Premier Exhibitions, Inc. – ‘10-K’ for 2/28/05

On:  Thursday, 6/16/05, at 6:20pm ET   ·   As of:  6/17/05   ·   For:  2/28/05   ·   Accession #:  796764-5-7   ·   File #:  0-24452

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report -- form10k                              47    271K 
 2: EX-21       Subsidiaries                                           1      4K 
 3: EX-31.A     Certifications                                         2±     9K 
 4: EX-31.B     Certifications                                         2±     9K 
 5: EX-32       Certifications                                         1      7K 
 6: EX-99       Code of Ethics                                         3     12K 

10-K   —   Annual Report — form10k
Document Table of Contents

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

 FORM 10-K

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

 FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2005

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

For the transition period from              to                        

Commission File No. 000-24452                                         

 PREMIER EXHIBITIONS, INC.
 -------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

3340 Peachtree Rd, NE, Suite 2250, Atlanta, GA 30326
Address of principal executive offices

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

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

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

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

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

       The aggregate market value of the voting stock held by non-affiliates
of the Registrant, as of June 1, 2005, was: $30,195,840                         

 The number of shares outstanding of each of the registrant's classes of
common stock, as of June 1, 2005 were:                                          
                                            NUMBER OF SHARES
TITLE OF EACH CLASS                        OUTSTANDING  

Common Stock, par value $.0001                          
per share                                  22,299,939   

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

Except for historical information contained herein, this Annual Report on Form  
10-K contains forward-looking statements within the meaning of the Private      
Securities Litigation Reform Act of 1995 that involves certain risks and        
uncertainties. The Company's actual results or outcomes may differ materially   
from those anticipated. Although the Company believes that the assumptions      
underlying the forward-looking statements contained herein are reasonable, any  
of the assumptions could be inaccurate, and therefore, there can be no assurance
that the forward-looking statements contained in the Report will prove to be    
accurate. In light of the significant uncertainties and risks inherent in the   
forward-looking statements included herein, such information should not be      
regarded as a representation by the Company that the objectives and plans of the
Company will be achieved. Included in these risks is the Company's expectation  
that it does not have sufficient working capital for the next 12 months of      
operations and its resultant need for financing, its history of losses, its     
fluctuations in operating results, uncertainty regarding the results of certain 
legal proceedings, competition and other risks set forth herein and in other    
reports the Company has filed. Such statements consist of any statement other   
than a recitation of historical fact and can be identified by the use of        
forward-looking terminology such as "may", "expect", "will", "anticipate",      
"estimate" or "continue" or the negative thereof or other variations thereon or 
comparable terminology. The Company does not have any obligation to update      
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.                          

ITEM 1.  BUSINESS                                                               

Overview                                                                        

 We are in the business of developing and touring museum quality
exhibitions. We are known best for our Titanic exhibitions, which we conduct    
through our wholly-owned subsidiary RMS Titanic, Inc. and which honor the       
ill-fated liner RMS Titanic. The Titanic has continued to captivate the thoughts
and imagination of millions of people throughout the world since 1912, when it  
struck an iceberg and sank in the North Atlantic Ocean, causing the loss of more
than 1,500 of the 2,228 lives on board.                                         

       At the present time, we are recognized as the salvor-in-possession of
the Titanic wreck. As such, we have the exclusive right to recover items from   
the Titanic wreck site. Through our explorations, we have obtained oceanic      
material and scientific data, including still photography and videotape, as well
as artifacts from the Titanic wreck site, which lies more than 12,500 feet below
the surface of the Atlantic Ocean, approximately 400 miles off the southern     
coast of Newfoundland. We utilize this data and the artifacts for historical    
verification, scientific education and public awareness. These activities       
generate income for us through touring exhibitions, television programs and the 
sale of merchandise. We believe that we are in a unique position to present     
exhibitions of Titanic artifacts. We intend to continue to present exhibitions  
throughout the world, as demand warrants, in an enlightening and dignified      
manner that embodies respect for those who lost their lives in the disaster.    

We believe that we are in the best position to provide for the
archaeological survey, scientific interpretation, public awareness, historical  
conservation, and stewardship of the Titanic shipwreck. We possess (but do not  
own) the largest collection of data, information, images, and cultural materials
associated with the shipwreck. Our Titanic exhibitions have toured throughout   
the world and have been viewed by more than 15 million people.                  

         We intend to operate our exhibitions through wholly-owned subsidiaries.
At this time, our wholly-owned subsidiary RMS Titanic, Inc. is operating our    
Titanic exhibitions. We adopted this holding company structure during October   
2004. Prior to that, we conducted all of our business activities, including our 
exhibitions, exclusively through RMS Titanic, Inc. We plan to conduct additional
exhibitions in the future, and we expect that those exhibitions will be         
conducted through other subsidiaries that we will organize in the future as     
needed.                                                                         

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        To date, we have generated most of our revenue from activities related
to our Titanic exhibitions. Our principal sources of revenue are exhibition     
tickets sales, merchandise sales, licensing activities and sponsorship          
agreements. Prior to April 2004, we relied on the services of Clear Channel     
Communications, Inc. to present our exhibitions. However, we are now solely     
responsible for our own exhibitions. Currently, we are operating and touring    
three exhibitions.                                                              

Background                                                                      

      Titanic Ventures Limited Partnership, or TVLP, a Connecticut limited
partnership, was formed in 1987 for the purposes of exploring the wreck and     
surrounding oceanic areas of the Titanic. In August 1987, TVLP contracted with  
the Institute of France for the Research and Exploration of the Sea, or IFREMER,
which is among the world's largest oceanographic institutes and is owned by the 
French government, to conduct an expedition and dive to the wreck of the        
Titanic. Using state-of-the-art technology provided by IFREMER, approximately 60
days of research and recovery operations were performed by TVLP at the Titanic  
wreck site through the use of a manned submersible named Nautile. Approximately 
1,800 objects were recovered during the course of the 32 dives in that          
expedition. The recovered objects were conserved and preserved by Electricite de
France, or EDF, a French government-owned utility. In addition to the recovery  
of historic objects, the 1987 expedition also produced approximately 140 hours  
of videotape footage and an estimated 7,000 still photographs of the wreck site.
Although the French government subsequently conveyed title to these artifacts to
us, the U.S. District Court for the Eastern District of Virginia has concluded  
that such conveyance is not valid.                                              

On May 4, 1993, we acquired all the assets and assumed all the
liabilities of TVLP. In June 1993, we successfully completed our second         
expedition to the Titanic wreck site, during which we recovered approximately   
800 artifacts and produced approximately 105 hours of videotape footage during  
the course of fifteen dives. In July 1994, we recovered more than 1,000 objects 
and produced approximately 125 hours of videotape footage during our third      
expedition to the Titanic wreck site. In August 1996, we again recovered        
numerous objects and produced approximately 125 hours of videotape footage      
during our fourth expedition to the Titanic wreck site. In August 1998, we      
recovered numerous objects and produced approximately 350 hours of videotape    
footage during our fifth expedition to the Titanic wreck site. Among the        
highlights of our 1998 expedition were the successful recovery of the "Big      
Piece," a section of the Titanic's hull measuring approximately 26 feet by 20   
feet and weighing approximately 20 tons, and extensive mapping of the Titanic   
and portions of the wreck site through the capture of thousands of              
high-resolution color digital photographs.                                      

         Our 1987, 1993, 1994, 1996, and 1998 Titanic expeditions were completed
by charter agreements with IFREMER. The objects recovered during those          
expeditions were ultimately transported to a privately-owned conservation       
laboratory in France for restoration and preservation in preparation for        
exhibition, except for several objects conserved by EDF that were recovered in  
1987 and the "Big Piece," which went through its conservation process in the    
United States. All of the artifacts not on exhibition are either in conservation
or housed in our storage facility in Atlanta, Georgia.                          

In March 1999, we entered into an agreement with Magicworks   
Entertainment, Inc., a direct subsidiary of PACE Entertainment, Inc. and an     
indirect subsidiary of SFX Entertainment, Inc., pursuant to which SFX was       
granted an exclusive worldwide license to exhibit Titanic artifacts. This       
license agreement later transferred to Clear Channel Communications, Inc., the  
successor to SFX. In April 2004, we elected not to renew this agreement so that 
we could begin to develop and market Titanic exhibitions on our own. In         
addition, we acquired all of the display equipment necessary for the Titanic    
exhibition from Clear Channel Communications for an aggregate cost of $600,000. 

   During July and August of 2000, we conducted an expedition to the
Titanic wreck site. During this expedition, we utilized the services of the P.P.
Shirshov Institute of Oceanology of Moscow, which provided us with the research 
vessel Akademik Mstislav Keldysh and two manned submersibles, the MIR-1 and the 
MIR-2. This expedition consisted of a total of twenty-eight dives over a        
four-week period and resulted in the recovery of more than 900 objects from the 
wreck site, as well as the discovery of a new debris field. Among the artifacts 

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recovered during this expedition were the ship's wheel and stand, nine leather  
bags containing more than 100 objects, the whistle control timer from the       
navigation bridge, the main telegraph base and the docking bridge telephone.    
Also recovered were binoculars, a pair of opera glasses, sixty-five intact      
perfume ampoules, a camera, a bowler hat, a first class demitasse and dinner    
plate, a base for a cherub (likely from the ship's grand staircase), as well as 
gilded wood from a balustrade.                                                  

       In May 2001, we acquired ownership of the wreck of the RMS Carpathia,
which was sunk during World War I off the coast of Ireland. This ship rescued   
more than 700 of the Titanic's survivors. We intend to utilize the RMS Carpathia
in our future business activities by salvaging objects from the wreck, which    
shall be used for exhibition and/or sold to collectors, and by exploring the    
production of television documentaries. At the present time, however, we have no
expedition to the RMS Carpathia planned.                                        

        We recently conducted our seventh expedition to the Titanic wreck site
and were successful in recovering more than 75 important historic artifacts. We 
plan to continue recovery work in the future by planning expeditions to the     
Titanic wreck-site. Expedition 2004 departed from Halifax, Nova Scotia, Canada  
on August 25, 2004 and for the first time allowed us to rely exclusively on a   
deep ocean remotely operated vehicle, or ROV, that permitted the expedition to  
utilize round-the-clock underwater operations. This expedition ended on         
September 9, 2004 with the recovery of 75 historic artifacts from the Titanic   
wreck site. In addition, a new debris field was discovered that included        
remnants from the first class a la carte restaurant.                            

     Our executive offices are located at 3340 Peachtree Road, NE, Suite
2250, Atlanta, Georgia 30326 and our telephone number is (404) 842-2600. We are 
a Florida corporation and maintain a web site located at                        
www.premierexhibitions.net. Information on our website is not part of this      
prospectus.                                                                     

Exhibitions                                                                     

We generate a substantial portion of our revenue by presenting
exhibitions of Titanic artifacts. We estimate that more than fifteen million    
people throughout the world have attended our exhibitions. We have exhibits that
are currently on display in Philadelphia, Pennsylvania, Salt Lake City, Utah,   
and Manchester, England. Two successful exhibitions recently concluded in       
Shanghai, China and Omaha, Nebraska. We expect to continue conducting Titanic   
exhibits in North America and throughout the world.                             

       From August to early October 2004, we previewed in the United Kingdom
our newest exhibition Bodies Revealed, which is a scientific human anatomy      
exhibition of museum quality. This new exhibition presents to patrons a         
fascinating examination of the human body made available for public viewing     
through a process known as polymer preservation. We plan to eventually operate  
several Bodies Revealed exhibitions that are now in various stages of           
development.                                                                    

Donation Initiative                                                             

      In keeping with our desire to conserve Titanic artifacts for history
and keep the collection of artifacts together, we are exploring the possibility 
of donating our Titanic artifacts to a charitable institution. Doing so might   
also be in our best financial interests, as it could clarify and finalize the   
ownership of the artifacts. In the event we donate the artifacts that we have   
recovered from the Titanic, we will seek a long-term lease back arrangement from
the recipient of the artifacts pursuant to which we would continue to exhibit   
the artifacts and continue to salvage the Titanic wreck and wreck site. At this 
time, however, we have not undertaken any affirmative action with respect to    
donating our Titanic artifacts.                                                 

Merchandising                                                                   

         We earn revenue from the sale of Titanic merchandise, such as catalogs,
posters and jewelry. We have a contractual relationship with Events Management, 
Inc., which is an unaffiliated company that operates gift shops at exhibitions  
and other locations. Events Management sells our Titanic merchandise at         

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exhibitions, as well as through its web site and its other distribution         
channels. In connection with these sales, we receive 10% of the gross sale      
proceeds. We also receive license fees from Events Management for the use of our
names and logos. We also sell merchandise directly to the public, and we plan to
begin distributing a catalog of our merchandise in the near future, with the    
hope that we can develop new revenues from the sales of merchandise through     
catalogs. Finally, we have produced a high quality, high content Titanic        
exhibition catalog, which we sell at exhibitions through Events Management.     

