f10q_071113.htm

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, 2013

[ ]	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 incorporation or organization)		(I.R.S. Employer Identification No.)

3340 Peachtree Road, NE, Suite 900, Atlanta, GA		30326
(Address of principal executive offices)		(Zip Code)

	(404) 842-2600
	(Registrant's telephone number, including area code)

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 at least the past 90 days. Yes [x] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer [ ]	Accelerated filer [ ]
	Non-accelerated filer [ ]	Smaller reporting company [x]
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (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 8, 2013 was 49,340,980.

PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES

QUARTERLY PERIOD ENDED MAY 31, 2013

TABLE OF CONTENTS

		Page No.


	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	20

Item 4.	Controls and Procedures.	37

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	38

Item 1A	Risk Factors.	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 6.	Exhibits.	38

PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

Premier Exhibitions, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

	May 31,			February 28,
	2013			2013
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	7,168		$	6,393
Certificates of deposit and other investments		406			407
Accounts receivable, net of allowance for doubtful accounts of $325, respectively		1,795			1,370
Merchandise inventory, net of reserve of $25, respectively		1,300			1,205
Deferred income taxes		8			8
Income taxes receivable		282			167
Prepaid expenses		1,298			1,177
Other current assets		270			562
Total current assets		12,527			11,289

Artifacts owned, at cost		2,920			2,933
Salvor's lien		1			1
Property and equipment, net of accumulated depreciation of $18,056 and $17,333, respectively		8,858			9,280
Exhibition licenses, net of accumulated amortization of $5,712 and $5,664, respectively		1,986			2,034
Film, gaming and other application assets, net of accumulated amortization of $631 and $475, respectively		2,703			2,858
Other receivables, net of allowance for doubtful accounts of $668 and $574, respectively		38			34
Goodwill		250			250
Future rights fees, net of accumulated amortization of $109 and $0, respectively		4,271			4,380
Restricted assets		3,746			3,618
Long-term exhibition costs		864			843
Subrogation rights		250			250
Total Assets	$	38,414		$	37,770


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued liabilities	$	3,697		$	4,146
Income taxes payable		247			175
Deferred revenue		2,154			2,363
Current portion of capital lease obligations		24			24
Current portion of notes payable, net of discount of $185 and $362, respectively		5,152			5,080
Total current liabilities		11,274			11,788

Long-Term liabilities:
Lease abandonment		1,768			1,903
Deferred income taxes		8			8
Long-term portion of capital lease obligations		76			83
Long-term portion of notes payable, net of discount of $380 and $340, respectively		2,629			2,629
Total long-term liabilities		4,481			4,623

Commitment and Contingencies

Shareholders' equity:
Common stock; $.0001 par value; authorized 65,000,000 shares; issued 49,342,320 and 49,072,364 shares, respectively; outstanding 49,340,311 and 49,070,355 shares, respectively		5			5
Additional paid-in capital		54,058			53,807
Accumulated deficit		(33,945	)		(34,916	)
Accumulated other comprehensive loss		(471	)		(471	)
Less treasury stock, at cost; 2,009 shares		(1	)		(1	)
Equity Attributable to Shareholders of Premier Exhibitions, Inc.		19,646			18,424
Equity Attributable to Non-controlling interest		3,013			2,935
Total liabilities and shareholders' equity	$	38,414		$	37,770

The accompanying notes are an integral part of the condensed consolidated financial statements.

Premier Exhibitions, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended May 31,
	2013			2012
Revenue:
Exhibition revenue	$	6,847		$	8,989
Merchandise and other		1,906			2,310
Management fee		187			111
Licensing fee		-			50
Total revenue		8,940			11,460

Cost of revenue:
Exhibition costs		2,964			4,390
Cost of merchandise sold		683			798
Total cost of revenue (exclusive of depreciation and amortization shown separately below)		3,647			5,188

Gross profit		5,293			6,272

Operating expenses:
General and administrative		3,370			3,936
Depreciation and amortization		985			914
Contract and legal settlements		(297	)		-
Gain on sale of assets		(28	)		-
Total operating expenses		4,030			4,850

Income from operations		1,263			1,422

Other income and (expense)
Interest expense		(138	)		(110	)
Other (expense)/income		(7	)		12
Total other expense		(145	)		(98	)

Income before income taxes		1,118			1,324

Income tax expense		69			112

Net income		1,049			1,212
Less: Net income attributable to non-controlling interest		(78	)		(13	)
Net income attributable to the shareholders of Premier Exhibitions, Inc.	$	971		$	1,199

Net income per share:
Basic income per common share	$	0.02		$	0.03
Diluted income per common share	$	0.02		$	0.02

Shares used in basic per share calculations		49,276,792			47,938,614
Shares used in diluted per share calculations		49,511,868			49,095,207

Comprehensive income:	$	971		$	1,205

The accompanying notes are an integral part of the condensed consolidated financial statements.

Premier Exhibitions, Inc.

Condensed Consolidated Statements of Cash Flow

(in thousands)

(unaudited)

	Three Months Ended May 31,
	2013			2012
Cash flows from operating activities:
Net income	$	1,049		$	1,212

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		985			914
Lease abandonment		(135	)		(144	)
Stock-based compensation		66			230
Allowance for doubtful accounts		94			90
Amortization of debt discount		137			110
Gain on sale of assets		(28	)		-
Changes in operating assets and liabilities:
Increase in accounts receivable		(425	)		(117	)
Increase in merchandise inventory, net of reserve		(95	)		(301	)
(Increase)/decrease in prepaid expenses		(167	)		51
(Increase)/decrease in other assets		292			(33	)
(Increase)/decrease in income taxes receivable		(115	)		196
Increase in other receivables		(98	)		(89	)
Increase in long-term development costs		(52	)		-
Increase/(decrease) in accounts payable and accrued liabilities		(449	)		335
Increase/(decrease) in deferred revenue		(209	)		31
Increase in income taxes payable		72			37
Total adjustments		(127	)		1,310
Net cash provided by operating activities		922			2,522

Cash flows from investing activities:
Purchases of property and equipment		(301	)		(174	)
Proceeds from disposal of assets		28			-
Decrease in artifacts		12			22
Net cash used in investing activities		(261	)		(152	)

Cash flows from financing activities:
Proceeds from options and warrants exercised		185			136
Payments on capital lease obligations		(7	)		-
Payments on notes payable		(65	)		(165	)
Net cash provided by (used in) financing activities		113			(29	)

Effects of exchange rate changes on cash and cash equivalents		1			6

Net increase in cash and cash equivalents		775			2,347
Cash and cash equivalents at beginning of period		6,393			2,344
Cash and cash equivalents at end of period	$	7,168		$	4,691

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	7		$	20
Cash paid (received) during the period for taxes	$	112		$	(120	)
Supplemental disclosure of non-cash investing and financing activities:
Assets purchased with notes payable and equity in Premier Exhibitions Management, LLC	$	-		$	14,451
Unrealized loss on marketable securities	$	1		$	-

The accompanying notes are an integral part of the condensed consolidated financial statements.

PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Background and Basis of Presentation

Description of Business

Premier Exhibitions, Inc. and subsidiaries (the “Company” or “Premier”) is in the business of presenting to the public museum-quality touring exhibitions around the world. Since our establishment, we have developed, deployed and operated unique exhibition products that are presented to the public in exhibition centers, museums and non-traditional venues. Income from exhibitions is generated primarily through ticket sales, third-party licensing, sponsorships and merchandise sales.

Titanic Ventures Limited Partnership (“TVLP”), a Connecticut limited partnership, was formed in 1987 for the purpose of exploring the wreck of the Titanic and its surrounding oceanic areas. In May of 1993, R.M.S. Titanic, Inc. (“RMST”) entered into a reverse merger under which RMST acquired all of the assets and assumed all of the liabilities of TVLP and TVLP became a shareholder of RMST. In October of 2004, we reorganized and Premier Exhibitions, Inc. became the parent company of RMST and RMST became a wholly-owned subsidiary. Additional wholly-owned subsidiaries were established in order to operate the various domestic and international exhibitions of the Company.

Our exhibitions tour regularly outside the U.S. Approximately 2.4% of our revenues and 4.0% of attendance for the three months ended May 31, 2013 compared with 6.5% and 13.1%, respectively, for the three months ended May 31, 2012 resulted from exhibition activities outside the U.S. Many of our financial arrangements with our international trade partners are based upon the U.S. dollar which limits the Company’s exposure to the risk of currency fluctuations between the U.S. dollar and the currencies of the countries in which our exhibitions are touring.

Corporate Structure

Our business has been divided into an exhibition management division and a content division. The content division is the Company’s existing subsidiary, RMST, which holds all of the Company’s rights with respect to the Titanic assets and is the salvor-in-possession of the Titanic wreck site. These assets include title to all of the recovered artifacts in the Company’s possession, as well as all of the intellectual property (data, video, photos, maps, etc.) related to the recovery of the artifacts and scientific study of the ship.

We formed a new entity, Premier Exhibition Management LLC (“PEM”), in September 2011 to manage all of the Company’s exhibition operations (exhibition management division). This includes the operation and management of our Bodies, Titanic and Dialog in the Dark exhibitions. PEM will also pursue “fee for service” arrangements to manage exhibitions based on content owned or controlled by third parties.

On April 20, 2012, Premier Exhibition Management LLC and its wholly owned subsidiary, PEM Newco, LLC (Newco”), both subsidiaries of the Company, entered into a purchase agreement with AEG Live LLC, AEG Exhibitions LLC, and Arts and Exhibitions International, LLC pursuant to which Newco purchased substantially all of the assets of Arts and Exhibitions International, LLC (“AEI”). The assets purchased include the rights and tangible assets relating to four touring exhibitions known as “King Tut II,” “Cleopatra,” “America I Am” and “Real Pirates.” Of these four exhibitions, the Company is currently touring only “Real Pirates”. The acquired assets include rights agreements with the owners of the artifacts and intellectual property comprising the exhibitions, museum/venue agreements for existing exhibition venues, sponsorship agreements, a warehouse lease and an office lease. In addition, the acquired assets include intellectual property related to proposed future exhibitions that the Company may further develop and produce. The Company will operate any such additional properties through its exhibition management subsidiary.

On July 12, 2012 the Company purchased substantially all of the assets of Exhibit Merchandising, LLC for $125 thousand. As part of the acquisition of the assets of Exhibit Merchandising, LLC, we obtained the rights to sell all merchandise related to “Tutankhamun and the Golden Age of the Pharaohs”, “Cleopatra: The Exhibition” and “Real Pirates”. These merchandising rights are operated under our Premier Merchandising, LLC subsidiary which is included in our Exhibition Management segment.

The restructuring of the Company and changes in its management, reflect that Premier has two operating segments – Exhibition Management and Content Management (RMS Titanic”).

Basis of Presentation

When we use the terms “Premier,” “Company,” “we,” “us” and “our,” we mean Premier Exhibitions, Inc., a Florida corporation and its subsidiaries. We have prepared the accompanying unaudited condensed consolidated financial statements and condensed notes pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States (“U.S. GAAP”) regarding interim financial reporting. Accordingly, they do not contain all of the information and notes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for our fiscal year ended February 28, 2013. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation of our financial condition as of May 31, 2013, our results of operations for the three months ended May 31, 2013 and 2012 and cash flows for the three months ended May 31, 2013 and 2012. The data in the consolidated balance sheet as of February 28, 2013 was derived from our audited consolidated balance sheet as of February 28, 2013, as presented in our Annual Report on Form 10-K for our fiscal year ended February 28, 2013. The unaudited condensed consolidated financial statements include the accounts of Premier, its wholly owned subsidiaries after the elimination of all significant intercompany accounts and transactions, and its consolidated joint venture. Our operating results for the three months ended May 31, 2013 are not necessarily indicative of the operating results that may be expected for future periods or the full fiscal year ending February 28, 2014 (“fiscal 2014”).

