in scientific
interpretation and stewardship of the site.

The Company is in the best position to provide for archaeological survey,
scientific interpretation, and stewardship of the TITANIC shipwreck. The Company
possesses the largest collection of data, information, images, and cultural
materials associated with the shipwreck. The Company has developed a partnership
with the Center for Maritime & Underwater Resource Management, a nonprofit
corporation, for services in archaeology, scientific research, and resource
management.

The Company intends to present its collection of knowledge and cultural
materials of TITANIC to researchers, educators, and other audiences in the form
of a scientific report, associated interactive website, and other intellectual
products that advance the purposes of the Company. Revenues from the sale of
these intellectual products are expected to at least meet the total production
costs. The scientific report will integrate the results of all expeditions to
TITANIC wreck site since its discovery. In addition, the publication will
include the first comprehensive site plan of the TITANIC, which will assist
greatly in determining future products in research, materials conservation, and
education. The interactive website will virtually share with the world this
scientific knowledge as well as its entire collection of cultural materials.

                                       9
<PAGE>


COMPETITION

The entertainment and exhibition industries are intensely competitive. There can
be no assurances given the Company's limited capital resources that we will be
able to compete effectively. Many enterprises with which the Company will be
competing have substantially greater resources than the Company. Additionally,
following the success of the motion picture "TITANIC" in December 1997, a number
of entities have undertaken, or announced an intention to offer, exhibitions or
events with the theme of TITANIC or involving memorabilia related to its
sinking. Although the Company is the only entity that exhibits artifacts
recovered from the wreck site of the TITANIC, competition may be encountered
from these exhibitions or events for the consumer's interest in TITANIC or the
Company's TITANIC exhibitions. Management intends to compete with other entities
based upon the mass appeal of its planned exhibits to consumers of
entertainment, museum, scientific and educational offerings, and the quality and
value of the entertainment experience. The Company will emphasize the unique and
distinctive perspective of the TITANIC into its exhibits as salvor-in-possession
and as the only entity that has ownership rights to objects recovered from the
wreck site.

The success of the Company's merchandising efforts will depend largely upon the
consumer appeal of its merchandise and the success of its exhibitions.
Management believes that its merchandise will compete primarily because of its
unique character and quality.

EMPLOYEES

As of June 2, 2003, the Company had eight employees. The Company is not a party
to any collective bargaining agreement.

ENVIRONMENTAL MATTERS

The Company will be subject to environmental laws and regulation by federal,
state and local authorities in connection with its planned exhibition
activities. The Company does not anticipate that the costs to comply with such
laws and regulations will have any material effect on the Company's capital
expenditures, earnings, or competitive position.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company has its principal executive offices located at Tower Place, 3340
Peachtree Road N.E., Suite 1225, Atlanta, Georgia. This space of approximately
2,759 square feet is used for management, administration, and marketing for its
operations. The lease commenced on April 18, 2000 and is for a five-year term
and requires base lease payments of $64,836 annually.

The Company has a thirty-eight month lease obligation commencing November 1,
2001 for approximately 10,080 square feet of space at an undisclosed location
for security purposes in Atlanta, Georgia. This facility is used for
conservation, restoration, and storage of TITANIC artifacts. The monthly rents
are $5,460 through October 31, 2002; and thereafter $6,090 through October 21,
2003 and finally $6,720 through December 31, 2004.

ITEM 3.  LEGAL PROCEEDINGS

The United States Department of State and the National Oceanic and Atmospheric
Administration of the United States Department of Commerce ("NOAA") are working
together to implement an International Agreement (the "Agreement") with entities
in the United Kingdom, France and Canada that would diminish and/or divest the
Company of its salvor-in-possession rights to the TITANIC which had been awarded
by the District Court. The Company has raised numerous objections to the United
States Department of State regarding the actions of the United States to
participate in efforts to reach an agreement governing salvage activities of the


                                       10
<PAGE>

TITANIC. The Agreement, as drafted, does not recognize the existing rights of
the Company in the TITANIC, that has been re-affirmed in the District Court and
affirmed by the Court of Appeals of the Fourth Circuit, and provides that the
Agreement becomes effective when any two of the party states sign it. The United
States Department of Justice has represented that the United States believed it
had complied with the RMS TITANIC Memorial Act in the development of the
international guidelines to implement the Agreement, but would solicit comments
from the public at large regarding the draft international guidelines and the
NOAA will consider the comments, and then publish the final international
guidelines. On April 3, 2000 the Company filed a motion for declaratory judgment
asking that the District Court declare unconstitutional and inappropriate the
efforts of the United States to reach an international agreement with the other
parties and that it be precluded from seeking to implement such an agreement. On
September 15, 2000, the Court it was ruled that the Company's motion was not
ripe for consideration at the present time, and that the Company may renew its
motion when and if an international Agreement is agreed to and signed by the
parties to the Agreement, final guidelines are drafted, and Congress passes
implementing legislation. The Company expects, that whatever the outcome of this
matter, there will be no impact on artifacts that have already been recovered,
but management does not know what effect, if any, this Agreement will have on
future Company operations.

On May 10, 2001, the Company received a subpoena duces tecum from the Securities
and Exchange Commission requesting various documents relating to, among other
things, the change in control of the Company that occurred during November 1999;
any solicitations that may have been made without a written proxy statement or a
filing; the purchase of the Company's common stock by certain shareholders; the
accuracy of the Company's financial statements; information about the Company's
accounting procedures and controls; documents about its subsidiaries; and other
information about consulting agreements, communications with certain
individuals, employment of its officers, and other company matters. The Company
has complied with the subpoena.

On September 7, 2000, Mr. G. Michael Harris, a former officer and director of
the Company filed suit in the Circuit Court of the Sixth Judicial Circuit in and
for Pinellas County, Florida, Civil Division. In that suit, Mr. Harris alleged
that the Company breached an employment agreement entered into between him and
the Company, that he was damaged by the breach, that he was wrongfully
terminated and had been defamed. The Company denied the validity and
enforceability of the employment agreement. Moreover, the Company filed a
counter-suit against Mr. Harris and others, to recover monies that the Company
believed were misappropriated. On April 23, 2003, after a jury trial, a verdict
was rendered that affirmed the unenforceability of any of Mr. Harris' employment
agreements and further found that $70,000 of Company monies were misappropriated
by Mr. Harris and others. These matters are subject to appeal.

On January 27, 2000, the Company was served with a lawsuit by Oceaneering
International, Inc. for monies purportedly owed under a June 27, 2000 contract
for maritime services for the Company's Expedition 2000. The Company filed an
answer that included a setoff for damages. On May 8, 2002, this case was
dismissed with prejudice with each party paying its own legal expenses and
executing a confidentiality agreement. The Company did not pay any consideration
for this settlement.

On May 3, 2001, the Company was served with a lawsuit in Superior Court in the
State of California which later was removed to the United States District Court
for the Central District of California by Westgate Entertainment Corporation, a
California corporation, and its wholly owned subsidiary, Weyland & Chase
Engineering, NV, a Netherlands Antilles corporation. The complaint claims that
on January 18, 2000, the plaintiffs entered into oral five year, "pay or play"
contracts of $200,000 per year for Westgate Entertainment and $100,000 per year
for Weyland & Chase. Westgate Entertainment further claimed the Company agreed
to pay or provide other additional considerations. The Central District Court
entered an order denying the Company's motion for summary judgment. In July
2002, the matter was settled between the parties whereby the Company agreed to
pay $388,000 over a thirty-month period, releases were exchanged and certain
restrictive covenants were agreed upon, among other considerations.

On April 12, 2002, the United States Court of Appeals for the Fourth Circuit
(the "Fourth Circuit") affirmed two orders of the United States District Court
for the Eastern District of Virginia, Norfolk Division in which the Company is a
party ("R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel . . ."). These


                                       11
<PAGE>

orders, dated September 26, 2001 and October 19, 2001, restricted the sale of
artifacts recovered by the Company from the RMS TITANIC wreck site. In its
opinion, the Fourth Circuit reviewed and declared ambiguous the June 7, 1994
order of the District Court that had awarded ownership to the Company of all
items then salvaged from the wreck of the TITANIC as well as all items to be
salvaged in the future by the Company so long as the Company remained
salvor-in-possession of the TITANIC. Having found the June 7, 1994 order
ambiguous, the Fourth Circuit reinterpreted the order to convey only possession,
not title, pending determination of a salvage award. This opinion conflicts with
previous rulings that were rendered by both the Fourth Circuit in "R.M.S.
Titanic, Inc. v. Haver, et al" and the District Court all of which rulings the
Company relied upon in the conduct of its business. Furthermore, based on a June
7th 1994 order of the District Court, the Company believed it was the exclusive
owner of the artifacts. The Company petitioned the United States Supreme Court
to hear its appeal of the April 12, 2002 decision of the Fourth Circuit.
However, the Company's Petition for Certiorari was denied on October 7, 2002.

On April 25, 2002, the Company was served with notice of litigation initiated by
Lawrence D'Addario, et al vs. Arnie Geller, G. Michael Harris, Joe Marsh, Gerald
Couture, Nick Cretan, Doug Banker and the Company in the United States District
Court for the Eastern District of Virginia, Norfolk Division. The suit alleges
fraud, self-dealing, mismanagement, diversion and waste of corporate assets by
the individuals in their capacity as directors and/or officers of the Company
and by Joe Marsh, as a principal shareholder of the Company. Subsequently, Mr.
Banker and Mr. Cretan, both directors of the Company, were dismissed from this
proceeding for lack of any personal jurisdiction. The Company has an obligation
to pay for the defense expenses of its officers and directors under
indemnification agreements. No determination can be made at this time as to the
likely outcome of this matter or what the consequences could be for the Company.
The Company intends to vigorously defend itself and its officers and directors
in this matter.

ITEM 4.  SUBMISSION OF MATTERS OF VOTE OF SECURITY HOLDERS

None.


PART II

ITEM 5.  PRICE RANGE OF SECURITIES

     (a)  MARKET  INFORMATION.  The  Company's  Common  Stock is  traded  on the
          over-the-counter market on a limited and sporadic basis. The following
          table  sets  forth  the  range of high and low bid  quotations  of the
          Company's Common Stock for the periods set forth below, as reported by
          OTC  Bulletin  Board  of  NASDAQ  Trading  &  Market  Services.   Such
          quotations represent inter-dealer  quotations,  without adjustment for
          retail  markets,  markdowns  or  commissions,  and do not  necessarily
          represent actual transactions.

     (b)  FISCAL PERIOD                           COMMON STOCK

                                             HIGH                       LOW
                                             BID                        BID

            2003
          --------
          1st Quarter                      0.35                         0.15
          2nd Quarter                      0.29                         0.19
          3rd Quarter                      0.29                         0.09
          4th Quarter                      0.14                         0.05


                                       12
<PAGE>

            2002
          --------
          1st Quarter                      1.20                         0.42
          2nd Quarter                      0.85                         0.65
          3rd Quarter                      0.80                         0.39
          4th Quarter                      0.55                         0.34

            2001
          --------
          1st Quarter                      2.83                         1.03
          2nd Quarter                      3.13                         1.39
          3rd Quarter                      1.75                         0.56
          4th Quarter                      1.44                         0.41

     (b)  HOLDERS. The number of holders of record of the Company's Common Stock
          as of May 30, 2003 was 1895.

     (c)  DIVIDENDS. The Company has not paid or declared any dividends upon its
          common stock since its inception, and intends to reinvest earnings, if
          any, in the Company to obtain  growth.  Accordingly,  the Company does
          not  contemplate  or anticipate  paying any dividends  upon its common
          stock in the future.

ITEM 6.  SELECTED FINANCIAL INFORMATION

The selected financial data set forth below is qualified by reference to, and
should be read in conjunction with, the Financial Statements and Notes thereto
and Management's Discussion and Analysis of Financial Condition and Results of
Operations included elsewhere in this Form 10-K. The selected financial data
have been derived from the Company's Financial Statements that have been audited
by independent certified public accountants. The financial statements as of
February 28, 2003, February 28, 2002, and February 28, 2001 and for each of the
three years in the period ended February 28, 2003 is included elsewhere in this
Form 10-K.

<TABLE>
<CAPTION>

YEAR ENDED FEBRUARY 28(29)
                                             1999        2000         2001        2002        2003
-------------------------------------------------------------------------------------------------------
<S>                                   <C>            <C>          <C>       <C>         <C>
Statement of Operations Data:
(In thousands, except per share
   and weighted average shares)

   Revenues:
     Continuing operations                $  9,857         6,433        5,699      2,768       2,861
     Discontinued operations                    --            --           14        504          --

   Net income (loss):
      Continuing operations               $  4,063           (21)          36     (7,260)       (827)
      Discontinued operations                   --            --          (88)      (168)         --
      Gain on sale                                                                   644

   Income (loss) per share:
      Continuing operations               $    .25            --           --       (.38)       (.04)
      Discontinued operations                   --            --           --         --          --

   Weighted average number of
   common shares
   outstanding                          16,187,128    16,187,128   16,732,991 18,058,573  18,615,294
</TABLE>


                                       13
<PAGE>

<TABLE>
<CAPTION>


FEBRUARY 28(29),                    1999             2000           2001      2002        2003
--------------------------------------------------------------------------------------------------------
<S>                               <C>           <C>           <C>        <C>          <C>
Balance Sheet Data:
  (In thousands)
   Total Assets                    $ 13,910         15,372        15,002      8,839       8,399
   Long Term Obligations                 --             --            --         --          --
  Total Liabilities                $  2,410          3,569         2,251      1,497       1,849
   Shareholders' Equity            $ 11,500         11,803        12,751      7,342       6,550

</TABLE>

<TABLE>
<CAPTION>

Selected Quarterly Financial Information (unaudited)
          (in thousands, except per share data)

             Period ended                          5/31/02    8/31/02     11/30/02    2/28/03
---------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>           <C>
     Revenues:                                   $   565     $    595    $  525        $1,176

     Expenses:                                       852        1,237     1,075           822

     Net income/(loss):                             (242)        (611)     (549)          575

     Net income/(loss) per share:                   (.01)        (.03)     (.03)          .03


                  Period ended                       5/31/01    8/31/01     11/30/01    2/28/02
---------------------------------------------------------------------------------------------------------
       Revenues:
          Continuing operations                  $   612     $    923    $  780        $ 453
          Discontinued operations                      -          438        66            -
                                                  ----------------------------------------------
                                                     612        1,361       846          453
      Expenses:
          Continuing operations                      827          937       845        7,427
          Discontinued operations                    111          337       145           79
                                                  ----------------------------------------------
                                                     938        1,274       990        7,506
     Net income/(loss):
           Continuing operations                    (213)         (12)      (65)      (6,224)
           Discontinued operations                  (118)         101       (79)         (72)
                                                  ----------------------------------------------
                                                    (323)          89      (143)      (6,296)
     Net income/(loss) per share:
           Continuing operations                    (.01)         .00       .00         (.35)
           Discontinued operations                  (.01)         .00      (.01)         .00
                                                    ---------------------------------------------
                                                    (.02)         .00      (.01)        (.35)
</TABLE>

The Company has declared no cash dividends. Basic income (loss) per common share
("EPS") is computed as net income (loss) divided by the weighted average number
of common shares outstanding for the period. Diluted EPS is not presented since
there was no effect of potential common shares or the dilution effect of such
potential common shares is not material.

