-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IpKqRGmEUmdH7ld5egU4RywZ1HaTeOXEgPy9YI4YPkLxWBnZ6+AkpusdpbZgm5Ud N/kmsUHlvFCgSHLkfmP+wQ== 0001044885-05-000040.txt : 20050714 0001044885-05-000040.hdr.sgml : 20050714 20050714165234 ACCESSION NUMBER: 0001044885-05-000040 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050531 FILED AS OF DATE: 20050714 DATE AS OF CHANGE: 20050714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER EXHIBITIONS, INC. CENTRAL INDEX KEY: 0000796764 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AMUSEMENT & RECREATION SERVICES [7900] IRS NUMBER: 201424922 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24452 FILM NUMBER: 05954973 BUSINESS ADDRESS: STREET 1: 3340 PEACHTREE ROAD NE STREET 2: SUITE 2250 CITY: ATLANTA STATE: GA ZIP: 30326 BUSINESS PHONE: 404-842-2600 MAIL ADDRESS: STREET 1: 3340 PEACHTREE ROAD NE STREET 2: SUITE 2250 CITY: ATLANTA STATE: GA ZIP: 30326 FORMER COMPANY: FORMER CONFORMED NAME: RMS TITANIC INC DATE OF NAME CHANGE: 20010404 FORMER COMPANY: FORMER CONFORMED NAME: FIRST RESPONSE MEDICAL INC /FL/ DATE OF NAME CHANGE: 20010404 FORMER COMPANY: FORMER CONFORMED NAME: CIP HOLDINGS INC DATE OF NAME CHANGE: 19930302 10-Q 1 form10q.txt FORM 10-Q 5-31-05 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended May 31, 2005 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________ to _________ Commission file number: 000-24452 PREMIER EXHIBITIONS, INC. ------------------------- (Exact name of registrant as specified in its charter) Florida 20-1424922 ------- ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3340 Peachtree Road, Suite 2250, Atlanta, GA 30326 - -------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (404) 842-2600 Indicate by check mark whether the registrant (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 --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- The number of shares outstanding of the registrant's common stock on July 13, 2005 was 22,299,939. PAGE NUMBER ------ PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosure About Market Risk 12 Item 4. Controls and Procedures 12 PART II OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 17 Item 6. Exhibits 17 Signatures 18 Index to Exhibits 19 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. The consolidated financial statements of Premier Exhibitions, Inc. and subsidiaries (collectively, the "Company," "we," "us," or "our"), included herein were prepared, without audit, in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to rules and regulations of the Securities and Exchange Commission. Because certain information and notes normally included in complete financial statements prepared in accordance with GAAP were condensed or omitted pursuant to such rules and regulations of the Securities and Exchange Commission, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as included in the Company's Form 10-K for the year ended February 28, 2005. 1
Premier Exhibitions, Inc. and Subsidiaries Consolidated Balance Sheets February 28, May 31, 2005 2005 --------------------- -------------------- (unaudited) Assets Current assets: Cash and cash equivalents $ 1,258,000 $ 2,710,000 Accounts receivable 1,057,000 705,000 Prepaid and refundable taxes 222,000 222,000 Prepaid expenses and other current assets 1,405,000 1,306,000 --------------------- -------------------- Total current assets 3,942,000 4,943,000 Artifacts owned, at cost 4,476,000 4,477,000 Salvor's lien 1,000 1,000 Salvor-in-possession rights 879,000 879,000 Property and equipment, net of accumulated depreciation of $1,976,000 and $2,050,000, respectively 738,000 967,000 Exhibition licenses - 4,373,000 Other assets 728,000 123,000 Total assets $ 10,764,000 $ 15,763,000 ===================== ==================== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities 1,660,000 1,187,000 Deferred revenue 1,000,000 575,000 Notes payable 425,000 4,350,000 --------------------- -------------------- Total current liabilities 3,085,000 6,112,000 --------------------- -------------------- Notes payable - long term - 250,000 --------------------- -------------------- Stockholders' equity: Common stock; $.0001 par value; authorized 30,000,000 shares; issued and outstanding 22,299,939 shares 2,000 2,000 Common stock and warrants payable - 1,267,000 Additional paid-in capital 20,316,000 20,316,000 Accumulated deficit (12,665,000) (12,210,000) Accumulated other comprehensive income 26,000 26,000 --------------------- -------------------- Total stockholders' equity 7,679,000 9,401,000 --------------------- -------------------- Total liabilities and stockholders' equity $ 10,764,000 $ 15,763,000 ===================== ====================
The accompanying notes are an integral part of the consolidated financial statements. 2
Premier Exhibitions, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited) Three Month Periods Ended May 31, --------------------------------------------- 2004 2005 -------------------- ------------------- Revenue: Exhibition and related merchandise sales $ 355,000 $ 2,393,000 Merchandise and other 23,000 92,000 Sale of coal 13,000 47,000 -------------------- ------------------- Total revenue 391,000 2,532,000 Expenses: General and administrative 945,000 1,091,000 Depreciation and amortization 28,000 74,000 Exhibition costs 274,000 796,000 Cost of merchandise sold 12,000 12,000 Cost of coal sold 4,000 7,000 -------------------- ------------------- Total expenses 1,263,000 1,980,000 Income (loss) from operations (872,000) 552,000 Other income and expenses: Interest income 1,000 4,000 Interest expense (4,000) (17,000) Loss on sale of fixed assets - (84,000) -------------------- ------------------- Total other income and expenses (3,000) (97,000) Income (loss) before provision for income taxes (875,000) 455,000 Provision for income taxes - - Net income (loss) (875,000) 455,000 ==================== =================== Basic income (loss) per common share (0.05) 0.02 ==================== =================== Basic weighted average number of common shares outstanding 19,240,047 22,299,939 ==================== =================== Diluted income (loss) per common share (0.05) 0.02 ==================== =================== Diluted weighted average number of common shares outstanding $ 19,240,047 $ 24,949,939 ==================== ===================
The accompanying notes are an integral part of the consolidated financial statements. 3
Premier Exhibitions, Inc. and Subsidiaries Consolidated Statements of Cash Flows (unaudited) Three Month Period Ended May 31, ------------------------------------------ 2004 2005 -------------------- ------------------ Cash flows from operating activities: Net income (loss) $ (875,000) $ 455,000 -------------------- ------------------ Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 28,000 74,000 Issuance of common stock for services 77,000 - (Increase) decrease in cost of artifacts 1,000 (1,000) Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 142,000 352,000 (Increase) decrease in prepaid and refundable taxes - - (Increase) decrease in prepaid expenses and other current assets 155,000 99,000 (Increase) decrease in other assets (235,000) 605,000 Increase (decrease) in deferred revenue 300,000 (425,000) Increase (decrease) in accounts payable and accrued liabilities 305,000 (377,000) -------------------- ------------------ Total adjustments 773,000 327,000 -------------------- ------------------ -------------------- ------------------ Net cash provided (used) by operating activities (102,000) 782,000 -------------------- ------------------ Cash flows used by investing activities: Purchases of property and equipment (605,000) (303,000) Purchase of exhibition license - (2,016,000) -------------------- ------------------ Net cash used by investing activities (605,000) (2,319,000) -------------------- ------------------ Cash flows from financing activities: Proceeds from notes payable 500,000 2,425,000 Proceeds from warrant exercise - 64,000 Proceeds from sale of common stock - 500,000 -------------------- ------------------ Net cash provided by financing activities 500,000 2,989,000 -------------------- ------------------ Effect of exchange rate changes on cash - - Net increase (decrease) in cash and cash equivalents (207,000) 1,452,000 Cash and cash equivalents at beginning of period 547,000 1,258,000 -------------------- ------------------ Cash and cash equivalents at end of period $ 340,000 $ 2,710,000 ==================== ================== Supplemental disclosure of cash flow information: Cash paid during the period for interest $ - $ 11,000 ==================== ==================