Significant Accounting Policies

For a description of significant accounting policies, see the Summary of Significant Accounting Policies footnote to the Financial Statements included in the Company’s 2013 Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies since the filing of the Company’s 2013 Annual Report on Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from reported results using those estimates.

2.	Income Per Share Data

Basic per share amounts exclude dilution and are computed using the weighted average number of common shares outstanding for the period. Diluted per share amounts reflect the potential reduction in earnings per share that could occur if equity based awards were exercised or converted into common stock, unless the effects are anti-dilutive (i.e., the exercise price is greater than the average market price of the common shares). Potential common shares are determined using the treasury stock method and include common shares issuable upon exercise of outstanding stock options and warrants.

The following table sets forth the computation of basic and diluted net income per share.

	Three Months Ended May 31,
	2013		2012

Numerator:
Net income attributable to shareholders (in thousands)	$	971	$	1,199

Denominator:
Basic weighted-average shares outstanding		49,276,792		47,938,614
Effect of dilutive stock options and warrants		235,076		1,156,593
Diluted weighted-average shares outstanding		49,511,868		49,095,207

Net income per share:
Basic	$	0.02	$	0.03
Diluted	$	0.02	$	0.02

Equity based awards not included in the per share computation because the option exercise price was greater than the average market price of the common shares are reflected in the following table.

	Three Months Ended May 31,
	2013		2012

Warrants		6,000		6,000
Stock options		1,145,032		1,145,032
Total		1,151,032		1,151,032

3.	Total Comprehensive Income

The following table provides a summary of total comprehensive income for the applicable periods (in thousands):

	Three Months Ended May 31,
	2013			2012

Net income attributable to the shareholders of Premier Exhibitions, Inc.	$	971		$	1,199

Other comprehensive income:
Unrealized loss on marketable securities		(1	)		-
Net foreign currency translation gain		1			6
Total comprehensive income	$	971		$	1,205

4.	Assets Related to 2010 Expedition to Titanic Wreck Site

During August and September 2010, our wholly owned subsidiary RMST, as Salvor-In-Possession of the RMS Titanic (the “Titanic”) and its wreck site, conducted an expedition to the Titanic wreck site.

We have capitalized $4.5 million of costs related to the expedition, discussed in more detail below, which have been allocated to specific assets as reflected in the following table (in thousands):

	May 31, 2013		February 28, 2013
3D film	$	1,817	$	1,817
3D exhibitry		857		857
2D documentary		631		631
Gaming application and other application		886		886
Expedition web point of presence		317		317
Total expedition costs capitalized		4,508		4,508
Less: Accumulated amortization		631		475
Accumulated depreciation		491		421
Expedition costs capitalized, net	$	3,386	$	3,612

All assets are being depreciated or amortized. The web point of presence and 3D exhibitry assets are included in Property and equipment on the Condensed Consolidated Balance Sheets. The 3D film, 2D documentary, gaming and other application assets are included in Film, gaming and other application assets on the Condensed Consolidated Balance Sheets.

5.	Notes Payable and Capital Lease Obligations

On October 17, 2011, the Company entered into an Asset Purchase Agreement to purchase the assets of a Titanic-themed exhibition (Titanic: The Experience or “TTE”) in Orlando, Florida from Worldwide Licensing & Merchandising, Inc. and its shareholder, G. Michael Harris (together, “Worldwide”). Pursuant to the Agreement, the Company purchased the assets of the Orlando exhibition from Worldwide in an installment sale. The Company agreed to pay Worldwide directly a total of $800 thousand over a two-year period, and also agreed to assume rental and other arrearages owed by Worldwide, totaling $720 thousand, which the Company will pay over a four-year period. Based upon an interest rate of 7.6% the net present value of these payments was approximately $1,377 thousand as of the date of the transaction.

On June 29, 2012 the Asset Purchase Agreement was amended to accelerate certain payments to Worldwide. To induce the Company into this agreement, Worldwide agreed to forgive one payment of $90 thousand. Based upon the imputed interest rate of 7.6%, this represented a decrease in the note of approximately $71 thousand.

On November 26, 2012 the Asset Purchase Agreement was amended to accelerate the final payment to Worldwide. To induce the Company into this agreement, Worldwide agreed to reduce the final payment by approximately $12 thousand dollars. The final payment was also reduced by approximately $6 thousand to repay accounts receivable owed to the Company. Based upon the imputed interest rate of 7.6%, this represented a decrease in the note of approximately $10 thousand. The final payment of $62 thousand was made to Worldwide in December 2012.

As of May 31, 2013 the short-term portion of the note payable was $64 thousand and the long-term portion was $167 thousand.

On April 20, 2012, Premier Exhibition Management LLC and its wholly owned subsidiary, PEM Newco, LLC, both subsidiaries of the Company, entered into a purchase agreement with AEG Live LLC, AEG Exhibitions LLC, and Arts and Exhibitions International, LLC pursuant to which Newco purchased substantially all of the assets of Arts and Exhibitions International, LLC (“AEI”). The assets purchased include the rights and tangible assets relating to four touring exhibitions known as “King Tut II,” “Cleopatra,” “America I Am” and “Real Pirates.” Of these four exhibitions, the Company is currently touring only “Real Pirates”. The Company issued a non-recourse non-interest bearing note of $14.2 million as part of this transaction. The Company originally recorded the note at $16.4 million. The increase from $14.2 million to $16.4 million was mainly for prepaid licenses and expenses paid by Arts and Exhibition, LLC that were added to the note balance. The book value of the note was reduced by $3.7 million for the amount that is not expected to be repaid based upon the terms of the note related to the expected future cash flows of the AEI exhibitions and $1.3 million related to the discount of the note to its net present value at an imputed interest rate of 7.0%. Based upon the expected repayment amount of $12.7 million and an imputed interest rate of 7.0%, the fair value of this note was approximately $11.4 million as of April 20, 2012. As of May 31, 2013 the balance sheet reflects the short-term portion of the note payable at $5.1 million and the long-term portion at $2.5 million, including accrued interest.

Capital lease obligations

On October 8, 2012, the Company entered into two capital leases for the use of computer equipment. The value of the equipment leased was $115 thousand. Future payments are $2,600 per month for the first three years and $1,700 per month for the final two years of leases. As of May 31, 2013 the balance sheet reflects the short-term portion of these capital leases at $24 thousand and the long-term portion at $76 thousand

6.	Non-controlling Interest

Arts and Exhibitions International, LLC

As part of its acquisition of AEI, LLC the Company granted a 10% interest in Premier Exhibition Management LLC (“PEM”) to AEG Live valued at $3.0 million as part of this transaction. The Company used level 3 inputs based upon Financial Accounting Statement Board (“FASB”) Accounting Standards Codification 820, “Fair Value Measurements and Disclosures” (“ASC 820”) to value AEG Live’s interest in PEM. The Company projected the future discounted cash flow by projecting the statement of operations and the probability of achievement to determine the fair value of the assets. During the three months ended May 31, 2013 and 2012 the net income related to the non-controlling interest in PEM was $78 thousand and $13 thousand, respectively.

7.	Legal Proceedings and Contingencies

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

The Company has been party to a salvage case titled RMS Titanic, Inc. v. The Wrecked and Abandoned Vessel, et al., in rem for nearly 20 years. The Company has served as sole salvor-in-possession of the Titanic wreck site since 1994. On August 12, 2010, the U. S. District Court for the Eastern District of Virginia (the “District Court”) issued an opinion granting a salvage award to RMST based upon the Company’s work in recovering and conserving over three thousand artifacts from the wreck of Titanic during its expeditions conducted in 1993, 1994, 1996, 1998, 2000, and 2004 (the “Post 1987 Artifacts”). The Company was awarded 100 percent of the fair market value of the artifacts, which the District Court set at approximately $110 million. The District Court reserved the right to determine whether to pay the Company a cash award from proceeds derived from a judicial sale, or in the alternative, to issue the Company an in-specie award of title to the artifacts with certain covenants and conditions which would govern their maintenance and future disposition.

On August 15, 2011, the District Court granted an in-specie award of title to the artifacts to RMST for the Post 1987 Artifacts. Title to the Post 1987 Artifacts comes with certain covenants and conditions drafted and negotiated by the Company and the United States government. These covenants and conditions govern the maintenance and future disposition of the artifacts. These covenants and conditions include the following:

·	The approximately 2,000 “1987 Artifacts" and the approximately 3,500 "Post 1987 Artifacts" must be maintained as a single collection;

·	The combined collections can only be sold together, in their entirety, and any buyer of the assets would be subject to the same conditions applicable to RMST and the purchase subject to court approval; and

RMST must comply with provisions that guarantee the long-term protection of all of the artifacts. These provisions include the creation by RMST of a reserve fund (the “Reserve Fund”). The Reserve Fund is irrevocably pledged to and held for the exclusive purpose of providing a performance guarantee for the maintenance and preservation of the Titanic collection for the public interest. The Company will pay into the Reserve Fund a minimum of twenty five thousand dollars ($25 thousand) for each future fiscal quarter until the corpus of such Reserve Fund equals five million dollars ($5 million). Though not required under the covenants and conditions, the Company may make additional payments into the Reserve Fund as it deems appropriate, consistent with its prior representations to the Court and sound fiscal operations. The Company established the Reserve Fund and funded it with $25 thousand during November 2011 and continues to fund it with quarterly $25 thousand payments. The current balance in the Reserve Fund is $175,199, including interest income.

During these proceedings, on July 2, 2004, the District Court also rendered an opinion and order in which it held that it would not recognize a 1993 Proces-Verbal, pursuant to which the government of France granted RMST title to all artifacts recovered from the wreck site during the 1987 expedition (the “1987 Artifacts”). RMST appealed the July 2, 2004 District Court order to the Appellate Court. On January 31, 2006, the Appellate Court reversed the lower court’s decision to invalidate the 1993 Proces-Verbal, pursuant to which the government of France granted RMST title to all artifacts recovered from the wreck site during the 1987 expedition. As a result, the Appellate Court tacitly reconfirmed that RMST owns the approximately 2,000 artifacts recovered during the 1987 expedition. These artifacts were not part of the August 2011 award, but are now subject to the covenants and conditions agreed to by the Company.

Status of International Treaty Concerning the Titanic Wreck

The U.S. Department of State (the “State Department”) and the National Oceanic and Atmospheric Administration of the U.S. Department of Commerce (“NOAA”) are working together to implement an international treaty (the “Treaty”) with the governments of the United Kingdom, France and Canada concerning the Titanic wreck site. If implemented in this country, this treaty could affect the way the District Court monitors our salvor-in-possession rights to the Titanic. These rights include the exclusive right to recover artifacts from the wreck site, claim possession of and perhaps title to artifacts recovered from the site, and display recovered artifacts. Years ago we raised objections to the State Department regarding the participation of the U.S. in efforts to reach an agreement governing salvage activities with respect to the Titanic. The proposed Treaty, as drafted, did not recognize our existing salvor-in-possession rights to the Titanic. The United Kingdom signed the Treaty in November 2003, and the U.S. signed the Treaty in June 2004. For the Treaty to take effect, the U.S. must enact implementing legislation. As no implementing legislation has been passed, the Treaty currently has no binding legal effect.

In August, 2011, the State Department and NOAA resubmitted draft legislation to Congress. Since that time, RMST has worked with the U.S. government to develop a number of textual modifications to this proposed implementing legislation to address the Company’s concerns. Recently, the members of the United States Congress have sponsored this revised legislation and it is now making its way through the legislative process. RMST has taken efforts to support the passage of this revised implementing legislation into law. The Company believes that the passage of this legislation, as modified by RMST, will recognize the Company’s past and future role with regard to the wreck site.

