<PAGE>   1




                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549

                         --------------------------
                                 FORM 10-KSB
(MARK ONE)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                               (FEE REQUIRED)
                 FOR THE FISCAL YEAR ENDED JANUARY 31, 1997
                                     OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                   OF THE SECURITIES EXCHANGE ACT OF 1934
                              (NO FEE REQUIRED)
                         COMMISSION FILE NO. 1-13490

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

                            MITCHAM INDUSTRIES, INC.
               (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

                TEXAS                                       76-0210849
    (State of other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)
      44000 HIGHWAY 75 SOUTH
             HUNTSVILLE, TEXAS                                 77340
   (Address of principal executive offices)                  (Zip Code)

                   Issuer's telephone number: 409-291-2277

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

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

                        COMMON STOCK, $.01 PAR VALUE
                              (TITLE OF CLASS)


         SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                        COMMON STOCK, $.01 PAR VALUE
                              (TITLE OF CLASS)

                                      
         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 
                                                                       ---   ---
         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definite proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. 
                                             ----

         Issuer's revenues for its most recent fiscal year were $14,690,000.

         As of April 22, 1997, there were outstanding 7,358,260 shares of the
registrant's common stock, par value $.01, which is the only class of common or
voting stock of the registrant.  As of that date, the aggregate market value of
the shares of common stock or voting stock held by non-affiliates of the
registrant (based on the closing price for the common stock on the NASDAQ
National Market System on April 22, 1997) was approximately $45,589,431.

                      DOCUMENTS INCORPORATED BY REFERENCE

         The information called for by Part III is incorporated by reference
from the Proxy Statement for the 1997 Annual Meeting of Shareholders of the
Company.

         Transitional Small Business Disclosure Format (check one): Yes    No X
                                                                       ---   ---
<PAGE>   2
                            MITCHAM INDUSTRIES, INC.

                          ANNUAL REPORT ON FORM 10-KSB

                               TABLE OF CONTENTS



                                     PART I

<TABLE>
<S>     <C>                                                                                                           <C>
Item 1.          Description of Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1

Item 2.          Description of Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             9

Item 3.          Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             9

Item 4.          Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . .             9


                                                         PART II

Item 5.          Market for the Registrant's Common Equity and Related
                 Stockholder Matters  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          10

Item 6.          Management's Discussion and Analysis or Plan
                 of Operation   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          11

Item 7.          Financial Statements   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          14

Item 8.          Changes in and Disagreements with Accountants on Accounting
                 and Financial Disclosure   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          14


                                                         PART III

Item 9.          Directors, Executive Officers, Promoters and Control Persons;
                 Compliance with Section 16(a) of the Exchange Act  . . . . . . . . . . . . . . . . . . . . . .        14

Item 10.         Executive Compensation   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        14

Item 11.         Security Ownership of Certain Beneficial Owners and Management   . . . . . . . . . . . . . . .        14

Item 12.         Certain Relationships and Related Transactions   . . . . . . . . . . . . . . . . . . . . . . .        14

Item 13.         Exhibits and Reports on Form 8-K   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        15
</TABLE>
<PAGE>   3

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

BACKGROUND

         Mitcham Industries Inc. leases and sells seismic data acquisition
equipment to companies engaged in the oil and gas industry.  The Company
believes it is the leading independent lessor of land-based three-dimensional
("3-D") seismic data acquisition equipment, including channel boxes and other
peripheral equipment.  Seismic data acquisition equipment is used in the
identification and graphic definition of subsurface geologic structures and
formation that potentially contain oil and gas.  Channel boxes are remote data
acquisition units that collect and transmit seismic data.  The Company has
exclusive lease referral and supply agreements with the two principal
manufacturers of land-based 3-D seismic equipment, Input/Output, Inc. ("I/O")
and Societe E'tudes Recherches et Construction Electroniques, S.A.  ("SERCEL").
From January 1, 1994 through January 31, 1997, the Company's lease fleet of 3-D
channel boxes increased from 85 to approximately 2,000 (or from 510 to
approximately 12,000 channels).