The accompanying notes are an integral part of the consolidated financial statements. 4 PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1: The accompanying consolidated financial information of Premier Exhibitions, Inc. and its subsidiaries (the "Company") as of May 31, 2005 and 2004 is unaudited and, in the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any interim period are not necessarily indicative of the results for any other interim period or for an entire year. Note 2: Basic and diluted 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 represents the potential dilution that could occur from common shares issuable through stock-based compensation including stock options, restricted stock awards, warrants and other convertible securities. Note 3: On May 17, 2004, the Company appeared before the United States District Court for the Eastern District of Virginia for a pre-trial hearing to address issues in preparation for an Interim Salvage Award trial. At that hearing, the Company informed the court that the United States government has declined the Company's proposal to transfer the Company's Salvor-in-Possession rights to the government. The Company confirmed that it intends to retain its Salvor-in-Possession rights in order to exclusively recover and preserve artifacts from the wreck site of the Titanic. As a result of that hearing, on July 2, 2004, the Court rendered an opinion and order that stated the Court will not recognize the 1993 Proces-Verbal, which granted to the Company all artifacts recovered from the wreck site during the 1987 expedition, and that the Company will not be permitted to present evidence at the Interim Salvage Award trial for the purpose of arguing that it should be awarded title to the Titanic artifacts under the law of finds. In part, the Court found that the law of finds does not apply to the Company because it is the Salvor-in-Possession of the Titanic wreck and wreck site. The Company has appealed the July 2, 2004 Court Order, which appeal is now pending in the United States Court of Appeals for the Fourth Circuit. The Court granted a stay of proceedings on August 2, 2004, which will delay the Interim Salvage Award trial. Note 4: The U.S. Department of State and the National Oceanic and Atmospheric Administration of the U.S. Department of Commerce are working together to implement an international treaty with the governments of the United Kingdom, France and Canada concerning the Titanic wreck site. Although U.S. Congress has not yet passed implementing legislation, it appears unlikely that this treaty will impair the Company's salvor-in-possession rights to the Titanic. The Company has raised numerous objections to the U.S. Department of State regarding the participation of the U.S. in efforts to reach an agreement governing salvage activities with respect to the Titanic. The treaty, as drafted, does not recognize the Company's existing rights in the Titanic. The treaty becomes effective when any two parties sign and ratify it. At this time it has not become effective. 5 On April 3, 2000, the Company filed a motion for declaratory judgment in United States Federal District Court asking that the court declare unconstitutional the efforts of the U.S. to implement the treaty. On September 15, 2000, the court ruled that the Company's motion was not ripe for consideration and that the Company may renew its motion when and if the treaty is agreed to and signed by the parties, final guidelines are drafted, and Congress passes implementing legislation. As discussed above, the treaty is not yet operative so it is not yet time for the Company to consider re-filing its motion. The Company expects that whatever the outcome of this matter, this treaty will have no impact as to artifacts that it has already recovered. Note 5: On April 13, 2005, the Company entered into a term sheet for a joint venture to co-produce four exhibitions for four domestic markets with a major entertainment producer. This undertaking will be finalized in a definitive agreement. Funding of $2,425,000 has been made to the Company by the joint venturer. These new exhibitions will provide the Company with minimum exhibition guarantees and revenue participation and include provisions for repayment of the advance funding. The Company provided a general security interest over its assets as part of this undertaking. On April 13, 2005, the Company received $500,000 for the purchase of 300,000 shares of the Company's common stock from the joint venturing party as consideration in the co-production undertaking. The common shares issued in this transaction at a $1.667 per share price are unregistered securities under the Securities Act of 1933, as amended (the "Securities Act"), and were issued in reliance on Section 4(2) of the Securities Act, as the issuance did not involve a public offering. These shares have not been issued as of May 31, 2005 and are reflected as common stock payable in the Company's financial statements. On March 7, 2005, the Company, through a newly formed wholly owned subsidiary, Premier Acquisitions, Inc. ("PAI"), a Nevada corporation, entered into a letter of intent, to acquire all the membership interests in Exhibitions International, LLC ("EI"), a Nevada LLC. EI held certain exclusive licensing rights to certain anatomical specimens and exhibitry that would significantly broaden the Company's offerings in its human anatomy educational exhibition business. The membership of EI included Mr. Joe Marsh, an individual who owns a greater than 10% interest in the Company. Mr. Marsh's interest in EI was 17%. The acquisition of EI was principally funded in two tranches, first on April 25, 2005 and then on May 2, 2005, and was completed as follows: (1) payment of $1,500,000 by PAI for 100% of the membership interests of EI; (2) the payment of a certain debt obligation of EI in the amount of $300,000 paid by PAI; (3) the promise to issue 200,000 shares of the Company's common stock, then valued at $1.54 per share; and (4) the promise to issue three-year warrants to acquire 300,000 shares of the Company's common stock, which warrants have respective strike prices of $1.25 (with respect to 100,000 shares of common stock), $1.50 (with respect to 100,000 shares of common stock), and $1.75 (with respect to 100,000 shares of common stock). 