Marketing                                                                       

         We have developed several retail products utilizing coal recovered from
the Titanic, which has been incorporated into jewelry. We intend to continue    
developing such products to increase our merchandising revenues. We also intend 
to pursue the direct marketing of merchandise and our video archives through our
web site and through third parties.                                             

Expeditions to the Titanic                                                      

    With the depth of the Titanic wreck approximately two and one-half
miles below the surface of the ocean in the North Atlantic, we are dependent    
upon chartering vessels outfitted with highly advanced deep sea technology in   
order to conduct expeditions to the site. In our 1987, 1993, 1994, 1996, and    
1998 expeditions, we entered into charter agreements with IFREMER, pursuant to  
which IFREMER supplied the crew and equipment necessary to conduct research and 
recovery efforts. In addition to utilization of the research vessel Nadir,      
recovery efforts were undertaken through the manned submersible Nautile. Small, 
hard-to-reach areas necessary for visual reconnaissance efforts were accessed by
a small robot, known as Robin, controlled by crewmen on board the Nautile. The  
dive team had the capability of retrieving heavy objects, such as a lifeboat    
davit weighing approximately 4,000 lbs. and fragile objects weighing only a few 
ounces. Because of the immense pressure of approximately 6,000 pounds per square
inch at the depth of the wreck site, it is impossible for a dive team to reach  
such depths and explore the wreck site through any means other than a           
submersible. The Nautile and Robin were each equipped with video and still      
cameras that recorded all recovery and exploration efforts. In connection with  
our 1987, 1993, 1994, 1996, 1998, 2000, and 2004 expeditions to the wreck site, 
we engaged maritime scientists and other professional experts to assist in the  
exploration and recovery efforts.                                               

       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. Research and recovery efforts with a manned submersible are    
presently limited to the availability and the co-operation with the Nautile     
through charter arrangements with IFREMER and MIR I and MIR II using charter    
arrangements with P.P. Shirshov Institute of Oceanology. To our knowledge, no   
other manned submersible with the capability of reaching the depth of the       
Titanic is presently commercially available, however there are a number of      
remote operated vehicles available for hire. Based upon our experience with the 
2004 expedition, remote operated vehicles are a viable and more efficient       
alternative to manned submersibles. The availability of remote operated vehicles
has substantially increased our flexibility in chartering for future            
expeditions.                                                                    

Restoration and Conservation of Titanic Artifacts                               

     Upon recovery from the Titanic wreck site, artifacts are in varying
states of deterioration and fragility. Having been submerged in the depths of   
the ocean for more than 90 years, objects have been subjected to the corrosive  
effects of chlorides present in seawater. The restoration of many of the metal, 
leather, and paper artifacts requires the application of sophisticated          
electrolysis and other electrochemical techniques. Some of the artifacts        
recovered from the 1987 expedition were restored and conserved by the           
laboratories of Electricite de France, the French government-owned utility.     
Except for un-restored artifacts that are currently being exhibited, many of the
artifacts recovered from the 1987, 1993, 1994, 1996 and 1998 expeditions have   
undergone conservation processes at LP3, a privately-owned conservation         
laboratory in Semur-en-Auxois, France. When not being exhibited or not being    
conserved at other conservation facilities, almost all of our Titanic artifacts 
are housed in our conservation and warehouse facility located in Atlanta,       
Georgia.                                                                        

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Science and Archaeology Related to the Titanic                                  

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

      We believe we are in the best position to provide for archaeological
survey, scientific interpretation, and stewardship of the Titanic shipwreck. We 
possess the largest collection of data, information, images, and cultural       
materials associated with the shipwreck. We have developed a partnership with   
the Center for Maritime & Underwater Resource Management, a nonprofit           
corporation, for services in archaeology, scientific research, and resource     
management to aid in stewardship of the Titanic wreck site.                     

         We intend to work with the U.S. government to present our collection of
knowledge and cultural materials to researchers, educators, and other audiences 
in the form of scientific reports, associated interactive website, and other    
intellectual products that advance our purposes. Revenues from the sale of these
intellectual products are expected to at least meet the total production costs. 
The scientific reports will integrate the results of all expeditions to the     
Titanic wreck site since its discovery. In addition, the publication will       
include the first comprehensive site plan of the Titanic, which will assist in  
determining future products in research, materials conservation and education.  
The interactive website will present this scientific knowledge as well as its   
entire collection of cultural materials.                                        

RMS Carpathia                                                                   

       In May 2001, we acquired ownership of the wreck of the RMS Carpathia,
which was sunk in during World War I off the coast of Ireland. This ship rescued
more than 700 of the Titanic's survivors. We intend to utilize the RMS Carpathia
in our future business activities by salvaging objects from the wreck, which    
shall be used for exhibition and/or sold to collectors, and by exploring the    
production of television documentaries. We plan to conduct a research and       
recovery operation at the Carpathia wreck site in the future. At the present    
time, no definitive schedule has been set for this endeavor.                    

Competition                                                                     

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

       The success of our merchandising efforts will depend largely upon the
consumer appeal of our merchandise and the success of our exhibitions. We       
believe that our merchandise will compete primarily because of both its unique  
character and quality.                                                          

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Employees                                                                       

        As of June 15, 2005, we had fourteen full-time employees. We are not a
party to any collective bargaining agreement and we believe that our relations  
with are employees are good.                                                    

Environmental Matters                                                           

       We are subject to environmental laws and regulation by federal, state
and local authorities in connection with our planned exhibition activities. It  
is undetermined, at the present time, what environmental laws may need to be    
complied with should we undertake an expedition to the RMS Carpathia. We do not 
anticipate that the costs to comply with such laws and regulations will have any
material effect on our capital expenditures, earnings, or competitive position. 

Description of Properties                                                       

      We have our principal executive offices located at Tower Place, 3340
Peachtree Road N.E., Suite 2250, Atlanta, Georgia. This space of approximately  
4,706 square feet is used for management, administration, and marketing for our 
operations. The lease for our principal executive offices commenced in April    
2000 and was amended on August 8, 2003, when the term was extended until        
February 29, 2008. The amended lease provides for base lease payments of        
$110,591 annually with a 2.5% annual adjustment thereafter.                     

   We also have a thirty-eight month lease obligation that commenced
November 1, 2001 for approximately 10,080 square feet of space at an undisclosed
location (for security purposes) in Atlanta, Georgia. This facility is used for 
conservation, restoration, and storage of Titanic artifacts. The monthly rent is
$6,720 through December 31, 2004. On October 6, 2004 we extended this lease for 
an additional three years with monthly payments of $6,855 for the first year    
beginning January 1, 2005, with 2% increases for each of the second and third   
years.                                                                          

ITEM 3.  LEGAL PROCEEDINGS                                                      

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

       The U.S. Department of State and the National Oceanic and Atmospheric
Administration of the U.S. Department of Commerce are working together to       
implement an international treaty with the governments of the United Kingdom,   
France and Canada concerning the Titanic wreck site. This treaty could impair   
our salvor-in-possession rights to the Titanic. We have raised numerous         
objections to the U.S. Department of State regarding the participation of the   
U.S. in efforts to reach an agreement governing salvage activities with respect 
to the Titanic. The treaty, as drafted, does not recognize our existing rights  
in the Titanic. The treaty becomes effective when any two parties sign it. At   
this time, both the United Kingdom and the U.S. have signed the treaty, so it   
has become effective. However, Congress has not yet adopted implementing        
legislation for the treaty, so the treaty is not yet operative under U.S. law.  

        On April 3, 2000, we filed a motion for declaratory judgment in United
States Federal District Court asking that the court declare unconstitutional the
efforts of the U.S. to implement the treaty. On September 15, 2000, the court   
ruled that our motion was not ripe for consideration and that we may renew our  
motion when and if the treaty is agreed to and signed by the parties, final     
guidelines are drafted, and Congress passes implementing legislation. As        
discussed above, the treaty has been finalized and is now in effect; but it is  
not yet operative because Congress has not adopted implementing legislation, so 
it is not yet time for us to consider re-filing our motion. We expect that      
whatever the outcome of this matter, there will be no impact as to artifacts    
that we have already recovered; but we do not know what effect, if any, this    
treaty will have on our future operations with respect to the Titanic.          

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

     On April 12, 2002, the U.S. Court of Appeals for the Fourth Circuit
affirmed two orders of the U.S. District Court in our ongoing                   
salvor-in-possession case. These orders, dated September 26, 2001 and October   
19, 2001, restricted the sale of the artifacts we recovered from the Titanic    
wreck site. In its opinion, the U.S. Court of Appeals for the Fourth Circuit    
declared ambiguous the June 1994 order of the district court that had awarded   
ownership to us of all items then salvaged from the wreck of the Titanic as well
as all items to be salvaged in the future so long as we remained                
salvor-in-possession. Having found the June 1994 order to be ambiguous, the     
court of appeals reinterpreted the order to convey only possession, not title,  
pending determination of a salvage award. We petitioned the U.S. Supreme Court  
to hear our appeal of the April 12, 2002 decision of the court of appeals,      
however, our petition was denied on October 7, 2002.                            

      On May 17, 2004, we appeared before the United States District Court
for the Eastern District of Virginia for a pre-trial hearing to address issues  
in preparation for an interim salvage award trial. At that hearing, we informed 
the court that the U.S. government had declined our proposal to transfer our    
salvor-in-possession rights to the government. We confirmed our intent to retain
our salvor-in-possession rights in order to exclusively recover and preserve    
artifacts from the wreck site of the Titanic. In addition, we stated our intent 
to conduct another expedition to the wreck site. As a result of that hearing, on
July 2, 2004, the court rendered an opinion and order in which it held that it  
would not recognize the 1993 Proces-Verbal, pursuant to which the French        
government granted us all artifacts recovered from the wreck site during the    
1987 expedition. The court also held that we will not be permitted to present   
evidence at the interim salvage award trial for the purpose of arguing that we  
should be awarded title to the Titanic artifacts.                               

    We have appealed the July 2, 2004 Court Order, which appeal is now
pending in the U.S. Court of Appeals for the Fourth Circuit. The court granted a
stay of proceedings on August 2, 2004 that will indefinitely delay the interim  
salvage award trial.                                                            

Other Legal Proceedings                                                         
-----------------------                                                         

   On September 7, 2000, Mr. G. Michael Harris, a former officer and
director of the Company filed suit in the Circuit Court of the Sixth Judicial   
Circuit in and for Pinellas County, Florida, Civil Division. In that suit, Mr.  
Harris alleged that the Company breached an employment agreement entered into   
between him and the Company, that he was damaged by the breach, that he was     
wrongfully terminated and had been defamed. The Company denied the validity and 
enforceability of the employment agreement. Moreover, the Company filed a       
counter-suit against Mr. Harris and others, to recover monies that the Company  
believed were misappropriated. On April 23, 2003, after a jury trial, a verdict 
was rendered that affirmed the unenforceability of any of Mr. Harris' employment
agreements and further found that $70,000 of Company monies were misappropriated
by Mr. Harris and others. During the quarter ended August 31, 2003, the Company 
settled this litigation by agreeing to certain payments and an exchange of      
releases. Upon the advice of counsel, this settlement is less than the expected 
legal costs and expenses of continuing litigation.                              

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

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    On April 25, 2002, we were served with a lawsuit filed by Lawrence
D'Addario, in the U.S.District Court for the Eastern District of Virginia,      
Norfolk Division Case No. 2:02cv250. The lawsuit alleges fraud, self-dealing,   
mismanagement, diversion and waste of corporate assets by our company and some  
of our officers, directors and shareholders. On April 23, 2004, the court       
dismissed the lawsuit. On May 24, 2004, we received notice that the plaintiff   
had appealed the dismissal to the U.S. Court of Appeals for the Fourth Circuit. 
On February 24, 2005 the appellate court partially affirmed and partially       
vacated the dismissal of the case. It remanded back to the district court for   
trial the one derivative count alleging that certain of the officers and        
directors breached their fiduciary duties to the company. Trial of this matter  
is currently scheduled to begin on July 25, 2005.                               

         On March 22, 2004, we were served with a lawsuit filed by David Shuttle
and Barbara Shuttle in the U.S. District Court for the Middle District of       
Florida. The suit seeks to recover damages to the plaintiffs and to all minority
shareholders allegedly caused by alleged breaches of fiduciary duties by some of
our directors and officers in connection with an alleged hostile takeover in    
November 1999. On March 1, 2005, the court issued an order granting the         
plaintiffs' motion to certify this matter as a class action. The class is       
defined as all persons who owned shares of RMS Titanic, Inc. as of November 26, 
1999 but who were not members of the group of shareholders who voted to remove  
previous officers and directors from their positions with the company. No       
determination can be made at this time as to the likely outcome of this matter  
or what the consequences could be for us, but we intend to vigorously defend    
ourselves in this matter, and we expect to seek recovery of all costs and       
expenses in defending this litigation from the plaintiffs once this matter is   
adjudicated.                                                                    

         On May 10, 2001, we received a subpoena duces tecum from the Securities
and Exchange Commission requesting various documents relating to, among other   
things, the change in control that occurred during November 1999; any           
solicitations that may have been made without a written proxy statement of a    
filing; the purchase of our common stock by certain shareholders; the accuracy  
of our financial statements; information about our accounting procedures and    
controls; documents about our subsidiaries; and other information about         
consulting agreements, communications with certain individuals, employment of   
officers, and other company matters. We complied with the subpoena. On November 
22, 2004, the staff of the Securities and Exchange Commission informed us that  
the investigation was terminated and that no action was recommended against our 
company to the Securities and Exchange Commission.                              

       On August 3, 2004, we filed a motion with the U.S. District Court for
the District of Connecticut against a former officer, director and lawyer of the
company. In this motion, we alleged that this former officer, director and      
lawyer secretly spearheaded litigation against us, in direct violation of a     
release and settlement agreement that he entered into with us in January 2000.  
On May 12, the court denied our motion, but, noting the good faith basis for our
claim, refused to grant the defendant any award of attorneys' fees or costs.    

