<PAGE>   1


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

================================================================================
(Mark One)
[X]            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JULY 31, 1999

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

                        COMMISSION FILE NUMBER 001-13490

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

                            MITCHAM INDUSTRIES, INC.
                (Name of registrant as specified in its charter)


               TEXAS                                            76-0210849
  (State or other jurisdiction of                            (I.R.S. Employer
  incorporation or organization)                            Identification No.)

                             44000 HIGHWAY 75 SOUTH
                             HUNTSVILLE, TEXAS 77340
                    (Address of principal executive offices)

                                 (409) 291-2277
              (Registrant's telephone number, including area code)

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

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

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 9,551,112 shares of Common
Stock, $0.01 par value, were outstanding as of August 27, 1999.




<PAGE>   2
                            MITCHAM INDUSTRIES, INC.
                                      INDEX


                          PART I. FINANCIAL INFORMATION


Item 1. Financial Statements

        Condensed Consolidated Balance Sheets...............................   3
        Condensed Consolidated Statements of Operations.....................   4
        Condensed Consolidated Statements of Cash Flows.....................   5
        Notes to Condensed Consolidated Financial Statements................   6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations...........................................   7

Item 3. Quantitative and Qualitative Disclosures About Market Risk..........  10


                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings...................................................  13

Item 4. Submission of Matters to a Vote of Security Holders.................  13

Item 6. Exhibits and Reports on Form 8-K....................................  14

        Signatures..........................................................  15


                                       2
<PAGE>   3



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                            MITCHAM INDUSTRIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                        July 31,    January 31,
                                   ASSETS                                 1999         1999
                                   ------                             -----------  -------------
                                                                      (Unaudited)
<S>                                                                   <C>          <C>
CURRENT ASSETS:
    Cash                                                               $  2,284      $  2,525
    Marketable securities, at market                                     18,186        17,335
    Accounts receivable, net                                              4,144         7,880
    Inventory                                                             1,773         1,191
    Income tax receivable                                                 1,459            --
    Deferred tax asset                                                      483           483
    Prepaid expenses and other current assets                               196            88
                                                                       --------      --------
       Total current assets                                              28,525        29,502
    Seismic equipment lease pool, property and equipment                 64,817        65,116
    Accumulated depreciation of seismic equipment lease pool,
      property and equipment                                            (34,488)      (31,472)
    Deferred tax asset                                                    3,447         4,028
                                                                       --------      --------
         Total assets                                                  $ 62,301      $ 67,174
                                                                       ========      ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
    Accounts payable                                                   $    489      $    668
    Deferred revenue                                                         59           131
    Accrued liabilities and other current liabilities                       304           806
    Income taxes payable                                                     --           817
                                                                       --------      --------
         Total current liabilities                                          852         2,422

SHAREHOLDERS' EQUITY:
    Preferred stock, $1.00 par value; 1,000,000 shares authorized;
        none issued and outstanding                                          --            --
    Common stock, $0.01 par value; 20,000,000 shares authorized
        9,551,112 and 9,545,658 shares, respectively, issued and
        outstanding                                                          95            95
    Additional paid-in capital                                           61,459        61,459
    Retained earnings                                                       911         4,244
    Cumulative translation adjustment                                    (1,016)       (1,046)
                                                                       --------      --------
         Total shareholders' equity                                      61,449        64,752
                                                                       --------      --------
         Total liabilities and shareholders' equity                    $ 62,301      $ 67,174
                                                                       ========      ========
</TABLE>


              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       3

<PAGE>   4




                            MITCHAM INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                 JULY 31,                         JULY 31,
                                                       ----------------------------     ----------------------------
                                                           1999            1998             1999            1998
                                                       -----------      -----------     -----------      -----------
<S>                                                    <C>              <C>             <C>              <C>
REVENUES:
Short-term leasing                                     $       431      $     3,954     $     1,729      $     9,844
Leasing under lease/purchase agreements                         18            1,602             202            2,802
Equipment sales under lease/purchase agreements                 --            1,315              --            8,651
Other equipment sales                                          176              793             339            1,820
                                                       -----------      -----------     -----------      -----------
         Total revenues                                        625            7,664           2,270           23,117

COSTS AND EXPENSES:
Direct costs                                                   207              291             303              837
Cost of sales under lease/purchase agreements                   --            2,000              11            9,343
Cost of other equipment sales                                    1              617             110            1,186
General and administrative                                     858            1,117           1,950            2,307
Provision for doubtful accounts                                 75               --             125              608
Depreciation                                                 2,347            2,850           4,598            5,562
                                                       -----------      -----------     -----------      -----------
         Total costs and expenses                            3,488            6,875           7,097           19,843
                                                       -----------      -----------     -----------      -----------