6 On May 2, 2005, the Company completed the cash payments for acquisition of El, and was consequently obligated to issue the following securities as further consideration: (1) 200,000 shares of the Company's common stock, valued at $1.54 per share; and (2) the three-year warrants discussed above. Mr. Joe Marsh, an owner of more than 10% of the Company's outstanding common stock, is a recipient of 68,000 shares of this common stock issuance. Mr. Marsh is not receiving any warrants that are to be issued. These shares and warrants have not been issued as of May 31, 2005 and are reflected as common stock and warrants payable in the Company's financial statements. They will be issued in reliance on Section 4(2) of the Securities Act, as the transaction did not involve a public offering. Note 6: The fair value of the three-year warrants for EI to acquire 300,000 shares of the Company's common stock at strike prices of $1.25 (with respect to 100,000 shares of common stock), $1.50 (with respect to 100,000 shares of common stock), and $1.75 (with respect to 100,000 shares of common stock) is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Expected life of options: 3 years Risk-free interest rate: 4.75% Expected volatility: 100.0% Expected dividend yield: $-0- The estimated value of the warrants is approximately $299,000, which is recorded in exhibition licenses in the Company's financial statements. 7 ITEM 2. 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. RESULTS OF OPERATIONS FOR THE QUARTER ENDED MAY 31, 2005 VERSUS THE QUARTER ENDED MAY 31, 2004 During the quarter ended May 31, 2005, the Company's revenues increased approximately 548% from $391,000 to $2,532,000 as compared to the quarter ended May 31, 2004. These changes were principally attributable to increases in exhibition and related merchandise sales of approximately 574% from $355,000 to $2,393,000 during the quarter ended May 31, 2004 and 2005, respectively. These significant increases in revenues for the Company's first quarter of the fiscal year ended February 28, 2006 ("2006 fiscal year") reflects the direct management by the Company of its Titanic Exhibitions that began in its fiscal year ended February 28, 2005 ("2005 fiscal year"). Other exhibition revenues of $1,000,000 were received for the quarter ended May 31, 2005. Merchandise and other revenue increased approximately 300% from $23,000 to $92,000, during the first quarter ended May 31, 2004 as compared to the first quarter ended May 31, 2005. These increases are attributed to higher sales during the quarter ended May 31, 2005 of Titanic merchandise sold separately from the exhibitions. The Company's sale of coal increased to $47,000 from $13,000, or approximately 262% during the first quarter of the 2006 fiscal year as compared to the first quarter of the 2005 fiscal year. This increase is attributed to higher exhibit sales of coal sold separately. Coal related jewelry is included in general merchandise sales. The cost of sales of coal and merchandise sold increased 75% to $7,000 from $4,000 in the first quarter of the 2006 fiscal year as compared to the first quarter of the 2005 fiscal year. These costs correspond to revenues in each period. The Company incurred exhibition costs of $796,000 and $274,000, respectively, for the first quarter ended May 31, 2005 and 2004, as the Company now conducts its own exhibitions with museum venues and thereby incurs costs for advertising, marketing, promotion and installation and de-installation of exhibitry and artifacts. Prior to the 2005 fiscal year, those costs were borne by the Company's licensee who conducted the Titanic exhibitions. The Company's general and administrative expenses increased to $1,091,000 from $945,000, or approximately 15% during the first quarter of the 2006 fiscal year as compared to the first quarter of the 2005 fiscal year. This increase is attributed to increased personnel necessary to organize, administer, and manage the Company's exhibitions. 8 The Company's depreciation and amortization expenses increased $46,000 or 164% from $28,000 to $74,000 during the first quarter ended May 31, 2004 and 2005, respectively. These increases primarily reflect the acquisition of fixed assets during the 2005 fiscal year that included five sets of exhibition exhibitry acquired from the Company's former licensee, and additional investments made in fixed assets for its exhibitions. The Company realized income of $552,000 from operations during the first quarter of the 2006 fiscal year as compared to a loss of $872,000 in the same period in the 2005 fiscal year. Management attributes this increase in income from operations from the quarter ended May 31, 2004 to 2005 to higher revenues attributed to conducting its own exhibitions, despite increases in operating and general and administrative expenses, and revenue contributions from the Company's newest exhibition, Bodies Revealed. The operating loss for the quarter ended May 31, 2004 is primarily attributed to the Company's transition as a licensor of Titanic artifacts to an operator of the Titanic exhibition tours. Interest income was $1,000 for the quarter ended May 31, 2004 and $4,000 for the quarter ended May 31, 2005. This increase in interest income is a consequence of higher cash balances being maintained by the Company and the interest earned on the Company's bank accounts. The Company incurred interest expense of $4,000 and $17,000 for the quarter ended May 31, 2004 and 2005, respectively. The interest expense primarily pertains to a shareholder loan of $500,000 that was made in anticipation of the Company's capital needs as it transitioned to the management of exhibitions. There was a loss on sale of fixed assets during the quarter ended May 31, 2005 of $84,000 associated with the sale of the Explorer vessel. The total loss associated with the sale of this vessel was $439,000. Net income of $455,000 was realized for the three months ended May 31, 2005 as compared to a net loss of $875,000 in the same prior year period. Basic income (loss) per common share for the three months ended May 31, 2005 and 2004 was $0.02 and ($0.05), respectively. The basic weighted average shares outstanding for the quarter ended May 31, 2005 and 2004 was 22,299,939 and 19,240,047, respectively. Diluted income (loss) per common share for the three months ended May 31, 2005 and 2004 was $0.02 and ($0.05), respectively. The diluted weighted average shares outstanding for the quarter ended May 31, 2005 and 2004 was 24,949,939 and 19,240,047, respectively. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $782,000 for the three months ended May 31, 2005 as compared to net cash used in operating activities of $102,000 in the same prior year period ended May 31, 2004. For the three months ended May 31, 2005, the total cash used in investing activities was $2,319,000 which included acquisition of property and equipment of $303,000 and the acquisition of exhibition licenses of $2,016,000. 9 For the three months ended May 31, 2005, cash provided by financing activities was $2,989,000 that included advanced exhibit funding of $2,425,000 made by our joint venturer. In addition, we received $500,000 for the purchase of 300,000 shares of the Company's common stock. The company received approximately $64,000 in cash from the exercise of warrants. In the prior year period, we received a shareholder loan of $500,000 that provided funding to assist the Company in its transition to managing its own exhibitions. The Company's negative working capital and stockholders' equity was $1,169,000 and $9,401,000, respectively, at May 31, 2005. The Company recently conducted its seventh research and recovery expedition to the Titanic wreck site and was successful in rescuing over 75 important historic artifacts. The Company plans to continue its recovery work by planning future expeditions to the Titanic wreck-site as it intends to maintain its sole and exclusive rights as salvor- in-possession as conferred upon it by the U.S. District Court for the Eastern District of Virginia. Expedition 2004 departed from Halifax, Nova Scotia, Canada on August 25, 2004 and for the first time allowed the Company to rely exclusively on a deep ocean Remotely Operated Vehicle that permitted the expedition to utilize round-the-clock underwater operations. The mission