       On December 3, 2004 we filed a complaint in the Court of Common Pleas
in Cuyahoga County, Ohio against Gunther Von Hagens, doing business as Body     
Worlds. We alleged that the defendant unfairly interfered with our ability to   
conduct a Bodies Revealed Exhibition in Cleveland, Ohio. On February 16, 2005,  
Mr. Von Hagens, through his company Plastination, Inc., served us with a lawsuit
in the United States District Court for the Northern District of Ohio in which  
he alleges that we violated his intellectual property rights with respect to our

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Bodies Revealed Exhibition. In order to reduce litigation costs we decided to   
consolidate the litigation. We voluntarily dismissed without prejudice our      
initial lawsuit filed in Cuyahoga County and we filed those same claims as a    
counterclaim in the Plastination, Inc. lawsuit pending in federal court. No     
trial date has been set at this time and no determination can be made at this   
time as to the likely outcome of these matters or what the consequences could be
for us, but we intend to vigorously defend ourselves against the claims of      
Plastination, Inc. and we likewise intend to vigorously prosecute the           
counterclaim.                                                                   

    On May 13, 2005, John Glassey and Donna Andersen filed a complaint
against our wholly owned subsidiary, RMS Titanic, Inc. in the Superior Court of 
New Jersey, Atlantic Division. The plaintiffs alleged that RMS Titanic, Inc.    
owes them $9,900 plus interest, costs and fees for breach of a contract. No     
trial date has been set at this time and no determination can be made at this   
time as to the likely outcome of this matter but we dispute the claim and will  
defend ourselves at trial.                                                      

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

   The Annual Meeting of the Shareholders of the Company was held on
December 10, 2004. Messrs. Arnie Geller, Gerald Couture, Doug Banker and Nick   
Cretan were elected directors of the Company until their successors are duly    
elected and qualified. The results of the election were as follows:             

                          Shares
                           Voted
                           For
Arnie           
          Geller          12,276,146
          --------------------------
Gerald          
          Couture         12,276,148
          --------------------------
          Doug Banker     12,283,908
          --------------------------
          Nick Cretan     12,283,909
          --------------------------

     Also at that Annual Meeting, Kempisty and Company, Certified Public
Accountants, P.C. was ratified as the Company's independent certified public    
accountants for fiscal year 2005 with 12,284,809 shares of common stock voted in
favor and 316,501 shares of common stock voted against.                         

PART II                                                                         

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASE OF EQUITY SECURITIES.                                           

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

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COMMON STOCK

FISCAL PERIOD                          HIGH                         LOW         
                              BID                          BID
                              -----                       ------
2005                                                                            
1st Quarter ending 5/31/04        $   2.48                     $   0.97         
2nd Quarter ending 8/31/04            1.48                         1.02         
3rd Quarter ending 11/30/04           1.18                         0.77         
4th Quarter ending 2/28/05            1.25                         0.57         

2004                                                                            
1st Quarter ending 5/31/03            0.49                         0.04         
2nd Quarter ending 8/31/03            0.45                         0.20         
3rd Quarter ending 11/30/03           0.30                         0.21         
4th Quarter ending 2/29/04            1.90                         0.26         

2003                                                                            
1st Quarter ending 5/31/02            0.35                         0.15         
2nd Quarter ending 8/31/02            0.29                         0.19         
3rd Quarter ending 11/30/02           0.29                         0.09         
4th Quarter ending 2/28/03            0.14                         0.05         

Common Stock                                                                    

   On June 10, 2005 there were approximately 2,300 stockholders of record of
common stock.                                                                   

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

The following is a summary of securities authorized for issuance under
equity compensation plans as of February 28, 2005:                              

                                                        [Enlarge/Download Table]


----------------------------------------- --------------- ----------------- ---------------------
                                                                                 Number of       
                                                                                 securities      
                                            Number of                       remaining available  
                                           shares to be                     for future issuance  
                                           issued upon        Weighted          under equity     
                                           exercise of       average of      compensation plans  
                                           outstanding     exercise price        (excluding      
                                             options,      of outstanding        securities      
                                           warrants and       options,      reflected in column  
                                              rights        warrants and            (a)          
                                               (a)             rights               (c)          
                                                                 (b)                             
----------------------------------------- --------------- ----------------- ---------------------
                                                                                                 
  Equity compensation plans                     --               --                  --          
 approved by security holders                                                                    
----------------------------------------- --------------- ----------------- ---------------------
  Equity compensation plans not                                                                  
 approved by security holders             2,350,000            $0.36              550,000        
----------------------------------------- --------------- ----------------- ---------------------
                                   Total  2,350,000            $0.36              550,000        
----------------------------------------- --------------- ----------------- ---------------------

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ITEM 6.  SELECTED FINANCIAL DATA                                                

       The selected financial data set forth below is qualified by reference
to, and should be read in conjunction with, the Financial Statements and Notes  
thereto and Management's Discussion and Analysis of Financial Condition and     
Results of Operations included elsewhere in this Form 10-K. The selected        
financial data have been derived from the Company's Financial Statements that   
have been audited by independent certified public accountants. The financial    
statements as of February 28, 2005, February 29, 2004, and February 28, 2003 and
for each of the three years in the period ended February 28, 2005 is included   
elsewhere in this Form 10-K.                                                    

                                                        [Enlarge/Download Table]


YEAR ENDED FEBRUARY 28(29)              2001          2002         2003             2004               2005     
----------------------------------------------------------------------------------------------------------------
Statement of Operations Data:                                                                                   
(In thousands, except per share                                                                                 
   and weighted average shares)                                                                                 

                                                                                                                
   Revenues:                                                                                                    
     Continuing operations            $5,699        2,768           2,861            2,864            6,857     
     Discontinued operations              14          504              --              --                --     

  Net income (loss)                                                                                             
      Continuing operations            $  36       (7,260)           (827)          (1,088)          (1,475)    
      Discontinued operations            (88)        (168)             --               --               --     
      Gain on sale                                    644                                                       

Income (loss) per share:                                                                                        
 Continuing operations                 $  --         (.38)           (.04)            (.06)            (.07)    
 Discontinued operations                  --           --              --               --               --     

   Weighted average number of                                                                                   
   common shares                                                                                                
   outstanding                    16,732,991   18,058,573   18,615,294          18,960,047       20,818,898     

                                                        [Enlarge/Download Table]


FEBRUARY 28(29)                      2001           2002         2003           2004           2005    
-------------------------------------------------------------------------------------------------------
                                                                                                       
Balance Sheet Data:                                                                                    
  (In thousands)                                                                                       
   Total Assets                   $ 15,002        8,839        8,399         7,253         10,764      
   Long Term Obligations                --           --           --            --             --      
  Total Liabilities               $  2,251        1,497        1,849         1,249          3,085      
   Shareholders' Equity           $ 12,751        7,342        6,550         6,004          7,679      

                                                        [Enlarge/Download Table]


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

                  Period ended                       5/31/04    8/31/04     11/30/04    2/28/05     
----------------------------------------------------------------------------------------------------
                                                                                                    
     Revenues:                                     $   391      $2,381      $2,432        $ 1,653   

     Expenses:                                       1,263       2,232       2,178          2,263   

     Net income (loss):                               (875)        134         240           (974)  

     Net income (loss) per share:                     (.05)        .01         .01           (.04)  

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                                                        [Enlarge/Download Table]


             Period ended                          5/31/03    8/31/03     11/30/03    2/29/04       

----------------------------------------------------------------------------------------------------
                                                                                                    
     Revenues:                                      $   836     $    741    $  735        $  552    

     Expenses:                                        1,113          822       806         1,220    

     Net income (loss):                                (273)         (78)      (69)         (668)   

     Net income (loss) per share:                      (.01)          --        --          (.05)   


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

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

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

RESULTS OF OPERATIONS                                                           

YEAR ENDED FEBRUARY 28, 2005 AS COMPARED                                        
TO YEAR ENDED FEBRUARY 29, 2004                                                 

        During its fiscal year ended February 28, 2005, the Company's revenues
increased to $6,857,000 from $2,864,000 in the fiscal year ended February 29,   
2004. This increase of approximately 139% as compared to the prior fiscal year  
is primarily a result of an increase of $3,643,000 in the Company's exhibition  
and related merchandise sales. We believe that these significant increases in   
revenues for these respective periods reflect our direct management of our      
Titanic exhibitions, which began during the first quarter of fiscal year 2005.  

 Merchandise and other revenue increased approximately 326% from
$119,000 to $507,000, during the fiscal year 2005 as compared to the fiscal year
2004. These increases are attributed to higher sales of Titanic merchandise sold
separately from the exhibitions during fiscal year 2005.                        

       The Company's revenue from the sale of coal decreased from $68,000 to
$30,000 or approximately 56% during the 2005 fiscal year as compared to the 2004
fiscal year. This decrease is attributed to lower exhibit sales of coal sold    
separately. Coal related jewelry is included in general merchandise sales.      

       The cost of sales of merchandise sold increased 134% to $257,000 from
$110,000 in the fiscal year 2005 as compared to the fiscal year 2004. This      
increase was the result of higher revenues of merchandise during the 2005 fiscal
year.                                                                           

        We incurred exhibition costs of $2,891,000 for the fiscal year 2005 as
we now conduct our own exhibitions with museum venues and thereby incur costs   
for advertising, marketing, promotion as well as installation and               
de-installation of exhibitry and artifacts. There were no similar costs incurred
in the prior fiscal year 2004 as those costs were borne by our licensee who     
conducted our Titanic exhibitions.                                              

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        General and administrative expenses of the Company increased $995,000,
or approximately 23%, from $3,402,000 in 2004 fiscal year to $4,397,000 in the  
2005 fiscal year. During fiscal year 2005, we hired personnel to organize,      
administer, and manage our exhibitions. Increases in expenses for legal,        
insurance, conservation and occupancy for fiscal 2005 represented the largest   
portion of the remaining increase in general and administrative expenses.       

   The Company's depreciation and amortization expenses increased to
$378,000 from $253,000, or 49%, during the 2005 fiscal year as compared to the  
2004 fiscal year. These increases primarily reflect the acquisition of fixed    
assets during fiscal year 2005, including the five sets of exhibition exhibitry 
acquired from our former licensee, as well as additional investments made in    
fixed assets for our exhibitions.                                               

        The Company's loss from operations decreased to $1,075,000 in the 2005
fiscal year as compared to $1,097,000 in the 2004 fiscal year, a decrease of    
approximately 2%. This operating loss is primarily attributed to the losses     
incurred from the transition from being a licensor of Titanic artifacts to a    
direct operator of Titanic exhibitions.                                         

         Interest income for the 2005 fiscal year amounted to $2,000 as compared
to $9,000 in the prior fiscal year. This decrease in interest income is a       
consequence of maintaining lower cash balances and the minimal interest earned  
on our bank accounts. We incurred interest expense of $46,000 and $-0- for the  
fiscal year 2004. The interest expense is for a shareholder loan of $500,000    
that was made in anticipation of our capital needs during our transition to the 
direct management of our exhibitions. There was no interest expense incurred    
during the corresponding fiscal year 2004, as we had no debt.                   

      The Company's loss from operations before provision for income taxes
was  $1,475,000  in fiscal year 2005 as compared  to a loss from  operations  of
$827,000 in the 2004 fiscal  year.  There was no  provision  for income taxes in
either  fiscal  year.  Basic and diluted  earnings  (loss) per common share were
$(.07)  and  $(.02),  respectively,  for the  2005 and 2004  fiscal  years.  The
weighted  average common shares  outstanding  were 20,818,898 and 18,960,047 for
the 2005 and 2004 fiscal years, respectively.                                   

       As we begin to more efficiently manage our exhibitions, we expect our
operations to become more profitable. In addition, as we have been able to      
devote less time to litigation, we have been able to focus on opportunities for 
future growth of our business. We are optimistic that our plans to become a     
major exhibitor of premier exhibitions can develop quickly with our present     
strategy.                                                                       

YEAR ENDED FEBRUARY 29, 2004 AS COMPARED                                        
TO YEAR ENDED FEBRUARY 28, 2003                                               

  During its fiscal year ended February 29, 2004 (the "2004 fiscal
year"), the Company's revenues increased to $2,864,000 as compared to $2,861,000
in the fiscal year ended February 28, 2003 (the "2003 fiscal year"). This       
increase of $3,000 in the 2004 fiscal year primarily reflects higher exhibition 
income to the extent not offset by a sale of coal revenue decrease in the 2003  
fiscal year.                                                                    

         Exhibition revenue and related sales were $2,677,000 in the 2004 fiscal
year as compared to $2,646,000 in the 2003 fiscal year for an increase of       
$31,000, or 1%. This increase in these revenues was principally attributable to 
higher catalog sales during the 2004 fiscal year.                               

         The Company's merchandise and other revenues, that included the sale of
merchandise, books and royalty payments, decreased slightly to $119,000 from    
$121,000 in the prior fiscal year. This decrease of $2,000, or about 2%, is     
primarily attributed to the lower contribution of poster income at each         
exhibition venue during the 2004 fiscal year. The sale of coal recovered from   
the TITANIC was $68,000 in the current fiscal year compared to $94,000 in the   
prior year and this decrease is attributed to lower demand at the exhibitions.  

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       Cost of goods sold were $131,000 for the 2004 fiscal year as compared
to $175,000 in the 2003 fiscal year. This decrease of $44,000 is primarily      
attributed to lower total cost of goods on the lower merchandise revenues       
experienced for these products sold during the 2004 fiscal year.                

         General and administrative expenses were $3,402,000 for the 2004 fiscal
year as compared to $2,809,000 in the 2003 fiscal year. This increase of        
$593,000, or 21%, is primarily attributed to charges of $434,000 incurred in    
expensing of options and warrants granted to employees, directors and           
consultants during the 2004 fiscal year. The Company has now elected to fully   
charge its operations for employee stock options issued in the year granted.    