OPERATING INCOME (LOSS)                                     (2,863)             789          (4,827)           3,274

Other income -- net                                            168              530             310              631
                                                       -----------      -----------     -----------      -----------

INCOME (LOSS) BEFORE INCOME TAXES                           (2,695)           1,319          (4,517)           3,905
PROVISION (BENEFIT) FOR INCOME TAXES                          (603)             467          (1,183)           1,373
                                                       -----------      -----------     -----------      -----------
NET INCOME (LOSS)                                      $    (2,092)     $       852     $    (3,334)     $     2,532
                                                       ===========      ===========     ===========      ===========

Earnings (loss) per common share
     Basic                                             $     (0.22)     $       .09     $     (0.35)     $       .27
     Diluted                                           $     (0.22)     $       .09     $     (0.35)     $       .26
                                                       ===========      ===========     ===========      ===========

Shares used in computing earnings per common share
     Basic                                               9,551,000        9,508,000       9,550,000        9,471,000
     Dilutive effect of common stock equivalents                --          195,000              --          256,000
                                                       -----------      -----------     -----------      -----------
     Diluted                                             9,551,000        9,703,000       9,550,000        9,727,000
                                                       ===========      ===========     ===========      ===========
</TABLE>


              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       4
<PAGE>   5





                            MITCHAM INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                         SIX MONTHS ENDED
                                                                             JULY 31,
                                                                      ----------------------
                                                                        1999          1998
                                                                      --------      --------
<S>                                                                   <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                     $ (3,334)     $  2,532
Adjustments to reconcile net income (loss) to net
     cash flows provided by (used in) operating activities:
         Depreciation                                                    4,598         5,562
         Provision for doubtful accounts, net of charge offs              (591)          181
         Deferred income taxes                                              --           140
         Inventory                                                         (55)       (1,147)
         Trade accounts receivable                                       4,327         4,293
         Federal income taxes                                           (1,695)       (1,309)
         Accounts payable                                                  (20)       (7,870)
         Other assets                                                     (108)            2
         Accrued and other liabilities                                    (573)       (5,378)
                                                                      --------      --------
              Net cash provided by (used in) operating activities        2,549        (2,994)

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of seismic equipment held for lease                      (1,915)      (23,080)
     Purchases of property and equipment                                   (91)         (206)
     Sale (purchase) of marketable securities                             (851)       14,731
     Disposal of lease pool equipment                                       64         9,820
     Disposal of property and equipment                                      3            31
                                                                      --------      --------
         Net cash provided by (used in) investing activities            (2,790)        1,296

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of common stock upon exercise of
       warrants and options                                                 --            64
                                                                      --------      --------
         Net cash provided by financing activities                          --            64

NET (DECREASE) IN CASH                                                    (241)       (1,634)
CASH, BEGINNING OF PERIOD                                                2,525         7,498
                                                                      --------      --------
CASH, END OF PERIOD                                                   $  2,284      $  5,864
                                                                      ========      ========

SUPPLEMENTAL CASH FLOW INFORMATION:
     Cash paid for:
         Interest                                                     $     10      $     10
         Income taxes                                                 $    500      $  1,950
                                                                      ========      ========
     Equipment purchases in accounts payable                          $     --      $  3,075
                                                                      ========      ========
</TABLE>


              THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
                  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                       5
<PAGE>   6



                            MITCHAM INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

         The condensed consolidated financial statements of Mitcham Industries,
         Inc. ("the Company") have been prepared by the Company, without audit,
         pursuant to the rules and regulations of the Securities and Exchange
         Commission. Certain information and footnote disclosures normally
         included in financial statements prepared in accordance with generally
         accepted accounting principles have been condensed or omitted pursuant
         to such rules and regulations, although the Company believes that the
         disclosures are adequate to make the information presented not
         misleading. These condensed consolidated financial statements should
         be read in conjunction with the financial statements and the notes
         thereto included in the Company's latest Annual Report to Shareholders
         and the Annual Report on Form 10-K for the year ended January 31,
         1999. In the opinion of the Company, all adjustments, consisting only
         of normal recurring adjustments, necessary to present fairly the
         financial position as of July 31, 1999; the results of operations for
         the three and six months ended July 31, 1999 and 1998; and cash flows
         for the six months ended July 31, 1999 and 1998 have been included.
         The foregoing interim results are not necessarily indicative of the
         results of the operations for the full fiscal year ending January 31,
         2000.