         Demand for channel boxes has increased significantly in recent years
primarily due to the increasing use of 3-D seismic surveys.  Current 3-D
seismic techniques use a greater number of channels and channel boxes than 2-D
surveys, thereby providing higher resolution data for better representation of
the earth's subsurface.  Additionally, oil and gas companies are contracting
for 3-D surveys over larger geographical areas and often specify an increase in
the concentration of channel boxes as a means of increasing data resolution.
Consequently, seismic survey companies frequently use more than twice the
number of channels for surveys than they typically own.  The Company believes
that many companies providing land-based seismic surveys will meet this
additional requirement by leasing channel boxes and supporting peripheral
equipment on a short-term basis rather than making the substantial capital
expenditures necessary to purchase such equipment.

         The Company leases its seismic equipment primarily to seismic data
acquisition companies and major oil and gas exploration companies conducting
land-based seismic data acquisition surveys.  The leases generally have terms
between three and nine months and are renewable thereafter on a month-to-month
basis.  Rates for 3-D channel boxes range from between 6% to 8% per month of
the equipment's purchase price.  For the fiscal year ended January 31, 1997,
the Company maintained a utilization rate of its 3-D channel boxes in excess of
80%.

         The Company has entered into supply and exclusive referral agreements
with each of I/O and SERCEL.  The Company believes that most of the land-based
3-D seismic systems and equipment currently in use and being put into use are
I/O and SERCEL systems.  The agreement with I/O, originally entered into in
February 1994, has been the source of a majority of the Company's lease pool
equipment to date.  Pursuant to this agreement, I/O must refer to the Company,
on an exclusive basis, any requests it receives to lease its 3-D channel boxes
and certain peripheral equipment in North and South America.  A condition of
the agreement with I/O is that the Company must purchase, at favorable rates,
$13.3 million of equipment from I/O by May 31, 2000.  Through January 31, 1997,
the Company has met $4.9 million of this requirement.

         In September 1996, the Company entered into two agreements with
SERCEL.  One agreement provides that until December 31, 1999, the Company will
be SERCEL's exclusive worldwide leasing agent and  that  SERCEL  must  refer
to the Company all requests it receives to lease its 3-D data acquisition





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<PAGE>   4


equipment and peripheral equipment.  This agreement also provides that the
Company must purchase, at favorable rates, up to $10.2 million of 3-D data
acquisition equipment and other field equipment from SERCEL.  Through January
31, 1997, the Company has met $5.4 million of this requirement.  The second
agreement provides that until September 19, 1999, subject to earlier
termination after September 20, 1997, the Company will be SERCEL's exclusive
sales agent in Canada.

         The Company's business strategy is to meet the expanding needs of
users of 3-D seismic equipment through its leasing and support services.  In
order to accomplish this, the Company has identified the following major
objectives:

         o  Enlarge and diversify its lease pool of seismic equipment.  To meet
            customer demand, the Company will continue to increase its lease
            pool of channel boxes and peripheral seismic equipment, such as
            seismic vibrators, vibrator control electronics and geophones.  The
            Company believes that the availability of a larger and more
            complete pool of 3-D seismic equipment for lease will encourage
            seismic survey companies to increasingly lease, rather than
            purchase, such equipment.  The Company is also evaluating the
            feasibility of a lease pool of marine seismic equipment.

         o  Expand its international presence.  The Company receives referrals
            from SERCEL on a worldwide basis and is its exclusive sales agent
            in Canada, where the Company has an office in Calgary, Alberta.
            The Company believes that its alliances with I/O and SERCEL will
            help the Company to further penetrate, on a cost- effective basis,
            international markets, where such manufacturers are well-recognized
            and have well-developed business relationships.  The Company is
            also evaluating the feasibility of opening additional foreign
            offices.

         o  Develop and enhance alliances with major seismic equipment
            manufacturers.  The Company uses alliances with manufacturers such
            as I/O and SERCEL to acquire and build its lease pool of equipment
            and increase customer referrals.  The Company continues to seek to
            expand the scope of these alliances, as well as develop similar
            arrangements with other equipment manufacturers.

SEISMIC TECHNOLOGY

         Oil and gas exploration companies utilize seismic data generated from
the use of digital seismic systems and peripheral equipment in determining
optimal locations for drilling oil and gas wells, in the development of oil and
gas reserves, and in reservoir management for the production of oil and gas.  A
complete digital seismic data acquisition system generally consists of (i) a
central electronics unit that records and stores digital data ("CEU"), (ii)
channel boxes, (iii) geophones, or seismic sensors and (iv) other peripheral,
or accessory equipment.  Other peripheral equipment includes earth vibrators
that create the necessary acoustic wave being analyzed and geophysical cables
that transmit digital seismic data from the channel boxes to the CEU.