    Depreciation and amortization expense for the 2004 fiscal year was
$253,000 as compared to $293,000 in the 2003 fiscal year. This decrease of      
$40,000, or 14%, is primarily lower charges for depreciation as the fixed asset 
lives of depreciable assets are realized.                                       

      In the 2003 fiscal year, the Company incurred a write-down of a note
receivable in the amount of $296,000. There was not a comparable charge for the 
2004 fiscal year. During the 2004 fiscal year, the Company incurred a charge of 
$175,000 for the settlement of litigation that compared to a charge in the prior
fiscal year of $413,000 for litigation settlement. These litigation settlements 
were unrelated.                                                                 

        There was a loss from continuing operations of $1,097,000 for the 2004
fiscal year as compared to a loss from operations of $1,125,000 in the 2003     
fiscal year. This decrease in income from operations is primarily attributed to 
higher general and administrative expense in the 2004 fiscal year that was not  
offset by the slightly higher revenues.                                         

    During the 2004 fiscal year, the Company earned interest income of
$9,000 as compared to $298,000 in the prior year. The Company maintained higher 
cash balances during the 2003 fiscal year and also benefited from interest      
earned on tax refunds received during that fiscal year.                         

         Income (loss) after provision for income taxes was ($1,088,000) for the
2004 fiscal year as compared to ($827,000) in the 2003 fiscal year. Basic and   
diluted earnings per common share were $(0.06) and $(0.04) for the 2004 and 2003
fiscal years, respectively. The weighted average common shares outstanding were 
18,960,047 and 18,615,294 for the 2004 and 2003 fiscal years, respectively.     

LIQUIDITY AND CAPITAL RESOURCES                                                 

        Net cash provided by operating activities was $595,000 for fiscal year
ended February 28, 2005 as compared to net cash used in operating activities of 
$1,377,000 for the fiscal year ended February 29, 2004. This increase in cash   
provided in operating activities for the current year is primarily attributed to
an increase in accounts payable and the issuance of non-cash consideration for  
expenses and services.                                                          

     For the fiscal year ended February 28, 2005, the total cash used in
investing activities was $1,613,000, which included acquisition of property and 
equipment for $964,000 and an investment in our salvor-in-possession rights for 
the expenditures for our seventh expedition to the Titanic wreck site during    
August and September of 2004. $600,000 of the expense for property and equipment
was expended in connection with the purchase of exhibitry to allow us to conduct
our own Titanic exhibitions. For the year ended February 29, 2004, we spent     
$21,000 on furniture and equipment.                                             

         For the fiscal year ended February 28, 2005, cash provided by financing
activities was $1,703,000, which included a private placement of securities in  
August 2004 and a loan provided by two shareholders.                            

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    We closed a private placement in which we sold 1,469,927 shares of
common stock and warrants to purchase 441,003 shares of common stock for        
aggregate consideration of $1,514,000. The net proceeds of the private placement
were $1,278,000 after fees, expenses and other costs. In connection with the    
private placement, we issued warrants to purchase 293,985 shares of common stock
to our placement agent. All of the warrants issued in the private placement are 
exercisable over a five-year term at an exercise price of $1.50 per share. The  
private placement was used to supplement our working capital needs. During      
fiscal year 2004, we did not have any comparable financing activities.          

    Our net working capital and stockholders' equity were $857,000 and
$7,679,000, respectively at February 28, 2005 as compared to $13,000 and        
$6,004,000, respectively, at February 29, 2004. Our working capital ratio was   
1.3 at February 28, 2005, as compared to 1.0 at February 29, 2004.              

       We recently conducted our seventh research and recovery expedition to
the Titanic wreck site and successfully recovered more than 75 historic         
artifacts. We plan to continue our recovery work by planning future expeditions 
to the Titanic wreck-site, as we intend to maintain our sole and exclusive      
rights as salvor-in-possession. Expedition 2004 departed from Halifax, Nova     
Scotia, Canada on August 25, 2004 and, for the first time, allowed us to rely   
exclusively on a deep ocean remotely operated vehicle that permitted the        
expedition to conduct round-the-clock underwater operations.                    

       The mission objectives for Expedition 2004, in addition to recovering
important historical objects and identifying artifacts for future recovery, were
to inspect the wreck-site for possible harm caused by previous visitors in order
to determine whether we need to establish guidelines for future visits. During  
fiscal year 2005, we spent $879,000 on Expedition 2004, which is accounted for  
as a cost of our salvor-in-possession rights. A federal district court has ruled
that our salvor-in-possession rights are our principal assets.                  

         Although no date has been set for an expedition, we continue to plan to
undertake a recovery operation to the RMS Carpathia to recover objects. As we   
own this wreck, we intend to sell and/or exhibit any items recovered.           

     Although we have recently completed a private placement in which we
raised approximately $1.2 million after costs and expenses, we expect that we   
will require additional outside funding to further implement our plans to       
conduct future exhibitions for both Titanic and other newly developed           
exhibitions.                                                                    

CRITICAL ACCOUNTING POLICIES AND ESTIMATES                                      

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

Impairment of assets held for use                                               
---------------------------------                                               

        SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," requires management to assess the recoverability of the carrying value 
of long-lived assets when an event of impairment has occurred. Management must  
exercise judgment in assessing whether an event of impairment has occurred. The 
Company concluded an event of impairment occurred in the carrying values of its 
artifacts in the fourth quarter of the 2002 fiscal year and the Company recorded
a pre-tax charge totaling $8.1 million. In this circumstance, a judicial ruling 
prompted the determination that an assessment for impairment was required.      
Management must also exercise judgment in the determination of expected future  
cash flows against which to compare the carrying value of the assets being      
evaluated. In this measurement, the carrying value far exceeded the expected    
cash flows. Management then exercised judgment in determining the fair value of 
the assets from which the impairment charge was measured.                       

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

Probability of litigation outcomes                                              
----------------------------------                                              

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

Exchanges of Nonmonetary Assets                                                 
-------------------------------                                                 

In December 2004, the FASB issued SFAS No. 153, "Exchanges of 
Nonmonetary Assets" (SFAS 153) which amends Accounting Principles Board Opinion 
No. 29, "Accounting for Nonmonetary Transactions (APB 29). SFAS 153 amends APB  
29 to eliminate the fair-value exception for nonmonetary exchanges of similar   
productive assets and replace it with a general exception for nonmonetary       
exchanges that do not have commercial substance. It is effective for nonmonetary
asset exchanges occurring in fiscal periods beginning after June 15, 2005. This 
statement is not anticipated to have a material impact on the Company's         
financial position or results of operations.                                    

Accounting for Stock-Based Compensation                                         
---------------------------------------                                         

 In December 2004, the FASB issued SFAS No. 123(R), "Share-Based
Payment" (SFAS 123(R), which establishes accounting standards for all           
transactions in which an entity exchanges its equity instruments for goods and  
services. SFAS 123(R) revises SFAS No. 123, "Accounting for Stock-Based         
Compensation", supersedes Accounting Principles Board Opinion No. 25,           
"Accounting for Stock Issued to Employees" and amends Financial Accounting      
Standard No. 95, "Statement of Cash Flows", SFAS No. 123(R) generally requires  
the Company to measure the cost of employee services received in exchange for an
award of equity instruments based on the fair value of the award on the date of 
the grant. The standard requires the fair value on the grant date to be         
estimated using either an option-pricing model which is consistent with the     
terms of the award or a market observed price, if such a price exists. The      
resulting cost must be recognized over the period during which an employee is   
required to provide service in exchange for the award, which is usually the     
vesting period. SFAS 123(R) must be adopted no later than periods beginning     
after June 15, 2005 and the Company expects to adopt SFAS 123(R) on the         
effective date. The Company expects the adoption of SFAS 123(R) will not have a 
material impact on its net income and earnings per share.                       

SALVOR-IN-POSSESSION                                                            

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

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   The Company is not presently exposed to interest rate risk but is
exposed to foreign currency exchange rate risk. The Company does not hold any   
derivative financial instruments.                                               

BUSINESS RISKS                                                                  

Our business is subject to a number of uncertainties, including those discussed 
below.                                                                          

The Company may not be able to raise the required capital to conduct our        
operations.                                                                     

        The Company does not have sufficient working capital to meet its needs
for the next twelve months. The exhibition tour agreement with CCE expired on   
May 29, 2004 with the closing of the Tampa exhibition. Management expects that  
it will require additional outside funding to implement plans to conduct its own
exhibitions that have begun in May 2004. Previously, the Company relied upon    
third parties to conduct exhibitions under a licensing arrangement. There can be
no assurances that this outside financing can be made available upon reasonable 
terms and as timely as management may require for the proper conduct of these   
and other future endeavors. If the required financing is not available, it could
be seriously detrimental to the Company and its business.                       

The successful implementation of our business strategy depends on our ability to
generate cash flows from exhibition and other factors.                          

         We have changed our business model from that of a licensor of artifacts
recovered from the TITANIC to that of direct exhibitor of these artifacts. The  
success of our future operating results depends on our ability to implement our 
business strategy by successfully operating these exhibitions, and others we may
develop and produce and by further exploiting our attractions assets. Our       
ability to do this depends upon many factors, some of which are beyond our      
control. These include:                                                         

     o    our  ability  to achieve  positive  cash flow from  operations  of our
TITANIC exhibitions within the anticipated ramp-up period;  
     o    our  ability  to  hire  and  retain  staff  skilled  in the  areas  of
management and exhibition for our exhibition tours;         
     o    our ability to capitalize on the strong brand  recognition of TITANIC;
and                                                         
     o    the continued  popularity  and demand of the public to attend  TITANIC
exhibitions.                                                

If we are unable to successfully implement the business strategies described    
above, our cash flows and eventual profitability will suffer.                   

Dependence on Key Management Personnel                                          

     The Company's future business and operating results depend in
significant part upon the continued contributions of Arnie Geller, the Company's
President, Gerald Couture, its Vice President of Finance and Tom Zaller, its    
Vice President of Exhibitions. The Company does not maintain any key person life
insurance policies on Mr. Geller, Mr. Couture or Mr. Zaller. The Company's      
future business and operating results also depends in significant part upon its 
ability to attract and retain other qualified additional management and support 
personnel for its operations.                                                   

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Costs of Maintaining Salvor-in-possession Status.                               

          In order to protect its salvor-in-possession status and to prevent
third-parties from salvaging the Titanic wreck and wreck site, or interfering   
with the Company's rights and ability to salvage the wreck and wreck site, the  
Company may have to commence judicial proceedings against third-parties. Such   
proceedings could be expensive and time-consuming. Additionally, the Company, in
order to maintain its salvor-in-possession status, needs to, among other things,
maintain a reasonable presence at the wreck through periodic expeditions. The   
Company will be required to incur the costs for future expeditions so as to     
maintain its salvor-in-possession status. The Company's ability to undertake    
future expeditions may be dependent upon the availability of financing.         

Dependence on Consumer Discretionary Spending.                                  

     The amount spent by consumers on discretionary items, such as
entertainment activities and the purchase of merchandise, is dependent upon     
consumers' levels of discretionary income, which may be adversely affected by   
general or local economic conditions. A decrease in consumer spending on such   
activities could have a material adverse effect on the Company's revenues from  
exhibition activities and merchandising efforts.                                

International Exchange Rate Fluctuations.                                       

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

The issuance of additional common stock for funding has the potential for       
substantial dilution.                                                           

    As noted above, the Company will need additional equity funding to
provide the needed capital to achieve our objectives. At the current market     
prices, such equity issuance would cause a substantially larger number of shares
to be outstanding and would dilute the ownership interest of existing           
shareholders.                                                                   

Stock price volatility.                                                         

   The market price of shares of the Company's common stock has been
volatile, ranging in closing price between $0.57 and $2.48 during the last      
twelve months with a June 1, 2005 closing price of $1.92. The price of the      
Company's common stock may continue to fluctuate in response to a number of     
factors, such as:                                                               

     o    the  amount of cash  resources  and the  Company's  ability  to obtain
additional funding;                                         
    o    announcements of business developments or future exhibition projects;
o    entering into or terminating strategic business relationships;   
o    changes in government regulations;                               
o    changes in the Company's revenue or expense levels;              
o    reports by security analysts; and                                
o    status of the investment markets.                                

    Any of these events may cause the price of the Company's shares to
fall, which may adversely affect its business and financing opportunities. In   
addition, the stock market in general and the market prices for other media     
companies have experienced volatility that often has been unrelated to the      
operating performance or financial condition of such companies. Any broad market
or industry fluctuations may adversely affect the trading price of the Company's
stock, regardless of operating performance or prospects.                        

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            
                                                                          Page

Report of Independent Registered Public Accounting Firm                     F-1 

Consolidated Balance Sheets at February 29, 2004                                
        and February 28, 2005                                              F-2

Consolidated Statements of Operations                                           
        for the years ended February 28(29), 2003, 2004 and 2005           F-3

Consolidated  Statements of Stockholders' Equity                                
for the years ended February 28(29), 2003, 2004 and 2005                    F-4 

Consolidated  Statements of Cash Flows for the years ended                      
February 28(29), 2003, 2004 and 2005                                        F-5 

Notes to Consolidated Financial Statements                                  F-7 

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

Not applicable.                                                                 

ITEM 9A. CONTROLS AND PROCEDURES.                                               

   The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the Company's   
reports f8iled pursuant to the Securities Act of 1934, as amended (the "Exchange
Act") is recorded, processed, summarized and reported within the time periods   
specified in the Securities and Exchange Commission's (the "SEC") rules and     
forms, and that such information is accumulated and communicated to the         
Company's management, including its Chief Executive Officer and Chief Financial 
Officer, as appropriate, to allow timely decisions regarding required           
disclosure.                                                                     

As of the end of the period covered by this annual report, an 
evaluation was performed under the supervision and with the participation of the
Company's management, including the Chief Executive Officer and Chief Financial 
Officer, of the effectiveness of the design and operation of the Company's      
disclosure controls and procedures. Based upon that evaluation, the Chief       
Executive Officer and Chief Financial Officer concluded that the Company's      
disclosure controls and procedures are effective in alerting them in a timely   
manner to material information relating to the Company required to be included  
in periodic filings with the SEC. There have been no significant changes in the 
Company's internal controls over financial reporting (as such term is defined in
Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act during the most recent   
fiscal quarter that have materially affected or are reasonably likely to        
materially affect, the Company's internal controls over financial reporting.    