2.       COMMITMENTS AND CONTINGENCIES

         Supplier Agreements

         Effective June 30, 1998, the Company and Input/Output, Inc. ("I/O")
         entered into a new Preferred Supplier Agreement (the "I/O Agreement"),
         replacing the parties' Exclusive Lease Referral Agreement, under which
         the Company had completely fulfilled its obligation. Under the I/O
         Agreement, the Company agreed to purchase a minimum of between $90 and
         $100 million of I/O products (after discounts) in stated increments
         over a five-year term. In addition, I/O agreed to refer rental
         inquiries from customers worldwide to the Company during the term of
         the agreement, and to not lease products covered by the I/O Agreement,
         except in limited circumstances. In a related transaction, I/O sold to
         the Company for $15 million a substantial portion of its subsidiary's
         equipment lease pool, some of which was subject to existing short-term
         lease agreements.

         On April 26, 1999, the Company and I/O agreed to terminate the I/O
         Agreement, thereby releasing the Company from its obligation to make
         future minimum purchases. As a result of the termination, I/O is no
         longer obligated to refer rental inquiries to the Company and is free
         to enter the short-term leasing business.

         Legal Proceedings

         On or about April 23, 1998, several class action lawsuits were filed
         against the Company and its chief executive officer and then chief
         financial officer in the U.S. District Court for the Southern District
         of Texas, Houston Division. The first-filed complaint, styled Stanley
         Moskowitz v. Mitcham Industries, Inc., Billy F. Mitcham, Jr. and
         Roberto Rios, alleged violations of Section 10(b), Rule 10b-5 and
         20(a) of the Securities Exchange Act of 1934 and Sections 11 and
         12(a)(2) of the Securities Act of 1933. On or about September 21,
         1998, the complaints were consolidated into one action. On November 4,
         1998, the plaintiffs filed a consolidated amended complaint ("CAC"),
         which seeks class action status on behalf of those who purchased the
         Company's common stock from June 4, 1997 through March 26, 1998, and
         damages in an unspecified amount plus costs and attorney's fees. The
         CAC alleges that the Company made materially false and misleading
         statements and omissions in public filings and announcements
         concerning its business and its allowance for doubtful accounts. On or
         about January 15, 1999, the Company filed a motion to dismiss the CAC.
         The motion is now fully briefed and the Company is awaiting a ruling
         by the Court.

         The Company is also involved in claims and legal actions arising in
         the ordinary course of business. In the opinion of management, the
         ultimate disposition of these matters will not have a material adverse
         effect on the Company's financial position, results of operations or
         liquidity.


                                       6
<PAGE>   7

3.       RECLASSIFICATIONS

         Certain 1998 amounts have been reclassified to conform to 1999
         presentation.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

          The Company's sales are directly related to the level of worldwide oil
and gas exploration activities and the profitability and cash flows of oil and
gas companies and seismic contractors, which in turn are affected by
expectations regarding the supply and demand for oil and natural gas, energy
prices and finding and development costs. The Company believes that during the
latter half of 1998, the exploration and production companies anticipated an
extended period of low oil and gas prices and began to reduce their intended
levels of expenditures for seismic data. Consolidation within the oil industry
has also delayed seismic data acquisition projects.

         Until the exploration and production companies can forecast with
reasonable certainty that future oil prices will stabilize, seismic data
acquisition activity is not expected to improve. Additional declines in oil
prices, or expectations that the recent improvement in oil prices will not
hold, could cause the Company's customers to further reduce their spending and
further adversely affect the Company's results of operation and financial
condition.

         The Company leases and sells seismic data acquisition equipment
primarily to seismic data acquisition companies and oil and gas companies
conducting land and transition zone seismic surveys worldwide. The Company
provides short-term leasing of seismic equipment to meet a customer's
requirements and offers maintenance and support during the lease term. All
leases at July 31, 1999 were for a term of one year or less. Seismic equipment
held for lease is carried at cost, net of accumulated depreciation.

         While most of the Company's transactions with foreign customers are
denominated in United States dollars, some of the Company's transactions with
Canadian customers are denominated in Canadian dollars. The Company does not
engage in currency hedging activities.

SEASONALITY

         Historically, seismic equipment leasing has been somewhat susceptible
to weather patterns in certain geographic regions. There is some seasonality to
the Company's expected lease revenues from customers operating in Canada, where
a significant percentage of seismic survey activity occurs in the winter
months, from October through March. During the months in which the weather is
warmer, certain areas are not accessible to trucks, earth vibrators and other
equipment because of the unstable terrain. This seasonal leasing activity by
the Company's Canadian customers has historically resulted in increased lease
revenues in the Company's first and fourth fiscal quarters. However, due to the
significant decrease in world oil prices in 1998, demand for the Company's
services both in Canada and worldwide declined dramatically in the fourth
quarter of fiscal 1999 and has remained at historically low levels throughout
the second quarter of fiscal 2000.