Other Litigation

The Company is also from time to time party to collection actions to recover amounts owed by promoters and other parties, particularly international promoters and partners. In RMS Titanic, Inc. v. Citywest Productions and H.S.S. Trading as the Mansfield Group, we sued in Dublin, Ireland to collect approximately $1.3 million owed by a promoter who licensed and presented a Titanic exhibition in Dublin. We were successful in obtaining judgment against the parties for the full amount of the claim. During the proceedings, the defendants went into receivership, which is an insolvency process under the laws of Ireland. This receivable was fully reserved in fiscal year 2011 and written off in fiscal year 2012. Recovery in this case is unlikely.

On February 26, 2013 the Company filed suit in the U.S. District Court for the Northern District of Georgia, Atlanta Division against Thomas Zaller and his companies, Imagine Exhibitions, Inc. and Imagine Exhibitions, PTE, LTD. Mr. Zaller is a former executive of the Company. The suit alleges that Mr. Zaller and his companies fraudulently obtained certain of the Company’s confidential and proprietary intellectual property related to the design of its Titanic exhibitions. The Company claims that Mr. Zaller and his companies unlawfully used such property in the development of their own competing Titanic exhibition which was presented this year at the Venetian Macau, and which is now being marketed around the world. In the suit, the Company makes claims against Mr. Zaller personally for conversion, breach of contract, and misappropriation of trade secrets under Georgia law. The Company makes claims against Mr. Zaller and his companies for unjust enrichment, fraud, fraudulent inducement, and trade dress violations under the Lanham Act. The Company has sued for unspecified damages. The case is still in its early stages and the outcome of the case is not readily predictable at this time.

In a related matter, on April 29, 2013, the Company filed suit in the U.S. District Court for the Middle District of Florida, Jacksonville Division against Kingsmen Creatives, LTD, and Kingsmen Exhibits PTE, LTD. Kingsmen Creatives is a publicly traded Singapore based design company and is traded on the Singapore Exchange. Kingsmen Exhibits PTE, LTD. is a wholly-owned subsidiary of Kingsmen Creatives, LTD. and designs exhibition and museum properties. The Kingsmen companies partnered with Thomas Zaller and his companies in development of their competing Titanic exhibition. The Company alleges that the Kingsmen companies participated in an unlawful conspiracy with Thomas Zaller and his companies which caused injury to the Company. The Company also makes claims against the Kingsmen companies for conversion, misappropriation of trade secrets under Florida law, unjust enrichment, and trade dress violations under the Lanham Act. The Company has sued for unspecified damages. The case is still in its early stages and the outcome of the case is not readily predictable at this time.

On April 22, 2013, Kingsmen Exhibits PTE, LTD. filed suit against the Company in the High Court of the Republic of Singapore. This suit followed extensive correspondence between the Company and the Kingsmen companies regarding the allegations of wrongdoing by the Kingsmen companies, along with their partners Thomas Zaller and his companies. Kingsmen seeks a judgment declaring that they did not violate the Singapore Copyright Act and the Singapore Trademark Act and prohibiting the Company from continuing to make claims that Kingsmen infringed the Company’s copyrights and trademarks. Kingsmen also seeks unspecified damages from the Company related to actions taken by the Company to protect its confidential and proprietary intellectual property. The case is still in its early stages and the outcome of the case is not readily predictable at this time.

From time to time the Company is or may become involved in other legal proceedings that result from the operation of its exhibitions and business.

Settled Litigation

On July 30, 2009, Sports Immortals, Inc. and its principals, Joel Platt and Jim Platt (together, “Sports Immortals”), filed an action against the Company in the Circuit Court of the Fifteenth Judicial District in Palm Beach County, Florida for claims arising from their license agreement with the Company under which the Company obtained rights to present sports memorabilia exhibitions utilizing the Sports Immortals, Inc. collection. The plaintiffs alleged that the Company breached the contract when the Company purported to terminate it in April of 2009, and they sought fees and stock warrant agreements required under the agreement. The Company filed its answer and counterclaims on September 7, 2009. Answering the complaint, the Company denied plaintiffs’ allegations and maintained that the Sports Immortals, Inc. license agreement was properly terminated. The Company counterclaimed against the plaintiffs for breach of contract, fraudulent inducement and misrepresentation, breach of the covenant of good faith and fair dealing, and violation of Florida’s deceptive and unfair practices act. On August 16, 2011, the Company and Sports Immortals entered into a Settlement and Release Agreement (the “Agreement”). In exchange for full settlement and release of all claims of Sports Immortals, pursuant to the Agreement the Company agreed to pay $475 thousand currently, $475 thousand on the first anniversary of settlement, and to exchange certain warrants previously issued to Jim Platt and Joel Platt for warrants with an exercise price set at the market price on the date of settlement of $1.82. An expense of $6 thousand for the exchange of these warrants is included in General and administrative expenses for the year ended February 29, 2012. In third quarter of fiscal 2010, the Company accrued $167 thousand as an estimate of the cost to settle this litigation. An additional expense of $783 thousand was recorded in second quarter of fiscal 2012. The first installment of the settlement agreement of $475 thousand was paid on September 7, 2011. The remaining $475 thousand settlement payable was paid during the second quarter of fiscal 2013.

In April 2011, the Company filed suit in the U.S. District Court for the Northern District of Georgia against Serge Grimaux and his companies, including Serge Grimaux Presents, Inc. and 9104-5773 Quebec, Inc. The suit alleges that Grimeaux failed to pay over $800 thousand due and owing the Company under a series of license agreements pursuant to which Mr. Grimaux and his entities presented the Company’s Titanic and human anatomy exhibitions in venues throughout Canada. The Company settled this litigation on November 10, 2011 for $375 thousand, of which $175 thousand has been received and the remainder of which is subject to collection. As of May 31, 2013 a receivable of $118 thousand, net of an allowance for doubtful accounts of $82 thousand, is included in the Company’s accounts receivable.

On August 5, 2011, the Company filed suit in the U.S. District Court for the Southern District of New York against Gunther Von Hagens and his company, Plastination Company, Inc. The suit alleged that Von Hagens and Plastination breached a settlement agreement with the Company, tortiously interfered with the Company’s business, conspired against the Company and engaged in unfair competition practices. These claims related to information Von Hagens and Plastination provided to ABC News and other third-parties about the origin of the human anatomy specimens licensed by the Company and used in its human anatomy exhibitions. The Company sued for unspecified damages. On April 23, 2013, the parties entered into a confidential settlement agreement under which the lawsuit has been dismissed. The proceeds related to this settlement have been included in the first quarter of fiscal 2014 condensed consolidated statement of operations.

On February 24, 2012, the Company filed suit against Dr. Hong-Jin Sui, Hoffen Global Ltd., and Arnie Geller in the Circuit Court in and for Hillsborough County, Florida. The Company alleged that Messrs. Sui and Hoffen breached certain contractual obligations relating to rights of first refusal and opportunities to match competing offers for the lease of sets of plastinated human anatomical specimens, leading to the opening of a series of exhibitions in Europe competitive with those of the Company. Mr. Geller, the Company’s former CEO, was alleged to have tortiously interfered with the Company’s contractual rights in connection with the European exhibitions. On February 15, 2013, the parties entered into a confidential settlement agreement under which the lawsuit has been dismissed.

On August 7, 2012, the Company filed suit against Marmargar, Inc. in the United States District Court for the Northern District of Georgia, Atlanta Division. The Company filed suit in response to a claim by Marmargar regarding amounts allegedly due Marmargar pursuant to two alleged contracts with the Company. In particular, Marmargar sought four percent of all monies received by the Company from a future sale of the Titanic artifacts. The Company denied all claims of Marmargar. In its lawsuit, the Company sought a judgment from the Court declaring that the alleged contracts were unenforceable and that the Company did not owe Marmargar any monies. The case was transferred to the United States District Court for the Eastern District of Virginia, Norfolk Division, where Marmargar has consented to jurisdiction. Marmargar filed a counterclaim seeking to enforce the two alleged contracts. On April 4, 2013, the parties entered into a confidential settlement agreement under which the lawsuit has been dismissed. The expense related to this settlement was recorded in the fourth quarter of fiscal 2013.

Revenue Examinations

As of May 31, 2013, the Internal Revenue Service (“IRS”) completed its examination of the Company’s federal tax returns for the fiscal years ended February 28(29), 2010, 2009, 2008 and 2007, with no significant adjustments required. The tax years February 28 (29), 2013, 2012 and 2011 remain open to IRS examination. In addition to the review by the IRS, the Company is, at times, under review by various state revenue authorities. The Company believes that adequate provisions for resolution of all contingencies, claims and pending litigation have been made for probable losses and that the ultimate outcome of these actions will not have a material adverse effect on the Company’s financial condition.

8.	Purchase and Registration Rights Agreements

On October 31, 2011, the Company and Lincoln Park Capital Fund, LLC (“LPC”), entered into a Purchase Agreement (the “LPC Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”), whereby the Company has the right to sell, at its sole discretion, to LPC up to $10 million of the Company’s common stock, over a 36-month period (any such shares sold being referred to as the “Purchase Shares”). Under the Registration Rights Agreement, the Company agreed to file a registration statement with the SEC covering the Purchase Shares and the Commitment Shares (as defined below).

The LPC Purchase Agreement and Registration Rights Agreement were entered into following the termination by mutual agreement of previous purchase agreements and registration rights agreements dated May 20, 2011 and October 19, 2011, which provided for a substantially similar financing transaction between the Company and LPC. The October 19, 2011 agreements were terminated in order to enable the parties to reduce the maximum number of shares of the Company’s common stock issuable in connection with the proposed financing transaction. The October 19, 2011 agreements replaced a previous purchase agreement and registration rights agreement dated May 20, 2011. The previous agreements were terminated by mutual agreement of the Company and LPC in order to eliminate the ability of the Company to sell Initial Purchase Shares of $1.25 million to LPC on the commencement of the Agreement, and to eliminate warrants that may have been issued under the original agreements if the Company had elected to sell the Initial Purchase Shares.

The registration statement filed pursuant to the Registration Rights Agreement has been declared effective by the SEC. The Company generally now has the right, but not the obligation, over a 36-month period, to direct LPC to periodically purchase the Purchase Shares in specific amounts under certain conditions at the Company’s sole discretion. The purchase price for the Purchase Shares will be the lower of (i) the lowest trading price on the date of sale or (ii) the arithmetic average of the three lowest closing sale prices for the common stock during the 12 consecutive business days ending on the business day immediately preceding the purchase date. In no event, however, will the Purchase Shares be sold to LPC below the floor price as defined in the LPC Purchase Agreement.

In consideration for entering into the purchase agreement between the Company and LPC dated May 20, 2011, the Company issued to LPC 149,165 shares of common stock as an initial commitment fee. Under the October 30, 2011 Purchase Agreement, the Company is also required to issue up to 149,165 shares of common stock as commitment shares on a pro rata basis as the Company directs LPC to purchase the Company’s shares under the Purchase Agreement. The LPC Purchase Agreement may be terminated by the Company at any time at the Company’s discretion without any cost to the Company. The proceeds that may be received by the Company under the LPC Purchase Agreement are expected to be used for general corporate purposes, including working capital.

Under the LPC Purchase Agreement, the Company has agreed that, subject to certain exceptions, it will not, during the term of the LPC Purchase Agreement, effect or enter into an agreement to effect any issuance of common stock or securities convertible into, exercisable for or exchangeable for common stock in a “Variable Rate Transaction,” which means a transaction in which the Company:

issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of common stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of common stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to our business or the market for the common stock; or

enters into any agreement, including, but not limited to, an equity line of credit, whereby it may sell securities at a future determined price.

The Company has also agreed to indemnify LPC against certain losses resulting from its breach of any of its representations, warranties or covenants under the agreements with LPC.