PART III

ITEM 10.  THROUGH 14.                                                           

        All information required by Items 10 through 14, with the exception of
information on Executive Officers which appears in this report under Item 1     
under the caption "Executive Officers" is incorporated by reference to Premier  
Exhibitions' Proxy Statement for the 2005 Annual Meeting of Shareholders.       

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PART IV                                                                         

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K       

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

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

Report of Independent Registered Public Accounting Firm                     F-1 

Consolidated Balance Sheets at February 29, 2004                                
        and February 28, 2005                                              F-2

Consolidated Statements of Operations                                           
        for the years ended February 28(29), 2003, 2004 and 2005           F-3

Consolidated  Statements of Stockholders' Equity                                
for the years ended February 28(29), 2003, 2004 and 2005                    F-4 

Consolidated  Statements of Cash Flows for the years ended                      
February 28(29), 2003, 2004 and 2005                                        F-5 

Notes to Consolidated Financial Statements                                  F-7 

(b) Reports on Form 8-K during the fiscal year ended February 28, 2005          

Date of event:             February 9, 2005                                     
Item(s) reported:          2.02, 7.01, 9.01                                     

Date of event:             October 14, 2004                                     
Item(s) reported:          9.01                                                 

Date of event:             October 14, 2004                                     
Item(s) reported:          8.01, 9.01                                           

Date of event:             May 6, 2004                                          
Item(s) reported:          5                                                    

Date of event:             April 20, 2004                                       
Item(s) reported:          5                                                    

Date of event:             April 20, 2004                                       
Item(s) reported:          5                                                    

(c)   Exhibits.                                                           

3.1     Articles of Incorporation, as amended.                                  

4.1      First Amendment to By-Laws of the Registrant.                          

4.2      Second Amendment to By-Laws of the Registrant.                         

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

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

10.1.2  Lease Agreement between the Company and Tower Place                                                                         

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

10.13   1998 Charter Agreement with IFREMER.                                                                                        

10.14   1998 Charter Agreement with Oceaneering International, Inc.                                                                 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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10.23.8  Employment Agreement dated February 2, 2002 between the Company and                                                      
         Arnie Geller.(*3)                                                                                                        

10.23.9  Employment Agreement dated February 2, 2002 between the Company and                                                      
         Gerald Couture.(*3)                                                                                                      

10.24    The Company's 2000 Stock Option Plan and form of stock option.(*1)                                                       

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

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

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

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

10.34    Form of lease dated October 16, 2001 for offices and warehouse in Atlanta, Georgia..(*3)                                 

10.35    Agreement dated April 2, 2002, between the Company, Argosy International Ltd, Danepath Ltd and Graham Jessop. (*3.1)     

10.36    Stock Pledge Agreement dated April 2, 2002, between the Company and Argosy International, Ltd. (*3.1)                    

10.37    Deed of Covenant from Danepath Ltd. to the Company. (*3.1)                                                               

10.38    Letter Modification Agreement dated April 4, 2002, between the Company, Argosy International  Ltd., Danepath Ltd. and    
         Graham Jessop. (*3.1)                                                                                                    

10.39    United States Court of Appeals R.M.S. Titanic, Inc. v. The Wrecked and Abandoned Vessel. Opinion No. 01-2227 (*3.2)      

10.40    Motion for Stay of Mandate as filed on April 22, 2002. (*3.2)                                                            

10.41    Letter Modification Agreement dated June 1, 2002, between the Company, Argosy International  Ltd, Danepath Ltd and Graham
         Jessop. (*3)                                                                                                             

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

10.43    Form of Stock Pledge Agreement between Argosy International Ltd and the                                                  
         Company is incorporated by reference to the Company's report on Form                                                     
         10-Q for the fiscal quarter ended November 30, 2002. .(*3.3)                                                             

10.44    Form of Settlement Agreement and Mutual General Release of all Claims Known and Unknown.(*3.3)                           

10.45    Form of Stipulation and [Proposed] Order for Dismissal of Action and Retention of Jurisdiction. (*3.3)                   

10.46    Form of Judgment pursuant to Stipulation for Entry of Judgment in the Event of Default. (*3.3)                           

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10.47   Form of Stipulation for Entry of Judgment in the Event of Default. (*3.3)                                         

10.48   Fifth Amendment to Exhibition Tour Agreement, dated August 15, 2003                                               
        between the Company and Clear Channel Entertainment Exhibits, Inc is                                              
        incorporated by reference to the Company's report on Form 10-Q for the                                            
        fiscal quarter ended August 31, 2003                                                                              

10.49   Lease amendment dated August 8, 2003 for offices in Atlanta, Georgia.(*5)                                         

10.50   Amendment to Employment Agreement dated April 10, 2004 between the Company and Arnie Geller.(*5)                  

10.51   Amendment to Employment Agreement dated April 10, 2004 between the Company and Gerald Couture.(*5)                

10.52   Sixth  Amendment  to  Exhibition  Tour  Agreement,  dated May 26,  2004  between  the  Company  and Clear  Channel
        Entertainment Exhibits, Inc.(*5)                                                                                  

10.53   The Company's 2004 Stock Option Plan and form of stock option.(*5)                                                

10.54   Employment Agreement dated August 4, 2003 between the Company and Tom Zaller. (*5)                                

99      Code of Ethics(*6)                                                                                                

(*1)    Incorporated hereby by reference to Form 10-K for year ended February 29, 2000                                    
(*2)    Incorporated hereby by reference to Form 10-K for year ended February 28, 2001                                    
(*3)    Incorporated hereby by reference to Form 10-K for year ended February 28, 2002                                    
(*3.1)  Incorporated hereby by reference to Form 8-K filing of April 17, 2002.                                            
(*3.2)  Incorporated hereby by reference to Form 8-K filing of April 30, 2002.                                            
(*3.3)   Incorporated hereby by reference to Form 8-K filing of July 16, 2002.                                            
(*4)    Incorporated hereby by reference to Form 10-K for year ended February 28, 2003                                    
(*5)    Incorporated hereby by reference to Form 10-K for year ended February 29, 2004                                    
(*6)    Filed herewith                                                                                                    

Additional Exhibits:                                          

21   Subsidiaries of the Company                  

               31(a) Certificate of Company's Chief Executive  Officer  required
          by Section 302 of the Sarbanes-Oxely Act of 2002

               31(b) Certificate of Company's Chief Financial  Officer  required
          by Section 302 of the Sarbanes-Oxely Act of 2002

               31(a) Certificate of Company's Chief Executive  Officer and Chief
                     Financial   Officer   required   by  Section   906  of  the
Sarbanes-Oxely Act of 2002            

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SIGNATURES                                                                      

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

                         PREMIER EXHIBITIONS, INC.

June 14, 2004                           By: /s/ Arnie Geller                    
                                         ---------------------------------
                                         Arnie Geller, President and Chief
                                                     Executive Officer

SIGNATURES                                                                      

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

/s/ Arnie Geller                                     June 14, 2005              
-----------------------------                                                   
Arnie Geller, President,                                                        
Chief Executive Officer, Director                                               

/s/ Gerald Couture                                   June 14, 2005              
-----------------------------                                                   
Gerald Couture, Vice President, Chief                                           
Financial Officer, Secretary,                                                   
Director                                                                        

/s/ Nick Cretan                                      June 14, 2005              
-----------------------------                                                   
Nick Cretan, Director                                                           

/s/ Doug Banker                                      June 14, 2005              
-----------------------------                                                   
Doug Banker, Director                                                           

25

PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES                                      

CONSOLIDATED FINANCIAL STATEMENTS                                               

FEBRUARY 28, 2005                                                               

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                                    PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES

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

Report of  Independent Registered Public Accounting Firm                     F-1

Consolidated Financial Statements:                                              

   Consolidated Balance Sheets at February 29, 2004 and February 28, 2005    F-2

Consolidated Statements of Operations for the                             
    Years Ended February 28, 2003, February 29, 2004 and February 28, 2005   F-3

Consolidated Statements of Stockholders' Equity for the Years Ended       
    February 28, 2003, February 29, 2004 and February 28, 2005               F-4

Consolidated Statements of Cash Flows for the Years Ended                 
    February 28, 2003, February 29, 2004 and February 28, 2005         F-5 - F-6

   Notes to Consolidated Financial Statements                         F-7 - F-23

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                         

To the Board of Directors                                                       
Premier Exhibitions, Inc.                                                       

We have audited the accompanying consolidated balance sheets of Premier         
Exhibitions, Inc. and Subsidiaries as of February 28, 2005 and February 29,     
2004, and the related statements of operations, stockholders' equity, and cash  
flows for each of the three years in the period ended February 28, 2005. These  
consolidated financial statements are the responsibility of the Company's       
management. Our responsibility is to express an opinion on these consolidated   
financial statements based on our audits.                                       

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Premier Exhibitions,
Inc. and Subsidiaries as of February 28, 2005 and February 29, 2004 and the     
results of their operations and their cash flows for each of the three years in 
the period ended February 28, 2005, in conformity with U.S. generally accepted  
accounting principles.                                                          

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

June 14, 2005                                                                   

F-1 

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                                                                                         PREMIER EXHBIITIONS, INC. AND SUBSIDIARIES 

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

                                                                                      February 29,         February 28,             
------------------------------------------------------------------------------------------------------------------------------------
                                                                                             2004                 2005              
------------------------------------------------------------------------------------------------------------------------------------

ASSETS                                                                                                                              

                                                                                                                                    
Current Assets:                                                                                                                     
  Cash and cash equivalents                                                             $ 547,000      $     1,258,000              
  Accounts receivable                                                                     353,000            1,057,000              
  Prepaid and refundable taxes                                                            221,000              222,000              
  Prepaid expenses and other current assets                                               141,000            1,405,000              
------------------------------------------------------------------------------------------------------------------------------------

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

      Total current assets                                                              1,262,000            3,942,000              

Artifacts owned, at cost (Note 2)                                                       4,479,000            4,476,000              
Salvor's lien                                                                               1,000                1,000              
Salvor-in-Possession Rights                                                                     -              879,000              
Property and Equipment, net of accumulated depreciation                                                                             
 of $1,754,000 and $1,976,000, respectively (Note 3)                                      747,000              738,000              
Other Assets                                                                              764,000              728,000              
------------------------------------------------------------------------------------------------------------------------------------
      Total Assets                                                                   $  7,253,000      $    10,764,000              
====================================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                

Current Liabilities:                                                                                                                
  Accounts payable and accrued liabilities (Note 4)                                  $  1,249,000      $     1,660,000              
  Deferred revenue                                                                             --            1,000,000              
  Note Payable - stockholder                                                                   --              425,000              
------------------------------------------------------------------------------------------------------------------------------------
      Total current liabilities                                                         1,249,000            3,085,000              
------------------------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies (Notes 8 & 9)                                                                                         

Stockholders' Equity: (Note 6)                                                                                                      
  Common stock - $.0001 par value; authorized 30,000,000 shares,                                                                    
   issued and outstanding 19,125,047 and 22,299,937 shares, respectively                    2,000                2,000              
  Additional paid-in capital                                                           17,192,000           20,316,000              
  Accumulated deficit                                                                 (11,190,000)         (12,665,000)             
  Accumulated other comprehensive income                                                        -               26,000              
      Stockholders' equity                                                              6,004,000            7,679,000              

------------------------------------------------------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Equity                                     $  7,253,000      $    10,764,000              
====================================================================================================================================

                                                                                                   See Notes to Financial Statements

F-2 

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                                                                                         PREMIER EXHBIITIONS, INC. AND SUBSIDIARIES 

                                                                                              CONSOLIDATED STATEMENTS OF OPERATIONS 
------------------------------------------------------------------------------------------------------------------------------------
                                                                                  February 28,      February 29,       February 28, 
Year ended                                                                               2003              2004               2005  
------------------------------------------------------------------------------------------------------------------------------------
Revenue:                                                                                                                            
                                                                                                                                    
  Exhibitions and related merchandise sales                                       $ 2,646,000      $  2,677,000       $  6,320,000  
  Merchandise and other                                                               121,000           119,000            507,000  
  Sale of coal                                                                         94,000            68,000             30,000  

------------------------------------------------------------------------------------------------------------------------------------
Total revenue                                                                       2,861,000         2,864,000          6,857,000  
------------------------------------------------------------------------------------------------------------------------------------
Expenses:                                                                                                                           
 General and administrative                                                         2,809,000         3,402,000          4,397,000  
  Depreciation and amortization                                                       293,000           253,000            378,000  
  Exhibition costs                                                                          -                 -          2,891,000  
  Cost of merchandise sold                                                            140,000           110,000            257,000  
  Cost of coal sold                                                                    35,000            21,000              9,000  
  Write down of note receivable                                                       296,000                 -                  -  
  Expenses for settlement of litigation                                               413,000           175,000                  -  
------------------------------------------------------------------------------------------------------------------------------------
Total expenses                                                                      3,986,000         3,961,000          7,932,000  
------------------------------------------------------------------------------------------------------------------------------------