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion provides information to assist in the understanding of
the Company's financial condition and results of operations, and should be read
in conjunction with the financial statements and related notes appearing
elsewhere herein.

                                       14
<PAGE>

RESULTS OF OPERATIONS

YEAR ENDED FEBRUARY 28, 2003 AS COMPARED
TO YEAR ENDED FEBRUARY 28, 2002

During its fiscal year ended February 28, 2003 ("2003 fiscal year"), Company's
revenues increased to $2,861,000 from $2,768,000 in the fiscal year ended
February 28, 2002 ("2002 fiscal year"). This increase of approximately 3% as
compared to the prior fiscal year is primarily a result of a increase of
$292,000 in the Company's exhibition and related merchandise sales, smaller
increases in merchandise and coal sales during its 2003 fiscal year as compared
to 2002 fiscal year that more than offset a decline in licensing fees.

The Company's revenue from the sale of coal increased from $62,000 to $94,000 or
approximately 52% during the 2003 fiscal year as compared to the 2002 fiscal
year as the Company has incorporated coal into jewelry items that have been well
received by patrons at the TITANIC exhibits.

The Company's cost of coal sold which now includes other related costs for the
jewelry items increased approximately 483% from $6,000 to $35,000 during the
2003 fiscal year as compared to the 2002 fiscal year as a result of an increase
in the cost of components.

General and administrative expenses of the Company decreased $582,000, or
approximately 17%, from $3,391,000 in 2002 fiscal year to $2,809,000 in the 2003
fiscal year. Legal expenses continue to be incurred at a high level and amounted
to $833,000 during the 2003 fiscal year as compared to $810,000 during the prior
year. Consulting expenses were reduced during the current year and amounted to
$194, 000 during the 2003 fiscal year as compared to $420,000 in the prior year.
There was also a reduction of $225,000 in compensation paid to personnel during
fiscal year ended 2003 over the prior fiscal year, There were also other reduced
administrative expenses during the current year although not as material.

The Company's depreciation and amortization expenses decreased to $293,000 from
$374,000, or 22%, during the 2003 fiscal year as compared to the 2002 fiscal
year. This decrease is primarily attributed to the reduction in amortization of
certain intangibles related to prospective salvage opportunities for twelve
shipwrecks that the Company acquired in early 2000 for $900,000 and which were
exchanged in May 2001 for the ownership rights to the "RMS CARPATHIA".

During the 2003 fiscal year, the Company incurred a write down of a note
receivable relating to the Danepath transaction in the net amount of $296,000.
On April 2, 2002, the Company entered into a Purchase Agreement for the sale of
the common stock, representing 100% ownership, of its Danepath Ltd. subsidiary
to Argosy International Ltd., an affiliated party who owns 1,704,545 shares of
the Company. The purchase price, as amended by Agreement on June 1, 2002, was
for $1.5 million. Danepath's principal asset was the research and recovery
vessel "SV EXPLORER". Under the terms of the Purchase Agreements the Company
received $100,000 upon execution and an obligation of $1.4 million, bearing
interest at 8% per annum that was to be paid within six months. This obligation
was collateralized with a first mortgage on the vessel "SV EXPLORER", the
principal asset owned by Danepath, and all the common stock of the Company owned
by Argosy International, Ltd. Subsequently, the note receivable was not paid at
its maturity on October 2, 2002. To avoid a costly international foreclosure
process, the Company entered into a Settlement Agreement whereby the Company
received a cancellation fee from Argosy for $250,000 in the form of a note with
a one-year maturity, cancellation of a vendor payable of $240,000, and
acquisition by deed in lieu of foreclosure of the marine vessel, "SV EXPLORER"
and related marine equipment for consideration of $750,000 in its new wholly
owned United Kingdom subsidiary- Seatron Limited. The ownership of the vessel is
subject to a mortgage with the Company for all monies advanced to this
subsidiary. With this settlement agreement, the Company released Argosy of the
original purchase debt obligation for $1.4 million.

Also during the 2003 fiscal year, the Company settled two lawsuits for a total
charge of $413,000. One of these lawsuits included a one-time charge of $388,000
that includes payments over a thirty-month period and the other required a
one-time payment of approximately $25,000. There were not similar charges during
the 2002 fiscal year, although the Company incurred an impairment charge for


                                       15
<PAGE>

artifacts recovered, net of taxes, of $6,148,000 because the Fourth Circuit
reviewed and declared ambiguous the June 7, 1994 Order of the District Court
that had awarded ownership to the Company of all items then salvaged from the
wreck of the TITANIC as well as all items to be salvaged in the future by the
Company so long as the Company remained salvor-in-possession of the TITANIC.
Having found the June 7, 1994 Order ambiguous, the Fourth Circuit reinterpreted
the order to convey only possession, not title, pending determination of a
salvage award. As a result, an impairment charge was recorded to reflect this
judicial decision. Total expenses for the fiscal year 2003 decreased to
$3,986,000 from $10,036,000, or 60%, primarily as a result of the reduction in
impairment charges.

The Company's loss from operations decreased to $1,125,000 in the fiscal year
2003 as compared to $7,268,000 in the fiscal year 2002, a decrease of
approximately 85%. Interest income for the 2003 fiscal year amounted to $298,000
as compared to $8,000 in the prior fiscal year. This increase is attributed to
interest derived from the Company's tax refunds received in the final quarter of
the fiscal year.

The Company's loss from continuing operation before provision for income taxes
was $827,000 in fiscal year 2003 and as compared to a loss from continuing
operation of $7,260,000 in the 2002 fiscal year. There was no provision for
income taxes in either fiscal year. Consequently, the net loss from continuing
operations before discontinued operations and an extra-ordinary gain was
$827,000 for the 2003 fiscal year whereas there was a net loss from continuing
operations before discontinued operations and an extra-ordinary gain of
$7,260,000 for the prior fiscal year.

The loss from operations was $827,000 for the 2003 fiscal year as compared to a
loss of $6,784,000 in the prior fiscal year of which included a loss from
operation of discontinued business in the amount of $168,000 and a gain on
disposal of a subsidiary of $644,000.

Basic and diluted earnings per common share were $(.04) and $(.38),
respectively, for the 2003 and 2002 fiscal years. The weighted average common
shares outstanding were 18,615,294 and 18,058,573 for the 2003 and 2002 fiscal
years, respectively.

YEAR ENDED FEBRUARY 28, 2002 AS COMPARED TO YEAR ENDED FEBRUARY 28, 2001

During its fiscal year ended February 28, 2002 (the "2002 fiscal year"), the
Company's revenues decreased to $2,768,000 as compared to $5,699,000 in the
fiscal year ended February 28, 2001 (the "2001 fiscal year"). This decrease of
$2,931,000, or 51%, primarily reflects lower licensing fee income in the 2002
fiscal year. In the 2001 year, licensing fee income benefited from the higher
guaranteed annual payment on the first year of the Exhibition Tour Agreement
with SFX.

Exhibition revenue and related sales were $2,354,000 in the 2002 fiscal year as
compared to $5,464,000 in the 2001 fiscal year for a decrease of $3,110,000, or
57%. This decrease in revenues was principally attributable to lower payments
under the Exhibition Tour Agreement with SFX. SFX declined to renew the
agreement on essentially similar terms during 2001 and consequently a revised
agreement was negotiated which resulted in lower annual guaranteed payments.

The Company's merchandise and other revenues, that included the sale of
merchandise, books and royalty payments, increased to $414,000 from $235,000 in
the prior fiscal year. This increase of $179,000, or 76% is primarily attributed
to the contribution of catalog income from the sale of catalogs at each
exhibition venue during the 2002 fiscal year. There was not any catalog sales in
the 2001 fiscal year. The sale of coal recovered from the TITANIC was $62,000 in
the current fiscal year compared to $67,000 in the prior year. In addition, the
Company received an insurance payment of $95,000 during fiscal year ended
February 28, 2002 for the loss of artifacts in a theft that occurred in
Nashville, Tennessee on January 28, 2001 of 10 coins and nine bank notes that
were recovered from the TITANIC wreck site in 1987.

                                       16
<PAGE>

Cost of goods sold were $91,000 for the 2002 fiscal year as compared to $13,000
in the 2002 fiscal year. This increase of $78,000 is primarily attributed to the
costs associated with the catalogs sold during the 2002 fiscal year. There were
no catalogs sales in the prior year's period.

Expenses for expedition costs were only $32,000 for the 2002 fiscal year as
compared to $763,000 in the 2001 fiscal year. During the 2001 fiscal year the
Company undertook the summer of 2000 expedition to the TITANIC wreck site. There
was not a similar expedition conducted during the 2002 fiscal year although a
survey was undertaken in early 2002 in Papua New Guinea territorial waters.

General and administrative expenses were $3,391,000 for the 2002 fiscal year as
compared to $4,405,000 in the 2001 fiscal year. This decrease of $1,014,000, or
23%, is primarily attributed to reductions in consulting expenses, accounting
fees, and legal expenses over the prior year.

Depreciation and amortization expense for the 2002 fiscal year was $374,000 as
compared to $558,000 in the 2001 fiscal year. This decrease of $184,000, or 33%,
is primarily attributed to the reduction of amortization expenses during the
year for intangibles acquired in the 2001 fiscal year that were sold as part of
the CARPATHIA acquisition transaction.

As a result of The United States Court of Appeals for the Fourth Circuit finding
the June 7, 1994 Order ambiguous, the Fourth Circuit reinterpreted the order to
convey only possession, not title, pending determination of a salvage award and
further held that the Company currently has no title to any artifacts that it
had previously recovered from the wreck of the TITANIC nor to any artifacts that
it might recover in the future. In light of the requirements of SFAS
121-impairment of long-lived assets and SFAS 142-the valuation of non-goodwill
intangibles, the value of a salvor lien that may be granted to the Company is at
present undeterminable and uncertain and cannot be reliably estimated,
management elected to establish an impairment charge of $8.1 million to costs of
artifacts recovered in expeditions that occurred after 1987. This loss was
reduced by expected tax benefits of $2.1 million. The artifacts recovered in the
1987 expedition that the Company was granted by the Government of France remains
a Company asset and is valued at $3.2 million, the cost of their recovery.

There was a loss from continuing operations of $7,268,000 for the 2002 fiscal
year as compared to a loss from operations of $40,000 in the 2001 fiscal year.
The substantial decrease in income from operations is primarily attributed to
the write down of the valuation of artifacts recovered that is attributed to the
recent Fourth Circuit Appellate Court decision. This loss is also attributed to
the lower revenues for fiscal year 2002 while the Company incurred higher
proportionate direct and general and administrative expenses although there were
overall reductions in those expenses.

During the 2002 fiscal year, the Company earned interest income of $8,000 as
compared to $76,000 in the prior year. The Company maintained higher cash
balances during the 2001 fiscal year at higher interest rates.

On April 2, 2002, the Company entered into a Purchase Agreement for the sale of
the common stock, representing 100% ownership, of its Danepath Ltd. subsidiary
to Argosy International Ltd, an affiliated party. The purchase price, as amended
by Agreement on June 1, 2002, was $1.5 million. Danepath's principal asset was
the research and recovery vessel "SV EXPLORER". Under the terms of the Purchase
Agreements the Company received $100,000 upon execution and an obligation of
$1.4 million, bearing interest at 8% per annum payable within six months. This
obligation was collateralized with both a first mortgage on the vessel "SV
EXPLORER", the principal asset owned by Danepath, and all the common stock of
the Company owned by Argosy. For the fiscal year 2002, the Danepath subsidiary
had an operating loss of $168,000. The Company realized a gain of $644,000 on
the sale of Danepath for the 2002 fiscal year.

Income (loss) after income taxes for continuing operations was ($7,260,000) for
the 2002 fiscal year as compared to $36,000 in the 2001 fiscal year. For
discontinued operations, the Company had a loss of $168,000 for the 2002 fiscal
year, but realized a gain of $644,000 on the sale of this business. Basic and


                                       17
<PAGE>

diluted earnings per common share were $(0.38) and $ -0- for the 2002 and 2001
fiscal years, respectively. The loss per common share for the discontinued
operation was not material. The weighted average common shares outstanding were
18,058,573 and 16,732,991 for the 2002 and 2001 fiscal years, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided in operating activities was $2,526,000 for the fiscal year
2003 as compared to cash used of $441,000 in the 2002 fiscal year. This increase
in cash provided by operating activities for this fiscal year is primarily
attributed to the decreases in prepaid and refundable taxes of $ 1,750,000,
prepaid expenses and other assets of $983,000, and an increase in accounts
payable and accrued liabilities of $405,000 that offset the net loss $827,000.

For the fiscal year 2003, cash used in investing activities included $727,000
for the purchase of a marine vessel and other property and equipment. In the
prior year cash used in investing activities was $23,000 for property and
equipment, primarily leasehold improvements.

The Company's net working capital and stockholders' equity were $1,042,000 and
$6,550,000, respectively, at February 28, 2003 as compared to a working capital
of $2,241,000 and stockholders' equity $7,342,000 at February 28, 2002. The
Company's current ratio was 1.6 at February 28, 2003 as compared to 2.5 at
February 28, 2002. Although the present working capital position has declined
from the prior year, the working capital liquidity has markedly improved with a
cash and cash equivalent balance of $1,945,000 at year-end. This cash balance is
attributed to tax refunds obtained from the utilization of its prior year
impairment charges and the resulting operating loss.