objectives for Expedition 2004, in addition to recovering important historical objects and identifying artifacts for future recovery, were to inspect the wreck-site for alleged harm caused by previous visitors and, if necessary, the Company would establish guidelines for future visitation. All of the mission objectives for Expedition 2004 were met. During the second and third quarters of the 2005 fiscal year, the Company spent $747,000 on this expedition that it accounted for as a cost of its Salvor-in-Possession Rights. A previous ruling from the U.S. District Court for the Eastern District of Virginia, which has jurisdiction over the Company's salvor activities, declared that the Company's Salvor-in-Possession Right was its principal asset. There can be no assurance that the Company's Salvor-in-Possession Right will be maintained, as such right may be impaired as discussed further herein under "Legal Proceedings." Although no date has been set for an expedition, management continues to plan to undertake a recovery operation to the RMS CARPATHIA to recover objects. As the Company owns this sunken vessel, it is the intent of management to sell and/or exhibit any items recovered. Management expects that it will require additional outside funding to further implement its plans to conduct future exhibitions for both Titanic and other newly developed exhibitions. Previously, the Company relied upon third parties to conduct exhibitions under a licensing arrangement. There can be no assurances that further outside financing will be available when needed upon reasonable terms and as timely as management may require for the proper conduct of these and other future endeavors. If such further financing is not available, it could have a detrimental impact on the Company and its businesses. The Company terminated its tour agreement with Clear Channel Exhibits Inc. ("CCE") on April 25, 2004 and is now directly conducting exhibitions of Titanic artifacts with museums and other parties. The Company will no longer receive 10 guaranteed payments from CCE for exhibition of Titanic artifacts. As a result of its direct operations, the Company has incurred substantial expenses for hiring personnel, purchasing exhibitry, transporting artifacts and exhibitry, administrative expense and other costs. Prior to the end of the license agreement with CCE, the Company purchased for $600,000, payable over two years, all Titanic exhibitry owned by CCE, which included exhibitry for five complete exhibitions of Titanic artifacts. The Company began its own Titanic Exhibitions in May 2004. Since then the Company has successfully conducted exhibitions in Philadelphia, Pennsylvania; Salt Lake City, Utah; and Manchester, England, Omaha, Nebraska and Shanghai, China. The Company is currently conducting Titanic Exhibitions in Las Vegas, Nevada; Baltimore, Maryland; Columbus, Ohio; and Harrisburg, Pennsylvania. In addition, the Company began its new prototype "Bodies Revealed" exhibition in Blackpool, England which ran from August through October 2004. The Company is currently conducting its new "Bodies Revealed" exhibition in Seoul, Korea. In order to protect its Salvor-in-Possession status and to prevent third-parties from salvaging the Titanic wreck and wreck site, or interfering with the Company's rights and ability 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 over the wreck. The Company may be required to incur the costs for future expeditions so as to maintain its Salvor-in-Possession status. The Company's ability to undertake future expeditions may be dependent upon the availability of financing. No assurances can be given that any financing will be available on satisfactory terms. FORWARD-LOOKING STATEMENTS - -------------------------- Except for historical information contained herein, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involve certain risks and uncertainties. The Company's actual results or outcomes may differ materially from those anticipated. Important facts that the Company believes might cause such differences are discussed in the cautionary statements accompanying the forward-looking statements as well as in the risk factors discussed in the Company's Annual Report on Form 10-K and below. Such statements consist of any statement other than a recitation of historical fact and can be identified by the use of forward looking terminology such as "may", "expect", "will", "anticipate", "estimate", or "continue" or the negative thereof or other variations thereon or comparable terminology. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 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 this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation of the Company or any other such person that the objectives and plans of the Company will be achieved. 11 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Market risk represents the risk of loss that may impact the Company's financial position due to adverse changes in financial market prices and rates. Market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange rates. The Company does not hold or issue financial instruments for trading purposes. Interest Rate Risk The Company has exposure to market rate risk for changes in interest rates related to the $500,000 variable interest shareholder loan discussed in Item 2 above. Interest income on our cash, cash equivalents, and short-term investments is subject to interest rate fluctuations, but the Company believes that the impact of these fluctuations does not have a material effect on its financial position due to the short-term nature of any such investments. The Company does have long-term debt. The Company's interest income and interest expense are most sensitive to the general level of interest rates in the United States. Sensitivity analysis is used to measure the Company's interest rate risk. For the three months ended May 31, 2005, a 100 basis-point adverse change in interest rates would not have had a material effect on the Company's consolidated financial position, earnings, or cash flows, as the only interest expense affected by changes in interest rates is the expense related to the $500,000 variable interest shareholder loan. Foreign Currency Risk The Company from time to time conducts business activities outside of the United States, and thereby 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 decreases in relation to the foreign currency, the Company's potential revenue from exhibition and merchandising activities outside of the United States will be adversely affected. During the quarter ended May 31, 2005, the Company did not incur any material losses because of changes in the exchange rates with respect to foreign currencies. Although the Company's financial arrangements with foreign parties may be based upon foreign currencies, the Company has sought, and will continue to seek, to make its financial commitments and understandings based upon the United States dollar in order to minimize the adverse potential effect of currency fluctuations. ITEM 4. CONTROLS AND PROCEDURES a.) Evaluation of disclosure controls and procedures. Under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the disclosure controls and procedures are effective. 