Profit (Loss) from operations                                                      (1,125,000)       (1,097,000)        (1,075,000) 

Other income and expenses:                                                                                                          
  Interest Income                                                                     298,000             9,000              2,000  
  Interest Expense                                                                      -                 -                (46,000) 
  Loss on Sale of Fixed Assets                                                          -                 -               (356,000) 
------------------------------------------------------------------------------------------------------------------------------------
Profit (Loss) before provision for income taxes                                    (7,260,000)         (827,000)        (1,475,000) 

Provision for income taxes                                                                  -                 -                  -  

------------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                               $ (827,000)        $ (1,088,000)     $  (1,475,000) 
====================================================================================================================================

Other comprehensive operations:                                                                                                     

       Foreign currency translation                                                       -               -                 26,000  

------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) from comprehensive operations                                 $ (827,000)        $ (1,088,000)     $  (1,449,000) 
====================================================================================================================================
Basic and diluted Loss                                                                                                              
Per common share                                                                $    (0.04)        $      (0.06)     $       (0.07) 
====================================================================================================================================

Weighted-average number of common shares outstanding                               18,615,294        18,960,047         20,818,898  
====================================================================================================================================
                                                                                                   See Notes to Financial Statements

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                                                                                         PREMIER EXHBIITIONS, INC. AND SUBSIDIARIES 

                                                                                    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Accumulated                                     
                                          Common Stock             Additional          Other                                        
                                      Number          Amount         Paid-in       Comprehensive   Accumulated        Stockholders' 
                                      of Shares                      Capital       Income(Loss)       Deficit             Equity    
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
Balance as of                                                                                                                       
 February 28, 2002                    18,550,047       $2,000     $16,615,000        $(31,000)      $(9,244,000)         $7,342,000 

Reclass of foreign currency translation                                                31,000           (31,000)                  - 
Issuance of common stock for services    125,000            -          35,000               -                 -              35,000 
Net loss                                                    -               -               -          (827,000)           (827,000)
------------------------------------------------------------------------------------------------------------------------------------

Balance as of February 28, 2003       18,675,047       $2,000     $16,650,000               -      $(10,102,000)         $6,550,000 
------------------------------------------------------------------------------------------------------------------------------------

Issuance of common stock for services    450,000            -         108,000               -                 -             108,000 
Issuance of compensatory stock options                                434,000                                               434,000 

Net loss                                                    -               -               -        (1,088,000)         (1,088,000)
------------------------------------------------------------------------------------------------------------------------------------

Balance as of February 29, 2004       19,125,047       $2,000     $17,192,000               -      $(11,190,000)         $6,004,000 

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

Issuance of common stock for services    150,000            -          77,000                                                77,000 
Issuance of common stock in exchange                                                                                                
 for options                             900,000                    1,569,000               -                 -           1,569,000 
Issuance of common stock for services    655,000            -         200,000               -                 -             200,000 
Issuance of common stock                                                                                                            
 in equity raise                       1,469,892                    1,278,000                                             1,278,000 
Net loss                                                                                             (1,475,000)         (1,475,000)
Foreign currency translation gain                                                       26,000                               26,000 
------------------------------------------------------------------------------------------------------------------------------------
Balance as of February 28, 2005       22,299,939       $2,000     $20,316,000           26,000     $(12,665,000)         $7,679,000 

                                                                                                  See Notes to Financial Statements 

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                                                                                         PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES 

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

                                                                                  February 28,       February 29,       February 28,
Year ended                                                                             2003               2004              2005    
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
Cash flows from operating activities:                                                                                               
  Net income (loss)                                                             $    (827,000)  $     (1,088,000)   $    (1,475,000)
------------------------------------------------------------------------------------------------------------------------------------

 Adjustments to reconcile net income (loss) to net cash provided (used) by                                                          
   operating activities:                                                                                                            
    Depreciation and amortization                                                     293,000            253,000            378,000 
    Issuance of common stock for services                                              35,000            108,000            277,000 
    Reduction in cost of artifacts                                                          -                  -              3,000 
    Loss on disposal of fixed assets                                                        -                  -            356,000 
    Issuance of stock for interest expense                                                  -                  -              6,000 
    Issuance of stock in exchange of option                                                 -                  -          1,569,000 
    Issuance of compensatory stock options                                                  -            434,000                  - 
      Changes in operating assets and liabilities:                                                                                  
      (Increase) decrease in accounts receivable                                      (88,000)          (225,000)          (704,000)
      (Increase) decrease in prepaid and refundable taxes                           1,750,000            290,000             (1,000)
      Decrease (increase) in prepaid expenses and other current assets                983,000            166,000         (1,264,000)
      Decrease (increase) in other assets                                              28,000           (715,000)            39,000 
      Increase (decrease) in deferred revenue                                         (53,000)          (735,000)         1,000,000 
      Increase (decrease) in accounts payable and accrued liabilities                 405,000            135,000            411,000 
------------------------------------------------------------------------------------------------------------------------------------

        Total adjustments                                                           3,353,000           (289,000)         2,070,000 
------------------------------------------------------------------------------------------------------------------------------------
        Net cash provided (used) by operating activities                            2,526,000         (1,377,000)           595,000 
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:                                                                                               

    Proceeds from sale of fixed assets                                                      -                  -            230,000 
    Purchases of property and equipment                                              (727,000)           (21,000)          (964,000)
    Investment in salvor-in-possession rights                                               -                  -           (879,000)
------------------------------------------------------------------------------------------------------------------------------------
        Cash used in investing activities                                            (727,000)           (21,000)        (1,613,000)
------------------------------------------------------------------------------------------------------------------------------------

Cash flows provided from financing activities:                                                                                      

    Proceeds from note payable                                                                                              500,000 
    Payment on note payable                                                                                                 (75,000)
    Proceeds from the sale of common stock                                                                                1,278,000 
------------------------------------------------------------------------------------------------------------------------------------
        Cash provided by financing activities                                        (727,000)           (21,000)         1,703,000 
------------------------------------------------------------------------------------------------------------------------------------

Effect of exchange rate changes on cash                                                     -                  -              26,000

Net increase (decrease) in cash and cash equivalents                                1,799,000         (1,398,000)            711,000

Cash and cash equivalents at beginning of year                                        146,000          1,945,000             547,000
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                          $ 1,945,000        $   547,000        $  1,258,000
====================================================================================================================================

Supplemental disclosure of cash flow information:                                                                                   
  Cash paid during the year for income taxes                                      $     - 0 -        $     - 0 -        $      - 0 -
  Cash paid during the year for interest                                          $     - 0 -        $     - 0 -        $     40,000
====================================================================================================================================

                                                                                                  See Notes to Financial Statements 

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                                                                                        PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES  

                                                                                     CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D) 
------------------------------------------------------------------------------------------------------------------------------------
                                                                       February 28,       February 29,       February 28,           
Year ended                                                                 2003               2004              2005                
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                    
Supplemental schedule of non-cash financing and                                                                                     
 investing activities:                                                                                                              
  Issuance of compensatory stock options                                $     -0-       $      434,000          $      -0-          
  Issuance of common stock in exchange for options                      $     -0-       $          -0-          $1,569,000          

==============================================================================================================================      
   Common stock issued for assets                                       $     -0-       $          -0-          $      -0-          
==============================================================================================================================      

                                                                                                  See Notes to Financial Statements 

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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:    

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

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

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

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

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

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

     The Company was declared  salvor-in-possession of the TITANIC pursuant to a
     judgment  entered in the Federal District Court for the Eastern District of
     Virginia.  On April 12,  2002,  the United  States Court of Appeals for the
     Fourth  Circuit  (the "Fourth  Circuit")  affirmed two orders of the United
     States  District  Court  for the  Eastern  District  of  Virginia,  Norfolk
     Division.  R.M.S.  Titanic,  Inc. v. The Wrecked and Abandoned  Vessel ...,
     2002 U.S. App.  LEXIS 6799 (4th Cir.  2002).  Dated  September 26, 2001 and
     October 19, 2001, these orders  restricted the sale of Artifacts  recovered
     by the Company from the RMS TITANIC  wreck site.  In rendering its opinion,
     the Fourth Circuit  reviewed and declared  ambiguous the June 7, 1994 order

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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

     of the  District  Court that had  awarded  ownership  to the Company of all
     items then  salvaged  from the wreck of the TITANIC as well as all items to
     be salvaged  in the future by the  Company so long as the Company  remained
     salvor-in-possession  of the  TITANIC.  Having found the June 7, 1994 order
     ambiguous,  the  Fourth  Circuit  reinterpreted  the order to  convey  only
possession, not title, pending determination of a salvage award.      

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

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

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

     To  ascertain  that the  aggregate  net  realizable  value  ("NRV")  of the
     Artifacts  exceeds  the direct  costs of recovery  of such  Artifacts,  the
     Company  evaluates  various  evidential  matters.  Such evidential  matters
     includes  documented  sales and offerings of  TITANIC-related  memorabilia,
     insurance coverage obtained in connection with the potential theft,  damage
     or destruction of all or part of the Artifacts and other evidential  matter
regarding the public interest in the TITANIC.                         

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

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

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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

     Basic earnings per common share ("EPS") is computed as net earnings divided
     by the weighted-average number of common shares outstanding for the period.
     Diluted EPS,  representing  the  potential  dilution  that would occur from
     common shares issuable through  stock-based  compensation,  including stock
     options,  restricted stock awards, warrants and other, is not presented for
     the years ended February 28, 2003,  February 29, 2004 and February 29, 2005
     since  there was no  dilutive  effect  of  potential  common  shares or the
dilutive effect is not material.                                      

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

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

Recent Accounting Pronouncements                                      
--------------------------------                                      

     In December 2004,  the FASB issued SFAS No. 153,  "Exchanges of Nonmonetary
     Assets" (SFAS 153) which amends Accounting Principles Board Opinion No. 29,
     "Accounting for Nonmonetary  Transactions  (APB 29). SFAS 153 amends APB 29
     to eliminate the fair-value exception for nonmonetary  exchanges of similar
     productive  assets and replace it with a general  exception for nonmonetary
     exchanges  that do not  have  commercial  substance.  It is  effective  for
     nonmonetary  asset  exchanges  occurring in fiscal periods  beginning after
     June 15, 2005.  This statement is not anticipated to have a material impact
on the Company's financial position or results of operations.         

     In December 2004, the FASB issued SFAS No.  123(R),  "Share-Based  Payment"
     (SFAS 123(R),  which establishes  accounting standards for all transactions
     in which an entity exchanges its equity instruments for goods and services.
     SFAS  123(R)   revises   SFAS  No.   123,   "Accounting   for   Stock-Based
     Compensation",  supersedes  Accounting  Principles  Board  Opinion  No. 25,
     "Accounting for Stock Issued to Employees" and amends Financial  Accounting
     Standard No. 95,  "Statement  of Cash  Flows",  SFAS No.  123(R)  generally
     requires the Company to measure the cost of employee  services  received in
     exchange for an award of equity  instruments based on the fair value of the
     award on the date of the grant. The standard requires the fair value on the
     grant date to be estimated  using either an  option-pricing  model which is
     consistent  with the terms of the award or a market observed price, if such
     a price  exists.  The  resulting  cost must be  recognized  over the period
     during which an employee is required to provide service in exchange for the
     award, which is usually the vesting period.  SFAS 123(R) must be adopted no
     later than periods beginning after June 15, 2005 and the Company expects to
     adopt SFAS 123(R) on the effective  date. The Company  expects the adoption
     of SFAS  123(R)  will not have a  material  impact  on its net  income  and
earnings per share.                                                   

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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

2.   ARTIFACTS:                                                                 

     Artifacts recovered in the 1987 TITANIC expedition are carried at the lower
     of cost of recovery or NRV. The ownership of these Artifacts was granted to
     the Company by the  Government  of France.  The costs of  recovery  are the
     direct  costs of  chartering  of vessels  and related  crews and  equipment
     required  to  complete  the  dive  operations  for  that  expedition.  Coal
     recovered  in  two  expeditions  is  the  only  item  available  for  sale.
     Periodically,  as sales of coal  occur,  ten  percent  of the sale value is
     deducted from the carrying costs of Artifacts recovered.  During 2005, 2004
     and 2003, $6,000, $6,000, and $11,000, respectively, were deducted from the
Artifacts cost.                                                       

Artifacts, at cost, consists of the following:                        

                                         February 29,             February 28,
                                         2004                       2005
     ---------------------------------------------------------------------------
  Artifacts recovered, TITANIC       $ 3,105,000            $  3,102,000
  Artifacts, CARPATHIA                 1,374,000               1,374,000
     ---------------------------------------------------------------------------
                                     $ 4,479,000            $  4,476,000

3. PROPERTY AND EQUIPMENT:                                                      

Property and equipment, at cost, consists of the following:           

                                                        [Enlarge/Download Table]


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

                                                                         February 29,    February 28,       Estimated               
                                                                                2004             2005      Useful Life              

                                                                                                                                    
                              Exhibitry equipment                         $1,378,000      $2,323,000           5 years              
                              Marine equipment                               750,000               -          10 years              
                              Office equipment                               208,000         227,000           5 years              
                              Furniture and fixtures                         164,000         164,000           5 years              
------------------------------------------------------------------------------------------------------------------------------------
                                                                           2,501,000       2,714,000                                
                              Less accumulated depreciation                1,754,000       1,976,000                                
------------------------------------------------------------------------------------------------------------------------------------
                                                                         $   747,000       $ 738,000                                
====================================================================================================================================