RESULTS OF OPERATIONS

For the three months ended July 31, 1999 and 1998

         For the quarter ended July 31, 1999, total revenues decreased 92% to
$625,000 from $7.7 million in the corresponding period of the prior year. This
decline reflects a significant decrease in all categories of revenues compared
to total revenues for the same period of the prior year, as a result of
decreased capital expenditure budgets throughout the oil and gas industry,
coupled with a decrease in customers exercising the purchase option of
lease/purchase contracts. During the quarter, the Company recorded no revenues
from the exercise of the purchase option of lease/purchase contracts as
compared to $1.4 million recorded in the prior year's second quarter.

                                       7
<PAGE>   8

         Equipment sales and leasing revenues under lease/purchase agreements
during the quarter ended July 31, 1999 were not significant due to the severe
downturn in business activity. During the quarter ended July 31, 1999, other
equipment sales generated a gross margin of 99% as compared to 22% for the same
period in 1998. Gross margins on equipment sales may vary significantly between
periods due to the mix of new versus older equipment being sold.

         General and administrative expenses decreased $259,000 from the
corresponding prior year period primarily due to a decrease in accounting and
legal expenses, advertising, convention, travel and compensation expenses
partially offset by an increase in insurance and investor relations expenses.

         Depreciation expense for the quarter ended July 31, 1999 decreased
$503,000, or 18%, to $2.3 million from $2.9 million for the same period last
year. The decrease is primarily the result of the lease pool asset impairment
recorded in fiscal 1999.

         The Company recorded a net loss for the quarter ended July 31, 1999 in
the amount of $2,092,000 compared to net income of $852,000 for the same period
of the previous year.

For the six months ended July 31, 1999 and 1998

         For the six months ended July 31, 1999, total revenues decreased 90%
to $2.3 million from $23.1 million in the corresponding period of the prior
year. This decline reflects a significant decrease in all categories of
revenues compared to total revenues for the same period of the prior year, as a
result of decreased capital expenditure budgets throughout the oil and gas
industry, coupled with a decrease in customers exercising the purchase option
of lease/purchase contracts.

         Equipment sales and leasing revenues under lease/purchase agreements
during the six months ended July 31, 1999 generated an aggregate gross margin
of 95% compared to 18% for the corresponding period of the prior year. This
increase in gross margin is because the Company had no equipment sales under
lease/purchase agreements during the six months ended July 31, 1999 as compared
to the same period of the prior year. The Company accounts for the lease
portion and the sales portion of lease/purchase agreements separately, but
believes the two aspects of the transaction must be considered together to
reflect its economic substance. Under the Company's lease/purchase
transactions, the lease generates a revenue stream before the customer
exercises its purchase option, a percentage of which the customer may use to
reduce the purchase price. Because the lease revenues that offset the purchase
price are not included in equipment sales under lease/purchase agreements,
management assesses the profitability of these transactions by combining lease
and sales revenues.

         During the six months ended July 31, 1999, other equipment sales
generated a gross margin of 68% as compared to 35% for the same period in 1998.
Gross margins on equipment sales may vary significantly between periods due to
the mix of new versus older equipment being sold.

         General and administrative expenses decreased $357,000 from the
corresponding prior year period primarily due to a decrease in advertising,
convention, accounting and legal, travel and consulting expenses, partially
offset by an increase in insurance and investor relations expenses as well as
expense related to a Texas sales tax audit.

         Depreciation expense for the six months ended July 31, 1999 decreased
$964,000, or 17%, to $4.6 million from $5.6 million for the same period last
year. The decrease is primarily the result of the $15.1 million lease pool
asset impairment charge recorded in fiscal 1999. The Company's seismic
equipment lease pool decreased $1.8 million, on a cost basis, to $63.3 million
at July 31, 1999, from $65.1 million at July 31, 1998.

         The Company recorded a net loss for the six months ended July 31, 1999
in the amount of $3,334,000 compared to net income of $2,532,000 for the same
period of the previous year.


                                       8
<PAGE>   9


LIQUIDITY AND CAPITAL RESOURCES

         As of July 31, 1999, the Company had net working capital of
approximately $27.7 million as compared to net working capital of $27.1 million
at January 31, 1999. Historically, the Company's principal liquidity
requirements and uses of cash have been for capital expenditures and working
capital and our principal sources of cash have been cash flows from operations
and issuances of equity securities. Net cash provided by operating activities
for the six months ended July 31, 1999 was $2.5 million, as compared to net
cash used in operating activities of $3.0 million for the six months ended July
31, 1998.