Management has plans to undertake a recovery operation to the RMS CARPATHIA to
recover objects. As the Company owns this vessel, it is the intent of management
to sell and/or exhibit those items recovered.

Management expects that it may require additional outside funding for its plan
to conduct its own exhibitions beginning in 2004. Previously, the Company relied
upon third parties to conduct exhibitions under a licensing arrangement. There
can be no assurances that should outside financing be needed, that the financial
resources can be made available upon reasonable terms and as timely as
management may require for the proper conduct of these and other future
endeavors. If financing is required and it is not available, this could be
detrimental to the Company and its business.

The Company may have sufficient working capital to meet its needs for the next
twelve months. The exhibition tour agreement with CCE is to expire on December
31, 2003. Renewal of that agreement for another year is not anticipated,
although an extension until late Spring of 2004 is anticipated for certain
venues but it is uncertain at the present time what license payments would
result from such extension because they would be dependent upon overage payments
of exhibition revenues exceeding $10,000,000 during the licensing period.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements requires management to make estimates
and assumptions that affect amounts reported therein. The estimates that
required management's most difficult, subjective or complex judgments are
described below.

Impairment of assets held for use

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
requires management to assess the recoverability of the carrying value of
long-lived assets when an event of impairment has occurred. Management must
exercise judgment in assessing whether an event of impairment has occurred. The
Company concluded an event of impairment occurred in the carrying values of its
Artifacts in the fourth quarter of the 2002 fiscal year and the company recorded


                                       18
<PAGE>

a pre-tax charge totaling $8.1 million. In this circumstance, a judicial ruling
prompted the determination that an assessment for impairment was required.
Management must also exercise judgment in the determination of expected future
cash flows against which to compare the carrying value of the assets being
evaluated. In this measurement, the carrying value far exceeded the expected
cash flows. Management then exercised judgment in determining the fair value of
the assets from which the impairment charge was measured.

In the event that facts and circumstances indicate that the carrying value of
long lived assets, including associated intangibles may be impaired, an
evaluation of recoverability is performed by comparing the estimated future
undiscounted cash flows associated with the asset to the assets carrying amount
to determine if a write down to market value or discounted cash flows is
required.

Probability of litigation outcomes

SFAS No. 5, "Accounting for Contingencies," requires management to make
judgments about future events that are inherently uncertain. In making its
determinations of likely outcomes of litigation matters, management considers
the evaluation of outside counsel knowledgeable about each matter, as well as
known outcomes in case law. See Item 3, "Legal Proceedings" for a detailed
discussion of the key litigation matters the Company faces.


SALVOR-IN-POSSESSION

In order to maintain its salvor-in-possession status as presently required by
the District Court and to prevent third-parties from salvaging the TITANIC wreck
and wreck site, or interfering with the Company's rights to salvage the wreck
and wreck site, the Company may have to commence judicial proceedings against
third-parties. Such proceedings could be expensive and time-consuming.
Additionally, the Company, in order to maintain its salvor-in-possession status,
needs to, among other things, maintain a reasonable presence at the wreck
through periodic expeditions. The Company is actively pursuing the donation of
its salvor status. Maintaining salvor status is entirely dependent upon a
mandate from the District Court in which the Company is subject to jurisdiction.

INTERNATIONAL CURRENCY RISKS

In connection with its activities outside of the United States, the Company is
exposed to the risk of currency fluctuations between the United States dollar
and certain foreign currency. If the value of the United States dollar increases
in relation to the foreign currency, the Company's potential revenues from
exhibition and merchandising activities outside of the United States will be
adversely affected. Although the Company's financial arrangements with its
foreign vendors and exhibition organizers have been based upon foreign
currencies, the Company has sought and will continue to seek to base its
financial commitments and understandings upon the United States Dollar in its
material business transactions so as to minimize the adverse potential effect of
currency fluctuations.



ITEM 8.  FINANCIAL STATEMENTS
                                                                           Page
                                                                           ----
Independent Auditors' Report                                               F-1

Consolidated Balance Sheets at February 28, 2002
and  February 28,2003                                                      F-2

Consolidated Statements of Operations and Comprehensive
Operations for the years ended
February 28, 2001, 2002 and 2003                                           F-3

                                       19
<PAGE>

Consolidated Statements of Stockholders' Equity for the years ended
February 28, 2001, 2002 and 2003                                           F-4

Consolidated Statements of Cash Flows for the years ended
February 28, 2001, 2002 and 2003                                           F-5


Notes to Financial Statements                                              F-7


ITEM 9  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.


ITEM 9A. CONTROLS AND PROCEDURES.

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Securities
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to the
Company's management, including its Chief Executive Officer, as appropriate, to
allow timely decisions regarding required disclosure.

During the 90-day period prior to the date of this report, an evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
upon that evaluation, the Chief Executive Officer concluded that the Company's
disclosure controls and procedures were effective. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls, and no corrective actions taken with
regard to significant deficiencies or material weaknesses in such controls,
subsequent to the date of our most recent evaluation of internal controls.

                                       20
<PAGE>

                                    PART III

ITEM 10.  MANAGEMENT

OFFICERS AND DIRECTORS

The directors, executive officers, and significant employees of the Company are:

Name                      Age                    Position
--------------------------------------------------------------------------------

Arnie Geller              62        President, Chief Executive Officer, Director

Gerald Couture            57        Vice President, Secretary, Director and
                                    Chief Financial Officer

Nick N. Cretan            68        Director

Doug Banker               51        Director


Arnie  Geller  serves as  President  and as a director of the  Company  from his
reappointment  in  November  1999 as an officer of the  Company.  Previously  he
served as President  from May 1993 to May 1995,  and has served as a director of
the Company since May 26,1999.  Prior to 1993, Mr. Geller had  principally  been
engaged in various executive capacities in the record industry for approximately
27 years.  Mr.  Geller was a  self-employed  corporate  consultant  prior to his
appointment  as  President  of the  Company.  Mr.  Geller is on the board of the
Titanic Foundation Inc., an unaffiliated non-profit entity.

Gerald Couture serves as Vice President-  Finance,  Chief Financial  Officer and
director  of the  Company  since  April  2000.  Mr.  Couture  is a  partner  and
principal,  in Couture & Company, Inc., a private corporate financial consulting
firm formed in 1973. Over the last  twenty-five  years, Mr. Couture has, through
his  consulting   firm,   been  involved  in  public   offerings,   mergers  and
acquisitions, venture capital investing, crisis management,  reorganizations and
the  financial  management  a number of growth  enterprises.  Mr.  Couture  is a
director and officer of Alpha Resources,  Inc., a registered  reporting  entity.
Mr.  Couture  has a MBA from  Temple  University,  Philadelphia,  and a B.S.  in
Chemical Engineering from the University of Massachusetts.

Nick Cretan has served as a Director of the Company since May 2000. Mr. Cretan
has more than thirty years of management experience including his present
position as Chief Operating Officer of the non-profit Maritime Association of
the Port of New York and New Jersey. He also serves as President of Friends of
the Statue of Liberty, Ellis Island Foundation, President of Friends of Gateway
National Parks Foundation and as Executive Director of the American Merchant
Marine Memorial Foundation. Previously he served as Deputy Director of the San
Francisco Marine Exchange and staff assistant at the National Federation of
Independent Business.

Doug Banker has served as a Director of the Company since August 2000. Mr.
Banker has more than twenty-five years experience in the entertainment industry
that includes providing management services to musicians and recording artists;
marketing, merchandising, licensing, and sales of music media products; the
development and management of concerts and similar events. Mr. Banker is
presently the manager and principal stockholder of Madhouse Management, Inc., a
nationally known firm that represents several prominent music artists.
Previously, he was a principal in Skillet Records LLC, an independent record
label business that provides national distribution for music artists. Mr. Banker
has also authored several commercially significant software programs and was
involved with the management of the enterprises created for their
commercialization. Mr. Banker is former president of the Board of the Motor City
Music Award Foundation in Detroit, Michigan.

                                       21
<PAGE>

No family relationship exists between or among any of the members of the board
of directors and executive officers of the Company. Except as disclosed above,
none of the nominees are directors of any other company having a class of equity
securities registered under or required to file periodic reports pursuant to the
Securities Exchange Act of 1934, as amended, or any company registered as an
investment company under the Investment Company Act of 1940, as amended.

The Board of Directors held seven meetings during the fiscal year ended February
28, 2003. At the present time, the Company has no nominating, executive, or
compensation committees. The full board presently functions as the audit
committee.

ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth a summary of compensation paid to the executive
officers of the Company for the fiscal years ended, February 28, 2001, February
28, 2002 and February 28, 2003 in excess of $50,000.

<TABLE>
<CAPTION>
                                                                            Long-Term
                                                                          Compensation
                                                                     ---------------------
                                                                                         Common
Name                                                               Other                 Shares
and                           Year                                 Annual                Subject to
Principal                     Ended February                       Compen-               Options
Position                      28th                 Salary          sation                Granted
-----------------------------------------------------------------------------------------------------

Current Officers:

<S>                           <C>             <C>                <C>                 <C>
Arnie Geller(1) (2)
President and Chief
Executive Officer               2003              $331,659         $37,961                  -0-
                                2002               358,463          48,101              500,000
                                2001               292,220          22,759              875,000


Gerald Couture(3)(4)
Vice President Finance
Chief Financial Officer         2003              $272,467         $51,849                  -0-
                                2002               225,687         113,059              600,000
                                2001               100,769           5,905              375,000


Former Officers:

G. Michael Harris (5)
Former Vice President and
Chief Operating Officer         2003                   -0-             -0-                  -0-
                                2002                   -0-             -0-                  -0-
                                2001             $ 325,000          $  710                  -0-

Dik Barton (6)
Vice President and
Director of Operations          2003                   -0-             -0-                  -0-
                                2002              $134,361        $  3,619                  -0-
                                2001                79,073             -0-                  -0-
</TABLE>

                                       22
<PAGE>

1.   Mr.  Geller was  appointed  President  and Chief  Executive  Officer of the
     Company on November 26, 1999.  Mr.  Geller was elected a director on August
     9, 1999.  An  employment  agreement  between the Company and Mr. Geller was
     executed  on February  2, 2002 that  provides  for an annual base salary of
     $330,000 with 5% per year increases.  At Mr. Geller's option,  he may elect
     to receive his  compensation in shares of the Company's  common stock.  For
     this  purpose,  the common  stock will be valued at 50% of its  closing bid
     price as of the date of the  election.  Mr.  Geller has been granted  stock
     options as an officer and director to purchase  1.375 million shares of the
     Company's  common stock at price ranging from $0.40 to $1.75 per share that
     were closing prices of the stock at the respective  times of issuance.  All
     of these options expire in ten years.

2.   Includes  in  other   compensation,   medical  payments  including  medical
     insurance of $24,180 and a car allowance of $12,000 for the current  fiscal
     year.

3.   On April 25, 2000,  the Company  engaged Mr.  Couture as Vice President and
     its Chief Financial  Officer pursuant to a one-year  employment  agreement.
     After that employment  agreement  expired Mr. Couture continued to serve as
     an officer of the Company with his compensation dependent upon the services
     he performed.  On February 2, 2002, Mr. Couture and the Company  executed a
     new employment  agreement for a term of four years at an annual base salary
     of $270,000 with 5% per year increases.  At Mr.  Couture's  option,  he may
     elect to receive his  compensation in shares of the Company's common stock.
     For this purpose, the common stock will be valued at 50% of its closing bid
     price as of the date of the  election.  Mr.  Couture  had  previously  been
     granted a stock option to purchase  300,000 shares of the Company's  common
     stock at a price of $1.625 per share,  which was the  closing  price of the
     stock on April 24, 2000. Mr. Couture received an option to purchase 600,000
     shares  at a price of $.40 per  share  that  was the  closing  price of the
     Company's  common  stock  on  February  1,  2002 as  part of an  employment
     agreement. In addition on February 2, 2002, Mr. Couture's option to acquire
     75,000 shares of common stock was reset to an exercise  price of $0.40 that
     was the closing price of the common stock on February 1, 2002. All of these
     options expire in ten years.

4.   Includes  in  other   compensation,   medical  payments  including  medical
     insurance of $20,099,  a car  allowance of $7,500,  an office  allowance of
     $12,000, and payments to his consulting firm for the professional  services
     of others of $10,750 for the current fiscal year.

5.   Mr.  Harris was appointed  Executive  Vice  President  and Chief  Operating
     Officer of the  Company on  November  26,  1999.  Mr.  Harris was elected a
     director on August 9, 1999. Mr. Harris' employment was terminated on August
     27, 2000 and he was removed from the Board of  Directors  on September  12,
     2000.  During the year,  Mr.  Harris was  issued a stock  option  which was
     cancelled at the time of his termination. See "LEGAL PROCEEDINGS."

6.   On May 6, 2001 Mr. Barton  previously a consultant to the Company  became a
     Vice  President  and  Director  of  Operations  for the  Company  with  the
     execution  of a three  year  employment  agreement  at a annual  salary  of
     $130,000 for the first year,  $143,000 for the second year and $157,000 for
     the final year. As part of his compensation,  Mr. Barton was issued options
     to purchase  250,000  shares of the  Company's  common stock at an exercise
     price of $0.88 per share,  the common stock price at the time of the grant.
     This stock option had a five-year term but expired by its terms during June
     2002. On March 22, 2002,  Mr. Barton  resigned as an officer of the Company
     and became a consultant to the Company. Mr. Barton resigned as a consultant
     during June 2002.


Option Exercises and Holdings

No executive officer of the Company exercised any stock options during the
fiscal year ended February 28, 2003.

                                       23
<PAGE>

Compensation of Directors

The Company presently compensates all directors by issuing 25,000 shares of
common stock for appointment as a director and subsequently, options to purchase
common stock of the Company for each year of service. On January 27, 2000, each
director was granted an option to purchase 75,000 shares of the common stock of
the Company at an exercise price of $1.15 that was the closing price of the
Company's common stock as of January 26, 2001. The purpose of this grant of
options and shares of common stock was to align the interests of the directors
with that of the Company's shareholders. On February 2, 2002 the strike price
for these options were reset to $0.40 the closing price of the Company's common
stock as of February 1, 2002. During fiscal year 2003, the two independent
directors were granted 100,000 shares of common stock each, having a fair market
value of $24,000, for their continued services on behalf of the Company with the
issuance of this common stock deferred until the second quarter of fiscal year
2004. During fiscal year 2002, each of the two independent directors received
cash compensation for meeting attendance of $2,100.