         In seismic data acquisition, an acoustic wave is discharged at or
below the earth's surface through the discharge of compressed air, the
detonation of small explosive charges or the use of vibrators.  As the acoustic
wave travels through the earth, portions are reflected by variations in the
underlying rock layers and the reflected energy is captured by the geophones,
which are situated at intervals along paths from the point of acoustical
impulse.  The resulting signals are then transmitted to the channel boxes,
which convert the reflected energy wave from analog to digital data and
transmit this data via cable to the CEU.  The





                                       2
<PAGE>   5


CEU stores the seismic data on magnetic tape for processing.  The digital data
is then input into a specialized seismic processing system that uses
sophisticated computer software programs to enhance the recorded signal and
produce an image of the subsurface strata.  By interpreting seismic data, oil
and gas exploration companies create detailed maps of exploration prospects and
oil and gas reservoirs.

         In the past, the 2-D seismic survey was the standard data acquisition
technique used to describe geologic formations over a broad area.  2-D seismic
data can be visualized as a single vertical plane of subsurface information,
and 2-D seismic surveys typically require 120 recording channels.  Data
gathered from a 3-D seismic survey is best visualized as a cube of information
that can be sliced into numerous planes, providing different views of a
geologic structure with much higher resolution than is available with
traditional 2-D seismic survey techniques.  3-D seismic surveys require much
larger data acquisition systems with a minimum of 480 recording channels.
Because of the greater number of channels and flexible configuration, 3-D
seismic data provides more extensive and detailed information regarding the
subsurface geology than does 2-D data.  As a result, 3-D data allows the
geophysicists interpreting the data to more closely select the optimal location
of a prospective drillsite or oil and gas reservoir.

         In the exploration and development process, oil and gas companies
establish requirements for seismic data acquisition programs based on their
technical objectives.  Because of the expense associated with drilling oil and
gas wells, decisions whether or where to drill are critical to the overall
process.  Because 3-D seismic data increases drilling success rates and reduces
costs, the Company believes that the major oil and gas exploration companies
are increasingly requiring 3-D seismic surveys in their exploration activities.
As a result of the increasing requirements for this higher resolution data,
which in turn requires additional channels to collect and transmit the data,
the additional required channel boxes are in great demand.

         While most working 3-D systems currently use from 600 to 800 channels,
management believes that the typical request for proposal from oil and gas
exploration companies now specifies a minimum of 1,000 to 1,200 channels.  The
Company believes that many seismic service companies meet this requirement for
additional equipment by leasing, rather than purchasing, the additional
required channel boxes.

BUSINESS AND OPERATIONS

         SEISMIC EQUIPMENT LEASING.  The Company typically purchases new and
used seismic equipment for lease to its customers.  After the termination of
the initial lease, the Company enters into additional short-term leases with
its customers engaged in seismic data acquisition.  The Company's  equipment
leasing services  generally include  the lease of the various components of
seismic data acquisition systems to meet a customer's job specifications.  Such
specifications may vary as to the number of channel boxes, geophones,
geophysical cables and other peripheral equipment items.

         The Company is pursuing a strategy of growth in its seismic equipment
leasing business, as potential for growth in new and used seismic equipment
sales is not believed to be significant.  The Company currently has in its
lease fleet a total of approximately 2,000 3-D channel boxes, or a total of
approximately 12,000 channels (each channel being capable of electronically
converting seismic data from analog to digital and transmitting the digital
data), and various peripheral equipment such as geophones, earth vibrators and
geophysical cables.  The Company's utilization rate on its 3-D channel boxes in
fiscal 1997 was in excess of 80%.





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<PAGE>   6



         Since the Company's customers lease its seismic equipment to meet
shortages of a varying number of channels for specific surveys, the Company
does not lease all of the channel boxes and other peripheral equipment required
for seismic surveys.  Rather, the Company is in the business of satisfying
shortages of such equipment on a short-term basis.  The Company's equipment
leases generally have terms of three to nine months and are typically renewable
on a month-to-month basis.  The Company offers maintenance of its leased
seismic equipment during the lease term for malfunctions due to failure of
material and parts and will provide replacement equipment as necessary.  In
addition, the Company provides telephone support to answer questions of its
lease customers.