         At July 31, 1999, the Company had trade accounts receivable of $4.2
million that were more than 90 days past due. As of July 31, 1999, the
Company's allowance for doubtful accounts was approximately $1.0 million, which
management believes is sufficient to cover any losses in its trade accounts
receivable, including any losses in its international customers' trade
accounts.

         The Company has a working capital revolving line of credit of up to
$15 million from Bank One (the "Revolver"). Interest on advances under the
Revolver are payable monthly at a variable rate which is based upon either, at
the Company's option, LIBOR or Bank One's base lending rate. The LIBOR rate, if
elected, ranges between LIBOR plus 1.75% and LIBOR plus 2.75% depending upon
the debt service coverage ratio the Company maintains. Similarly, the Bank One
base lending rate, if elected, ranges between the base rate minus 0.25% and the
base rate plus 0.25%, again depending upon the Company's debt service coverage
ratio. Additionally, the Company pays Bank One each fiscal quarter a fee equal
to 0.25% of the average daily unused portion of the Revolver calculated for the
previous quarter. Advances are limited to the total of 80% of eligible accounts
receivable and 50% of all eligible lease pool equipment. The Revolver contains
restrictions, among others, on the ability of the Company to incur indebtedness
and pay dividends and requires the Company to meet certain financial covenants,
including a minimum tangible net worth, a debt service coverage ratio, aging of
accounts receivable and net income. The Revolver will expire on December 8,
1999, at which time any unpaid principal amount will be due and payable in
full. As of July 31, 1999, there were no amounts outstanding under the
Revolver.

         As of July 31, 1999, the Company was in violation of a certain
covenant of the Revolver, although there were no amounts outstanding under the
Revolver. The Company obtained a waiver of the covenant from Bank One; however,
Bank One will not make any advances under the Revolver until the Company: (i)
is in compliance with the relevant covenant; and (ii) grants Bank One a first
priority secured interest in substantially all of the Company's assets.

         Capital expenditures for the six months ended July 31, 1999 totaled
approximately $2.0 million compared to capital expenditures of $26.2 million
for the corresponding period in the prior year. During the quarter ended July
31, 1999, the Company secured a two-year lease contract, commencing in
September 1999, with one of its large customers. The terms of the lease
contract requires that the Company expend up to $4 million on lease pool
equipment purchases during the third quarter of fiscal 2000. Management
believes that cash on hand and cash provided by future operations will be
sufficient to fund its anticipated capital and liquidity needs over the next
twelve months.


YEAR 2000 COMPLIANCE

         The Year 2000 problem is the result of computer programs being written
using two digits rather than four to define the applicable year. Any programs
that have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a major system failure or
miscalculations. As a result, many companies may be forced to upgrade or
completely replace existing hardware and software in order to be Year 2000
compliant.

State of Readiness

         During 1998, the Company began evaluating its internal operating
systems and software ("IT") and embedded manufacturing control technology
("Non-IT") in the equipment that it leases and sells. In its evaluation, vendors
of the software and hardware the Company uses in its business have represented
that such software and


                                       9
<PAGE>   10
hardware are either Year 2000 compliant or compatible. To assess risk
associated with possible non-compliance of customers' and equipment suppliers'
failure to be Year 2000 compliant, the Company prepared and mailed Year 2000
compliance questionnaires to its significant customers and equipment suppliers.
Completed questionnaires the Company has received to date indicate there are no
known Year 2000 compliance issues that would negatively affect the Company's
operations and business. However, the Company has not yet completed its
assessment with respect to its equipment suppliers.

Costs to Address Year 2000 Issues

         The Company has utilized internal resources in assessing the Year 2000
issue and has not employed outside consultants to assist. There have been no
material expenditures related to identifying, assessing or remediating Year
2000 compliance issues, nor does the Company expect to incur any material
expenditures related to this issue. As of the date of this report, the Company
has identified lease pool equipment requiring approximately $10,000 of
expenditures to become Year 2000 compatible.

Risks

         As the Company has not completed its Non-IT assessment with respect to
its equipment suppliers, it is unable to estimate the impact of any Year 2000
compliance issues that may arise if any equipment supplier were not Year 2000
compliant. Though it has a number of suppliers, two suppliers provide the vast
majority of the Company's seismic equipment. In addition, the Company derives a
large percentage of its revenues from a relatively small number of customers.
Under a "most likely worst-case Year 2000 scenario," if one of the Company's
significant suppliers or customers experienced a material business interruption
or, if the Company lost a significant supplier or customer due to Year 2000
non-compliance issues, it could have a material adverse impact on the Company's
operations, results of operations or financial position.