ITEM. 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table enumerates, as of June 3, 2003, the name, address, and
ownership, both by numerical holding and percentage of interest, of each
beneficial owner or more than five percent (5%) of the Company's outstanding
Common Stock, the directors of the Company, individually, and its directors and
executive officers as a group.
<TABLE>
<CAPTION>

                                                        Amount
Name and Address of                                   Beneficially        Common Stock
Beneficial Owner                            Class        Owned             Percentage
------------------------------------------------------------------------------------------

<S>                                     <C>         <C>                   <C>
Joe Marsh (1)                              Common       2,833,768             15.3
605 Southside Drive
Akron, Ohio  44317

William S. Gasparrini                      Common       2,328,937             12.6
23 Oak Street
Greenwich, CT 06831

Argosy International , Ltd.                Common       1,704,545              9.2
PO Box 260
Providenciales
Turks & Caicos, B.W.I.

Arnie Geller (2)
c/o RMS Titanic, Inc.                      Common       1,475,000              8.0
3340 Peachtree Road, N.E, Suite 1225.
Atlanta, GA 30326

Nick Cretan (3)                            Common          25,000               --
Suite 913
17 Battery Place
New York, NY 10004

Gerald Couture (4)                         Common         358,764              1.9
901 Chestnut Street, Suite A
Clearwater, FL 33756

Doug Banker (5)                            Common          25,000               --
6508 Crane Road
Ypsilanti, MI 48197

All Officers and Directors as a Group      Common       1,883,764             10.1
   (4 persons)
</TABLE>

                                       24
<PAGE>


(1)      Includes Mr. Marsh's latest Form 13D filing.
(2)      Common stock held as tenancy by the entireties with his wife.  Excludes
          options to purchase 1,375,000 shares of common stock.
(3)      Excludes options to purchase 75,000 shares of common stock.
(4)      Excludes options to purchase 975,000 shares of common stock.
(5)      Excludes options to purchase 75,000 shares of common stock.

Other than as set forth above, the Company is not aware of any other
stockholders who beneficially own, individually or as a group, 5% or more of the
outstanding shares of Common Stock.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's outstanding shares of Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulation to furnish the Company with copies of all such reports that they
file.

At the present time all officers and directors are current in their Forms 3 and
4 filings for the fiscal year ended February 28, 2003. The Company is aware of
one beneficial owner who owns of more than 10% of the Company's Common Stock who
has not filed a report as required by Section 16 of the Securities Exchange Act
of 1934.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On May 1, 2002, an extension was granted to Clear Channel Entertainment
Exhibits, Inc., a Delaware corporation formerly known as SFX Family
Entertainment, Inc. pursuant to which, among other things, the Company licensed
the worldwide rights to exhibit the Company's TITANIC artifacts for the period
commencing on January 6, 2003 until December 31, 2003.

A consulting firm in which the Company's Chief Financial Officer is a principal,
has rendered services to the Company for the time of other professionals.
Payment for these services amounted to $10,750, $7,415, and $5,905 for fiscal
years 2003, 2002, and 2001, respectively.

On April 2, 2002, the Company entered into a Purchase Agreement for the sale of
the common stock, representing 100% ownership, of its Danepath Ltd. subsidiary
to Argosy International Ltd., an affiliated party who owns 1,704,545 shares of
the Company. The purchase price, as amended by Agreement on June 1, 2002, was
for $1.5 million. Danepath's principal asset was the research and recovery
vessel "SV EXPLORER". Under the terms of the Purchase Agreements the Company
received $100,000 upon execution and an obligation of $1.4 million, bearing
interest at 8% per annum that was to be paid within six months. This obligation
was collateralized with a first mortgage on the vessel "SV EXPLORER", the
principal asset owned by Danepath, and all the common stock of the Company owned
by Argosy International, Ltd. Subsequently, the note receivable was not paid at
its maturity on October 2, 2002. In order to avoid a costly international
foreclosure process, the Company entered in a Settlement Agreement whereby the
Company received a cancellation fee for $250,000 from Argosy in the form of a
note with a one-year maturity, cancellation of a $240,000 vendor payable, and
acquired by deed in lieu of foreclosure the marine vessel, "SV EXPLORER" and
related marine equipment for consideration of $750,000 in its new wholly owned
United Kingdom subsidiary - Seatron Limited. The ownership of the vessel is
subject to a mortgage with the Company for all monies advanced to this
subsidiary. With this settlement agreement, the Company released Argosy of the
original purchase debt obligation for $1.4 million.

                                       25
<PAGE>

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES & REPORTS ON FORM 8-K

The following documents are filed as part of this Report on Form 10-K:

(a) Financial Statements.  The following financial statements of the Company are
included in this Annual Report:

Independent Auditors' Report                                               F-1

Consolidated Balance Sheets at February 28, 2002
and February 28, 2003                                                      F-2

Consolidated Statements of Operations
and Comprehensive Operations  for the years ended
February 28, 2001, 2002 and 2003                                           F-3

Consolidated  Statements of Stockholders' Equity
for the years ended February 28, 2001, 2002 and 2003                       F-4

Consolidated  Statements of Cash Flows for the years ended
February 28, 2001, 2002 and 2003                                           F-5

Notes to Financial Statements                                              F-7

(b) Reports on Form 8-K

     None.

(c) Exhibits.

3.1     Articles of Incorporation, as amended.

4.1     First Amendment to By-Laws of the Registrant.

4.2     Second Amendment to By-Laws of the Registrant.

9.1     Voting Trust  Agreement  among  Titanic  Ventures  Limited  Partnership,
        George Tulloch,  Allan H. Carlin,  Arnie Geller, G. Michael Harris, Kurt
        Hothorn,  Cheryl Hothorn,  Westgate  Entertainment  Corp., Anne A. Hill,
        Diane Carlin, Shirley A. Hill, James A. Hill, and D. Michael Harris.

10.1.1  Lease  Agreement   between  the  Company  and  17  Battery  Place  North
        Associates.

10.1.2  Lease Agreement between the Company and Tower Park Place

10.2    Agreement  dated  April 15, 1996  between the Company and CRE-CO  Finanz
        GmbH.


10.13   1998 Charter Agreement with IFREMER.

10.14   1998 Charter Agreement with Oceaneering International, Inc.

                                       26
<PAGE>

10.20   Promissory  Note dated  January 5, 1999  executed  by George  Tulloch in
        favor of the registrant.

10.21   Pledge  Agreement  dated January 5, 1999 between  George Tulloch and the
        registrant.

10.22.1 Exhibition  Tour Agreement  dated March 31, 1999 between the Company and
        Magicworks  Entertainment  Inc.  is  incorporated  by  reference  to the
        Company's report on Form 10-Q for the fiscal quarter ended May 31, 1999.

10.22.2 Agreement  dated April 18, 2000 by and among  Whitestar  Marine Recover,
        Ltd., Argosy International, Ltd. Graham Jessop and the Company.

10.22.3 Agreement  dated  April  18,  2000  by and  among  the  Company,  Argosy
        International, Inc. and Graham Jessop.

10.22.4 Agreement   dated  May  7,  2001  by  and  among  the  Company,   Argosy
        International, Inc. and Graham Jessop.

10.23   Lease dated March 27, 2000 for offices in Atlanta, Georgia.

10.23.1 Employment Agreement dated April 25, 2000 between the Company and Gerald
        Couture.

10.23.2 Stock  Option  Agreement  dated April 25,  2000  between the Company and
        Gerald Couture.

10.23.3 Employment  Agreement  dated June 29, 2000 between the Company and Arnie
        Geller is incorporated by reference to the Company's report on Form 10-Q
        for the fiscal quarter ended August 31, 2000.

10.23.4 Stock Option Agreement dated June 29, 2000 between the Company and Arnie
        Geller is incorporated by reference to the Company's report on Form 10-Q
        for the fiscal quarter ended August 31, 2000.

10.23.5 Employment  Agreement  dated June 29,  2000  between  the Company and G.
        Michael Harris is incorporated  by reference to the Company's  report on
        Form 10-Q for the fiscal quarter ended August 31, 2000.

10.23.6 Stock  Option  Agreement  dated June 29, 2000 between the Company and G.
        Michael Harris is incorporated  by reference to the Company's  report on
        Form 10-Q for the fiscal quarter ended August 31, 2000.

10.23.7 Employment  Agreement  dated May 6, 2001  between  the  Company  and Dik
        Barton.

10.23.8 Employment  Agreement  dated  February  2, 2002  between the Company and
        Arnie Geller.

10.23.9 Employment  Agreement  dated  February  2, 2002  between the Company and
        Gerald Couture.

10.24   The Company's 2000 Stock Option Plan and form of stock option.

10.30   Amendment  to  Exhibition  Tour  Agreement,  dated  September  18, 2000,
        between the Company and SFX Family Entertainment Inc.

10.31   Second Amendment to Exhibition Tour Agreement, dated May 7, 2001 between
        the Company and SFX Family Entertainment Inc.

10.32   Third  Amendment  to  Exhibition  Tour  Agreement,  dated  March 7, 2002
        between the Company and SFX Family Entertainment Inc.

                                       27
<PAGE>

10.33   Fourth Amendment to Exhibition Tour Agreement, dated May 1, 2002 between
        the Company and Clear Channel Entertainment Exhibits, Inc.

10.34   Form of lease  dated  October 16,  2001 for  offices  and  warehouse  in
        Atlanta, Georgia.

10.35   Agreement dated April 2, 2002, between the Company, Argosy International
        Ltd, Danepath Ltd and Graham Jessop.

10.36   Stock  Pledge  Agreement  dated  April 2, 2002,  between the Company and
        Argosy International, Ltd.

10.37   Deed of Covenant from Danepath Ltd. to the Company.

10.38   Letter Modification  Agreement dated April 4, 2002, between the Company,
        Argosy International Ltd., Danepath Ltd. and Graham Jessop.

10.39   United States Court of Appeals R.M.S.  Titanic,  Inc. v. The Wrecked and
        Abandoned Vessel. Opinion No. 01-2227

10.40   Motion for Stay of Mandate as filed on April 22, 2002.

10.41   Letter  Modification  Agreement dated June 1, 2002, between the Company,
        Argosy International Ltd, Danepath Ltd and Graham Jessop.

10.42   Form of Settlement  Agreement  between Argosy  International Ltd and the
        Company is  incorporated  by reference to the  Company's  report on Form
        10-Q for the fiscal quarter ended November 30, 2002.

10.43   Form of Stock Pledge Agreement between Argosy  International Ltd and the
        Company is  incorporated  by reference to the  Company's  report on Form
        10-Q for the fiscal quarter ended November 30, 2002.

10.44   Form of Promissory Note of Argosy  International  Ltd is incorporated by
        reference to the  Company's  report on Form 10-Q for the fiscal  quarter
        ended November 30, 2002.

10.45   Form of Settlement  Agreement and Mutual  General  Release of all Claims
        Known and Unknown (*1).

10.46   Form of  Stipulation  and  [Proposed]  Order for Dismissal of Action and
        Retention of Jurisdiction (*1).

10.47   Form of Judgment  pursuant to  Stipulation  for Entry of Judgment in the
        Event of Default (*1).

10.48   Form of Stipulation for Entry of Judgment in the Event of Default (*1).

99.1    Certifications of the Company's CEO and CFO.

99.2    Additional Exhibits

              Subsidiaries of RMS TITANIC

(*1) -- incorporated herein as referenced to an 8-K filing of July 16, 2002.

                                       28
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange
Act of 1934, the Registrant had duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                                           RMS TITANIC, INC.

June 12, 2003                              By: /s/ Arnie Geller
                                           --------------------------------
                                           Arnie Geller, President and Chief
                                           Executive Officer

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and as of the date indicated:


/s/ Arnie Geller                                     June 12, 2003
-----------------------------
Arnie Geller, President,
Chief Executive Officer, Director


/s/ Gerald Couture                                   June 12, 2003
-----------------------------
Gerald Couture, Vice President, Chief
Financial Officer, Secretary,
Director


/s/ Nick Cretan                                      June 12, 2003
-----------------------------
Nick Cretan, Director


/s/ Doug Banker                                      June 12, 2003
-----------------------------
Doug Banker, Director

                                       29
<PAGE>


RMS TITANIC, INC.

FINANCIAL STATEMENTS

FEBRUARY 28, 2003


<PAGE>

<TABLE>
<CAPTION>

                                                    RMS TITANIC, INC. AND SUBSIDIARY


                                          INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------------

<S>                                                                             <C>
Independent Auditors' Report                                                       F-1


Consolidated Financial Statements:

   Consolidated Balance Sheets at February 28, 2002 and February 28, 2003          F-2

   Consolidated Statements of Operations and Comprehensive Operations for the
    Years Ended February 28, 2001, February 28, 2002 and February 28, 2003         F-3

   Consolidated Statements of Stockholders' Equity for the Years Ended
    February 28, 2001, February 28, 2002 and February 28, 2003                     F-4

   Consolidated Statements of Cash Flows for the Years Ended
    February 28, 2001, February 28, 2002 and February 28, 2003                  F-5 - F-6

   Notes to Financial Statements                                                F-7 - F-23

</TABLE>


<PAGE>

INDEPENDENT AUDITORS' REPORT




To the Board of Directors
RMS Titanic, Inc.


We have audited the accompanying consolidated balance sheets of RMS Titanic,
Inc. and Subsidiary as of February 28, 2003 and February 28, 2002, and the
related statements of operations and comprehensive operations, stockholders'
equity, and cash flows for each of the three years in the period ended February
28, 2003. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of RMS Titanic, Inc.
and Subsidiary as of February 28, 2003 and February 28, 2002, and the results of
their operations and their cash flows for each of the three years in the period
ended February 28, 2003, in conformity with accounting principles generally
accepted in the United States of America.