4.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:                                  

Accounts payable and accrued liabilities consist of the following:              

                                                        [Enlarge/Download Table]

                                                                                          February 29,    February 28,              
                                                                                              2004            2005                  
                              ----------------------------------------------------------------------------------------              

                                                                                                                                    
                              Amounts payable for professional and consulting fees          $ 419,000      $ 1,231,000              
                              Settlement accrual                                              248,000          107,000              
                              Other miscellaneous liabilities                                 582,000          322,000              
------------------------------------------------------------------------------------------------------------------------------------
                                                                                           $1,249,000       $1,660,000              
====================================================================================================================================

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                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

5. INCOME TAXES                                                                 

The provision for income taxes consists of the following components:  

                                                        [Enlarge/Download Table]


                                                             February 28,            February 29,          February 28,             
                              Year ended                           2003                   2004                 2005                 
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                              Current:                                                                                              
                                Federal                          $(264,000)             $(300,000)           $(450,000)             
                                State and local                    (50,000)               (90,000)            (120,000)             
------------------------------------------------------------------------------------------------------------------------------------
                                                                  (314,000)              (390,000)            (670,000)             
------------------------------------------------------------------------------------------------------------------------------------

                                Federal                            264,000                300,000              450,000              
                                State and local                     50,000                 90,000              120,000              
------------------------------------------------------------------------------------------------------------------------------------
                                                                   314,000                390,000              670,000              
------------------------------------------------------------------------------------------------------------------------------------
                              Provision for income taxes             $- 0 -              $  - 0 -               $  -0-              
------------------------------------------------------------------------------------------------------------------------------------

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

                                                        [Enlarge/Download Table]


                                                                      February 28,      February 29,       February 28,             
                              Year ended                                      2003             2004                2005             
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                    
                              Statutory federal income tax rate             (34.0)%            (34.0)%           (34.0)%            
                              Effect of federal graduated tax                                                                       
                               rates benefit                                 (4.0)              --                --                
                              Net Operating Loss Carry-forward               38.0               34.0              34.0              
                              Other, net                                      -                  -                 -                

------------------------------------------------------------------------------------------------------------------------------------
                                    Effective income tax rate               - 0 -  %           - 0 -  %           -0-  %            
====================================================================================================================================

The net deferred income tax asset consists of the following:          

                                                        [Enlarge/Download Table]


                                                                                      February 29,         February 28,             
                                                                                          2004                  2005                
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                              Net Operating loss carry-forward                          $2,180,000           $2,800,000             
                              Deferred tax asset - expenses not currently                                                           
                               deductible                                                   $   --                   --             
                              Valuation allowance for doubtful tax assets               (2,180,000)          (2,800,000)            

                                    Net deferred tax                                           $-0-                 $-0-            


     The net operating loss carry-forwards of approximately $7,000,000 expire in
     varying  amounts  from 2019 to 2025.  A valuation  allowance of 100% of the
     deferred income tax asset has been provided at February 28, 2005 because of
     the uncertainties as to the amount of taxable income that will be generated
     in the future years as a result of the  determination  by the Federal Court
of Appeals that the Company does not own the Titanic artifacts.       

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6.   STOCKHOLDERS' EQUITY:                                                      

     Prior to the  acquisition  of  TVLP's  assets,  the  Company  initiated  an
     exchange  agreement  with the holders of certain  Class B warrants in which
     the holders would receive shares of the Company's  common stock in exchange
     for certain Class B warrants.  Through  February 28, 2003,  the Company had
     received  20,700  Class B warrants  to be  exchanged  for 20,700  shares of
     common  stock of the  Company,  of which  16,500  shares still remain to be
issued. There were 5,556 warrants outstanding as of February 28, 2005.

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

     During the year ended  February 29, 2004, the Company issued 450,000 shares
     of common stock as payment for services and compensation  having a value of
$108,000.                                                             

     During the year ended  February 28, 2005, the Company issued 150,000 shares
     of common stock as payment for  services and 625,000  shares as payment for
compensation.                                                         

     During the year ended February 28, 2005, the Company sold 1,469,927  shares
     of common stock and warrants to purchase 441,003 shares of common stock for
     aggregate  consideration  of  $1,514,000.  The net  proceeds of the private
     placement  were  $1,278,000  after  fees,  expenses  and  other  costs.  In
     connection  with the  private  placement,  the Company  issued  warrants to
     purchase  293,985 shares of common stock to its placement agent. All of the
     warrants issued in the private  placement are exercisable  over a five-year
term at an exercise price of $1.50 per share.                         

7.   STOCK OPTIONS:                                                             

Transactions relating to stock options are as follows:                

                                                        [Enlarge/Download Table]


                                                                                                              Weighted-             
                                                                                        Number of              Average              
                                                                                       Shares and             Exercise              
                                                                                        Options                Price                
                                                                                       Exercisable            per Share             
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                              Balance at February 28, 2002                              4,000,000                $1.22              
                              Canceled                                                    250,000                $0.88              
                              Granted                                                          -0-                 -0-              
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
                              Balance at February 28, 2003                              3,750,000                $1.24              
                              Canceled                                                    250,000                 4.00              
                              Granted                                                     950,000                 0.31              
------------------------------------------------------------------------------------------------------------------------------------

                              Balance at February 29, 2004                              4,450,000                $0.89              
                              Canceled and expired                                      2,800,000                 1.90              
                              Granted                                                     700,000                $1.64              
------------------------------------------------------------------------------------------------------------------------------------
                              Balance at February 28, 2005                              2,350,000                $0.36              
====================================================================================================================================

     In April 2000,  the Company  adopted an  incentive  stock  option plan (the
     "2000 Plan")  under which  options to purchase  3,000,000  shares of common
     stock may be granted to certain key  employees,  directors or  consultants.
     The  exercise  price was based on the fair  market  value of such shares as
     determined  by the  board of  directors  at the  date of the  grant of such
     options.  In December 2003, the Company  adopted a second  incentive  stock
     option plan (the "2004  Plan")  under which  options to purchase  3,000,000
     shares of common stock may be granted to certain key  employees,  directors
     or consultants.  The exercise price is be based on the fair market value of
     such  shares as  determined  by the board of  directors  at the date of the
grant of such options.                                                

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

     In February 2002, the Company granted an option to purchase  600,000 shares
     of the Company's  common stock at $0.40 per share to its Vice President and
     Chief Financial  Officer.  This option has a 10-year maturity from the date
of grant.                                                             

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

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

     In December 2003, the Company  established a 2004 Stock Incentive Plan that
     included 3,000,000 shares of common stock. In addition, the Company granted
     options to  employees  and  directors  on 940,000  shares of the  Company's
     common stock at $0.32 per share. These options have a 10-year maturity from
the date of grant.                                                    

     During  August 2004,  two officers of the Company,  its  President and Vice
     President  of Finance as  requested  by the  Company's  investment  banker,
     exchanged options that they held for common stock at a ratio of two options
     for the  issuance  of one  share  of  common  stock.  The  purpose  of this
     transaction was to make available more common shares to be sold in the SB-2
     Registration.  The Company's  President  exchanged 1.2 million  options for
     600,000  shares  of  common  stock  to vest  over a two  year  period.  The
     Company's Vice President of Finance  exchanged  600,000 options for 300,000
shares of common stock to be vested over at two year period.          

     As of February 28,  2005,  options to purchase  1,660,000  shares of common
     stock have been  granted  under the 2000 Plan and 690,000  shares of common
     stock under the 2004 Plan. The following  table  summarizes the information
about all stock options outstanding at February 28, 2005:             

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                                                        [Enlarge/Download Table]


                                                                         Options Outstanding and Exercisable                        
                                                                                           Weighted-                                
                                                                                            Average           Weighted-             
                                                                                           Remaining           Average              
                                  Range of                             Number             Contractual         Exercise              
                              Exercise Price                         Outstanding         Life (Years)           Price               
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                    
                                    $0.28                              250,000               8.5                 $0.28              

                                    $0.32                              690,000               8.75                $0.32              

                                    $0.40                            1,410,000               6.72                $0.40              
------------------------------------------------------------------------------------------------------------------------------------

                              $0.40 - $5.00                          2,350,000                                   $0.36              
====================================================================================================================================

     The Company elected , in accordance with the provisions of SFAS No. 123, to
     apply the  current  accounting  rules  under APB Opinion No. 25 and related
     interpretations  in  accounting  for stock  options and,  accordingly,  has
     presented the  disclosure-only  information as required by SFAS No. 123. If
     the Company had elected to  recognize  compensation  cost based on the fair
     value of the options  granted at the grant date as  prescribed  by SFAS No.
     123,  the  Company's  net income and income per common  share for the years
     ended  February  28, 2003,  February 29, 2004,  and February 28, 2005 would
approximate the pro forma amounts shown in the table below:           

                                                        [Enlarge/Download Table]


                                                                   February 28,        February 29,       February 28,              
                              Year ended                                2003               2004                2005                 
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    

                              Reported net income (loss)        $     (827,000)   $     (1,088,000)   $     (1,479,000)             
====================================================================================================================================

                              Pro forma net income (loss)       $     (827,000)   $     (1,088,000)   $     (1,479,000)             
====================================================================================================================================

                              Reported net income (loss)                                                                            
                               per common share                 $        (0.04)   $          (0.06)   $          (0.07)             

                              Pro forma net income (loss)                                                                           
                               per common share                 $        (0.04)   $          (0.06)   $          (0.07)             
====================================================================================================================================

                       The fair value of options granted (which is
                        amortized to expense over the option vesting
                         period in determining the proforma impact) is
                    estimated on the date of grant using the
                       Black-Scholes option-pricing model with the
                   following weighted-average assumptions:

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                                                        [Enlarge/Download Table]


                                                                           February 28,        February 29,    February 28,         
                              Year ended                                       2003                2004           2005              
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                                    
                              Expected life of options                      8.07 years         7.07 years         6.07 years        
====================================================================================================================================

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

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

                              Expected dividend yield on                                                                            
                               RMS Titanic, Inc.                           $ - 0 -            $ - 0 -            $ - 0 -            
====================================================================================================================================

                                                        [Enlarge/Download Table]


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

                                                                       February 28,        February 29,    February 28,             
                              Year ended                                    2003                2004           2005                 
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                              Fair value of each option granted   $          --             $   --          $      --               
                              Total number of options granted                --            940,000                 --               
------------------------------------------------------------------------------------------------------------------------------------
                                    Total fair value of all                                                                         
                                     options granted              $          --             $   --          $      --               
====================================================================================================================================

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

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8.   LITIGATION:                                                                

     The  United  States  Department  of  State  and the  National  Oceanic  and
     Atmospheric  Administration  of the United  States  Department  of Commerce
     ("NOAA") are working  together to implement  an  International  Treaty (the
     "Agreement") with entities in Britain France and Canada that could diminish
     or  otherwise  impact  the  Company's  salvor-in-possession  rights  to the
     TITANIC  which had been  awarded by the  District  Court.  The  Company has
     raised  numerous  objections  to the  United  States  Department  of  State
     regarding  the actions of the United  States to  participate  in efforts to
     reach  an  agreement  governing  salvage  activities  of the  TITANIC.  The
     Agreement,  as  drafted,  does not  recognize  the  existing  rights of the
     Company in the TITANIC,  that have been  re-affirmed  in the District Court
     and affirmed by the Fourth Circuit, and provides that the Agreement becomes
     effective  when any two of the party states sign it. During  November 2003,
     the Britain  signed the Treaty.  United  States  Department  of Justice has
     represented  that the United  States  believed it had complied with the RMS
     TITANIC Memorial Act in the development of the international  guidelines to
     implement  the  Agreement,  but would  solicit  comments from the public at
     large  regarding  the  draft  international  guidelines  and the NOAA  will
     consider the comments, and then publish the final international guidelines.
     On April 3, 2000 the Company filed a motion for declaratory judgment asking
     that the District  Court declare  unconstitutional  and  inappropriate  the
     efforts of the United States to reach an  international  agreement with the
     other  parties  and that it be  precluded  from  seeking to  implement  the
     Agreement. On September 15, 2000, the Court ruled that the Company's motion
     was not ripe for  consideration  at the present time,  and that the Company
     may renew its motion  when and if an  Agreement  is agreed to and signed by
     the parties, final guidelines are drafted, and Congress passes implementing
     legislation.  The Company expects that whatever the outcome of this matter,
     there will be no impact on artifacts that have already been recovered,  but
     the Company does not know what effect,  if any, this Agreement will have on
future Company operations.                                            

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

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

     On April 12,  2002,  the  United  States  Court of  Appeals  for the Fourth
     Circuit (the  "Fourth  Circuit")  affirmed two orders of the United  States
     District  Court for the Eastern  District of  Virginia,  Norfolk  Division.
     R.M.S.  Titanic,  Inc. v. The Wrecked and Abandoned Vessel , 2002 U.S. App.
     LEXIS 6799 (4th Cir. 2002).  Dated September 26, 2001 and October 19, 2001,
     these orders restricted the sale of artifacts recovered by the Company from
     the TITANIC  wreck site.  In  rendering  its  opinion,  the Fourth  Circuit
     reviewed  and  declared  ambiguous  the June 7, 1994 Order of the  District
     Court that had awarded  ownership to the Company of all items then salvaged
     from the wreck of the  Titanic as well as all items to be  salvaged  in the
     future by the Company so long as the Company remained  salvor-in-possession
     of the TITANIC.  Having found the June 7, 1994 Order ambiguous,  the Fourth
     Circuit  reinterpreted  the order to convey  only  possession,  not  title,
     pending  determination  of a salvage  award.  This opinion  conflicts  with
     previous  rulings  that were  rendered by both the Fourth  Circuit,  R.M.S.
     Titanic,  Inc.  v.  Haver,  et al,  171 F.3d 943 (4th  Cir.  1999)  and the
     District Court,  all of which the Company had relied upon in the conduct of
     its  business.  Furthermore,  based on a June 7, 1994 Order of the District
     Court,  the Company  believed it was the exclusive  owner of the Artifacts.
     The Company  petitioned  the United States Supreme Court to hear its appeal
     of the April  12,  2002  decision  of the  Fourth  Circuit.  However,  that
petition was denied on October 7, 2002.                               