12 b.) Changes in internal control over financial reporting. There have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during its most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Status of International Treaty Concerning Titanic Wreck - ------------------------------------------------------- The U.S. Department of State and the National Oceanic and Atmospheric Administration of the U.S. Department of Commerce are working together to implement an international treaty with the governments of the United Kingdom, France and Canada concerning the Titanic wreck site. This treaty could impair our salvor-in-possession rights to the Titanic. We have raised numerous objections to the U.S. Department of State regarding the participation of the U.S. in efforts to reach an agreement governing salvage activities with respect to the Titanic. The treaty, as drafted, does not recognize our existing rights in the Titanic. The treaty becomes effective when any two parties sign it. At this time, both the United Kingdom and the U.S. have signed the treaty, so it has become effective. However, Congress has not yet adopted implementing legislation for the treaty, so the treaty is not yet operative under U.S. law. On April 3, 2000, we filed a motion for declaratory judgment in United States Federal District Court asking that the court declare unconstitutional the efforts of the U.S. to implement the treaty. On September 15, 2000, the court ruled that our motion was not ripe for consideration and that we may renew our motion when and if the treaty is agreed to and signed by the parties, final guidelines are drafted, and Congress passes implementing legislation. As discussed above, the treaty has been finalized and is now in effect; but it is not yet operative because Congress has not adopted implementing legislation, so it is not yet time for us to consider re-filing our motion. We expect that whatever the outcome of this matter, the treaty will have no impact as to artifacts that we have already recovered; but we do not know what effect, if any, this treaty will have on our future operations with respect to the Titanic. Status of Salvor-in-Possession and Interim Salvage Award Proceedings - -------------------------------------------------------------------- On April 12, 2002, the U.S. Court of Appeals for the Fourth Circuit affirmed two orders of the U.S. District Court in our ongoing salvor-in-possession case. These orders, dated September 26, 2001 and October 19, 2001, restricted the sale of the artifacts we recovered from the Titanic wreck site. In its opinion, the U.S. Court of Appeals for the Fourth Circuit declared ambiguous the June 1994 order of the district court that had awarded ownership to us of all items then salvaged from the wreck of the Titanic as well as all items to be salvaged in the future so long as we remained salvor-in-possession. Having found the June 1994 order to be ambiguous, the court of appeals reinterpreted the order to convey only possession, not title, pending determination of a salvage award. We petitioned the U.S. Supreme Court to hear our appeal of the April 12, 2002 decision of the court of appeals, however, our petition was denied on October 7, 2002. 13 On May 17, 2004, we appeared before the United States District Court for the Eastern District of Virginia for a pre-trial hearing to address issues in preparation for an interim salvage award trial. At that hearing, we informed the court that the U.S. government had declined our proposal to transfer our salvor-in-possession rights to the government. We confirmed our intent to retain our salvor-in-possession rights in order to exclusively recover and preserve artifacts from the wreck site of the Titanic. In addition, we stated our intent to conduct another expedition to the wreck site. As a result of that hearing, on July 2, 2004, the court rendered an opinion and order in which it held that it would not recognize the 1993 Proces-Verbal, pursuant to which the French government granted us all artifacts recovered from the wreck site during the 1987 expedition. The court also held that we will not be permitted to present evidence at the interim salvage award trial for the purpose of arguing that we should be awarded title to the Titanic artifacts. In part, the court found that the law of finds does not apply to the Company because it is the salvor-in-possession of the Titanic wreck and wreck site. We have appealed the July 2, 2004 Court Order, which appeal is now pending in the U.S. Court of Appeals for the Fourth Circuit. The court granted a stay of proceedings on August 2, 2004 that will indefinitely delay the interim salvage award trial. Other Legal Proceedings - ----------------------- On April 25, 2002, the Company, our President and Chief Executive Officer and our former Chief Financial Officer were served with a lawsuit filed by Lawrence D'Addario, in the U.S. District Court for the Eastern District of Virginia, Norfolk Division Case No. 2:02cv250. The lawsuit alleges fraud, self-dealing, mismanagement, diversion and waste of corporate assets by the Company and some of our officers, directors and shareholders and seeks damages in excess of $26,000,000. On April 23, 2004, the court dismissed the lawsuit. On May 24, 2004, we received notice that the plaintiff had appealed the dismissal to the U.S. Court of Appeals for the Fourth Circuit. On February 24, 2005 the appellate court partially affirmed and partially vacated the dismissal of the case. It remanded back to the district court for trial the one derivative count alleging that certain of the officers and directors breached their fiduciary duties to the company. Trial of this matter is currently scheduled to begin on July 25, 2005. No determination can be made at this time as to the likely outcome of this matter or what the consequences could be for us, but we intend to vigorously defend ourselves in this matter. On March 22, 2004, the Company, our President and Chief Executive Officer and our former Chief Financial Officer were served with a lawsuit filed by David Shuttle and Barbara Shuttle in the U.S. District Court for the Middle District of Florida. The suit seeks to recover damages in excess of $26,000,000 for the plaintiffs and all minority shareholders allegedly caused by alleged breaches of fiduciary duties by some of our directors and officers in connection with an alleged hostile takeover in November 1999. On March 1, 2005, the court issued an order granting the plaintiffs' motion to certify this matter as a class action. The class is defined as all persons who owned shares of RMS Titanic, Inc. as of November 26, 1999 but who were not members of the group of shareholders who voted to remove previous officers and directors from their positions with the company. No determination can be made at this time as to the likely outcome of this matter or what the consequences could be for us, but we intend to vigorously defend ourselves in this matter, and we expect to seek recovery of all costs and expenses in defending this litigation from the plaintiffs once this matter is adjudicated. 14 In connection with a case initiated in late 1999, on August 3, 2004, we filed a motion with the U.S. District Court for the District of Connecticut against Alan Carlin, a former officer, director and lawyer of the Company. In this motion, we alleged that this former officer, director and lawyer secretly spearheaded litigation against us, in direct violation of a release and settlement agreement that he entered into with us in January 2000. On May 12, 2005, the court denied our motion, but, noting the good faith basis for our claim, refused to grant the defendant any award of attorneys' fees or costs. On December 3, 2004 we filed a complaint in the Court of Common Pleas in Cuyahoga County, Ohio against Gunther Von Hagens, doing business as Body Worlds. We alleged that the defendant unfairly interfered with our ability to conduct a Bodies Revealed Exhibition in Cleveland, Ohio and are seeking unspecified damages. On February 16, 2005, Mr. Von Hagens, through his company Plastination, Inc., served us with a lawsuit in the United States District Court for the Northern District of Ohio in which he alleges that we violated his intellectual property rights with respect to our Bodies