Kempisty & Company
Certified Public Accountants, P. C.
New York, New York

June 9, 2003

                                      F-1
<PAGE>

<TABLE>
<CAPTION>

                                                                                                 RMS TITANIC, INC. AND SUBSIDIARY

                                                                                                      CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------------------------------------------------------------------

                                                                                         February 28,         February 28,
---------------------------------------------------------------------------------------------------------------------------------
                                                                                             2002                 2003
---------------------------------------------------------------------------------------------------------------------------------

ASSETS

<S>                                                                                  <C>             <C>
Current Assets:
  Cash and cash equivalents                                                            $  146,000      $     1,945,000
  Accounts receivable                                                                      40,000              128,000
  Prepaid and refundable taxes                                                          2,261,000              511,000
  Prepaid expenses and other current assets                                                70,000              307,000
  Net assets of discontinued operations                                                 1,221,000                    -
---------------------------------------------------------------------------------------------------------------------------------

      Total current assets                                                              3,738,000            2,891,000

Artifacts owned, at cost                                                                4,495,000            4,484,000
Salvor's lien                                                                               1,000                1,000
Property and Equipment, net of accumulated depreciation
 of $1,210,000 and $1,501,000, respectively                                               544,000              979,000
Other Assets                                                                               61,000               44,000
---------------------------------------------------------------------------------------------------------------------------------
      Total Assets                                                                     $8,839,000           $8,399,000
=================================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable and accrued liabilities                                             $  709,000      $     1,114,000
   Deferred revenue                                                                       788,000              735,000
---------------------------------------------------------------------------------------------------------------------------------
      Total current liabilities                                                         1,497,000            1,849,000
---------------------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies

Stockholders' Equity:
  Common stock - $.0001 par value; authorized 30,000,000 shares,
   issued and outstanding 18,550,047 and 18,675,047 shares, respectively                    2,000                2,000
  Additional paid-in capital                                                           16,615,000           16,650,000
  Accumulated other comprehensive loss                                                    (31,000)                   -
  Accumulated deficit                                                                  (9,244,000)         (10,102,000)
---------------------------------------------------------------------------------------------------------------------------------
      Stockholders' equity                                                              7,342,000            6,550,000
---------------------------------------------------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Equity                                       $8,839,000           $8,399,000
=================================================================================================================================


                                                                                                See Notes to Financial Statements
</TABLE>
                                      F-2
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 RMS TITANIC, INC. AND SUBSIDIARY

                                                               CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS
----------------------------------------------------------------------------------------------------------------------------------
                                                                                  February 28,      February 28,       February 28,
Year ended                                                                            2001              2002               2003
<S>                                                                          <C>               <C>                <C>
----------------------------------------------------------------------------------------------------------------------------------
Revenue:
  Exhibitions and related merchandise sales                                       $ 5,464,000      $  2,354,000       $  2,646,000
  Licensing fees                                                                      108,000           313,000               -
  Merchandise and other                                                                60,000            39,000            121,000
  Sale of coal                                                                         67,000            62,000             94,000

----------------------------------------------------------------------------------------------------------------------------------
Total revenue                                                                       5,699,000         2,768,000          2,861,000
----------------------------------------------------------------------------------------------------------------------------------
Expenses:
 General and administrative                                                         4,405,000         3,391,000          2,809,000
  Depreciation and amortization                                                       558,000           374,000            293,000
  Expedition costs                                                                    763,000            32,000               -
  Cost of merchandise sold                                                              5,000            85,000            140,000
  Cost of coal sold                                                                     8,000             6,000             35,000
  Write down of note receivable                                                             -                 -            296,000
  Expenses for settlement of litigation                                                     -                 -            413,000
Impairment charge for artifacts recovered, net of taxes                                     -         6,148,000                  -
----------------------------------------------------------------------------------------------------------------------------------
Total expenses                                                                      5,739,000        10,036,000          3,986,000
----------------------------------------------------------------------------------------------------------------------------------

Income (loss) from continuing operations                                              (40,000)       (7,268,000)        (1,125,000)
Other income:
  Interest                                                                             76,000             8,000            298,000
  Other                                                                                     -                 -                  -
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before provision for income taxes                                        36,000        (7,260,000)          (827,000)

Provision (benefit) for income taxes                                                      -               -                      -

----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) from Continuing Operations                                          $36,000      $ (7,260,000)     $    (827,000)
==================================================================================================================================
Discontinued operations:
     Loss from operations of Danepath subsidiary disposed of:                         (88,000)         (168,000)                 -
     Gain on disposal of Danepath including provision in 2002 of
       a $46,000 operating loss during phase out period.                                    -           644,000                  -
==================================================================================================================================
                                                                                     $(52,000)      $(6,784,000)      $   (827,000)
----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) for basic and diluted common shares from
  Continuing operations                                                            $    - 0 -        $    (0.38)      $      (0.04)
Net income (loss) for basic and diluted common shares from
  discontinued operations                                                          $    - 0 -        $    - 0 -       $        -0-

Earnings (loss) per common share, basic and diluted                                $    - 0 -        $    (0.38)      $      (0.04)
==================================================================================================================================

Weighted-average number of common shares outstanding                               16,732,991        18,058,573         18,615,294
==================================================================================================================================

                                                                                                See Notes to Financial Statements
</TABLE>
                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                                                                                                   RMS TITANIC, INC. AND SUBSIDIARY

                                                                                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------------------------

Years ended February 28, 2001, February 28, 2002 and February 28, 2003
---------------------------------------------------------------------------------------------------------------------
                                                                                   Accumulated
                                                 Common Stock       Additional     Other
                                           Number                   Paid-in        Comprehensive     Accumulated   Stockholders'
                                           of Shares      Amount    Capital        Operation         Deficit       Equity
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                    <C>             <C>      <C>             <C>              <C>              <C>
Balance as of March 1, 2000                16,287,128      2,000   $14,240,000      $      -        $(2,439,000)     $11,803,000

Common stock issued for acquisition of
 intangibles                                  600,000          -       900,000             -                  -          900,000
Issuance of common stock for services          60,000          -       100,000             -                  -          100,000
Foreign currency translation adjustment             -          -             -      $(31,000)                 -          (31,000)
Net loss                                            -          -             -             -            (21,000)         (21,000)

-----------------------------------------------------------------------------------------------------------------------------------

Balance as of February 28, 2001            16,947,128     $2,000   $15,240,000      $(31,000)       $(2,460,000)     $12,751,000

Common stock issued for acquisition
of ownership of RMS Carpathia               1,104,545          -       819,000                                           819,000
Issuance of common stock for compensation     453,374          -       314,000             -                  -          314,000
Issuance of common stock for services          45,000          -        29,000             -                  -           29,000
Issuance of compensatory stock options                                               213,000                             213,000
Net loss                                                                                             (6,784,000)      (6,784,000)
-----------------------------------------------------------------------------------------------------------------------------------
Balance as of February 28, 2002            18,550,047      2,000    16,615,000      $(31,000)       $(9,244,000)      $7,342,000

Reclass of foreign currency translation                                               31,000            (31,000)               -
Issuance of common stock for services         125,000          -        35,000             -                  -           35,000
Net loss                                                       -             -             -           (827,000)        (827,000)
-----------------------------------------------------------------------------------------------------------------------------------
Balance as of February 28, 2003            18,675,047     $2,000   $16,650,000       $     -       $(10,102,000)      $6,550,000
===================================================================================================================================

                                                                                                See Notes to Financial Statements
</TABLE>

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                                                                                 RMS TITANIC, INC. AND SUBSIDIARY

                                                                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
=================================================================================================================================

                                                                                  February 28,       February 28,      February 28,
Year ended                                                                            2001               2002             2003
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>            <C>                 <C>
Cash flows from operating activities:
  Net income (loss)                                                              $    (21,000)   $    (6,784,000)    $   (827,000)
---------------------------------------------------------------------------------------------------------------------------------
  Deduct Loss from discontinued operation                                              (9,000)          (168,000)               -

 Income (Loss) from continuing operations                                        $    (12,000)   $    (6,616,000)    $   (827,000)
 Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
    Net gain on sale of business                                                            -            644,000                -
    Depreciation and amortization                                                     558,000            374,000          293,000
    Issuance of common stock for services                                                   -            100,000           35,000
    Issuance of compensatory stock options                                                  -            213,000                -
    Net deferred income tax benefit (expense)                                         324,000
      Changes in operating assets and liabilities:
      (Increase) decrease in accounts receivable                                      335,000             (3,000)         (88,000)
      (Increase) decrease in prepaid and refundable taxes                             578,000         (1,365,000)       1,750,000
      Decrease (increase) in prepaid expenses and other current assets               (103,000)           208,000          983,000
      Decrease (decrease) in other assets                                            (571,000)         6,749,000           28,000
      Increase (decrease) in deferred revenue                                         637,000           (453,000)         (53,000)
      Increase (decrease) in accounts payable and accrued liabilities              (1,645,000)          (292,000)         405,000
---------------------------------------------------------------------------------------------------------------------------------
        Total adjustments                                                             113,000          6,175,000        3,353,000
---------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by operating activities                                     101,000           (441,000)       2,526,000
---------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Artifact recovery costs                                                          (2,107,000)                 -                -
  Purchases of property and equipment                                                (247,000)           (23,000)        (727,000)
---------------------------------------------------------------------------------------------------------------------------------
        Cash used in investing activities                                          (2,354,000)           (23,000)        (727,000)
---------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Proceeds from debt                                                                  250,000                  -                -
Repayment of debt                                                                    (250,000)                 -                -
---------------------------------------------------------------------------------------------------------------------------------
        Cash used in financing activities                                                   -                  -                -
---------------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                               (2,455,000)          (464,000)       1,799,000

Cash and cash equivalents at beginning of year                                      3,065,000            610,000          146,000
---------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                            $ 610,000       $    146,000     $  1,945,000
=================================================================================================================================

Supplemental disclosure of cash flow information:
  Cash paid during the year for income taxes                                        $   - 0 -       $      - 0 -     $      - 0 -
=================================================================================================================================


                                                                                                See Notes to Financial Statements
</TABLE>

                                      F-5
<PAGE>
<TABLE>
<CAPTION>

                                                                                                 RMS TITANIC, INC. AND SUBSIDIARY

                                                                                    CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)

                                                                       February 28,       February 28,       February 28,
Year ended                                                                  2001              2002               2003
---------------------------------------------------------------------------------------------------------------------------------

<S>                                                                 <C>                 <C>                   <C>
Supplemental schedule of non-cash financing and
 investing activities:
  Issuance of compensatory stock options                               $       -0-         $   213,000            $   -0-

=================================================================================================================================
   Common stock issued for assets                                      $   900,000         $   819,000            $   -0-
=================================================================================================================================


                                                                                                See Notes to Financial Statements
</TABLE>

                                      F-6
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

1.      DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES:

RMS Titanic,  Inc.  initially  conducted  business as Titanic  Ventures  Limited
Partnership  ("TVLP").  In 1993, RMS Titanic, Inc. acquired all of TVLP's assets
and assumed all of TVLP's SIGNIFICANT liabilities. The transaction was accounted
for as a "reverse  acquisition" with TVLP deemed to be the acquiring entity. RMS
Titanic, Inc. and TVLP are referred to as the "Company" as the context dictates.

In June 2000, the Company  established a wholly owned United Kingdom subsidiary,
Danepath  Ltd.,  for  the  purpose  of  purchasing  the  research  vessel,   RRS
Challenger,  a 178 foot- 1050 ton ship that was to be utilized in the expedition
to the TITANIC  wreck site during that summer.  This vessel was acquired on June
30, 2000 from the Natural Environment  Research Council, a British  governmental
agency. The name of the vessel was changed to the SV EXPLORER. On April 2, 2002,
the Company  sold its  Danepath  subsidiary  to Argosy  International  Ltd.,  an
affiliated  party.  In January 2003, in settlement of an outstanding  obligation
from  Argosy,  the Company  acquired the vessel,  the SV  EXPLORER,  and related
marine  equipment in a wholly owned United  Kingdom  subsidiary  of the Company,
Seatron Limited.

In May 2001, the Company  acquired the ownership rights to the shipwreck the RMS
CARPATHIA  (the  "CARPATHIA").  The  CARPATHIA  was the vessel that  rescued the
survivors  from  the  Titanic.  The  value  that  was  assigned  to  this  asset
($1,374,000) is the un-amortized  value of other intangible  assets purchased by
the Company in April 2000 from this same entity ($555,000), plus the fair market
value of 1,104,545 newly issued shares of common stock ($819,000).

On  March  6,  2002,  in a  separate  agreement,  the  Company  sold  to  Argosy
International,  for minimal consideration,  its 100% ownership interest in White
Star  Marine  Recovery,  Ltd.  That  sale  terminated  its  obligation  under an
agreement  with  Argosy  International  for the  consulting  services  of Graham
Jessop. At the time of this sale, White Star Marine Recovery had no assets other
than this consulting contract.

The accompanying  consolidated  financial statements include the accounts of the
Company  and  its  wholly  owned  subsidiary.  All  inter-company  accounts  and
transactions have been eliminated.

The  Company  was formed in 1987 for the  purposes  of  exploring  the wreck and
surrounding  oceanic  area  of the  vessel  the  RMS  TITANIC  (the  "TITANIC");
obtaining  oceanic material and scientific data available  there-from in various
forms,  including still and moving photography and artifacts  ("Artifacts") from
the wreck site;  and  utilizing  such data and  Artifacts  in  revenue-producing
activities  such as touring  exhibitions,  television  programs  and the sale of
still  photography.  The Company  also earns  revenue  from the sale of coal and
TITANIC -related products.

The  Company was  declared  salvor-in-possession  of the  TITANIC  pursuant to a
judgment  entered in the  Federal  District  Court for the  Eastern  District of
Virginia.  On April 12, 2002,  the United States Court of Appeals for the Fourth
Circuit (the "Fourth Circuit") affirmed two orders of the United States District
Court for the Eastern District of Virginia,  Norfolk Division.  R.M.S.  Titanic,
Inc. v. The Wrecked and Abandoned  Vessel ...,  2002 U.S.  App.  LEXIS 6799 (4th
Cir.  2002).  Dated  September  26,  2001 and  October 19,  2001,  these  orders
restricted  the sale of artifacts  recovered by the Company from the RMS TITANIC
wreck site. In rendering its opinion,  the Fourth Circuit  reviewed and declared
ambiguous  the  June 7,  1994  order of the  District  Court  that  had  awarded
ownership  to the  Company  of all  items  then  salvaged  from the wreck of the
TITANIC as well as all items to be salvaged in the future by the Company so long
as the Company remained  salvor-in-possession  of the TITANIC.  Having found the
June 7, 1994 order  ambiguous,  the Fourth  Circuit  reinterpreted  the order to
convey only possession, not title, pending determination of a salvage award.