During the year ended February 29, 2012 the Company sold 275,000 shares for $634,675 and issued 158,632 commitment shares under this agreement. No shares have been issued or sold since that time.

9.	Asset Purchase Agreement and Related Matters

Transaction - Arts and Exhibitions International, LLC

On April 20, 2012, Premier Exhibition Management LLC and its wholly owned subsidiary, PEM Newco, LLC (“Newco”), both subsidiaries of the Company, entered into a purchase agreement with AEG Live LLC, AEG Exhibitions LLC, and Arts and Exhibitions International, LLC pursuant to which Newco purchased, effective April 20, 2012, substantially all of the assets of Arts and Exhibitions International, LLC (“AEI”). The assets purchased include the rights and tangible assets relating to four touring exhibitions known as “King Tut II,” “Cleopatra,” “America I Am” and “Real Pirates.” Of these four exhibitions, the Company is currently touring only “Real Pirates”. The acquired assets include rights agreements with the owners of the artifacts and intellectual property comprising the exhibitions, museum/venue agreements for existing exhibition venues, sponsorship agreements, a warehouse lease and an office lease. Our license to exhibit “King Tut II” expired during fiscal 2013. We were notified by the Egyptian government that the license to exhibit “Cleopatra”, originally set to expire during fiscal 2014, would be terminated at the end of fiscal 2013. In addition, the acquired assets include intellectual property related to proposed future exhibitions that the Company may further develop and produce. The Company will operate any such additional properties under its exhibition management subsidiary.

Pursuant to the Purchase Agreement, Newco purchased the exhibition properties and assets of AEI in exchange for the issuance to AEG of a 10% equity interest in PEM and a non-recourse and non-interest bearing promissory note in the initial principal amount of $14,187,000 and with a maturity date of February 28, 2017 (the “Promissory Note”). While no cash consideration was paid upon the closing of the transaction, the Company incurred approximately $660,000 in transaction related expenses for investment banking, legal, and accounting fees of the acquired business, of which $550,000 was recognized in fiscal year 2013 and $110,000 in fiscal year 2012 which are included in general and administrative expenses. Newco has also assumed substantially all of the agreements and obligations associated with the acquired assets arising after the closing date, but AEG will retain the obligation to pay the rights fees that accrue on existing exhibitions, which payments totaled $2.2 million. When AEG paid these fees, the balance of the Promissory Note was increased by the amount of the payment(s).

Pursuant to the Promissory Note, Newco will make payments to AEG equal to (a) 100% of net revenues from exhibition bookings entered into by AEG or pending as of closing and transferred to Newco pursuant to the Purchase Agreement, (b) 100% of net revenues from future bookings, after payment to PEM of a 10% booking fee, (c) 100% of the net revenues from the future sale of any tangible exhibitry, equipment and other fixed assets comprising the acquired assets, and (d) 20% of the net revenues from proposed exhibitions acquired from AEG that are ultimately developed and presented. “Net revenues” are determined after deduction by Newco of the direct expenses of operating the exhibitions. Newco is also entitled to retain, before remitting any payments on the Promissory Note, a management fee in the following amount: (a) 5% of gross revenues (after deducting any PEM booking fees) for calendar year 2012; and (b) 10% of gross revenues (after deducting any PEM booking fees) for each calendar year thereafter; provided that the management fee shall not be less than the following minimum fees: $697 thousand in calendar year 2012; $750 thousand in calendar year 2013; $500 thousand in calendar year 2014; and $250 thousand in each of calendar years 2015 and 2016.

If the face value of the Promissory Note is paid in full prior to the maturity date, Newco will pay AEG 40% of any additional net revenues derived from operation of the acquired assets thereafter through the maturity date, after deduction of the 10% management fee and the 10% booking fee, if applicable. If the face value of the Promissory Note is not satisfied in full at the maturity date, Newco shall satisfy any shortfall by, at its option, selling some or all of the remaining acquired tangible assets, returning some or all the remaining acquired tangible assets to AEG, or paying the applicable portion of the value of the remaining tangible assets to AEG.

Due to the non-recourse nature of the Promissory Note, if the proceeds from the acquired exhibitions and asset sales described above are not sufficient to satisfy the Promissory Note in full on or prior to the maturity date, then none of the Company, PEM or Newco will have any liability with respect to any shortfall.

The following table summarizes the allocation of the purchase price of the Arts and Exhibition International, LLC acquisition to the estimated fair values of the assets and liabilities assumed at the date of acquisition (in thousands):

Consideration:
Non-recourse note payable	$	11,433
Non-controlling interest in PEM, LLC		3,018
Total consideration given		14,451

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash		2,481
Prepaid expenses		6,200
Property, plant, and equipment		3,003
Long-term exhibition costs		618
Identifiable intangible assets		4,380
Deferred revenue		(2,481	)
Total identifiable net assets		14,201
Goodwill	$	250

Transaction – Exhibit Merchandising, LLC

On July 12, 2012 the Company purchased substantially all of the assets of Exhibit Merchandising, LLC for $125 thousand from TIX Corporation and Exhibit Merchandising, LLC. The assets purchased consisted of inventory valued at $25 thousand and fixed assets valued at $100 thousand.

As part of the asset purchase of Exhibit Merchandising, LLC, we obtained the rights to sell all merchandise related to “Tutankhamun and the Golden Age of the Pharaohs”, “Cleopatra: The Exhibition” and “Real Pirates.”

10.	Segment Information

The Company has two reportable segments -- Exhibition Management and RMS Titanic. The Exhibition Management segment involves the management of all of the Company’s exhibition operations, including the operation and management of Premier’s Bodies, Titanic (through an inter-company agreement with RMST), and Dialog in the Dark exhibitions. The RMS Titanic segment manages the Company’s rights to the Titanic assets, including title to all of the recovered artifacts in the Company’s possession and all of the intellectual property (video, photos, maps, etc.) related to the recovery of the artifacts and research of the ship. In addition, the RMS Titanic segment manages the Company’s responsibilities as salvor-in-possession of the Titanic wreck site.

Revenue derived from exhibitions presented outside of the U.S. was $218 thousand and $750 thousand for the three months ended May 31, 2013 and 2012, respectively. The Company’s foreign exhibitions are all touring. As such, the concentration of foreign income in any period is fluid and changes as exhibitions are moved, normally every four to six months.

All reported revenues were derived from external customers, with the exception of $633 thousand and $687 thousand reported for the RMS Titanic segment for the three months ended May 31, 2013 and 2012, respectively. This revenue represents a royalty fee paid by the Exhibition Management segment for the use of Titanic assets in its exhibits, and is reflected as a corresponding cost of revenue in the Exhibition Management segment. Revenue earned and expenses charged between segments are eliminated in consolidation.

Certain corporate expenses are allocated to the RMS Titanic segment based on an intercompany agreement between PEM and RMST for corporate shared services. The remaining corporate expenses and income taxes are allocated to the Exhibition Management segment.

The following tables reflect the Statements of Operations for the three months ended May 31, 2013 and 2012 by segment (in thousands):

	Three Months Ended May 31, 2013
	(In thousands)

	Exhibition Management			RMS Titanic		Elimination			Total
Revenue		8,940			633		(633	)		8,940
Cost of revenue (exclusive of depreciation and amortization)		4,280			-		(633	)		3,647
Gross profit		4,660			633		-			5,293

Operating expenses:
General and administrative		3,065			305		-			3,370
Depreciation and amortization		934			51		-			985
Contract and legal settlements		(297	)		-		-			(297	)
Gain on disposal of property and equipment		(28	)		-		-			(28	)
Total Operating expenses		3,674			356		-			4,030

Income from operations		986			277		-			1,263

Other expense		(145	)		-		-			(145	)

Income before income tax		841			277		-			1,118

Income tax expense		53			16		-			69

Net income		788			261		-			1,049
Less: Net income attributable to non-controlling interest		(78	)		-		-			(78	)
Net income attributable to the shareholders of Premier Exhibitions, Inc.		710			261		-			971

	Three Months Ended May 31, 2012
	(In thousands)

	Exhibition Management			RMS Titanic		Elimination			Total
Revenue	$	11,460		$	687	$	(687	)	$	11,460
Cost of revenue (exclusive of depreciation and amortization)		5,875			-		(687	)		5,188
Gross profit		5,585			687		-			6,272

Operating expenses:
General and administrative		3,380			556					3,936
Depreciation and amortization		859			55		-			914
Total Operating expenses		4,239			611		-			4,850

Income from operations		1,346			76		-			1,422

Other expense		(98	)		-		-			(98	)

Income before income tax		1,248			76		-			1,324

Income tax expense		112			-		-			112

Net income		1,136			76		-			1,212
Less: Net income attributable to non-controlling interest		(13	)		-		-			(13	)
Net income attributable to the shareholders of Premier Exhibitions, Inc.	$	1,123		$	76	$	-		$	1,199

The assets in the Exhibition Management segment include exhibitry, leasehold improvements, venue license agreements, and other assets necessary for operation of the Company’s exhibitions. The RMS Titanic segment contains all of the Titanic assets (other than the Orlando “Titanic: The Experience” exhibition and certain venue Titanic license agreements entered into by PEM), including title to all of the recovered artifacts in the Company’s possession and all related intellectual property (video, photos, maps, etc.). The Company’s assets by segment are reflected in the following table (in thousands):

	As of
	May 31, 2013		February 28, 2013

Assets:

Exhibition Management	$	30,570	$	28,926
RMS Titanic		6,867		7,088
Corporate and unallocated		977		1,756
Total assets	$	38,414	$	37,770

Expenditures for additions to long-lived assets by segment for the three months ended May 31, 2013 and 2012 are reflected in the table below (in thousands):

Capital Expenditures:
	May 31, 2013		May 31, 2012

Exhibition Management	$	301	$	174
RMS Titanic		-		-
Total capital expenditures	$	301	$	174

11.	Consignment agreement

On December 20, 2011, Premier entered into an agreement with Guernsey’s auction house to conduct a sale of the Company’s Titanic artifact collection and related intellectual property. Both the legal form of an ultimate transaction and the use of the proceeds are to be determined by the Board of Directors at a later date.

12.	RMS Titanic Sale

Letter of Intent

On October 15, 2012, the Company announced that it had entered into a non-binding letter of intent with an entity representing a group of individuals (the “Consortium”) working to effect a purchase of the stock of RMS Titanic, Inc., for educational, regional economic development and cultural purposes in the Hampton Roads region of Southeastern Virginia. The letter of intent is confidential, and is subject to the parties negotiating binding purchase agreements, obtaining requisite financing commitments and other approvals. The letter of intent is designed to allow the Consortium the opportunity to secure its financing sources, prepare to handle and house the collection of artifacts and to continue its efforts to establish public and private support for the venture. While this process is ongoing, the Company’s Board has authorized management to consider, and if appropriate to pursue, other strategic alternatives. The Board is working to evaluate all options available to maximize shareholder value. There is no guarantee that a transaction or series of transactions will result from this process.

13.	Subsequent Events

On June 12, 2013, the Company entered into an amendment to the employment agreement between the Company and Samuel S. Weiser, the Company’s Chief Executive Officer. Pursuant to the amendment the Company will grant Mr. Weiser an option to purchase 150,000 shares of common stock under the Premier Exhibitions, Inc. 2009 Equity Incentive Plan, to vest one-third on each of the first three anniversaries of the date of grant. These shares will be issued effective the second day following the release of earnings for the first quarter of 2014. In addition, Mr. Weiser will be eligible for a bonus of up to 50% of his base salary under the Premier Exhibitions, Inc. Annual Incentive Plan, consistent with other executives of the Company. The amendment also amends the severance provision in Mr. Weiser’s employment agreement from six months of base salary to twelve months of base salary and provides for a cost of living increase to base salary beginning in fiscal 2014.