Revealed Exhibition. In order to reduce litigation costs we decided to consolidate the litigation. We voluntarily dismissed without prejudice our initial lawsuit filed in Cuyahoga County, Ohio and we filed those same claims as a counterclaim in the Plastination, Inc. lawsuit pending in federal court. No trial date has been set at this time and no determination can be made at this time as to the likely outcome of these matters or what the consequences could be for us, but we intend to vigorously defend ourselves against the claims of Plastination, Inc. and we likewise intend to vigorously prosecute the counterclaim. On May 13, 2005, John Glassey and Donna Andersen filed a complaint against our wholly owned subsidiary, RMS Titanic, Inc. in the Superior Court of New Jersey, Atlantic Division. The plaintiffs alleged that RMS Titanic, Inc. owes them $9,900 plus interest, costs and fees for breach of a contract. No trial date has been set at this time and no determination can be made at this time as to the likely outcome of this matter but the Company disputes the claim and intends to defend RMS Titanic, Inc. at trial. On June 28, 2005, the Company filed a complaint against G. Michael Harris and D. Michael Harris in the United States District Court for the District of Connecticut. The Company is seeking to prevent these defendants from violating the Company's Salvor-in-Possession rights and/or from violating two previous orders of this court which generally prevent the defendants from competing with the Company. No trial date has been set at this time and no determination can be made at this time as to the likely outcome of these matters. There have been no other material changes in the legal proceedings discussed in the Company's Annual Report on Form 10-K for the year ended February 29, 2005. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On April 13, 2005, the Company entered into a term sheet for a joint venture to co-produce four exhibitions for four domestic markets with a major entertainment producer. This undertaking will be finalized in a definitive agreement. Funding of $2,425,000 has been made to the Company by the joint venturer. These new 15 exhibitions will provide the Company with minimum exhibition guarantees and revenue participation and include provisions for repayment of the advance funding. The Company provided a general security interest over its assets as part of this undertaking. On April 13, 2005, the Company received $500,000 for the purchase of 300,000 shares of the Company's common stock from the joint venturing party as consideration in the co-production undertaking. The common shares issued in this transaction at a $1.667 per share price are unregistered securities under the Securities Act of 1933, as amended (the "Securities Act"), and were issued in reliance on Section 4(2) of the Securities Act, as the transaction did not involve a public offering. These shares have not been issued as of May 31, 2005 and are reflected as common stock and warrants payable in the Company's financial statements. On March 7, 2005, the Company, through a newly formed wholly owned subsidiary, Premier Acquisitions, Inc. ("PAI"), a Nevada corporation, entered into a letter of intent, to acquire all the membership interests in Exhibitions International, LLC ("EI"), a Nevada LLC. EI held certain exclusive licensing rights to certain anatomical specimens and exhibitry that would significantly broaden the Company's offerings in its human anatomy educational exhibition business. The membership of EI included Mr. Joe Marsh, an individual who owns a greater than 10% interest in the Company. Mr. Marsh's interest in EI was 17%. The acquisition of EI was principally funded in two tranches, first on April 25 and then on May 2, 2005 and was completed as follows: (1) payment of $1,500,000 by PAI for 100% of the membership interests of EI; (2) the payment of a certain debt obligation of EI in the amount of $300,000 paid by PAI; (3) the promise to issue 200,000 shares of the Company stock, then valued at $1.54 per share; and (4) the promise to issue three-year warrants to acquire 300,000 shares of the Company's common stock, which warrants have respective strike prices of $1.25 (with respect to 100,000 shares of common stock), $1.50 (with respect to 100,000 shares of common stock), and $1.75 (with respect to 100,000 shares of common stock). On May 2, 2005, the Company completed the cash payments for acquisition of El, and was consequently obligated to issue the following securities as further consideration: (1) 200,000 shares of the Company's common stock, valued at $1.54 per share; and (2) the three-year warrants discussed above. Mr. Joe Marsh an owner of more than 10% of the Company's outstanding common stock is a recipient of 68,000 shares of this common stock issuance. Mr. Marsh is not receiving any warrants that are to be issued. These shares and warrants have not been issued as of May 31, 2005 and are reflected as common stock and warrants payable in the Company's financial statements. They will be issued in reliance on Section 4(2) of the Securities Act, as the transaction did not involve a public offering. ITEM 3. DEFAULT UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 16 ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS See Index to Exhibits. 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. PREMIER EXHIBITIONS, INC. (Registrant) Dated: July 14, 2005 By: /s/ Arnie Geller ---------------- Arnie Geller, President, Chief Executive Officer and Chief Financial Officer 18 INDEX TO EXHIBITS 10.1 Letter Agreement between Premier Acquisitions, Inc. and Arts & Exhibitions International, LLC, IP Live, Joseph B. Marsh, Lee D. Marshall, Global Entertainment Group, Inc. and Andres Numhauser dated March 7, 2005. 11.1 Computation of Net Income (Loss) Per Share. 31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350. 19 EX-10.1 2 ex10-1.txt Premier Acquisitions, Inc. 3340 PEACHTREE ROAD NE, SUITE 2250, ATLANTA, GA 30326 Tel: (404) 842 2600 Fax: (404) 842 2626 March 7, 2005 Arts & Exhibitions International, LLC IP Live, PLC 199 East Garfield Road 1 Berkeley Street Aurora, OH 44202 London W1J 8DJ Attn: John T. Norman, President Attn: Martin Flitton, Business Development Director Lee D. Marshall Joseph B. Marsh c/o Magic Arts & Entertainment, Inc. 11006 Bridge House Road 199 East Garfield Road Windermere, FL 34786 Aurora, OH 44202 Global Entertainment Group, Inc. Andres Numhauser 6160 W Sahara Ave. Av Santa Maria 9200 5030 Spanish Hills Dr. Dep 62 Las Vegas, NV 89146 Santiago, Chile 766-0311 c/o Robert B. Cayne, Jr., President Re: Exhibitions International, LLC "Wonders of the Human Body" Exhibit Dear Gentlemen: This letter agreement is effective as of March 7, 2005, and is between Premier Acquisitions, Inc., a Nevada corporation ("Buyer"), and Arts & Exhibitions International, LLC, an Ohio limited liability company, IP Live, PLC, an English corporation, Joseph B. Marsh, Lee D. Marshall, Global Entertainment Group, Inc., a Nevada corporation, and Andres Numhauser (each, a "Seller" and collectively, "Sellers"). This letter will confirm our agreement regarding the following proposed transaction (the "Transaction"). Exhibitions International, LLC March 7, 2005 Page 2 Confidential 1. Background. The Sellers in the aggregate own one hundred percent (100%) of the interest in profits, losses, special allocations, distributions, and rights to vote or participate in the management ("Membership Interest") of Exhibitions International, LLC, a Nevada limited liability company (the "Company"). The Company has entered into (i) that certain Agreement for Exhibition (the "Exhibition Agreement") dated as of January 30, 2004, with Dalian Medical University Plastination Co., Ltd. ("Dalian") and