     On April 25,  2002,  the  Company  was  served  with  notice of  litigation
     initiated by Lawrence D'Addario,  et al v. Arnie Geller, G. Michael Harris,
     Joe Marsh, Gerald Couture,  Nick Cretan, Doug Banker and the Company in the
     United States District Court for the Eastern District of Virginia,  Norfolk
     Division. The suit alleges fraud,  self-dealing,  mismanagement,  diversion
     and waste of  corporate  assets by the  individuals  in their  capacity  as
     directors  and/or officers of the Company and for Joe Marsh, as a principal
     shareholder of the Company.  On April 23, 2004, the United States  District
     Judge for the Eastern  District of Virginia  Rebecca B. Smith dismissed the
     lawsuit  filed by Lawrence  D'Addario  against the Company and Arnie Geller
     and  Gerald   Couture,   two  officers   and   directors  of  the  company.
     Specifically,  the Court  approved  and  adopted in full the  findings  and
     recommendations   set  forth  in  the   Magistrate   Judge's   reports  and
     recommendations  of March 5, 2004 whereby summary  judgment as to Counts I,
     II and III of the  D'Addario  Complaint  was  granted  in favor of  Messrs.
     Geller  and  Couture.  Summary  judgment  was  also  granted  in  favor  of
     defendants  Mr. Joseph Marsh,  a principal  shareholder  and Mr. G. Michael
     Harris, a former officer and director.  By Order,  dated December 19, 2003,
     the Court had previously  dismissed  Count IV of the Complaint as moot. The
     Court's final order is subject to a possible  appeal to the Fourth  Circuit
Court of Appeals.                                                     

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

9.   COMMITMENTS AND CONTINGENCIES:                                             

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

     On February 2, 2002, the Company executed an employment  agreement with its
     President and Chief Executive  Officer.  The employment  agreement is for a
     five-year  term and provides for annual base salaries of $330,750 per year,
     with annual 5% increases.  On April 10, 2004, this employment agreement was
     extended on the same terms and conditions  with a new  termination  date of
February 2, 2009.                                                     

     On February 2, 2002, the Company executed an employment  agreement with its
     Vice President and Chief Financial Officer. The employment agreement is for
     a four-year  term and  provides  for annual base  salaries of $270,000  per
     year,  with  annual  5%  increases.  On April  10,  2004,  this  employment
     agreement  was  extended  on  the  same  terms  and  conditions  with a new
termination date of February 2, 2008.                                 

     The Company  has  non-cancelable  operating  leases for office  space.  The
     leases  are  subject  to  escalation  for the  Company's  pro rata share of
     increases in real estate taxes and operating costs.  During the fiscal year
     ended  February 28, 2005, the Company  entered into another  non-cancelable
operating lease for warehouse space through December 31, 2007.        

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     Future  minimum lease payments for leases in effect as of February 28, 2005
and entered into subsequent to that date are as follows:              

Year ending February 28(29),                                

        2006                                  $197,000
        2007                                   202,000
        2008                                   192,000
        2009                                   124,000

--------------------------------------------------------------------------------
                                              $715,000
================================================================================

                          Rent expense charged to operations amounted to
                         $205,000, $132,000 and $207,000 for the years
                           ended February 28, 2003, February 29, 2004, and
            February 28, 2005, respectively.

10.  OTHER RELATED PARTY TRANSACTIONS:                                          

     Included in accounts  payable and accrued  liabilities at February 29, 2004
and February 28, 2005 is $25,000 due to certain partners of TVLP.     

11.  EXHIBITIONS:                                                               

     During the two-year period ended February 29, 2004 and thru April 25, 2004,
     the Company has presented,  through licensing  arrangements  exhibitions of
TITANIC's Artifacts and other TITANIC memorabilia.                    

     In March 1999,  the  Company  entered  into an  agreement  with  Magicworks
     Entertainment, Inc., a direct subsidiary of PACE Entertainment, Inc. and an
     indirect  subsidiary of SFX Entertainment,  Inc.  (collectively  "SFX"), in
     which the Company granted SFX an exclusive worldwide license to exhibit the
     Company's TITANIC artifacts for a minimum payment of $8,500,000,  annually.
     This  license  agreement  had  an  initial  term  of one  year,  commencing
     September 15, 1999, with SFX having the option to extend the term for up to
     four   additional   one-year   periods.   All   obligations  of  Magicworks
     Entertainment,  Inc. under this license  agreement  were  guaranteed by SFX
     Entertainment,  Inc. The original  agreement  was amended on September  18,
     2000 by the  Company  and SFX  Family  Entertainment,  Inc.,  successor  to
     Magicworks Entertainment,  Inc. Another amendment extended the agreement to
     January 3, 2003. The first  amendment  required a minimum annual payment of
     $2,000,000  that was received  during fiscal year ended  February 28, 2002.
     Pursuant to the license agreement,  as amended,  the Company was to receive
     twenty percent of the ticket,  merchandise,  and  sponsorship and ancillary
     revenues over  $10,000,000.  Each amendment  required a guaranteed  minimum
     annual payment of $2,000,000.  For the amendment periods ended November 31,
     2001 and January 3, 2003,  the Company  received  payments of $616,000  and
     $683,242,   respectively,  over  the  guaranteed  minimum  annual  payments
     pursuant to the revenue sharing provisions of the agreement.  On August 15,
     2003, a Fifth Amendment to the license  agreement was executed  whereby the
     term was extended to April 25, 2004. In this amendment, the exhibitry owned
     by Clear  Channel  Exhibitions,  Inc.  ("CCE")  was sold to the Company for
     $600,000 with $300,000  forthcoming  from overage payments during the final
     extended  term  and  the  balance  to be paid by the  Company  in  $150,000
     installments due annually over the next two years. On May 26, 2004, a Sixth
     Amendment to this same license  agreement was executed  which provided that
     the two  installment  payments of  $150,000  were  changed  whereby CCE was
     granted a security  interest in the exhibitry being acquired by the Company
     and the  necessity  of a letter  of credit  was  waived  for a new  payment
     schedule  that  included all overage  payments due from CCE and payments of
     $50,000  every six months until the  remaining  obligation is paid in full.
     The last three  amendments  were executed with CCE,  formerly  known as SFX
Family Entertainment, Inc.                                            

F-21

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                                  PREMIER EXHIBITIONS, INC. AND SUBSIDIARIES

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

12.  401(k) PLAN:                                                               

Effective  March 2004,  the Company  adopted the RMS  Titanic,  Inc.  401(k) and
Profit Sharing Plan under section  401(k) of the Internal  Revenue Code of 1986,
as amended.  Under the Plan, all employees  eligible to participate may elect to
contirbute up to the lesser of 12% of their salary or the maximum  allowed under
the Code. All employees who are at least age 21 and have  completed  1,000 hours
of service are eligible. The Company may elect to make contributions to the Plan
at the  discretion of the Board of Directors.  During 2004,  the Company made no
contributions to the plan. The Plan name has been changed to Premier  Exhbitions
401(k) and Profit Sharing Plan.                                                 

13.  SUBSEQUENT EVENT:                                                          

     On April  13,  2005,  the  Company  entered  into a term  sheet for a joint
     venture to co-produce  four  exhibitions  for four domestic  markets with a
     major  entertainment  producer.  This  undertaking  will be  finalized in a
     definitive  agreement  to be  executed  with  thirty  days but  funding  of
     $2,425,000  has been made to the Company by the joint  venturer.  These new
     exhibitions will provide the Company with minimum exhibition guarantees and
     revenue  participation and include  provisions for repayment of the advance
     funding.  The Company provided a general security  interest over its assets
as part of this undertaking.                                          

     On April 13,  2005,  the  Company  received  $500,000  for the  purchase of
     300,000 shares of the Company's common stock from the joint venturing party
     as  consideration  in the  co-production  undertaking.  These common shares
     issued in this  transaction  at a $1.667 per share  price are  unregistered
securities under the Securities Acts, as amended.                     

     On  March 7,  2005,  the  Company,  through  a newly  formed  wholly  owned
     subsidiary, Premier Acquisitions, Inc. (PAI), a Nevada corporation, entered
     into a letter  of  intent,  to  acquire  all the  membership  interests  in
     Exhibitions  International  LLC  ("EI"),  a  Nevada  LLC.  EI held  certain
     exclusive  licensing rights to certain  anatomical  specimens and exhibitry
     that would  significantly  broaden  the  Company's  offerings  in its human
     anatomy educational  exhibition business. The membership of EI included Mr.
     Joe Marsh,  an  individual  who owns a greater than 10% interest in Premier
Exhibitions, Inc.. Mr. Marsh's interest in EI was 17%.                

     The  acquisition  of EI was  principally  funded in two tranches,  first on
     April 25th and then on May 2nd,  2005 and was  completed  as  follows:  (1)
     payment of $1.5 million by PAI for 100% of the membership  interests of EI;
     (2) the  payment  of a  certain  debt  obligation  of EI in the  amount  of
     $300,000  paid by PAI;  (3) the  issuance of 200,000  shares of the Company
     stock,  then valued at $1.54 per share; and (4) the issuance of warrants to
     acquire  Company common stock with a three year term,  each of which is for
     100,000 shares with their respective strike prices of $1.25, 1.50 and 1.75.

     On May 2, 2005, the Company  completed the cash payments for acquisition of
     Exhibitions International,  a Nevada LLC, and was consequently obligated to
     issue the following securities as further consideration: (1) 200,000 shares
     of the Company stock,  valued at $1.54 per share;  and (2) 300,000 warrants
     to acquire  Company  common stock with a three year term,  each of which is
     for 100,000 shares with their respective  strike prices of $1.25,  1.50 and
     1.75. Mr. Joe Marsh an owner of more than 10% of the Company's  outstanding
     common stock is a recipient of 68,000 shares of this common stock issuance.
Mr. Marsh is not receiving any warrants that are to be issued.        

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		2/2/09		45					3,  SC 13D/A
		2/29/08		7					10-K
		2/2/08		45
		12/31/07		45
		7/25/05		9
Filed as of:		6/17/05
Filed on:		6/16/05
		6/15/05		7		36
		6/14/05		25		27
		6/10/05		11
		6/1/05		1		19			8-K
		5/13/05		10
		5/2/05		47
		4/13/05		47
		3/7/05		47					8-K
		3/1/05		9
For Period End:		2/28/05		1		46			NT 10-K
		2/24/05		9
		2/16/05		9
		2/9/05		21					8-K
		1/1/05		7
		12/31/04		7
		12/10/04		10
		12/3/04		9
		11/22/04		9
		10/14/04		21					8-K,  8-K/A
		10/6/04		7
		9/9/04		4
		8/25/04		4		16
		8/3/04		9
		8/2/04		8
		7/2/04		8
		6/14/04		25					10-K,  4
		5/29/04		18
		5/26/04		24		46
		5/24/04		9
		5/17/04		8
		5/6/04		21					8-K
		4/25/04		46
		4/23/04		9		44
		4/20/04		21					8-K
		4/10/04		24		45
		3/22/04		9
		3/5/04		44
		2/29/04		12		46			10-K,  10-K/A,  NT 10-K
		12/19/03		44
		8/31/03		8		24			10-Q
		8/15/03		24		46
		8/8/03		7		24
		8/4/03		24
		4/23/03		8
		2/28/03		12		46			10-K,  8-K,  NT 10-K,  PRE 14A
		1/3/03		46
		11/30/02		23					10-Q,  8-K,  NT 10-Q
		10/7/02		8		44
		7/16/02		24
		6/1/02		23
		5/1/02		23
		4/30/02		24					8-K
		4/25/02		9		44
		4/22/02		23
		4/17/02		24					8-K
		4/12/02		8		44
		4/4/02		23
		4/2/02		23		33
		3/7/02		23
		3/6/02		33
		2/28/02		24		46			10-K,  10-K/A,  3,  4,  8-K,  8-K/A,  NT 10-K
		2/2/02		23		45
		11/1/01		7
		10/19/01		8		44			4/A
		10/16/01		23
		9/26/01		8		44
		5/10/01		9
		5/7/01		22		23
		5/6/01		22
		5/3/01		8		44
		2/28/01		24					10-K,  5,  NT 10-K
		1/16/01		44					NT 10-Q
		9/18/00		23		46
		9/15/00		7		43
		9/7/00		8					8-K
		8/31/00		22					10-Q,  3,  8-K
		6/30/00		33					4
		6/29/00		22
		4/25/00		22
		4/18/00		22
		4/3/00		7		43
		3/27/00		22
		2/29/00		24					10-K,  NT 10-K
		1/18/00		8		44
		11/26/99		9					8-K,  SC 13D
		9/15/99		46
		5/31/99		22					10-Q,  NT 10-Q
		3/31/99		22
		1/5/99		22
		4/15/96		22
		6/7/94		33		44
		5/4/93		3
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