Also on June 12, 2013, the Company entered into an amendment to the employment agreement between the Company and Michael Little, the Company’s Chief Financial Officer and Chief Operating Officer. Pursuant to the amendment, the Company will pay Mr. Little a salary of $280,000 per year, increased from $250,000 per year. The Company will also grant Mr. Little an option to purchase 100,000 shares of common stock under the Premier Exhibitions, Inc. 2009 Equity Incentive Plan, to vest one-third on each of the first three anniversaries of the date of grant. These shares will be issued effective the second day following the release of earnings for the first quarter of 2014.

On June 17, 2013 the Company announced that the Board of Directors has authorized a stock repurchase plan pursuant to which the Company may repurchase up to 1.5 million shares of outstanding common stock. The authorization will terminate on the date the full number of authorized shares have been repurchased or when otherwise terminated by the Board of Directors. The Company may repurchase shares of its common stock on the open market at times and prices considered appropriate by the Board of Directors and management. Repurchasing will take place through brokers and dealers and may be made under a Rule 10b5-1 plan.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This report contains information that may constitute "forward-looking statements." Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to revenue growth, improvements to margin and earnings per share growth, and statements expressing general views about future operating results — are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, such statements are dependent upon, and can be influenced by, a number of external variables over which management has little or no control, including but not limited to, general economic conditions, public tastes and demand, competition, the availability of venues, the results of certain legal matters described herein, governmental regulation and the efforts of co-sponsors and joint venture participants. As a result, caution should be taken not to place undue reliance on any such forward-looking statements. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Forward-looking statements should not be relied upon as a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the performance that is ultimately achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements.

In this report, the terms “Premier Exhibitions, Inc.,” the “Company,” “Premier”, “we,” “us,” and “our” mean Premier Exhibitions, Inc., a Florida corporation and its subsidiaries. The condensed consolidated financial statements include the accounts of Premier, its wholly owned subsidiaries after the elimination of all significant intercompany accounts and transactions, and its consolidated joint venture.

You are urged to read the risk factors described in our Annual Report on Form 10-K for our fiscal year ended February 28, 2013 (“fiscal 2013”), as filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available. The following discussion should be read in conjunction with the unaudited condensed financial statements and notes appearing elsewhere herein and our Annual Report on Form 10-K for our fiscal year ended February 28, 2013.

Premier’s principal executive offices are located at 3340 Peachtree Road, NE, Suite 900, Atlanta, Georgia 30326 and the Company’s telephone number is (404) 842-2600. The Company is a Florida corporation and maintains websites located at www.prxi.com, http://www.rmstitanic.net, http://bodiestheexhibition.com, www.bodiesrevealed.com, www.thetitanicstore.com, http://prxi.com/exhibitions/titanic-the-artifact-exhibition.html, http://prxi.com/exhibitions/titanic-the-experience.html, http://prxi.com/exhibitions/bodies-the-exhibition.html, http://prxi.com/exhibitions/dialog-in-the-dark.html, http://prxi.com/exhibitions/bodies-revealed.html, http://prxi.com/exhibitions/tutankhamun.html, http://prxi.com/exhibitions/real-pirates.html, http://prxi.com/exhibitions/cleopatra.html, http://prxi.com/exhibitions/america-i-am.html. Information on Premier’s websites are not part of this report.

Corporate Structure and Management

Overview

Premier Exhibitions, Inc. and subsidiaries, (the “Company” or “Premier”) is in the business of presenting to the public museum-quality touring exhibitions around the world. Since our establishment, we have developed, deployed, and operated unique exhibition products that are presented to the public in exhibition centers, museums, and non-traditional venues. Income from exhibitions is generated primarily through ticket sales, third-party licensing, sponsorships and merchandise sales.

Titanic Ventures Limited Partnership (“TVLP”), a Connecticut limited partnership, was formed in 1987 for the purposes of exploring the wreck of the R.M.S. Titanic and its surrounding oceanic areas. In May of 1993, RMS Titanic, Inc. (“RMST”) entered into a reverse merger under which RMST acquired all of the assets and assumed all of the liabilities of TVLP and TVLP became a shareholder of RMST. In October of 2004, we reorganized and Premier Exhibitions, Inc. became the parent company of RMST and RMST became a wholly-owned subsidiary. Additional wholly-owned subsidiaries were established in order to operate the various domestic and international exhibitions of the Company.

On September 29, 2011, the Company announced that it intended to separate its operations into two operating subdivisions. The change is intended to better position the Company to pursue strategic alternatives and manage both businesses independently.

The exhibition management division includes our exhibition operations and merchandising operations. We formed a new entity, Premier Exhibition Management LLC (“PEM”), in September 2011 to manage all of the Company’s exhibition operations. This includes the operation and management of our Bodies, Titanic (pursuant to an intercompany agreement with RMST) and Dialog in the Dark exhibitions and merchandising related to these exhibits. PEM will also pursue “fee for service” arrangements to manage exhibitions based on content owned or controlled by third parties. On April 20, 2012, Premier Exhibition Management LLC and its wholly owned subsidiary, PEM Newco, LLC (“Newco”), both subsidiaries of the Company, entered into a purchase agreement with AEG Live LLC, AEG Exhibitions LLC, and Arts and Exhibitions International, LLC pursuant to which Newco purchased substantially all of the assets of Arts and Exhibitions International, LLC (“AEI”). The assets purchased include the rights and tangible assets relating to four touring exhibitions known as “King Tut II,” “Cleopatra,” “America I Am” and “Real Pirates.” Of these four exhibitions, the Company is currently touring only “Real Pirates”. The acquired assets include rights agreements with the owners of the artifacts and intellectual property comprising the exhibitions, museum/venue agreements for existing exhibition venues, sponsorship agreements, a warehouse lease and an office lease. In addition, the acquired assets include intellectual property related to proposed future exhibitions that the Company may further develop and produce. The Company will operate any such additional properties through its exhibition management subsidiary. Subsequent to the asset purchase, Newco changed its name to Arts and Exhibitions International, LLC.

As part of the purchase price for the assets of AEI, 10% of the ownership interest in Premier Exhibition Management LLC was transferred to AEG Live LLC. This ownership interest is reported as a "non-controlling interest" in our financial statements, and the financials of Premier Exhibition Management LLC are reported on a consolidated basis.

The exhibition management division also includes our exhibition merchandising business, conducted under the Company’s wholly owned subsidiary, Premier Merchandising, LLC. This entity has purchased the merchandise rights related to the AEI exhibition properties, and also pursues other exhibition merchandising opportunities.

The restructuring of the Company and changes in its management reflect that Premier has two operating segments – Exhibition Management and Content Management (RMS Titanic).

As of May 31, 2013, our portfolio of exhibitions contains the following:

	Year Ended May 31, 2013
	Stationary		Touring		Total
"Bodies…The Exhibition" and "Bodies Revealed"		3		5		8
"Titanic: The Artifact Exhibiton" and "Titanic: The Experience		3		6		9
"Real Pirates"		-		1		1
Exhibitions under management:
"Real Pirates"		-		1		1
Total Exhibitions		6		13		19

Our touring exhibitions usually span four to six months. The stationary exhibitions are longer-term engagements which are located in New York, New York, Las Vegas, Nevada, Orlando, Florida, and Atlanta, Georgia. In fiscal 2013, our New York, New York location was closed in late October 2012 due to the impact of Hurricane Sandy and subsequent action by governmental authorities and the landlord. We are currently in negotiations to open a new location in New York City which we hope to open in the fall of fiscal 2014 which would include a “Bodies…The Exhibition” and a “Titanic: The Experience” exhibition. In addition, we have leased an exhibition facility in Buena Park, California which will include a “Bodies…The Exhibition and a “Titanic: The Experience” which is scheduled to open in the second quarter of 2014.

In addition to developing new content for future exhibitions, the Company continually evaluates its touring capacity and may expand or contract to suit the addressable market for its content.

We first became known for our Titanic exhibitions which present the story of the ill-fated ocean liner, the R.M.S. Titanic (the “Titanic”). The Titanic has captivated the imaginations of millions of people throughout the world since 1912 when she struck an iceberg and sank in the North Atlantic on her maiden voyage approximately 400 miles off the coast of Newfoundland. More than 1,500 of the 2,228 lives on board the Titanic were lost.

We own approximately 5,500 Titanic artifacts recovered from the wreck site 2 ½ miles below the ocean’s surface which we have the right to present at our exhibitions. In 1994, a federal district court declared us salvor-in-possession of the Titanic wreck and wreck site, and, as such, we have the exclusive right to recover additional objects from the Titanic wreck site. Through our explorations, we have obtained and are in possession of the largest collection of data, information, images and cultural materials associated with the Titanic shipwreck. We believe that our salvor-in-possession status puts us in the best position to provide for the archaeological, scientific and educational interpretation, public awareness, historical conservation and stewardship of the Titanic shipwreck. As of May 31, 2013 we had the ability to present 9 concurrent Titanic exhibitions. Management continues to explore ways to expand the Titanic model beyond the exhibition business to broaden the Company's reach.

In 2004, we diversified our exhibitions beyond the Titanic and into human anatomy by acquiring licenses that give us rights to present exhibitions of human anatomy sets, each of which contains a collection of whole human body specimens plus single human organs and body parts. As of May 31, 2013 we had the ability to present 8 concurrent human anatomy exhibitions of which 2 sets are being used by S2BN under a Co-promotion agreement.

In February 2012 the Company decided to close its Atlanta, Georgia “Dialog in the Dark” exhibition effective March 6, 2012, which resulted in an impairment charge of $60 thousand for exhibition licenses and $282 thousand of property and equipment related to our “Dialog in the Dark” exhibitions as these assets were determined to no longer be of use to the Company. In addition, as part of our annual impairment testing of long-lived assets it was determined that the property and equipment related to our New York City “Dialog in the Dark” exhibition were impaired resulting in an impairment charge of $648 thousand. The total impairment charge of $990 thousand related to “Dialog in the Dark” is included in Impairment of intangibles and property and equipment on the Consolidated Statement of Operations for the fiscal year ended February 29, 2012. Our final remaining Dialog in the Dark exhibition became inactive when our facility at The South Street Seaport was closed due to Hurricane Sandy and subsequent action by governmental authorities and the landlord, and management has decided not to reopen that exhibition. As of February 28, 2013 we have closed all of our “Dialog in the Dark” exhibitions and have no plans to re-open any “Dialog in the Dark” exhibitions.

South Street Seaport

The Company’s Bodies and Dialog in the Dark exhibitions at The South Street Seaport in New York City “Seaport” were closed during the end of October and remained closed through fiscal year ending February 28, 2013 due to complications from Hurricane Sandy and subsequent action by governmental authorities and the landlord. The exhibitions remain closed. Municipal authorities have ordered that the building may not be reopened to the public until the landlord makes the necessary repairs. In December 2012, the landlord notified the Company that it had no estimate for the date the facility would be reopened. On January 2, 2013, the landlord notified the Company that it intended to terminate the Company’s South Street Seaport lease on June 30, 2013.

During the months of March 2013 through May 2013, the Company received no revenue at the Seaport. The revenue earned at the Seaport for the same months of fiscal 2013 was approximately $1.7 million. The Company will not be resuming operations at the Seaport.

The Company has property and business interruption coverage at the Seaport and has submitted claims for each. The carrier has denied coverage under both policies, and the Company and the carrier are entering into a mediation regarding the coverage decision. The amount of potential recovery for these claims is uncertain at this time, and the Company has not recorded a receivable for insurance proceeds.