Hong Jin Sui (together with Dalian, the "Specimens Owner" or "Sui"), and (ii) that certain Agreement for Technology, Documentation and Know-How (the "IP Agreement") dated as of January 30, 2004, with the Specimens Owner (collectively, the "Rights Agreements"). Pursuant to the Rights Agreements, the Company has obtained the right to display and use 20 plastinated body specimens and approximately 170 single plastinated organs of humans and animals (collectively, the "Specimens"), and the right and license to use the related documentation, intellectual property, images and know-how of the Specimens Owner (the "IP"). The Company has entered into that certain Agreement (the "Stefano Agreement") dated as of January 30, 2004, with Stefano Arts, a Korean corporation ("Stefano"), pursuant to which Stefano has agreed to provide to the Company the right to use in the Exhibit (defined below) the equipment, backdrops, cases, lighting and other exhibition assets (collectively, the "Stefano Equipment") owned and used by Stefano and Union Exhibition in an exhibition of the Specimens in Korea. The Company has entered into a Co-Promotion Agreement (the "Co-Promotion Agreement") dated as of July 2, 2004, with Clear Channel Entertainment-Exhibits, Inc. ("CCE") to co-promote a tour of an exhibition of the Specimens in an exhibit tentatively entitled "Wonders of the Human Body" (the "Exhibit"), to be initially displayed in venues located in Western Europe and thereafter potentially in North America and South America, all in accordance with the terms thereof. 2. Transaction. The material terms of the Transaction are as follows: 2.1 Purchase and Sale of Membership Interest. Buyer agrees to purchase from each Seller, and each Seller agrees to sell to Buyer, all of his or its Membership Interest which collectively represents one hundred percent (100%) of the Membership Interest in the Company for the consideration specified below. The Membership Interests are as follows: Exhibitions International, LLC March 7, 2005 Page 3
Percentage Name of Member Interest -------------------------------------------------------- ------------------- IP Live, PLC 23% Arts & Exhibitions International, LLC 17% Joseph B. Marsh 17% Lee D. Marshall 17% Global Entertainment Group, Inc. 18% Andres Numhauser 8% ------------------- Total 100%
2.2 Purchase Price. (a) Buyer shall pay to Sellers at the Closing $800,000 in cash, payable by wire transfer or delivery of immediately available funds. The $800,000 shall be allocated among Sellers as follows:
Name of Member Amount ----------------------------------------------- ------------------- IP Live, PLC $350,000 Arts & Exhibitions International, LLC $150,000 Joseph B. Marsh $300,000 ------------------- Total $800,000
(b) Buyer shall pay to Sellers at the Closing $700,000 in cash, payable by wire transfer or delivery of immediately available funds. The $700,000 shall be allocated among Sellers as follows:
Name of Member Amount ----------------------------------------------- ------------------- IP Live, PLC $230,000 Arts & Exhibitions International, LLC $103,766 Joseph B. Marsh $103,766 Lee D. Marshall $103,766 Global Entertainment Group, Inc. $109,870 Andres Numhauser $48,831 ------------------- Total $700,000
(c) Buyer shall pay to Global Entertainment Group, Inc. at the Closing $300,000 in cash, payable by wire transfer or delivery of immediately available funds, representing repayment of a note from Robert B. Cayne to the Company. (d) Buyer will transfer to the Sellers (or their assignees or designees) at the Closing 200,000 shares of common stock in Premier Exhibitions, Inc., a Florida corporation, and 300,000 options to purchase shares of common stock in Premier Exhibitions, Inc. at the following strike prices: (i) 100,000 shares at $1.25 per share; (ii) 100,000 shares at $1.50 per share; and Exhibitions International, LLC March 7, 2005 Page 4 (iii) 100,000 shares at $1.75 per share. The stock and options in Premier Exhibitions, Inc. shall be subject to section 144 of the Security and Exchange Commission regulations but the Sellers will have piggyback registration rights subject to the approval of the managing underwriter in an underwritten public offering. The stock and options shall be allocated pro rata among Sellers in proportion to their respective Membership Interest as identified in section 2.1 herein. (e) Buyer shall pay to Sellers immediately upon execution of this document $10.00 (TEN DOLLARS) which represents good and valuable consideration, the receipt of which is hereby acknowledged. 2.3 Covenant. Sellers agree and covenant that on the Closing Date, Company's bank account shall have a balance of at least $700,000.00. 2.4 Non-Competition. (a) Each Seller agrees that he or it shall not, and shall cause his or its Affiliates to not, engage, directly or indirectly, acting alone or as a partner, shareholder, manager, consultant, or otherwise, in any exhibition of the Specimens licensed under a five year agreement and any extensions thereto, or any other plastinated or polymer preserved body specimens or plastinated or polymer preserved organs except for the Specimens contemplated by this agreement. As used in this Agreement, the term "Affiliate" shall mean with respect to any person or entity, any other person or entity which controls, is controlled by or is under common control with such person or entity. As used in the immediately preceding sentence, the term "control" (with correlative meanings for the phrases "controlled by" and "under common control with") shall mean, with respect to any person, the possession, directly or indirectly, of the power to direct the management and policies of such person through the ownership of voting securities, by contract or otherwise. (b) It is expressly stipulated, acknowledged and agreed that, except as prohibited by paragraph (a) of this Section 2.4, nothing herein shall prohibit or restrict the parties hereto or their Affiliates from engaging on their own and without being joined by the other party hereto in the business of developing, constructing, presenting, touring or exhibiting any exhibitions of any and all types and kinds anywhere in the world during the term hereof, which exhibitions may be in direct competition with the Tour. 2.5 Exhibit at Earls Court. Buyer agrees to negotiate in good faith for an exhibition at Earls Court in London noting that time is of the essence. 2.6 Name Change. Buyer agrees that, immediately after Closing, it will change the Company's name and will assign any rights the Company may have to the name "Exhibits International" to the Sellers, for no additional consideration. Exhibitions International, LLC March 7, 2005 Page 5 2.7 Free Access. Subject to any confidentiality requirements of any agreement to which Company is a party, each Seller will permit, and the Sellers will cause the Company to permit, representatives of Buyer (including legal counsel and accountants) to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Company, to all books, records, contracts, and all documents of or pertaining to the Company. Buyer will treat and hold as such any confidential information it receives from any of the Sellers and the Company in the course of the reviews contemplated by this letter agreement, and will not use any of the confidential information except in connection with this letter agreement, and if this letter agreement is terminated for any reason, will return to Sellers and Company all tangible embodiments (and all copies) of the confidential information which are in its possession. Sellers will supply copies of all documents requested by Buyer to complete its due diligence. 