                                      F-7
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

As a consequence  of the Fourth  Circuit's  decision,  the Company  reviewed the
carrying  cost of  artifacts  recovered  from TITANIC  expeditions  to determine
impairment of values. Up until the ruling by the Fourth Circuit, the Company was
carrying the value of the  artifacts  that it recovered  from the TITANIC  wreck
site at the respective  costs of the expeditions as the Company  believed it was
the owner of all artifacts recovered.  The Company had relied on ownership being
granted by the United  States  District  Court in the June 7, 1994  Order.  As a
consequence of this review and in compliance with the  requirements of Statement
of Financial  Accounting Standards ("SFAS") 142- impairment of long-lived assets
and SFAS 121-the valuation of non-goodwill  intangibles,  it was determined that
an impairment of realizable  values had occurred because of the Fourth Circuit's
ruling that  removed  ownership of certain  artifacts  from the Company that are
under the  jurisdiction of the United States District Court.  The District Court
has  jurisdiction  of all artifacts  that have been  recovered  from the TITANIC
wreck site except for those 1800  artifacts  recovered  in the 1987  expedition.
These 1987 artifacts were previously granted to the Company by the government of
France in 1993.  Furthermore,  the Salvor's  Lien that the Fourth  Circuit Court
acknowledged the Company was entitled to under its  Salvor-in-Possession  status
could not be  quantified  other  than for a de  minimus  amount  because  of the
uncertainty of the wide latitude given a United States Federal Maritime Court to
apply the Blackwall  factors for a salvor's  award and the adjustment to such an
award,  if any, for  revenues  the Company may have derived from the  artifacts.
Therefore an  impairment  charge of an amount equal to the costs of recovery for
all  expeditions  after  1987,  net  of  tax  benefit,  was  established  less a
re-classification  of $1,000,  a de minimus amount,  for the value of a salvor's
lien.

Since August 1987,  the Company has completed six  expeditions to the wreck site
of the TITANIC and has recovered approximately 6,000 artifacts including a large
section of the TITANIC's hull along with coal from the wreck site.

Costs  associated  with the  care,  management  and  preservation  of  recovered
Artifacts  are  expensed  as  incurred.  A  majority  of  the  Artifacts  not in
exhibition are located within the United States.

To ascertain that the aggregate NRV of the Artifacts exceeds the direct costs of
recovery of such Artifacts,  the Company evaluates various  evidential  matters.
Such   evidential   matters   includes   documented   sales  and   offerings  of
TITANIC-related  memorabilia by auction houses and private dealers, an appraisal
of  certain  Artifacts,  insurance  coverage  obtained  in  connection  with the
potential theft, damage or destruction of all or part of the Artifacts and other
evidential matter regarding the public interest in the TITANIC.

At each balance sheet date, the Company  evaluates the period of amortization of
intangible  assets.  The factors used in evaluating  the period of  amortization
include: (i) current operating results, (ii) projected future operating results,
and (ii) other material factors that affect the continuity of the business.

                                      F-8
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  investments  with  maturities  of  three  months  or  less  to  be  cash
equivalents.

The Company maintains cash in bank accounts that, at times, may exceed federally
insured limits. The Company has not experienced any losses on these accounts.

Revenue  from the  licensing of the  production  and  exploitation  of audio and
visual  recordings by third parties,  related to the Company's  expeditions,  is
recognized at the time that the expedition and dive takes place.

Revenue from the licensing of still  photographs  and video is recognized at the
time the rights are granted to the licensee.

Revenue  from the  granting  of  sponsorship  rights  related  to the  Company's
expeditions and dives is recognized at the completion of the expedition.

Revenue  sharing from the sale of  TITANIC-related  products by third parties is
recognized when the item is sold.

Revenue from license  agreements  is  recognized  pro-rata  over the life of the
agreements.  Amounts  received in excess of amounts earned are shown as deferred
revenue.

Coal recovered from the TITANIC wreck site is sold by the Company.  Revenue from
sales of such coal is recognized at the date of shipment to customers.  Recovery
costs  attributable  to the coal are charged to  operations as revenue from coal
sales are recognized.

Income tax expense  includes income taxes  currently  payable and deferred taxes
arising from temporary  differences  between financial  reporting and income tax
bases of assets and  liabilities.  They are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse.

Depreciation  of property and  equipment  is provided  for by the  straight-line
method over the estimated lives of the related assets.

SFAS No. 123, Accounting for Stock-Based Compensation,  encourages, but does not
require,   companies  to  record  compensation  cost  for  stock-based  employee
compensation  plans at fair  value.  The  Company has elected to account for its
stock-based  compensation  plans using the intrinsic value method  prescribed by
Accounting  Procedures  Bulletin  ("APB")  Opinion No. 25,  Accounting for Stock
Issued to  Employees,  and to present  pro forma  earnings  (loss) and per share
information  as though it had adopted SFAS No. 123.  Under the provisions of APB
Opinion No. 25,  compensation  cost for stock options is measured as the excess,
if any, of the quoted market price of the Company's  common stock at the date of
the grant over the amount an employee must pay to acquire the stock.

Basic  earnings per common share ("EPS") is computed as net earnings  divided by
the weighted-average number of common shares outstanding for the period. Diluted
EPS,  representing  the  potential  dilution that would occur from common shares
issuable through stock-based compensation,  including stock options,  restricted
stock awards,  warrants and other, is not presented for the years ended February
28,  2001,  February  28, 2002 and February 28, 2003 since there was no dilutive
effect of potential common shares or the dilutive effect is not material.

                                      F-9
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts in the financial statements. Actual results could differ
from those estimates.

Impairment  of  Long-Lived  Assets.  In the event that  facts and  circumstances
indicate  that the carrying  value of long lived  assets,  including  associated
intangibles  may be impaired,  an evaluation of  recoverability  is performed by
comparing the estimated future undiscounted cash flows associated with the asset
to the assets  carrying  amount to  determine if a write down to market value or
discounted cash flows is required.

New Standard Adopted. In August 2001, the FASB issued SFAS No. 144,  "Accounting
for the Impairment or Disposal of Long-Lived  Assets." This standard  supercedes
SFAS No.  121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
Long-Lived  Assets to Be  Disposed  Of." The  standard  retains  the  previously
existing accounting  requirements  related to the recognition and measurement of
the  impairment  of  long-lived  assets to beheld and used while  expanding  the
measurement  requirements  of  long-lived  assets to be  disposed  of by sale to
include  discontinued  operations.  It also expands on the  previously  existing
reporting requirements for discontinued  operations to include a component of an
entity that either has been disposed of or is  classified as held for sale.  The
Company  adopted SFAS No.144  during fiscal 2002. As a result of the adoption of
SFAS No. 144 the Company wrote down its artifacts by $8.1 million.

New  Accounting  Standards.  In  June  2001,  the  FASB  issued  SFAS  No.  143,
"Accounting for Asset Retirement Obligations." This standard addresses financial
accounting  and  reporting for  obligations  associated  with the  retirement of
tangible  long-lived  assets and the associated asset retirement costs. SFAS No.
143 is  effective  for the fiscal year  beginning  March 1, 2003.  RMST does not
expect this  standard to have a material  impact on its  consolidated  financial
position or results of operations.

In April  2002,  the FASB  issued  SFAS No.  145,  which  rescinds  SFAS No.  4,
:Reporting  Gains  and  Losses  from  Extinguishment  of  Debt,"  SFAS  No.  44,
"Accounting  for  Intangible   Assets  of  Motor  Carriers"  and  SFAS  No.  64,
"Extinguishments of Debt Made to Satisfy  Sinking-Fund  Requirements" and amends
SFAS No. 13,  "Accounting  for Leases." This  statement  updates,  clarifies and
simplifies  existing accounting  pronouncements.  As a result of rescinding SFAS
No. 4 and SFAS No. 64, the criteria in APB No. 30 will be used to classify gains
and  losses  from  extinguishment  of debt.  SFAS No. 145 is  effective  for the
financial  statements  issued  after  May 15,  2002.  RMST does not  expect  the
adoption  of  this  standard  to  have a  material  impact  on its  consolidated
financial position or results of operations.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." This standard nullifies Emerging Issues Task
Force Issue No. 94-3,  "Liability  Recognition for Certain Employee  Termination
Benefits and Other Costs to Exit an Activity  (including  Certain Costs Incurred
in a  Restructuring)."  This  standard  requires  that  a  liability  for a cost
associated with an exit or disposal  activity be recognize when the liability is
incurred  rather than the date of an entity's  commitment to an exit plan.  SFAS
No. 146 is effective for exit or disposal  activities  instituted after December
31, 2002.  This adoption of this standard does not have a material impact on the
Company's consolidated financial position or results of operations.

                                      F-10
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================


In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others," which expands previously issued accounting guidance and
disclosure  requirements for certain guarantees.  The interpretation requires an
entity to recognize  an initial  liability  for the fair value of an  obligation
assumed by issuing a  guarantee.  The  provision  for  initial  recognition  and
measurement  of  the  liability  will  be  applied  on a  prospective  basis  to
guarantees  issued or modified  after  December 31,  2002.  The company does not
expect  this  interpretation  to  have a  material  impact  on its  consolidated
financial position or results of operations.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure - an amendment of FASB Statement No. 123,
"which provides  optional  transition  guidance for those companies  electing to
voluntarily  adopt the accounting  provisions of SFAS No. 123. In addition,  the
statement  mandates  certain  new  disclosures  that  are  incremental  to those
required  by SFAS No.  123.  RMST  will  continue  to  account  for  stock-based
compensation  in accordance  with APB no. 25. As such, RMST does not expect this
standard to have a material  impact on its  consolidated  financial  position or
results of operations.  RMST has adopted the disclosure-only  provisions of SFAS
No. 148 at February 28, 2003.

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities, an Interpretation of ARB No. 51, "which requires all
variable   interest   entities  ("VIEs")  to  be  consolidated  by  the  primary
beneficiary.  The primary  beneficiary  is the entity that holds the majority of
the beneficial  interests in the VIE. In addition,  the  interpretation  expands
disclosure   requirements   for  both  variable   interest   entities  that  are
consolidated  as  will  as  VIEs  from  which  the  entity  is the  holder  of a
significant  amount  of the  beneficial  interests,  but not the  majority.  The
disclosure  requirements of this  interpretation are effective for all financial
statements issued after January 31, 2003. The consolidation requirements of this
interpretation  are effective for all periods beginning after June 15, 2003. The
Company is not a beneficiary to any VIEs.

                                      F-11
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

2.      ARTIFACTS:

        Artifacts  recovered in the 1987 TITANIC  expedition  are carried at the
        lower of cost of recovery or net realizable value ("NRV"). The ownership
        of these  Artifacts  was  granted to the  Company by the  Government  of
        France.  The costs of recovery  are the direct  costs of  chartering  of
        vessels and related  crews and  equipment  required to complete the dive
        operations for that expedition. Coal recovered in two expeditions is the
        only item available for sale. Periodically,  as sales of coal occur, ten
        percent  of the  sale  value is  deducted  from  the  carrying  costs of
        Artifacts  recovered.  During 2003, 2002 and 2001 $11,000,  $6,000,  and
        $8,000 were deducted from the Artifacts cost, respectively.

        Artifacts, at cost, consists of the following:

                                                 February 28,       February 28,
                                                    2002                 2003
        ------------------------------------------------------------------------

        Artifacts recovered, TITANIC            $ 3,121,000        $  3,110,000
        Artifacts, CARPATHIA                      1,374,000           1,374,000
        ------------------------------------------------------------------------
                                                $ 4,484,000        $  4,495,000

3.      property and equipment:Property and equipment,  at cost, consists of the
        following:
<TABLE>
<CAPTION>

                                                                         February 28,    February 28,       Estimated
                                                                             2002             2003          Useful Life
                              -------------------------------------------------------------------------------------------

<S>                                                                       <C>             <C>              <C>
                              Exhibitry equipment                         $1,378,000      $1,378,000           5 years
                              Marine equipment                                     -         750,000          10 years
                              Office equipment                               188,000         188,000           5 years
                              Furniture and fixtures                         188,000         164,000           5 years
                              -------------------------------------------------------------------------------------------
                                                                           1,754,000       2,480,000
                              Less accumulated depreciation                1,210,000       1,501,000
                              -------------------------------------------------------------------------------------------
                                                                         $   544,000       $ 979,000
                              ===========================================================================================
</TABLE>


4.      ACCOUNTS PAYABLE AND Accounts payable and accrued liabilities consist of
        the following: ACCRUED LIABILITIES:
<TABLE>
<CAPTION>

                                                                                          February 28,    February 28,
                                                                                              2002            2003
                              ----------------------------------------------------------------------------------------

<S>                                                                                        <C>            <C>
                              Amounts payable for professional and consulting fees            413,000        $ 440,000
                              Settlement accrual                                                               322,000
                              Other miscellaneous liabilities                                 296,000          352,000
                              ----------------------------------------------------------------------------------------
                                                                                             $709,000       $1,114,000
                              ========================================================================================
</TABLE>

                                      F-12
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

5.      INCOME TAXES

        The provision for income taxes consists of the following components:

<TABLE>
<CAPTION>


                                                                February 28,            February 28,          February 28,
                              Year ended                            2001                    2002                 2003
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                  <C>                  <C>
                              Current:
                                Federal                          $(257,000)           $(2,720,000)           $(264,000)
                                State and local                    (35,000)              (786,000)             (50,000)
---------------------------------------------------------------------------------------------------------------------------------
                                                                  (292,000)            (3,506,000)            (314,000)
                              Less: Tax effect
                                      of impairment charge             -                1,954,000                  -
---------------------------------------------------------------------------------------------------------------------------------
                              Deferred:
                                Federal                            257,000              1,230,000              264,000
                                State and local                     35,000                322,000               50,000
---------------------------------------------------------------------------------------------------------------------------------
                                                                   292,000              1,552,000              314,000
                              Provision for income taxes              $-0-              $     -0-               $  -0-
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

        The total  provision  for income  taxes  differs  from that amount which
        would be computed by applying the U.S. federal income tax rate to income
        before provision for income taxes. The reasons for these differences are
        as follows:

<TABLE>
<CAPTION>

                                                                      February 28,      February 28,       February 28,
                              Year ended                                  2001             2002                2003
---------------------------------------------------------------------------------------------------------------------------------

<S>                                                                     <C>                <C>               <C>
                              Statutory federal income tax rate             (34.0)%            (34.0)%           (34.0)%
                              Effect of federal graduated tax
                               rates                                         (5.2)               -                 -
                              State income taxes, net of federal
                               benefit                                        6.0               (6.0)             (4.0)
                              Net Operating Loss Carry-forward                  -               21.0              38.0
                              Impairment Charge -                               -               19.0                 -
                              Other, net                                     33.2                  -                 -

----------------------------------------------------------------------------------------------------------------------------------
                                    Effective income tax rate               - 0 -%             - 0 -%              -0-%
==================================================================================================================================
</TABLE>


     The net deferred income tax asset consists of the following:
<TABLE>

                                                                                      February 28,         February 28,
                                                                                          2002                  2003
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                       <C>
                              Net Operating loss carry-forward                           $1,552,000                $1,788,000
                              Deferred tax asset - expenses not currently
                               deductible                                                  $294,000                   100,000
                              Deferred tax liability - depreciation                               -                         -
                              Valuation allowance for doubtful tax assets                (1,846,000)               (1,888,000)

                                    Net deferred tax                                           $-0-                      $-0-
</TABLE>

                                      F-13
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

        The  net  operating  loss  carry-forwards  of  approximately  $4,700,000
        expires in varying  amounts from 2019 to 2023. A valuation  allowance of
        100% of the deferred  income tax asset has been provided at February 28,
        2003  because of the  uncertainties  as to the amount of taxable  income
        that  will  be  generated  in  the  future  years  as a  result  of  the
        determination  by the federal court of appeals that the Company does not
        own the Titanic artifacts.