         The Company's monthly lease rates for its I/O 3-D channel boxes have
ranged from 6% to 8% of the purchase cost.  Lease payments are due and payable
on the first day of each month of the lease term.  The Company typically
requires its lessees to provide a deposit in the amount of one month's lease
payment as security for the cost of any repairs in excess of normal wear and
tear that may be required after the termination of the lease term.  The lessee
must also obtain and keep in force a minimum of $1.0 million casualty and
general liability insurance on the leased equipment during the term of the
lease, and, before equipment is delivered, provide certification to the Company
that the Company has been named an additional insured and loss payee on such
policy.  All taxes (other than U.S. federal income taxes) and assessments are
the contractual obligation of the lessee.  To the extent foreign taxes are not
paid by the lessor, the relevant foreign taxing authority might seek to collect
such taxes from the Company.  To date, no such collection action has been taken
against the Company.

         A majority of the Company's leasing revenues have historically come
from North American operations.  Within North America, about one-half of the
Company's total fiscal 1997 leasing revenues are attributable to Canadian
operations, with the remainder related to United States business.  Management
believes that the United States and Canada will continue to be the focal points
of the Company's seismic equipment leasing operations for the foreseeable
future.

         Historically, seismic equipment leasing has been somewhat susceptible
to weather patterns in certain geographic regions.  For example, in Canada, a
significant percentage of the seismic survey activity usually occurs in the
winter season, from October through March.  During the months in which the
weather is warmer, certain areas are not accessible to trucks and other
equipment because of the muddy terrain.  In the United States, most of the
seismic survey work is not usually affected by weather.  As a result of weather
conditions, the Company attempts to manage its lease pool of equipment to meet
seasonal demands.  Equipment leased in Canada during the winter months may be
moved to the United States in the warmer months.

         SEISMIC EQUIPMENT SALES.  The Company's equipment sales business
serves a diverse base of industry, governmental, university and research
customers. The Company typically buys equipment for resale:  (i) at disposal
prices, speculatively; and (ii) in response to specific customer orders.  On
occasion, the Company will also hold equipment of third parties and sell such
equipment on consignment.

         In large part, the Company's international operations (excluding
Canada) have been restricted to the sale of used equipment.  Over the past
three years, its primary international markets have been Europe, Australia and
China.  In the near future, the Company believes that these markets will
continue to comprise a majority of the Company's international sales.





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<PAGE>   7


I/O AGREEMENT

         Under the I/O Agreement, the Company is the exclusive third-party
recipient of requests from I/O customers and other to lease channel boxes and
certain peripheral equipment in North and South America through May 31, 2000
and may acquire 3-D channel boxes from I/O at favorable prices based upon the
volume of channel boxes purchased.  Subject to certain exceptions, I/O may not
recommend or suggest any competitor of the Company as a potential lessor of I/O
3-D channel boxes in North and South America.  As a manufacturer of complete
data acquisition systems that are compatible only with I/O channel boxes, I/O
typically receives inquiries to lease I/O 3-D channel boxes from customers
desiring to expand the capacities of their systems on a short-term basis.

         A condition of the I/O Agreement is that the Company must purchase an
aggregate of $13.25 million of I/O 3-D channel boxes on or before May 31, 2000
in the following stated installments: (i) by  November 30, 1996, at least $3.0
million, (ii) from January 1, 1997 through May 31, 1997, at least $1.25 million
and (iii) in each of the years from June 1, 1997 through May 31, 1998, June 1
through May 31, 1999, and June 1, 1999 through May 31, 2000, at least $3.0
million.  As of January 31, 1997, the Company had purchased I/O equipment
totalling $4.9 million under the I/O Agreement, thereby exceeding its purchase
requirements through May 1997.