Contingency Plan

         The Company has not developed a contingency plan related to Year 2000
compliance since no significant issues have been specifically identified. Once
the Company has completed its assessment with respect to its customers and
equipment suppliers, if necessary, the Company will develop a contingency plan
to address any significant non-compliance issues identified. The Company
expects to complete such assessment by October 31, 1999.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company operates internationally, giving rise to exposure to
market risks from changes in foreign exchange rates to the extent that
transactions are not denominated in U.S. dollars. The Company typically
denominates the majority of its lease and sales contracts in U.S. dollars to
mitigate the exposure to fluctuations in foreign currencies.



FORWARD-LOOKING STATEMENTS AND RISK FACTORS

         Certain information contained in this Quarterly Report on Form 10-Q
(including statements contained in Part I, Item 2. "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and in Part II, Item
1. "Legal Proceedings"), as well as other written and oral statements made or
incorporated by reference from time by the Company and its representatives in
other reports, filings with the Securities and Exchange Commission, press
releases, conferences, or otherwise, may be deemed to be forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. This information includes, without limitation, statements concerning the
Company's future financial position and results of operations; planned capital
expenditures; business strategy and other plans for future operations; the
future mix of revenues and business; commitments and contingent liabilities;
Year 2000 issues; and future demand and industry conditions. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. When used in this report, the words "anticipate,"
"believe," "estimate," "expect," "may," and similar expressions, as they relate
to the Company and its management, identify forward-


                                       10
<PAGE>   11

looking statements. The actual results of future events described in such
forward-looking statements could differ materially from the results described in
the forward-looking statements due to the risks and uncertainties set forth
below and within this Quarterly Report on Form 10-Q generally.

UNCERTAINTY OF OIL AND GAS INDUSTRY CONDITIONS AND DEMAND FOR SERVICES

         Demand for the Company's services depends on the level of spending by
oil and gas companies for exploration, production and development activities,
as well as on the number of crews conducting land and transition zone seismic
data acquisition worldwide, and especially in North America. The continuing
downturn in the energy services sector has resulted in a sharp decline in
demand for the Company's services. Recent increases in the price of oil have
not yet countered decreased demand. Any future fluctuations in the price of oil
and gas in response to relatively minor changes in the supply and demand for
oil and gas will continue to have a major effect on exploration, production and
development activities and thus, on the demand for the Company's services.

CREDIT RISK FROM CUSTOMER CONCENTRATION AND RISK FROM INDUSTRY CONSOLIDATION

         The Company typically leases and sells significant amounts of seismic
equipment to a relatively small number of customers, the composition of which
changes from year to year as leases are initiated and concluded and as
customers' equipment needs vary. Therefore, at any one time, a large portion of
the Company's revenues may be derived from a limited number of customers. The
Company's ability to maintain profitability includes risks associated with the
creditworthiness and profitability of those customers. In the fiscal years
ended January 31, 1997, 1998 and 1999, the single largest customer accounted
for approximately 15%, 20% and 36%, respectively, of the Company's total
revenues. In addition, because the Company's customer base is relatively small,
the trend toward consolidation in the oil and gas industry could adversely
affect the Company's business and financial condition if significant customers
are acquired by other companies.

DEPENDENCE ON ADDITIONAL LEASE CONTRACTS

         The Company's seismic equipment leases typically have a term of three
to nine months and provide gross revenues that recover only a portion of the
Company's capital investment. The Company's ability to generate lease revenues
and profits is dependent on obtaining additional lease contracts after the
termination of an original lease. However, lessees are under no obligation to,
and frequently do not, continue to lease seismic equipment after the expiration
of a lease. Although the Company has been successful in obtaining additional
lease contracts with other lessees after the termination of the original
leases, there can be no assurance that it will continue to do so. The Company's
failure to obtain additional or extended leases beyond the initial term would
have a material adverse effect on its operations and financial condition.

DEPENDENCE ON KEY PERSONNEL

         The Company's success is dependent on, among other things, the
services of certain key personnel, including specifically Billy F. Mitcham,
Jr., Chairman of the Board, President and Chief Executive Officer of the
Company. Mr. Mitcham's employment agreement has an initial term through January
15, 2002, and is automatically extended on a year-to-year basis until
terminated by either party giving 30 days notice prior to the end of the
current term (subject to earlier termination on certain stated events). The
agreement prohibits Mr. Mitcham from engaging in any business activities that
are competitive with the Company's business and from diverting any of the
Company's customers to a competitor for two years after the termination of his
employment. The Company has obtained a $1.0 million key employee life insurance
policy payable to the Company in the event of Mr. Mitcham's death. The loss of
the services of Mr. Mitcham could have a material adverse effect on the
Company. In particular, the Exclusive Equipment Lease Agreement with Sercel is
terminable at such time as he is no longer employed by the Company in a senior
management capacity.