6.      STOCKHOLDERS' EQUITY:

        Prior to the  acquisition  of TVLP's  assets,  the Company  initiated an
        exchange agreement with the holders of certain Class B warrants in which
        the  holders  would  receive  shares of the  Company's  common  stock in
        exchange for certain Class B warrants.  Through  February 28, 2002,  the
        Company had received  20,700 Class B warrants to be exchanged for 20,700
        shares of common  stock of the  Company,  of which  16,500  shares still
        remain  to be  issued.  There  were  5,556  warrants  outstanding  as of
        February 28, 2003.

        During the year ended  February 28,  2002,  the Company  issued  498,374
        shares of common stock having a value of $343,000 of which  $314,000 was
        for compensation and $29,000 was for services.

        During the year ended  February 28,  2003,  the Company  issued  125,000
        shares of common  stock as payment for  conservation  services  having a
        value of $35,000.

        In April  2000,  the Company  acquired  certain  intangible  assets that
        included confidential research data to be utilized in locating the wreck
        sites of twelve sunken vessels containing valuable cargo in exchange for
        600,000  shares of its common  stock  valued at  $900,000  after  giving
        effect  to   certain   restrictions   placed  on  such   common   stock.
        Concurrently,  the Company entered into an agreement for the services of
        an individual  to January 3, 2003.  Since the  individual  was primarily
        responsible in assisting the Company in exploiting the intangible assets
        acquired,  the  assets  were  being  amortized  over  the  term  of  the
        individual's service agreement.  The assets are included in other assets
        in the  accompanying  balance sheet.  Amortization  expense for the year
        ended  February 28, 2001 and  accumulated  amortization  at February 28,
        2001 amounted to approximately  $285,000.  Amortization  expense for the
        year ended February 28, 2002 amounted to approximately  $60,000.  In May
        of 2001  these  intangibles  were  exchanged  in a  transaction  for the
        ownership of the RMS CARPATHIA as discussed below.

        In May 2001,  the  Company  acquired  the  rights to the  shipwreck  RMS
        CARPATHIA (the  "CARPATHIA").  The CARPATHIA was the vessel that rescued
        the  survivors  from the  TITANIC.  The value that was  assigned to this
        asset  ($1,374,000) is the un-amortized  value of the twelve wreck sites
        purchased by the Company in April 2000 from this same entity ($555,000),
        plus the fair market  value of 1,104,545  newly issued  shares of common
        stock ($819,000).  The Company has the right of first refusal to salvage
        the twelve wreck sites.

        On April 2, 2002, the Company entered into a Purchase  Agreement for the
        sale of the common stock,  representing 100% ownership,  of its Danepath
        Ltd.  subsidiary to Argosy  International  Ltd. The purchase  price,  as
        amended by  Agreement  on June 1,  2002,  was $1.5  million.  Danepath's
        principal asset is the research and recovery vessel "SV EXPLORER". Under
        the terms of the Purchase  Agreements the Company received $100,000 upon
        execution and an obligation of $1.4 million,  bearing interest at 8% per


                                      F-14
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

        annum  that  will  be  paid  within  six  months.   This  obligation  is
        collateralized  with both a first  mortgage on the vessel "SV EXPLORER",
        the principal  asset owned by Danepath,  and all the common stock of the
        Company  owned by  Argosy  International,  Ltd.  Subsequently,  the note
        receivable  was not paid at its maturity on October 2, 2002. In order to
        avoid a costly international foreclosure process, the Company entered in
        a Settlement  Agreement  whereby the Company received a cancellation fee
        for $250,000 from Argosy in the form of a note with a one-year maturity,
        cancellation of a $240,000 vendor payable,  and acquired by deed in lieu
        of  foreclosure  the marine  vessel,  "SV EXPLORER"  and related  marine
        equipment for consideration of $750,000.  in its new wholly owned United
        Kingdom  subsidiary-  Seatron  Limited.  The  ownership of the vessel is
        subject to a mortgage  with the Company for all monies  advanced to this
        subsidiary.  With this settlement agreement, the Company released Argosy
        from the original purchase obligation for $1.4 million.

        On March 6, 2002,  in a separate  agreement,  the Company sold to Argosy
        International, for minimal consideration, its 100% ownership interest in
        White Star Marine  Recovery,  Ltd. That sale  terminated  its obligation
        under an agreement with Argosy International for the consulting services
        of Graham Jessop.  At the time of this sale,  White Star Marine Recovery
        had no assets other than this consulting contract.

7.      STOCK OPTIONS:

 Transactions relating to stock options are as follows:

<TABLE>
<CAPTION>
<S>                                                                           <C>                       <C>

                                                                                                              Weighted-
                                                                                        Number of              Average
                                                                                       Shares and             Exercise
                                                                                         Options                Price
                                                                                       Exercisable            per Share

                              Balance at March 1, 2000                                  1,000,000                $1.63
                              Canceled                                                   (500,000)               $1.15
                              Granted                                                   2,150,000                $1.79

---------------------------------------------------------------------------------------------------------------------------------

                              Balance at February 28, 2001                              2,650,000                $1.60
                              Canceled                                                         -0-                 -0-
                              Granted                                                   1,350,000                $0.48
---------------------------------------------------------------------------------------------------------------------------------
                              Balance at February 28, 2002                              4,000,000                $1.22
                              Canceled                                                    250,000                $0.88
                              Granted                                                          -0-                 -0-
---------------------------------------------------------------------------------------------------------------------------------
                              Balance at February 28, 2003                              3,750,000                $1.24
=================================================================================================================================
</TABLE>


        In April 2000, the Company  adopted an incentive  stock option plan (the
        "Plan") under which options to purchase 3,000,000 shares of common stock
        may be granted to certain key employees,  directors or consultants.  The
        exercise  price will be based on the fair market value of such shares as
        determined  by the board of  directors  at the date of the grant of such
        options.

                                      F-15
<PAGE>

        In April 2000, the Company granted an officer/director a stock option to
        purchase  300,000  shares of the  Company's  common  stock at a price of
        $1.625 per share, which was the market value of the stock at the time of
        grant. The option expires in 10 years.

        In June 2000, the Company  granted an option to purchase  500,000 shares
        of the  Company's  common stock at $1.75 per share to its  President and
        Chief Executive Officer. This option has a 10-year maturity.

        In June 2000, the Company  granted an option to purchase  500,000 shares
        of the  Company's  common  stock at $1.75  per share to an  officer  and
        director. Subsequently, this option was cancelled.

        During the year ended  February  28,  2001,  the  Company  granted to an
        employee options, expiring March 31, 2003, to acquire: (a) 83,333 shares
        of the Company's  common stock at an exercise  price of $3.00 per share;
        (b) 83,333 shares of the Company's  common stock at an exercise price of
        $4.00 per share;  and (c) 83,334 shares of the Company's common stock at
        an exercise price of $5.00 per share.

        In January  2001,  options  were issued to  employees  and  directors to
        purchase  600,000 shares of common stock at $1.15 per share. The options
        expire in 10 years.

        In May 2001, the Company granted an option to purchase 250,000 shares of
        the Company's  common stock at $0.88 per share to its Vice President and
        Director of Operations.  This option has a 5-year maturity.  This option
        was  canceled by its term ninety days after the  employee's  resignation
        during the fiscal year ended February 28, 2003.

        In  February  2002,  the Company  granted an option to purchase  500,000
        shares  of the  Company's  common  stock at $0.40  per share to its Vice
        President  and  Chief  Financial  Officer.  This  option  has a  10-year
        maturity.

        In  February  2002,  the Company  granted an option to purchase  500,000
        shares of the Company's common stock at $0.40 per share to its President
        and Chief Executive Officer. This option has a 10-year maturity.

        In February  2002, the Company reset the option strike price for 300,000
        outstanding  options  owned by its  directors  to  $0.40.  A  charge  to
        compensation was not necessary.

        As of February 28, 2003,  options to purchase 2,750,000 shares of common
        stock have been granted under the plan. The following  table  summarizes
        the  information  about all stock  options  outstanding  at February 28,
        2003:

                                      F-16
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

<TABLE>
<CAPTION>

                                                                             Options Outstanding and Exercisable
                                                                             -----------------------------------
                                                                                           Weighted-
                                                                                            Average           Weighted-
                                                                                           Remaining           Average
                                  Range of                             Number             Contractual         Exercise
                              Exercise Price                         Outstanding         Life (Years)           Price
---------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                               <C>                     <C>                 <C>
                                   $0.40                             1,700,000               8.72                $0.40

                                   $1.25                               500,000               1.10                $1.25

                                   $1.63                               300,000               7.17                $1.63

                                   $1.75                               500,000               7.33                $1.75

                                   $2.00                               500,000               1.24                $2.00

                              $3.00 - $5.00                            250,000               1.00                $4.00
---------------------------------------------------------------------------------------------------------------------------------
                              $0.40 - $5.00                          3,750,000                                   $1.24
=================================================================================================================================
</TABLE>

        The Company has elected,  in accordance  with the provisions of SFAS No.
        123, to apply the current  accounting rules under APB Opinion No. 25 and
        related   interpretations   in   accounting   for  stock   options  and,
        accordingly,  has presented the disclosure-only  information as required
        by SFAS No. 123. If the  Company had elected to  recognize  compensation
        cost based on the fair value of the options granted at the grant date as
        prescribed  by SFAS No.  123,  the  Company's  net income and income per
        common share for the years ended February 28, 2001,  2002 and 2003 would
        approximate the pro forma amounts shown in the table below:
<TABLE>
<CAPTION>

                                                                       February 28,        February 28,       February 28,
                              Year ended                                   2001               2002                2003
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>              <C>                   <C>
                              Reported net income (loss)         $     (21,000)   $     (6,784,000)     $     (827,000)
=================================================================================================================================
                              Pro forma net income (loss)        $  (2,896,000)   $     (6,784,000)     $     (827,000)
=================================================================================================================================
                              Reported net income (loss)
                               per common share                  $       - 0 -    $           (.38)     $         (.04)

                              Pro forma net income (loss)
                               per common share                  $        (.17)   $           (.38)     $         (.04)
=================================================================================================================================
</TABLE>

        The fair value of options  granted  (which is  amortized to expense over
        the  option  vesting  period in  determining  the pro forma  impact)  is
        estimated  on the date of grant using the  Black-Scholes  option-pricing
        model with the following weighted-average assumptions:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                           February 28,        February 28,    February 28,
                              Year ended                                       2001                2002           2003
---------------------------------------------------------------------------------------------------------------------------------

<S>                                                                  <C>                  <C>                 <C>
                              Expected life of options                   9.07 years           9.07 years          8.07 years
=================================================================================================================================

                              Risk-free interest rate                          5.85%                4.75%              4.75%
=================================================================================================================================

                              Expected volatility of RMS
=================================================================================================================================
                               Titanic, Inc.                                  116.7%               100.0%              100.0%
=================================================================================================================================

                              Expected dividend yield on
=================================================================================================================================
                               RMS Titanic, Inc.                             $ - 0 -              $ - 0 -            $ - 0 -
=================================================================================================================================
</TABLE>


                                      F-17
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================


        The  weighted-average  fair value of options granted during the years is
        as follows:

<TABLE>
<CAPTION>

                                                                            February 28,        February 28,       February 28,
                              Year ended                                       2001                2002               2003
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                   <C>                   <C>
                              Fair value of each option granted   $          1.38              $   .16               $  --
                              Total number of options granted           2,150,000            1,350,000                  --
---------------------------------------------------------------------------------------------------------------------------------
                                    Total fair value of all
                                     options granted                   $2,962,000           $  212,600               $  --
=================================================================================================================================
</TABLE>

        In  accordance  with SFAS No. 123,  the  weighted-average  fair value of
        stock options granted is based on a theoretical  statistical model using
        the  preceding  Black-Scholes  assumptions.  In  actuality,  because the
        Company's stock options do not trade on a secondary exchange,  employees
        can receive no value or derive any benefit  from holding  stock  options
        under these arrangements  without an increase in the market price of the
        Company.  Such an increase in stock price would benefit all stockholders
        commensurately.