Exhibitions

“Titanic: The Artifact Exhibition” and “Titanic: The Experience”

By featuring the artifacts recovered from the wreck site, our exhibitions tell the Titanic’s story from construction through her sinking and discovery as well as the Company’s efforts to preserve the wreck site and conserve recovered artifacts. The artifacts are placed in historically correct re-creations of the significant rooms onboard the ship and are illuminated by moving stories of her passengers and crew. The Company has supplemented the exhibitions with assets generated during the 2010 Titanic expedition such as 3D exhibitry and film. Approximately 23 million visitors have attended our Titanic exhibitions at venues throughout the world, including in the United States (“U.S.”), Canada, Czech Republic, Germany, Norway, France, Greece, Japan, Switzerland, Chile, Argentina, China, Mexico, Hungary, South Korea, Spain, Brazil, the United Kingdom, and Australia. During the first quarter of fiscal 2014, we presented 9 separate Titanic exhibitions at 10 venues, including “Titanic: The Experience”.

Consistent with the Company’s desire to increase its number of permanent exhibitions, on October 17, 2011 the Company purchased the assets of a Titanic-themed exhibition (Titanic: The Experience or “TTE”) in Orlando, Florida. The Company believes, historically it had not availed itself to the opportunity associated with the large tourist market in Orlando and seeks to do so through this acquisition.

The Company has supplemented the acquired exhibitry with authentic Titanic artifacts from our existing collections and also by including assets generated during the 2010 Titanic expedition such as 3D exhibitry and film. In addition, this exhibition is expected to increase the Company’s penetration into the Orlando market for merchandise sales.

“Bodies...The Exhibition” and “Bodies Revealed”

We presently have the right to display multiple human anatomy sets, each of which contains a collection of whole human body specimens plus single human organs and body parts, which are known as “Bodies Revealed” and “Bodies...The Exhibition.” We secured the rights to produce these two types of human anatomy exhibitions through separate exhibition agreements. During the first quarter of fiscal 2014, we presented 5 separate Bodies exhibitions at 7 venues.

These specimens are assembled into anatomy-based exhibitions featuring preserved human bodies, organs and body parts to offer the public an opportunity to view the intricacies and complexities of the human body. The exhibitions include displays of dissected human bodies which are permanently preserved through a process called polymer preservation, also known as plastination. In essence, the bodies are drained of all fat and fluids, which are replaced with polymers such as silicone rubber, epoxy and polyester. This preserves the flesh and maintains its natural look. Skin from the bodies is removed, or partially removed, to reveal musculoskeletal, nervous, circulatory, and reproductive or digestive systems. The full body specimens are complimented by presentation cases of related individual organs and body parts, both healthy and diseased, that provide a detailed look into the elements that comprise each system of the body. Using more than 200 specimens, each exhibition follows a systems-based approach to human anatomy which examines the skeletal, muscular, nervous, digestive, respiratory, circulatory, urinary, integumentary (skin, sweat glands, hair, and nails), and reproductive systems.

Our full-body specimens and individual organs were obtained through plastination facilities mostly in China. The full body specimens are persons who lived in China and died from natural causes. Most of the bodies were unclaimed at death, and were ultimately delivered to medical schools for education and research. Where known, information about the identities, medical history and causes of death is kept strictly confidential. China has a large and highly competent group of anatomists and dissectors, who are essential to properly preparing these specimens for exhibition and educational purposes. In a number of cases, our medical director has been able to identify medical problems that were present in certain organs and, where appropriate, those organs were clearly labeled in the exhibitions. For example, an emphysema-diseased lung is displayed and identified, giving the visitors a visual understanding of the effects of the disease.

Arts and Exhibitions International, LLC (“AEI”)

On April 20, 2012, we expanded our exhibition portfolio through the purchase of the exhibition business of AEI which gave us the rights to present the following four exhibitions:

“Tutankhamun and the Golden Age of the Pharaohs”

For the first time in a generation, King Tut’s treasures were under license from Egypt’s Supreme Council of Antiquities and drew record-breaking crowds at museums around the world. The exhibition includes an array of possessions unearthed from Tutankhamun's tomb, including King Tut's golden canopic coffinette and the crown found on his head when the tomb was discovered. Attendees learn about the extraordinary discovery of King Tut’s tomb and the belief and burial processes of Ancient Egypt, and view results from the latest scientific testing conducted on King Tut's mummy and what it is telling researchers about his life and death. More than nine million visitors attended the exhibition to date. This exhibition was closed in January 2013 and the artifacts were returned to Egypt.

“Cleopatra: The Exhibition”

The world of Cleopatra lost to the sea and sand for nearly 2,000 years, surfaced in Cleopatra: the Exhibition. Never-before-seen artifacts and multi-media atmospheres give visitors a front-row seat in the riveting present-day quest for Cleopatra VII, which extends from the sands of Egypt to the depths of the Mediterranean Sea. More than 150 artifacts from Cleopatra’s world represent facets of her elusive history, from her family to the places she lived, walked and worshiped. These artifacts were on view in the U.S. for the first time, bringing with them new insights into the tragedies and triumphs of one of the most remarkable and intriguing leaders in history. This exhibition was closed in January 2013 and the artifacts were returned to Egypt.

“Real Pirates”

Real Pirates tells the compelling story of the Whydah, the first authenticated pirate shipwreck in U.S. waters, and the stories of the diverse people whose lives converged on the vessel. Sunk in a fierce storm off the coast of Cape Cod, Massachusetts in April 1717, the Whydah was located in 1984 by underwater explorer Barry Clifford, who had been fascinated with finding the ship since tales from his youth. Many before him tried and failed, and only after decades of tireless searching did Clifford discover the wreck site, which he’s still actively excavating today.

The exhibition features more than 200 authentic items recovered from the Whydah – real treasure last touched by real pirates. Ranging from cannons and coins and from the massive ship’s bell to personal items that the pirates wore, visitors are given an unprecedented glimpse into unique economic, political and social circumstances of the early 18th-century Caribbean.

Effective November 13, 2012, the Company signed a binding letter of intent with Barry Clifford to develop and present a second Real Pirates exhibition, which the Company began touring in March 2013. As of May 31, 2013 we have the ability to present 2 concurrent Pirates exhibitions, one of which is under management.

“America I AM: The African American Imprint”

Presented in partnership with broadcaster Tavis Smiley, this unprecedented travelling museum exhibition celebrates the extraordinary impact of African Americans on our nation and the world. From the first Africans who arrived in Jamestown to the nation’s first black president, this award-winning exhibition takes visitors from all walks of life on an emotional journey through history. Spanning 500 years, the exhibition includes artifacts, documents, multimedia, photos and music that have helped shape the nation and the way we live today. This exhibition was closed in March 2013.

New Content

The Company continues to pursue new content opportunities. To mitigate the risk associated with building an exhibition and then attempting to book the exhibition after incurring the capital expenditure, the Company has begun optioning new content opportunities to assess market demand and evaluate the expected return on the investment based on that market assessment. The Company currently has 3 new projects in development. In November 2013, we plan to open an exhibition at the Franklin Institute in Philadelphia that tells the story of the City of Pompeii, Italy. Through a license with an agency of the Italian government, the Company can present three Pompeii exhibitions using the artifacts from Pompeii’s ruins. The Company also has development agreements in place, to develop an exhibition featuring characters from the Ice Age movie franchise licensed from 20th Century Fox and an exhibition based on the Emmy Award winning sports science show hosted by John Brenkus and seen on ESPN.

Other Exhibitions

“Dialog in the Dark”

In 2008, we further expanded our exhibition portfolio when we entered into a long-term license agreement to present an exhibition series entitled “Dialog in the Dark.” Our “Dialog in the Dark” exhibitions were intended to provide visitors with an opportunity to experience the paradox of learning to “see” without the use of sight. As of February 28, 2013 we have closed all of our “Dialog in the Dark” exhibitions and have no plans to re-open any “Dialog in the Dark” exhibitions. All assets related to this exhibition were impaired as of February 29, 2012.

We intend to acquire, develop and present additional new exhibitions for presentation in the future, including exhibitions both related and unrelated to our currently ongoing exhibitions. Management has created a process to evaluate and develop new content that can be used to create new touring exhibitions.

Titanic Expeditions

In August 1987, TVLP contracted with the Institute of France for the Research and Exploration of the Sea (“IFREMER”) to conduct an expedition and dive to the wreck of the Titanic. Approximately 2,000 objects were recovered and 140 hours of video tape footage and an estimated seven thousand still photographs were taken during the course of the 32 dives in that original expedition. A French maritime tribunal subsequently conveyed to us title to these artifacts. In 1993, RMST acquired all of the assets and assumed all of the liabilities of TVLP. In July 2004, the U.S. District Court for the Eastern District of Virginia (the “District Court”) concluded that such conveyance by the French tribunal was not valid and sought to deprive us of title to these artifacts. We appealed that decision to the U.S. Court of Appeals for the Fourth Circuit (the “Appellate Court”). On January 31, 2006, the Court of Appeals reversed and vacated the ruling of the lower court. This decision reaffirmed the validity of our title to the approximately 2,000 artifacts recovered during the 1987 expedition.

We completed additional expeditions to the wreck of the Titanic in 1994, 1996, 1998, 2000 and 2004 recovering approximately 3,500 additional artifacts and additional video tape footage and still photographs. With the depth of the Titanic wreck approximately two and one-half miles below the surface of the North Atlantic Ocean, our ability to conduct expeditions to the Titanic has been subject to the availability of necessary research and recovery vessels and equipment for chartering by us from June to September, which is the “open weather window” for such activities.

2010 Expedition to Titanic Wreck Site

During August and September 2010, our wholly owned subsidiary RMST, as salvor-in-possession of the RMS Titanic (the “Titanic”) and its wreck site, conducted an expedition to the Titanic wreck site. RMST brought together an alliance of the world’s leading archaeologists, oceanographers and scientists together with U.S. governmental agencies to join RMST in the 2010 expedition to the wreck site and the post-expedition scientific study. This alliance included the Woods Hole Oceanographic Institution (“WHOI”), the Institute of Nautical Archaeology (“INA”), the National Oceanic Atmospheric Administration’s Office of the National Marine Sanctuaries (“NOAA/ONMS”), The National Park Service’s Submerged Resources Center (“NPS”) and the Waitt Institute. Never before had all of these entities partnered to work together on one project. While all of these parties worked together to participate in the expedition, RMST has sole legal ownership of the film footage, data, and other assets generated from the expedition.

While the general purpose of the expedition was to collect and interpret archeological and scientific data utilizing state-of-the-art high definition 2D and 3D cameras and sonar scanning equipment, the Company also planned and executed the expedition in order to create digital assets for commercial purposes, including a 2D documentary that was aired by a major cable network in April 2012, a separate HD3D film featuring a tour of the bow and stern sections of the ship that is now being distributed, and assets to be utilized in enhancing the Titanic exhibitions, as well as other applications. The collected data will also provide the basis for an archaeological site plan, and ultimately a long-term management plan for the Titanic wreck site.

We have capitalized $4.5 million of costs related to the expedition, discussed in more detail below, which have been allocated to specific assets as reflected in Footnote 4 of the financial statements.

In order to increase interest in the expedition, the Company established a central web point of presence for the expedition (ExpeditionTitanic.com), which will also continue to serve as the central site to convey the ongoing efforts to preserve the legacy of the Titanic. During the 2010 expedition, the website featured updates from the crew and other expedition participants, images of the wreck site, and photo/live feed updates that allowed visitors to the site to follow the expedition as it was in process. These features account for most of the capitalized website costs of $317 thousand, which were capitalized in accordance with ASC 350, “Intangibles – Goodwill and Other” (“ASC 350”), as they served as a significant draw to the website and also have future value as assets to be used in our exhibits and/or movies. The remaining capitalized website costs were for additional graphics, which were also capitalized in accordance with ASC 350. Website costs are depreciated on a straight-line basis, using a three year useful life.