RISKS RELATED TO TECHNOLOGICAL OBSOLESCENCE

         The Company has a substantial capital investment in seismic data
acquisition equipment. The development by manufacturers of seismic equipment of
newer technology systems or component parts that have significant


                                       11
<PAGE>   12

competitive advantages over seismic systems and component parts now in use could
have an adverse effect on the Company's ability to profitably lease and sell its
existing seismic equipment.

         During the fiscal year ended January 31, 1999, the Company recorded a
pretax asset impairment charge of $15.1 million. Included in this charge is a
$900,000 lower of cost or market adjustment related to certain seismic
equipment assets classified as inventory. The non-cash asset impairment charge
was recorded in accordance with SFAS No. 121, which requires that long-lived
assets and certain identifiable intangibles held and used by the Company be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The severity as
well as the duration of the current oil and gas industry downturn is such an
event. The Company's review of its long-lived assets indicated that the
carrying value of certain of the Company's seismic equipment lease pool and
inventory assets was more than the estimated undiscounted future net cash
flows. As such, under SFAS No. 121, the Company wrote down those assets to
their estimated fair market value based on discounted cash flows using an
effective rate of 8.0%. Undiscounted future net cash flows were calculated
based on individual types of seismic equipment using projected future
utilization and lease rates over the estimated remaining useful lives of the
assets. The Company's seismic equipment assets have been historically
depreciated over 3-10 years. The impairment was recorded based on certain
estimates and projections as stipulated in SFAS No. 121. There can be no
assurance that the Company will not record asset impairment charges under SFAS
No. 121 in the future.

VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS

         The first and fourth quarters of the Company's fiscal year have
historically accounted for a greater portion of the Company's revenues than do
the second and third quarters of its fiscal year. This seasonality in revenues
is primarily due to the increased seismic survey activity in Canada from
October through March, which affects the Company due to its significant
Canadian operations. This seasonal pattern may cause the Company's results of
operations to vary significantly from quarter to quarter. However, due to the
significant decrease in world oil prices in 1998, demand for the Company's
services both in Canada and worldwide declined dramatically in the fourth
quarter of fiscal 1999 and has remained at historically low levels throughout
the second quarter of fiscal 2000. Accordingly, period-to-period comparisons
are not necessarily meaningful and should not be relied on as indicative of
future results.

DEPENDENCE ON KEY SUPPLIERS

         The Company has and continues to rely on purchase agreements with the
Sercel subsidiaries of Compagnie Generale de Geophysique and Pelton Company,
Inc. To a lesser extent, the Company also relies on its suppliers for lease
referrals. The termination of these agreements for any reason could materially
adversely affect the Company's business. While the Company does not anticipate
any difficulty in obtaining seismic equipment from its suppliers based on past
experience, any such occurrence could have a material adverse effect on the
Company's business, financial condition and results of operations.

COMPETITION

         Competition in the leasing of seismic equipment is fragmented, and the
Company is aware of several companies that engage in seismic equipment leasing.
The Company believes that its competitors, in general, do not have as extensive
a seismic equipment lease pool as does the Company. The Company also believes
that its competitors do not have similar exclusive lease referral agreements
with suppliers. Competition exists to a lesser extent from seismic data
acquisition contractors that may lease equipment that is temporarily idle.

         The Company has several competitors engaged in seismic equipment
leasing and sales, including seismic equipment manufacturers, companies
providing seismic surveys and oil and gas exploration companies that use
seismic equipment, many of which have substantially greater financial resources
than the Company. There are also several smaller competitors who, in the
aggregate, generate significant revenue from the sale of seismic survey
equipment.



                                       12
<PAGE>   13

RISK FROM VOLATILE STOCK PRICES AND NO PAYMENT OF DIVIDENDS

         Due to current energy industry conditions, energy and energy service
company stock prices, including the Company's stock price, have been extremely
volatile. Such stock price volatility could adversely affect the Company's
business operations by, among other things, impeding its ability to attract and
retain qualified personnel and to obtain additional financing if such financing
is ever needed. The Company has historically not paid dividends on its common
stock and does not anticipate paying dividends in the foreseeable future. In
addition, the Company's bank loan agreement restricts the payment of dividends.