         Under the I/O Agreement, I/O must inform the Company by telephone,
facsimile or letter of the identity of the third party prospective lessee and
the terms, if any, that have been discussed regarding a proposed lease.  The
Company may then contact the prospective lessee and negotiate the terms of a
proposed lease of channel boxes.  If the Company (i) is unable to lease the 3-D
channel boxes due to a shortage in its lease fleet, (ii) cannot agree with a
prospective lessee on the terms of a proposed lease within 72 hours of the
lessee's introduction to the Company or (iii) otherwise chooses not to lease to
a prospective lessee, then I/O may lease channel boxes to the prospective
lessee.  I/O has indicated that the 72-hour time period referred to may be
extended as long as the Company and a prospective lessee are engaged in good
faith negotiations and neither of them has terminated such negotiations.

         Leases of channel boxes with purchase options are specifically
excluded from the I/O Agreement.  Therefore, I/O may continue to enter into
leases with purchase options in North and South America during the term of the
I/O Agreement.  I/O may also continue to sell 3-D channel boxes during the term
of the I/O Agreement.

         The Company primarily purchases new channel boxes from I/O, but from
time to time purchases channel boxes from I/O's existing lease fleet.  All of
the channel boxes purchased from I/O which are new are covered by a warranty
which covers, with certain exceptions, defects in workmanship for six months
and defects in materials and parts from 12 months.  The channel boxes, if
acquired from I/O's existing lease fleet and therefore used previously, will be
refurbished by I/O and carry a warranty which covers, with certain exceptions,
defects in workmanship for three months.

         The I/O Agreement is subject to termination by I/O upon the occurrence
of (i) the Company's failure to comply with the terms of the I/O Agreement
after having received written notice of its non-compliance,  (ii)   the
Company's discontinuance  as   a   going   concern,  (iii)  the   Company's
default  in the payment of any obligations to I/O after having received notice
that payment is due, (iv) the Company's insolvency or bankruptcy, (v) Billy F.
Mitcham, Jr.  no longer owning at least 250,000 shares of Common Stock of the
Company, (vi) Billy F. Mitcham, Jr. no longer remaining as the President of the
Company, (vii) any transfer of the I/O agreement by merger, consolidation, or
liquidation, or (viii) the Company's assignment, or attempted assignment of its
rights under the agreement.





                                       5
<PAGE>   8
SERCEL AGREEMENTS

   SERCEL Lease Agreement

         In September 1996, the Company entered into the Exclusive Equipment
Lease Agreement with SERCEL (the "SERCEL Lease Agreement"), under which the
Company acts as SERCEL's exclusive worldwide short-term leasing agent
throughout the world and SERCEL must refer to the Company all requests it
receives (other than requests from its affiliates) to lease its 3-D data
acquisition equipment and other field equipment.  Subject to the exceptions
discussed below, SERCEL may not recommend or suggest any competitor of the
Company as a potential lessor of such data acquisition equipment.  In addition,
the Company may not engage in financing leases and leases for a duration of
more than one year.

         A condition of the SERCEL Lease Agreement is that the Company must
purchase an aggregate of $10.2 million of SERCEL data acquisition and other
field equipment on or before December 31, 1999 in six installments of $1.7
million as follows: (i) by June 30, 1997, and (ii) from July 1, 1997 to
December 31, 1997 and each succeeding six-month period thereafter through
December 31, 1999.  However, SERCEL may not terminate the agreement if the
Company fails to purchase the minimum requirement in a period ending before
June 30, 1998, unless in the succeeding period the Company does not make
aggregate purchases equal to any shortfall for the previous period, plus the
minimum purchase requirement for the succeeding period.  As of January 31,
1997, the Company had purchased SERCEL equipment totalling $5.4 million,
thereby exceeding its purchase requirements through December 31, 1997.

         As with the I/O Agreement, SERCEL must inform the Company of the
identity of the third party prospective lessee and the terms, if any, that have
been discussed regarding a proposed lease.  If the Company either (i) is unable
to lease the SERCEL equipment due to a shortage in its lease fleet, (ii) cannot
agree with a prospective lessee on the terms of a proposed lease within five
business days of the lessee's introduction to the Company, or (iii) otherwise
chooses not to lease to a prospective lessee, then SERCEL may lease its
equipment to the prospective lessee.

         The agreement is subject to termination by SERCEL (i) at any time upon
(a) SERCEL's reasonable belief that the Company has violated or intends to
violate the Foreign Corrupt Practices Act of 1977, as amended, (b) the
Company's refusal or inability to certify that it is in compliance with laws
applicable to its activities, (c) the Company's insolvency, voluntary or
involuntary bankruptcy, assignment for the benefit of creditors or
discontinuance as a going concern and (ii) upon 90 days prior written notice if
the Company no longer employs Billy F. Mitcham, Jr. in a senior management
capacity.