8.      LITIGATION:

        The United  States  Department  of State and the  National  Oceanic  and
        Atmospheric  Administration  of the United States Department of Commerce
        ("NOAA") are working  together to implement an  International  Agreement
        (the "Agreement") with entities in the United Kingdom, France and Canada
        that   could    diminish    and/or    divest   the    Company   of   its
        salvor-in-possession rights to the TITANIC which had been awarded by the
        Federal  District  Court  for the  Eastern  District  of  Virginia  (the
        "District  Court").  The Company raised  objections to the United States
        Department  of State  regarding  the  actions  of the  United  States to
        participate  in  efforts  to  reach  an  agreement   governing   salvage
        activities of the TITANIC. The Agreement, as drafted, does not recognize
        the  existing  rights  of the  Company  in the  TITANIC  that  have been
        reaffirmed in the District Court and affirmed by the Court of Appeals of
        the Fourth  Circuit and provides  that the  Agreement  enters into force
        when any two of the party states sign it. The United  States  Department
        of Justice  has  represented  that the  United  States  believed  it had
        complied  with the RMS Titanic  Memorial Act in the  development  of the
        international  guidelines to implement the Agreement,  but would solicit
        comments  from the  public at large  regarding  the draft  international
        guidelines  and NOAA will  consider the  comments,  and then publish the
        final  international  guidelines.  On April 3, 2000, the Company filed a
        motion for  declaratory  judgment asking that the District Court declare
        unconstitutional  and  inappropriate the efforts of the United States to
        reach an  international  agreement with the other parties and that it be
        precluded from seeking to implement such an agreement.  On September 15,
        2000, in a decision by the Court it was ruled that the Company's  motion
        was not ripe for consideration at the present time, and that the Company
        may renew its motion when and if an international Agreement is agreed to
        and  signed  by the  parties  to the  Agreement,  final  guidelines  are
        drafted,  and  Congress  passes  implementing  legislation.  The Company
        expects,  that  whatever  the outcome of this  matter,  there will be no
        impact on artifacts  that have already been  recovered,  but  management
        does not know what effect,  if any, this  Agreement  will have on future
        Company operations.

        On  September  7, 2000,  Mr. G.  Michael  Harris,  a former  officer and
        director  of the Company  filed suit in the  Circuit  Court of the Sixth
        Judicial Circuit in and for Pinellas County, Florida, Civil Division. In
        that suit,  Mr. Harris  alleged that the Company  breached an employment
        agreement entered into between him and the Company,  that he was damaged
        by the breach,  that he was wrongfully  terminated and had been defamed.
        The Company  denied the validity and  enforceability  of the  employment


                                      F-18
<PAGE>
                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

        agreement. Moreover, the Company filed a counter-suit against Mr. Harris
        and  others,   to  recover   monies  that  the  Company   believed  were
        misappropriated.  On April 23, 2003,  after a jury trial,  a verdict was
        rendered  that  affirmed  the  unenforceability  of any  of Mr.  Harris'
        employment  agreements  and further found that $70,000 of Company monies
        were misappropriated by Mr. Harris and others. These matters are subject
        to appeal.

        On January  16,  2001,  the  Securities  and  Exchange  Commission  (the
        "Commission")  authorized  its  staff  to  conduct  a  formal  order  of
        investigation.  The Commission has requested various documents  relating
        to,  among  other  things,  the change in control  of the  Company  that
        occurred during November 1999; any solicitations that may have been made
        without a written  proxy  statement  or a filing;  the  purchase  of the
        Company's  common  stock by certain  shareholders;  the  accuracy of the
        Company's   financial   statements;   information  about  the  Company's
        accounting  procedures and controls;  documents about its  subsidiaries;
        and other information about consulting  agreements,  communications with
        certain  individuals,  employment  of its  officers,  and other  Company
        matters.  The  Company is  cooperating  with the  investigation  and has
        produced documents requested by the Commission. The Company is unable to
        predict the eventual outcome of this matter.

        On  January  27,  2001,  the  Company  was  served  with  a  lawsuit  by
        Oceaneering  International,  Inc. ("Oceaneering") for monies purportedly
        owed under a June 27, 2000 contract for maritime services in association
        with the  Company's  2000  expedition.  The Company filed an answer that
        included a setoff for damages that it  sustained.  On May 8, 2002,  this
        case was dismissed  with  prejudice with each party paying its own legal
        expenses and executing a confidentiality  agreement. The Company did not
        pay any additional consideration for this settlement.

        On May 3, 2001,  the Company was served with a lawsuit in Superior Court
        in the State of California  which later was removed to the United States
        District  Court for the  Central  District  of  California  by  Westgate
        Entertainment  Corporation,  a  California  corporation,  and its wholly
        owned  subsidiary,  Weyland  &  Chase  Engineering,  NV,  a  Netherlands
        Antilles corporation. The complaint claims that on January 18, 2000, the
        plaintiffs  entered  into oral five  year,  "pay or play"  contracts  of
        $200,000 per year for Westgate  Entertainment  and $100,000 per year for
        Weyland & Chase.  Westgate  Entertainment  further  claimed  the Company
        agreed to pay or provide other  additional  considerations.  The Central
        District Court entered an order denying the Company's motion for summary
        judgment.  Thereafter,  in March of 2002,  the  Central  District  Court
        denied the Company's right to appeal its interlocutory order denying the
        Company's  motion for  summary  judgment.  In July 2002,  the matter was
        settled  whereby the Company  agreed to pay $388,000 over a thirty-month
        period and the parties further exchanged  releases and agreed to certain
        restrictive covenants, among other considerations.

        On April 12,  2002,  the United  States  Court of Appeals for the Fourth
        Circuit (the "Fourth Circuit")  affirmed two orders of the United States
        District Court for the Eastern District of Virginia,  Norfolk  Division.
        R.M.S.  Titanic,  Inc. v. The Wrecked and  Abandoned  Vessel . . ., 2002
        U.S.  App.  LEXIS 6799 (4th Cir.  2002).  Dated  September  26, 2001 and
        October  19,  2001,  these  orders  restricted  the  sale  of  artifacts
        recovered by the Company from the RMS Titanic  wreck site.  In rendering
        its opinion, the Fourth Circuit reviewed and declared ambiguous the June


                                      F-19
<PAGE>

                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

        7, 1994 Order of the  District  Court that had awarded  ownership to the
        Company of all items then salvaged from the wreck of the Titanic as well
        as all items to be  salvaged in the future by the Company so long as the
        Company remained  salvor-in-possession  of the TITANIC. Having found the
        June 7, 1994 Order ambiguous, the Fourth Circuit reinterpreted the order
        to convey only possession, not title, pending determination of a salvage
        award.  This opinion  conflicts with previous rulings that were rendered
        by both the Fourth Circuit,  R.M.S.  Titanic,  Inc. v. Haver, et al, 171
        F.3d 943 (4th  Cir.  1999)  and the  District  Court,  all of which  the
        Company  had relied upon in the  conduct of its  business.  Furthermore,
        based  on a June 7,  1994  Order  of the  District  Court,  the  Company
        believed  it was the  exclusive  owner  of the  artifacts.  The  Company
        petitioned  the United  States  Supreme  Court to hear its appeal of the
        April 12, 2002 decision of the Fourth Circuit.  However, that petitioned
        was denied on October 7, 2002.

        On April 25,  2002,  the Company  was served  with notice of  litigation
        initiated  by Lawrence  D'Addario,  et al v. Arnie  Geller,  G.  Michael
        Harris,  Joe Marsh,  Gerald  Couture,  Nick Cretan,  Doug Banker and the
        Company in the United States District Court for the Eastern  District of
        Virginia,  Norfolk Division Case No. 2:02cv250.  The suit alleges fraud,
        self-dealing,  mismanagement, diversion and waste of corporate assets by
        the  individuals in their capacity as directors  and/or  officers of the
        Company and for Joe Marsh,  as a principal  shareholder  of the Company.
        The Company  intends to  vigorously  defend  itself and its officers and
        directors in this matter.  No determination  can be made at this time as
        to the likely outcome of this matter or what the  consequences  could be
        for the Company.

        The  Company is  involved  in various  claims  and other  legal  actions
        arising in the ordinary course of business. Management is of the opinion
        that the  ultimate  outcome of these  matters  would not have a material
        adverse  impact on the financial  position of the Company or the results
        of its operations.

9.      COMMITMENTS ANDCONTINGENCIES:

        During the year ended  February  28,  2002,  the  Company  entered  into
        agreements for the services of two individuals  for an annual  aggregate
        amount of $600,750. Each individual, at his option, may elect to receive
        his  compensation  in shares of the  Company's  common  stock.  For this
        purpose, the common stock will be valued at 50% of its closing bid price
        as of the  date  of  the  election.  However,  for  financial  statement
        purposes  the  Company  will  charge the full value of the common  stock
        issued to compensation expense.

        On May 6,  2001,  the  Company  entered  into  a  three-year  employment
        agreement   with  an  individual  as  Vice  President  and  Director  of
        Operations,  providing for a salary of $130,000,  $143,000, and $157,850
        respectively,  for each year of the three-year  term. In addition,  this
        individual received options to purchase 250,000 share of common stock at
        an exercise price of $.88 per share.  On March 22, 2002, this individual
        resigned  his  position  and became a  consultant  to the  Company,  and
        thereafter ended his consulting arrangement in May 2002.

        On February 2, 2002, the Company  executed an employment  agreement with
        its President and Chief Executive Officer.  The employment  agreement is
        for a five-year  term and provides for annual base  salaries of $330,750
        per year, with annual 5% increases.

        On February 2, 2002, the Company  executed an employment  agreement with
        its Vice President and Chief Financial Officer. The employment agreement
        is for a  four-year  term and  provides  for  annual  base  salaries  of
        $270,000 per year, with annual 5% increases.

                                      F-20
<PAGE>

                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

        The Company has  non-cancelable  operating  leases for office space. The
        leases are subject to  escalation  for the  Company's  pro rata share of
        increases in real estate taxes and  operating  costs.  During the fiscal
        year  ended  February  28,  2002,  the  Company   entered  into  another
        non-cancelable  operating  lease for office space and vacated one of its
        previously  used  offices.  During  this last fiscal  year,  the Company
        entered into an agreement to lease certain  office and  warehouse  space
        through December 31, 2004.

        Future  minimum  lease  payments for leases in effect as of February 28,
        2003 and entered into subsequent to that date are as follows:

        Year ending February 28(29),

                   2004                                      $150,000
                   2005                                       144,000
                   2006                                         7,000
             2007 and thereafter                                  -0-
-------------------------------------------------------------------------------
                                                             $301,000
===============================================================================

        Rent expense  charged to operations  amounted to $147,000,  $167,000 and
        $205,000 for the years ended,  February 28, 2001, February 28, 2002, and
        February 28, 2003 respectively.

10.     OTHER RELATED PARTY TRANSACTIONS:

        Included in accounts  payable and accrued  liabilities  at February  28,
        2002 and February 28, 2003 is $25,000 due to certain partners of TVLP.

        On April 2, 2002, the Company entered into a Purchase  Agreement for the
        sale of the common stock,  representing 100% ownership,  of its Danepath
        Ltd.  subsidiary to Argosy  International  Ltd., an affiliated party who
        owns 1,704,545 shares of the Company.  The purchase price, as amended by
        agreement on June 1, 2002, was $1.5 million.  Danepath's principal asset
        is the research and recovery  vessel "SV  EXPLORER".  Under the terms of
        the Purchase Agreements the Company received $100,000 upon execution and
        an  obligation of $1.4  million,  bearing  interest at 8% per annum that
        will be paid within six months.  This obligation is collateralized  with
        both a first mortgage on the vessel "SV EXPLORER",  the principal  asset
        owned by  Danepath,  and all the common  stock of the  Company  owned by
        Argosy  International,  Ltd.  Subsequently,  the note receivable was not
        paid at its maturity on October 2, 2002. To avoid a costly international
        foreclosure  process,  the Company  entered into a Settlement  Agreement
        whereby the Company received a cancellation fee from Argosy for $250,000
        in the  form  of a note  with a  one-year  maturity,  cancellation  of a
        $240,000 vendor payable, and acquired by deed in lieu of foreclosure the
        marine  vessel,   "SV  EXPLORER"  and  related   marine   equipment  for
        consideration  of  $750,000.  in its new  wholly  owned  United  Kingdom
        subsidiary- Seatron Limited. The ownership of the vessel is subject to a
        mortgage  with the Company for all monies  advanced to this  subsidiary.
        With this  settlement  agreement,  the Company  released Argosy from the
        original purchase obligation for $1.4 million.

        On March 6, 2002,  in a separate  agreement,  the Company sold to Argosy
        International, for minimal consideration, its 100% ownership interest in
        White Star Marine  Recovery,  Ltd. That sale  terminated  its obligation
        under an agreement with Argosy International for the consulting services
        of Graham Jessop.  At the time of this sale,  White Star Marine Recovery
        had no assets other than this consulting contract.

                                      F-21
<PAGE>

                                               RMS TITANIC, INC. AND SUBSIDIARY

                                                  NOTES TO FINANCIAL STATEMENTS
================================================================================

11.     EXHIBITIONS:


        During the  three-year  period ended February 28, 2003 and subsequent to
        year-end,  the Company has  presented,  through  licensing  arrangements
        exhibitions of TITANIC's Artifacts and other TITANIC memorabilia.

        In March 1999,  the Company  entered into an agreement  with  Magicworks
        Entertainment, Inc., a direct subsidiary of PACE Entertainment, Inc. and
        an indirect subsidiary of SFX Entertainment,  Inc. (collectively "SFX"),
        in which the  Company  granted  SFX an  exclusive  worldwide  license to
        exhibit  the  Company's  TITANIC  artifacts  for a  minimum  payment  of
        $8,500,000,  annually. This license agreement had an initial term of one
        year,  commencing  September  15,  1999,  with SFX  having the option to
        extend  the  term  for  up to  four  additional  one-year  periods.  All
        obligations  of  Magicworks  Entertainment,   Inc.  under  this  license
        agreement  were  guaranteed  by SFX  Entertainment,  Inc.  The  original
        agreement  was  amended on  September  18,  2000 by the  Company and SFX
        Family Entertainment,  Inc., successor to Magicworks Entertainment, Inc.
        Another  amendment  extended the agreement to January 3, 2003. The first
        amendment  required  a minimum  annual  payment of  $2,000,000  that was
        received  during  fiscal year ended  February 28, 2001.  Pursuant to the
        license agreement,  as amended,  the Company will receive twenty percent
        of the ticket, merchandise,  and sponsorship and ancillary revenues over
        $10,000,000. Each amendment required a guaranteed minimum annual payment
        of  $2,000,000.  For the amendment  periods ended  November 31, 2001 and
        January 3, 2003, the Company received payments of $616,000 and $683,242,
        respectively,  over the guaranteed  minimum annual payments  pursuant to
        the revenue sharing provisions of the agreement. The last two amendments
        were executed with Clear Channel  Exhibitions,  Inc.  ("CCE"),  formerly
        known as SFX Family Entertainment, Inc.

                                      F-22
<PAGE>