POSSIBLE ADVERSE EFFECT OF ANTI-TAKEOVER PROVISIONS; POTENTIAL ISSUANCE OF
PREFERRED STOCK

         Certain provisions of the Company's Articles of Incorporation and the
Texas Business Corporation Act may tend to delay, defer or prevent a potential
unsolicited offer or takeover attempt that is not approved by the Board of
Directors but that the Company's shareholders might consider to be in their
best interest, including an attempt that might result in shareholders receiving
a premium over the market price for their shares. Because the Board of
Directors is authorized to issue preferred stock with such preferences and
rights as it determines, it may afford the holders of any series of preferred
stock preferences, rights or voting powers superior to those of the holders of
common stock. Although the Company has no shares of preferred stock outstanding
and no present intention to issue any shares of its preferred stock, there can
be no assurance that the Company will not do so in the future.

LIMITATION ON DIRECTORS' LIABILITY

         The Company's Articles of Incorporation provide, as permitted by
governing Texas law, that a director of the Company shall not be personally
liable to the Company or its shareholders for monetary damages for breach of
fiduciary duty as a director, with certain exceptions. These provisions may
discourage shareholders from bringing suit against a director for breach of
fiduciary duty and may reduce the likelihood of derivative litigation brought
by shareholders on behalf of the Company against a director.


                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         On or about April 23, 1998, several class action lawsuits were filed
against the Company and its chief executive officer and then chief financial
officer in the U.S. District Court for the Southern District of Texas, Houston
Division. The first-filed complaint, styled Stanley Moskowitz V. Mitcham
Industries, Inc., Billy F. Mitcham, Jr. and Roberto Rios, alleged violations of
Section 10(b), Rule 10b-5 and 20(a) of the Securities Exchange Act of 1934 and
Sections 11 and 12(a)(2) of the Securities Act of 1933. On or about September
21, 1998, the complaints were consolidated into one action. On November 4,
1998, the plaintiffs filed a consolidated amended complaint ("CAC"), which
seeks class action status on behalf of those who purchased the Company's common
stock from June 4, 1997 through March 26, 1998, and damages in an unspecified
amount plus costs and attorney's fees. The CAC alleges that the Company made
materially false and misleading statements and omissions in public filings and
announcements concerning its business and its allowance for doubtful accounts.
On or about January 15, 1999, the Company filed a motion to dismiss the CAC.
The motion is now fully briefed and the Company is awaiting a ruling by the
Court.


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

    (a) The Company held its Annual Meeting of Shareholders on July 23, 1999.
        Shareholders of record at the close of business on May 24, 1999 were
        entitled to vote.

    (b) Shareholders elected each of the six directors nominated for the board
        of directors:


                                       13
<PAGE>   14

<TABLE>
<CAPTION>

            NAME OF NOMINEE                 FOR             AGAINST          ABSTAINING         WITHHELD
<S>                                      <C>                <C>              <C>                <C>
        Billy F. Mitcham, Jr.            9,139,228             -                  -                93,561
        R. Dean Lewis                    9,130,328             -                  -               102,461
        Paul C. Mitcham                  9,125,728             -                  -               107,061
        John F. Schwalbe                 9,130,328             -                  -               102,461
        William J. Sheppard              9,133,228             -                  -                99,561
</TABLE>

    (c) The Shareholders ratified the appointment of Hein + Associates LLP as
        the Company's independent certified public accountants.

<TABLE>
<CAPTION>

                       FOR                  AGAINST                 ABSTAINING               NON-VOTE

                     <S>                    <C>                     <C>                      <C>
                     9,165,924              47,485                   19,380                     -
</TABLE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

    (a) REPORTS ON FORM 8-K

        On May 7, 1999, the Company filed a Form 8-K reporting the termination
        of its Preferred Supplier Agreement with Input/Output, Inc., effective
        April 26, 1999.

    (b) EXHIBITS

        11   -  Statement Re Computation of Earnings Per Share
        27   -  Financial Data Schedule



                                       14
<PAGE>   15




                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        MITCHAM INDUSTRIES, INC.




Date:  September 3, 1999                /s/ P. BLAKE DUPUIS
                                        ----------------------------------------
                                        P. BLAKE DUPUIS,
                                        CHIEF FINANCIAL OFFICER
                                        (AUTHORIZED OFFICER AND PRINCIPAL
                                        ACCOUNTING OFFICER)




                                       15
<PAGE>   16

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>

EXHIBIT
   NO.                                  DESCRIPTION
-------                                 -----------
<S>              <C>
   11     -      Statement Re Computation of Earnings Per Share

   27     -      Financial Data Schedule
</TABLE>