During fiscal 2011 the Company capitalized an additional $3.9 million in costs related to the expedition, comprised of $562 thousand in general management costs and $3.3 million in ship charter costs, underwater gear, and filming costs. Costs directly related to the 2D documentary, 3D film, 3D exhibitry or gaming and other applications were separately ascribed to the respective assets; additional costs related to all four types of assets were allocated ratably based on the anticipated future revenue associated with the asset, based on the reasonable expectations of management. Included in these costs is $2.0 million related to agreements with WHOI for optical services and the use of two autonomous underwater vehicles.

During fiscal 2012, as additional costs were incurred for assets developed by our vendors, an additional $262 thousand in underwater gear and filming cost was capitalized.

A significant project such as this requires management by a team of professionals, from the Expedition Leader to other individuals specializing in project management, legal and other specialties which were necessary to ensure that the expedition was conducted efficiently and effectively. A portion of the general management expenses that we capitalized is an allocation of production overhead, which, in accordance with Accounting Standards Codification 926-20-25-2, includes an allocation of costs of the individuals with either exclusive or significant responsibility for the production of a film. For those individuals with a significant, but not an exclusive responsibility, we allocated their costs based on hours worked related to the expedition and tasks related to the development of the film versus hours worked on other matters. In addition, included in capitalized general management expenses are legal and public relations costs incurred associated with the creation of the digital assets.

The web point of presence and 3D exhibitry assets are included in Property and equipment on the Consolidated Balance Sheets. The 3D film, 2D documentary, gaming, and other application assets are included in Film, gaming and other application assets on the Consolidated Balance Sheets.

Certain costs related to the expedition were expensed as incurred, and not included in the capitalized assets discussed above. Examples of these expenditures include costs to advertise the expedition, ongoing maintenance of the expedition web point of presence, certain legal and public relations fees, mapping and profiling of Titanic artifacts, and any management costs subsequent to the ship’s return in September 2010.

Science, Archaeology and Conservation Related to the Titanic and Titanic Artifacts

In addition to being important to our exhibition business, the Titanic is an important archaeological, historical and cultural site. In addition to the alliance brought together for the 2010 expedition described above, we have long standing relationships with several other archaeologists and conservators for services to aid in stewardship of the Titanic wreck site. Upon recovery from the Titanic wreck site, artifacts are in varying states of deterioration. Having been submerged in the ocean for almost 100 years, artifacts have been subjected to the corrosive effects of seawater. The conservation of all artifacts recovered from the wreck site of the Titanic is an extensive process that employs many techniques in order to stabilize them for display in our exhibitions. We also own and maintain an extensive database, together with digital and photographic archives, that establish, with certainty, the origin of the artifacts.

Merchandising

We earn revenue from the sale of exclusively sourced merchandise, such as apparel, posters, gifts and Titanic-related jewelry (some of which utilizes coal we have recovered from the shipwreck). In addition, we also publish exhibition catalogs and provide ancillary services such as audio tours and visitor exhibition themed photographs, which are sold at our exhibition gift shops. We intend to continue to focus on merchandising activities at all our exhibition locations to increase revenue per attendee and our margins on these sales.

During the second quarter of fiscal 2011, we launched an e-commerce website that allows us to sell merchandise related to our shows over the internet. Also, at the end of the third quarter of fiscal 2012, we re-launched our e-commerce website as www.thetitanicstore.com, which offers Titanic-themed merchandise.

Consistent with the Company’s desire to take advantage of additional distribution channels for our merchandise, we entered into agreements with a direct response marketer, and an online and television retailer, to produce, market, and sell Titanic-themed merchandise in order to capitalize on the 100th anniversary of the sinking of the Titanic in April 2012. The agreement with the direct response marketer is for the development and promotion, via direct channels of distribution, of Titanic commemorative jewelry and other items. The agreement with the online and television retailer was for the development and promotion of jewelry, housewares, fragrances, and other Titanic-themed merchandise inspired by, or replicated based on authentic artifacts. This merchandise was launched during a television program aired in April 2012. Due to the strength of the April 2012 show an additional airing was done during the same month. In addition, the merchandise is also available on the retailer’s website.

Information Regarding Exhibitions Outside the United States

Results of Operations

The Quarter Ended May 31, 2013 Compared to the Quarter Ended May 31, 2012

An analysis of our condensed consolidated Statements of Operations for the three months ended May 31, 2013 and 2012, with percent changes, follows:

	Three Months Ended May 31,						% Change
	2013			2012
	(In thousands except percentages)


Revenue	$	8,940		$	11,460			(22.0	) %
Cost of revenue (exclusive of depreciation and amortization)		3,647			5,188			(29.7	) %
Gross profit		5,293			6,272			(15.6	) %
Gross profit as a percent of revenue		59.2	%		54.7	%

Operating expenses		4,030			4,850			(16.9	) %
Income from operations		1,263			1,422			(11.2	) %

Other expense		(145	)		(98	)		48.0	%

Income before income tax		1,118			1,324			(15.6	) %

Income tax expense		69			112			(38.4	) %
Effective tax rate		6.2	%		8.5	%

Net income		1,049			1,212			(13.4	) %
Less: Net (income)/ loss attributable to non-controlling interest		(78	)		(13	)		500.0	%
Net income attributable to the shareholders of Premier Exhibitions, Inc.	$	971		$	1,199			(19.0	) %

Income per share:
Basic income per share	$	0.02		$	0.03
Diluted income per share	$	0.02		$	0.02

Revenue. During the quarter ended May 31, 2013, total revenue decreased by $2.5 million, or 22.0% to $8.9 million compared to the same period last year, as reflected in the following table.

	Revenue (in thousands)
	Three Months Ended
	May 31,
	2013		2012
Exhibition Revenue
Admissions revenue	$	6,115	$	7,513
Non-refundable license fees for current exhibitions		732		1,476
Total Exhibition revenue		6,847		8,989
Merchandise and Other		1,906		2,310
Management fee		187		111
Licensing fee		-		50
Total Revenue	$	8,940	$	11,460

Key Non-financial Measurements
Number of venues presented		18		18
Operating days		1,122		1,361
Attendance (in thousands)		546		824
Average attendance per operating day		510		605
Average ticket price at permanent, museums and other locations	$	13.62	$	15.06
Average retail per attendee	$	3.67	$	3.12

These key non-financial measurements do not include the AEI properties or merchandise sales

Exhibition revenue decreased by $2.1 million to $6.8 million. During the first quarter of fiscal 2014 revenue was negatively affected by Hurricane Sandy which closed the Company’s “Bodies the Exhibition” and “Dialog in the Dark” exhibitions at The South Street Seaport in New York City. This closing is estimated to have decreased revenue by approximately $1.7 million. We do not recognize exhibition revenue or merchandise revenue for the four AEI exhibitions but instead receive a management fee for managing these properties.

With 18 exhibitions presented, the Company experienced a decrease in attendance from approximately 824,000 in the first quarter of fiscal 2013 to approximately 546,000 in the first quarter of fiscal 2014. We attribute this decrease in attendance to the closing of the The South Street Seaport in New York City, smaller venues selected in the current fiscal year and last year's 100th anniversary of Titanic. Revenue from self-run exhibitions was 49.6% of total revenue in the first quarter of fiscal 2014, compared to 69% of revenue for the first quarter of fiscal 2013. These comparisions exclude the AEI portfolio.

Merchandise revenue decreased $0.4 million to $1.9 million for the three months ended May 31, 2013. Merchandise revenue decreased due to a decrease in attendance at our venues.

Cost of revenue. During the three months ended May 31, 2013, total cost of revenue decreased by $1.5 million, or 29.7%, to $3.6 million compared to the same period last year, as reflected in the following table.

	Cost of Revenue
	(in thousands, except percentages)
	Three Months Ended						Percent Change
	May 31, 2013			May 31, 2012			2013 vs. 2012

Exhibition costs

Production	$	58		$	147			(60.5	) %
Operating Expenses		1,838			2,481			(25.9	) %
Marketing		1,068			1,762			(39.4	) %
		2,964			4,390			(32.5	) %
Exhibition expense as percent of exhibition revenue		43.3	%		48.8	%

Cost of merchandise		683			798			(14.4	) %
Cost of merchandise as percent of merchandise revenue		35.8	%		34.5	%

Total	$	3,647		$	5,188			(29.7	) %
Cost of revenue as a percent of total revenue		40.8	%		45.3	%

Exhibition expense decreased from 48.8% of exhibition revenue in the first quarter of 2013 to 43.3% in the first quarter of fiscal 2014 primarily due to a decrease in marketing expense. In addition, operating expenses decreased because of the closure of the South Street Seaport location due to Hurricane Sandy.

Cost of merchandise as a percent of merchandise revenue increased from 34.5% in the first quarter of fiscal 2013 to 35.8% in the first quarter of fiscal 2014 primarily due to higher retail labor cost.

Gross profit. During the three months ended May 31, 2013, our total gross profit decreased by $1.0 million as we generated a gross profit of $5.3 million compared to $6.3 million for the same period last year. Our gross profit decreased primarily due to the decrease in exhibition and merchandise revenues as outlined above as well as the closure of The South Street Seaport in New York City.

Operating expenses. Our general and administrative expenses decreased by $0.6 million to $3.4 million for the three months ended May 31, 2013 compared to the same period last year. The decrease is primarily due to a decrease in professional fees.

Our depreciation and amortization expenses increased by $71 thousand from the prior year as we placed our 3D and 2D film assets in service during the 3rd quarter of fiscal 2013. This increase in amortization expense was partially offset by lower depreciation expense as many fixed assets are now fully depreciated.

Gain on disposal of property and equipment. During the first quarter of fiscal 2014 we sold certain property and equipment that was no longer used for a gain of $28 thousand.

Income from operations. We realized income from operations of $1.3 million in the first quarter of fiscal 2014 as compared to income from operations of $1.4 million for the first quarter of fiscal 2013. This is mainly lower exhibition and merchandise revenues partially offset by decreases in costs of goods sold, general and administrative expenses and the settlement of a lawsuit as noted in Contract and legal settlements in the condensed consolidated statement of operations.

Other expense. We recognized interest expense of $138 thousand on our notes payable during first quarter of fiscal 2014 as compared to $110 thousand in the first quarter of 2013.

Income tax expense. We recorded income tax expense for the three months ended May 31, 2013 of $69 thousand as compared to $112 thousand in income tax for the same period in the prior year. The Company has prior operating losses that are being carried forward and mostly offset current taxable income. The fiscal 2014 and 2013 income tax expense relates primarily to Federal Alternative Minimum Tax.

Net income attributable to non-controlling interest. This represents the income AEG Live, LLC earned on its 10% interest in Premier Exhibition Management LLC in the current year.

Net income. We realized net income of $1.0 million for the three months ended May 31, 2013 as compared to net income of $1.2 million for the same period last year.

The Quarter Ended May 31, 2013 Compared to the Quarter Ended May 31, 2012 – Segment results

Exhibition Management

An analysis of operations for our Exhibition Management segment for the three months ended May 31, 2013 and 2012, with percent changes, follows:

	Three Months Ended May 31,						% Change
	2013			2012
	(In thousands except percentages)


Revenue	$	8,940		$	11,460			(22.0	) %
Cost of revenue (exclusive of depreciation and amortization)		4,280			5,875			(27.1	) %
Gross profit		4,660			5,585			(16.6	) %
Gross profit as a percent of revenue		52.1	%		48.7	%

Operating expenses		3,674			4,239			(13.3	) %
Income from operations		986			1,346			(26.7	) %

Other expense		(145	)		(98	)		48.0	%

Income before income tax		841			1,248			(32.6	) %

Income tax expense		53			112			(52.7	) %
Effective tax rate		6.3	%		9.0	%

Net income		788			1,136			(30.6	) %
Less: Net income attributable to non-controlling interest		(78	)		(13	)		500.0	%
Net income attributable to the shareholders of Premier Exhibitions, Inc.	$	710		$	1,123			(36.8	) %

Revenue. During the quarter ended May 31, 2013, total revenue decreased by $2.5 million, or 22.0% to $8.9 million compared to the same period last year, as reflected in the following table.