2.8 Due Diligence. In the event that Buyer is not reasonably satisfied with the results of its continuing business, legal, and accounting due diligence regarding the Company, Buyer may terminate or modify this Agreement by giving written notice to the Sellers at the addresses listed above on or before the tenth (10th) day following delivery to the Buyer of the due diligence documents as identified in Exhibit A attached hereto. 2.9 Closing. The closing of the Transaction contemplated by this letter agreement (the "Closing") shall be at a mutually agreed upon place and time on the second business day following the satisfaction or waiver of all of the obligations of the parties to consummate the Transaction contemplated hereby or such other date as Buyer and Sellers may mutually determine (the "Closing Date"). 2.10 Integration. This letter agreement supersedes all prior negotiations and understandings; and represents the entire understanding of Buyer and Sellers with respect to the subject matter hereof. Except as otherwise expressly provided herein, no termination, revocation, waiver, modification or amendment of this letter agreement shall be binding unless in writing signed by Buyer and Sellers. 2.11 Notice. For purposes of this letter agreement, written notice shall be deemed provided on the date such written document is placed in the United States Mail, Express Mail, or is sent via facsimile transmission. All notices provided to Sellers shall be sent to the addresses listed above. 2.12 Representations and Warranties. (a) The Company is a Nevada limited liability company, duly organized and validly existing under the laws of Nevada with corporate power and authority to carry on its business as presently conducted. (b) All material agreements entered into by the Company including but not limited to those listed in section 1 of this letter agreement are enforceable in accordance with their terms, are in good standing, and are legally binding on the parties involved. Copies of all such agreements shall be furnished to the Buyer upon execution of this agreement. Exhibitions International, LLC March 7, 2005 Page 6 (c) Copies of the Company's financial statement for the year ended December 31, 2004 shall be furnished to the Buyer upon execution of this agreement. Since the date of such financial statement, there has been no material adverse change in the financial condition of the Company. (d) There is no action pending, or to the best of our knowledge, threatened against the Company, except (1) with respect to action threatened in the letter which the Museum of Sciences (Museu de les Ciencies) in Valencia, Spain, as received from a German law firm (Norr Stiefenhofer Lutz) that represents the Institut fur Plastination e.K., Rathausstrasse 18, 69126 Heidelberg, Germany (Dr. Gunther von Hagens); and (2) with respect to any action which may be brought by CCE for alleged violation of the confidentiality provisions contained in the Co-Promotion Agreement. (e) There are no commitments outstanding pursuant to which the Company may be obligated to issue any additional membership interests. 2.13 Indemnification. The Company agrees to indemnify, defend and hold harmless Buyer, its subsidiaries, parent companies, affiliates, agents, and assigns and their respective agents, officers, employees, and directors, from and against any and all losses, damages, liabilities, claims, demands, suits and expenses that Buyer may incur or be liable for as a result of any claim, suit or proceeding made or brought against Buyer based upon, arising out of, or in connection with (i) any breach of any representation or warranty made by the Company in this agreement (ii) any breach of any duties or obligations of Seller hereunder, or (iii) willful misconduct of the Company (or any of its agents, employees or representatives) in connection with this letter agreement. Buyer hereby agrees to indemnify, defend and hold harmless Sellers, their subsidiaries, parent companies, affiliates, agents, and assigns and their respective agents, officers, employees, and directors, in an action which may be brought by CCE against the Company or Sellers for alleged violation of the confidentiality provisions contained in the Co-Promotion Agreement as referenced in section 2.12 (e)(2) above. Despite this indemnification provision, the parties hereto wish to state affirmatively their opinions that production of the Co-Promotion Agreement to Buyer after execution of this letter agreement will not violate any provision of the Co-Promotion Agreement, and further that nothing contained herein shall be viewed as a willful attempt to violate the Co-Promotion Agreement. 2.14 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. 2.15 Confidentiality. Each of the undersigned hereby agrees that it will not disclose to or discuss with any third-parties the nature and terms of this letter agreement except as may be required by law or with the prior written approval of the parties. Exhibitions International, LLC March 7, 2005 Page 7 If this letter correctly sets forth the terms of our agreement regarding the Transaction, please so acknowledge by countersigning the next page and returning a copy of this letter agreement. Very truly yours, Premier Acquisitions, Inc. By: ----------------------------------- Name: Arnie Geller Title: President Exhibitions International, LLC March 7, 2005 Page 8 Agreed and accepted: Arts & Exhibitions International, LLC By: ----------------------------------- Name: John T. Norman Title: President IP Live, PLC By: ----------------------------------- Name: Martin Flitton Title: Business Development Director ----------------------------------- Name: Lee D. Marshall ----------------------------------- Name: Joseph B. Marsh Global Entertainment Group, Inc. By: ----------------------------------- Name: Robert B. Cayne, Jr. Title: President ----------------------------------- EX-11.1 3 ex11-1.txt EXHIBIT 11 Premier Exhibitions, Inc. and Subsidiaries Computation of Net Income (Loss) Per Share (Unaudited)
Three months ended May 31, ----------------------------------- 2004 2005 ----------------------------------- ----------------------------------- Net income (loss) $ (875,000) $ 455,000 =================================== Weighted average number of common 19,240,047 22,299,939 shares outstanding Common equivalent shares representing shares issuable upon exercise of outstanding warrants and options - 2,650,000 ----------------------------------- 19,240,047 24,949,939 =================================== Net income (loss) per share: Basic $ (0.05) $ 0.02 =================================== Diluted $ (0.05) $ 0.02 ===================================
Basic income (loss) per share of common stock is computed based on the average number of common shares outstanding during the period. Diluted EPS includes the potential conversion of warrants and convertible notes that are dilutive. Stock options are not considered in the diluted EPS calculation for those periods with net losses, as the impact of the potential common shares would be to decrease loss per share. EX-31.1 4 ex31-1.txt Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Arnie Geller, certify that: 1. I have reviewed this quarterly report on Form 10-Q of PREMIER EXHIBITIONS, INC., the registrant; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: July 14, 2005 /s/ Arnie Geller - ---------------- Arnie Geller, President, Chief Executive Officer and Chief Financial Officer EX-32.1 5 ex32-1.txt Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q (the "Report") of PREMIER EXHIBITIONS, INC. (the "Company") for the quarter ended May 31, 2005, the undersigned Arnie Geller, the Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: July 14, 2005 /s/ Arnie Geller ---------------- Arnie Geller President, Chief Executive Officer and Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----