	Revenue (in thousands)
	Three Months Ended
	May 31,
	2013		2012
Exhibition Revenue
Admissions revenue	$	6,115	$	7,513
Non-refundable license fees for current exhibitions		732		1,476
Total Exibition revenue		6,847		8,989
Merchandise and Other		1,906		2,310
Management fee		187		111
Film Revenue		-		50
Total Revenue	$	8,940	$	11,460

Key Non-financial Measurements
Number of venues presented		18		18
Operating days		1,122		1,361
Attendance (in thousands)		546		824
Average attendance per operating day		510		605
Average ticket price at permanent, museums and other locations	$	13.62	$	15.06
Average retail per attendee	$	3.67	$	3.12

These key non-financial measurements do not include the AEI properties or merchandise sales

Merchandise revenue decreased $0.4 million to $1.9 million for the three months ended May 31, 2013. Merchandise revenue decreased due to a decrease in attendance at our venues.

Cost of revenue. During the three months ended May 31, 2013, total cost of revenue decreased by $1.6 million, or 27.1%, to $4.3 million compared to the same period last year, as reflected in the following table.

	Cost of Revenue
	(in thousands, except percentages)
	Three Months Ended						Percent Change
	May 31, 2013			May 31, 2012			2013 vs. 2012

Exhibition costs

Production	$	58		$	147			(60.5	) %
Operating Expenses		2,471			3,168			(22.0	) %
Marketing		1,068			1,762			(39.4	) %
		3,597			5,077			(29.2	) %
Exhibition expense as percent of exhibition revenue		52.5	%		56.5	%

Cost of merchandise		683			798			(14.4	) %
Cost of merchandise as percent of merchandise revenue		35.8	%		34.5	%

Total	$	4,280		$	5,875			(27.1	) %
Cost of revenue as a percent of total revenue		47.9	%		51.3	%

Exhibition expense decreased from 56.5% of exhibition revenue in the first quarter of 2013 to 52.5% in the first quarter of fiscal 2014 primarily due to a decrease in marketing expense. In addition, operating expenses decreased because of the closure of the South Street Seaport location due to Hurricane Sandy.

Gross profit. During the three months ended May 31, 2013, our total gross profit decreased by $0.9 million as we generated a gross profit of $4.7 million compared to $5.6 million for the same period last year. Our gross profit decreased primarily due to the decrease in exhibition and merchandise revenues as outlined above as well as the closure of The South Street Seaport in New York City.

Operating expenses. Our general and administrative expenses decreased by $0.3 million to $3.1 million for the three months ended May 31, 2013 compared to the same period last year. The decrease is primarily due to a decrease in professional fees offset partially by a decrease in administrative fees charged to our RMS Titanic segment.

Our depreciation and amortization expenses increased by $75 thousand from the prior year as we placed our 3D and 2D film assets in service during the 3rd quarter of fiscal 2013. This increase in amortization expense was partially offset by lower depreciation expense as many fixed assets are now fully depreciated.

Gain on disposal of property and equipment. During the first quarter of fiscal 2014 we sold certain property and equipment that was no longer used for a gain of $28 thousand.

Income from operations. We realized income from operations of $1.0 million in the first quarter of fiscal 2014 as compared to income from operations of $1.3 million for the first quarter of fiscal 2013. This is mainly lower exhibition and merchandise revenues partially offset by decreases in costs of goods sold, general and administrative expenses and the settlement of a lawsuit as noted in Contract and legal settlements in the condensed consolidated statement of operations.

Other expense. We recognized interest expense of $138 thousand on our notes payable during first quarter of fiscal 2014 as compared to $110 thousand in the first quarter of 2013.

Income tax expense. We recorded income tax expense for the three months ended May 31, 2013 of $53 thousand as compared to $112 thousand in income tax for the same period in the prior year. The Company has prior operating losses that are being carried forward and mostly offset current taxable income. The fiscal 2014 and 2013 income tax expense relates primarily to Federal Alternative Minimum Tax.

Net income attributable to non-controlling interest. This represents the income AEG Live, LLC earned on its 10% interest in Premier Exhibition Management LLC in the current year.

Net income. We realized net income of $0.7 million for the three months ended May 31, 2013 as compared to net income of $1.1 million for the same period last year.

RMS Titanic

An analysis of operations for our RMS Titanic segment for the three months ended May 31, 2013 and 2012 with percent changes, follows:

	Three Months Ended May 31,						% Change
	2013			2012
	(In thousands except percentages)


Revenue	$	633		$	687			(7.9	) %
Cost of revenue (exclusive of depreciation and amortization)		-			-			-	%
Gross profit		633			687			(7.9	) %
Gross profit as a percent of revenue		100.0	%		100.0	%

Operating expenses		356			611			(41.7	) %
Income from operations		277			76			264.5	%

Income tax expense		16			-			N/A	%

Net income	$	261		$	76			243.4	%

Revenue. During the three months ended May 31, 2013 total revenue decreased by $54 thousand, or 7.9%, to $0.6 million compared to the same period in the prior year due to the decrease in revenues from Titanic exhibitions and the increase in merchandise sales. PEM pays RMST a royalty fee for the use of Titanic artifacts in its exhibits. The royalty fee is calculated based on 10% of revenues generated from Titanic ticket sales, merchandising, and other ancillary revenue-related streams. As Titanic related revenues decreased to $6.3 million from $6.9 million, royalty revenue decreased accordingly.

Gross Profit. Gross profit decreased based on the 7.9% decrease in revenue discussed above.

Operating Expenses. Operating expenses for the three months ended May 31, 2013 decreased 41.7% from the same period in the prior year mainly due to a change in the methodology used to calculate the administrative fee charged to RMS Titanic.

Income tax expense. We recorded income tax expense for the three months ended May 31, 2013 of $16 thousand as compared to $0 thousand in income tax for the same period in the prior year. The Company has prior operating losses that are being carried forward and mostly offset current taxable income. The fiscal 2014 income tax expense relates to the Federal Alternative Minimum Tax.

Net income. Income for the three months ended May 31, 2013 was $261 thousand compared to income of $76 thousand for the same period in the prior year based on the items discussed above.

Liquidity and Capital Resources

Liquidity

The following tables reflect selected information about our cash flows during the three months ended May 31, 2013 and 2012:

Selected cash flow information:
	Three Months Ended May 31,
	2013			2012

Net cash provided by operating activities	$	923		$	2,522
Net cash used in investing activities		(262	)		(152	)
Net cash (used in) provided by financing activities		113			(29	)
Effects of exchange rate changes on cash and cash equivalents		1			6
Net increase and cash equivalents	$	775		$	2,347

Operating Activities. For the three months ended May 31, 2013, cash provided by operating activities was $0.9 million as compared to $2.5 million in the prior year. The decrease in cash flow from operating activities is mainly due to the changes in our accounts payable and other liabilities, income tax receivable and accounts receivable.

Investing Activities. Cash used in investing activities was $0.3 million for the three months ended May 31, 2013 as compared to $0.2 million in the prior year. Of the cash used in investing activities the majority was used in the purchase of property and equipment of $302 thousand and $174 thousand for the three months ended May 31, 2013 and 2012, respectively.

Financing Activities. Cash provided by financing activities was $113 thousand for the three months ended May 31, 2013 compared to cash used of $29 thousand for the three months ended May 31, 2012. Cash provided by financing activities in fiscal 2013 relates to the proceeds from the exercise of stock options partially offset by the repayment of notes payable. Cash used in financing for the first quarter of fiscal 2013 related to the repayment of notes payable which was largely offset by proceeds related to the exercise of stock options and warrants.

Capital Resources

Purchase and Registration Rights Agreements

●

●	enters into any agreement, including, but not limited to, an equity line of credit, whereby it may sell securities at a future determined price.

The Company has also agreed to indemnify LPC against certain losses resulting from its breach of any of its representations, warranties or covenants under the agreements with LPC.

During the year ended February 29, 2012, we sold 275,000 shares to Lincoln Park Capital, LLC at an average price of $2.31, and issued 158,632 shares as commitment shares under the Purchase Agreement. No shares have been sold or issued since that time.

Capital requirements. We believe that our expected cash flows from operations together with our existing cash will be sufficient to meet our anticipated cash needs for working capital requirements, debt obligations and capital expenditures for the next 12 months. If cash generated from operations with our existing cash is insufficient to satisfy our liquidity requirements, we may obtain financing pursuant to the Lincoln Park Capital agreements described above, or we may seek additional financing, which could include the issuance of equity or debt securities. The sale of equity or convertible debt securities could result in additional dilution to our shareholders. Additional indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure that financing will be available in amounts or on terms acceptable to us, or at all.

Contractual Obligations

There have been no material changes to our contractual obligations as disclosed in our Annual Report filed on Form 10-K for our fiscal year ended February 28, 2013.

Off-Balance Sheet Arrangements

We have no off-balance sheet financial arrangements.

Critical Accounting Policies

There have been no material changes to our critical accounting policies as disclosed in our Annual Report filed on Form 10-K for our fiscal year ended February 28, 2013.

Item 4. Controls and Procedures.

Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, our management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Information presented in PART I of this FORM 10-Q is incorporated herein by reference.

Item 1.Legal Proceedings.

There have been no material changes in the legal proceedings discussed in our Annual Report on Form 10-K for the year ended February 28, 2013.

Item 1A. Risk Factors.

For a complete list of our Risk Factors, please refer to our Annual Report on Form 10-K for our fiscal year ended February 28, 2013. During the three months ended May 31, 2013, there were no material changes to our Risk Factors. You should consider carefully the Risk Factors. If any of these risks actually occur, our business, financial condition or results of operations would likely suffer. In that case, the trading price of our common stock could decline, and you may lose all or a part of the money you paid to buy our common stock.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.Exhibits.

See Index to Exhibits on page 40 of this Quarterly Report on Form 10-Q.

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.

Dated: July 11, 2013	By: /s/ Samuel S. Weiser
	Samuel S. Weiser,
	President and Chief Executive Officer
	(Principal Executive Officer)


Dated: July 11, 2013	By: /s/ Michael J. Little
	Michael J. Little,
	Chief Financial Officer and
	Chief Operating Officer
	(Principal Financial Officer)

INDEX TO EXHIBITS

Exhibit		Filed	Incorporated by Reference
No.	Exhibit Description	Herewith	Form	Exhibit	Filing Date
10.1#	First Amendment to Employment Agreement, effective June 12, 2013 , by and between the Company and Samuel S. Weiser.		8-K		6/17/2013

10.2#	First Amendment to Employment Agreement, effective June 12, 2013 , by and between the Company and Michael J. Little.		8-K		6/17/2013

10.3#	Form of Nonqualified Stock Option Agreement		8-K		6/17/2013

31.1	Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer	X

31.2	Rule 13a-14(a)/15d-14(a) Certification of Interim Chief Financial Officer	X

32.1	Section 1350 Certifications	X

101.INS	XBRL Instance Document (1)	X

101.SCH	XBRL Taxonomy Extension Schema	X

101.CAL	XBRL Taxonomy Extension Calculation Linkbase	X

101.DEF	XBRL Taxonomy Extension Definition Linkbase	X

101.LAB	XBRL Taxonomy Extension Label Linkbase	X

101.PRE	XBRL Taxonomy Extension Presentation Linkbase	X

(1)	Attached as Exhibit 101 to this report are the following Interactive Data Files formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of May 31, 2013 and February 28, 2013; (ii) Condensed Consolidated Statements of Operations for the three months ended May 31, 2013 and 2012; (iii) Condensed Consolidated Statements of Cash Flow for the three months ended May 31, 2013 and 2012; and (iv) Notes to Condensed Consolidated Financial Statements.

#	Management contract or compensating plan or arrangement.