SERCEL Sales Agreement

         Through Mitcham Canada Ltd., the Company's wholly-owned subsidiary
formed in September 1996, the Company entered into the Commercial
Representation Agreement (the "SERCEL Sales Agreement") with Georex, Inc., a
wholly-owned subsidiary of SERCEL, under which the Company is SERCEL's
designated sales agent in Canada for its data acquisition and other field
equipment through September 19, 1999, subject to earlier termination after
September 20, 1997 on 90 days prior notice.  If  not sooner terminated, the
agreement will automatically be extended for successive one-year periods after
September 19, 1999.  Under the agreement, the Company is entitled to receive a
commission on all SERCEL equipment and spare parts sold by the Company in
Canada.





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<PAGE>   9
         In connection with the SERCEL Sales Agreement and the SERCEL Lease
Agreement, in November 1996, the Company established an office in Calgary,
Alberta, Canada to sell, service and lease SERCEL equipment and to lease and
service equipment of other manufacturers.  The Company is prohibited from
selling seismic equipment that competes with SERCEL equipment during the term
of  the  agreement  and for  six  months thereafter,  except that  the  Company
may  sell individual components that compete with components of SERCEL
equipment, such as I/O 3-D channel boxes and Pelton vibrator control
electronics, as well as any seismic equipment previously used in its lease
fleet.

         The SERCEL Sales Agreement is subject to termination by Georex upon
(i) Georex's reasonable belief that the Company has violated or intends to
violate the Foreign Corrupt Practices Act of 1977, as amended, (ii) the
Company's refusal or inability to certify that it is in compliance with laws
applicable to its activities, or (iii) the Company's insolvency, voluntary or
involuntary bankruptcy, assignment for the benefit of creditors or
discontinuance as a going concern.

PELTON AGREEMENT

         In May 1996, the Company entered into an exclusive lease referral
agreement (the "Pelton Agreement") with Pelton Company, Inc.  The Company
believes Pelton is the leading manufacturer and supplier of vibrator control
electronics.  The terms of the Pelton Agreement regarding exclusive lease
referrals and favorable prices are substantially similar to those of the I/O
Agreement, except that (i) the Company has the exclusive referral rights with
respect to Pelton's vibrator control electronics throughout the world, through
December 31, 1997, subject to cancellation by either party thereafter upon
three months prior written notice and (ii) there are no minimum purchase
requirements.

         The Pelton Agreement is subject to termination upon the occurrence of
(i) the Company's failure to comply with the terms of the Pelton Agreement
after having received written notice of its non-compliance, (ii) the Company's
discontinuance as a going concern, (iii) the Company's default in the payment
of any obligations to Pelton after having received notice that payment is due,
(iv) the Company's insolvency or bankruptcy, (v) the Company's transfer of the
agreement by merger, consolidation, or liquidation, (vi) the Company's
assignment, or attempted assignment, of the rights under the agreement (vii)
Billy F. Mitcham no longer owning at least 250,000 shares of Common Stock of
the Company, or (viii) any competitor of Pelton owning, directly or indirectly,
more than 5% of the Company's outstanding capital stock on a fully-diluted
basis.

CUSTOMERS; SALES AND MARKETING

         The Company's major lease customers are seismic data acquisition
companies and major and independent oil and gas exploration companies.  The
Company typically has a small number of lease customers, the composition of
which changes yearly as leases are negotiated and concluded and equipment needs
vary.  As of January 31, 1997, the Company had 17 lease customers with active
leases of various lengths.  Customers of the Company's used and new seismic
equipment sales and service business (in addition to the aforementioned lease
customers, some of whom purchase significant amounts of equipment) include
foreign governments, universities, engineering firms and research organizations
worldwide.

         The Company participates in both domestic and international trade
shows and expositions to inform the  oil and gas industry of its products and
services.  In addition to advertising in major geophysical trade journals,
direct advertising in the form of a biannual listing of equipment offerings is
mailed to over 3,000



                                       7
<PAGE>   10
oil and gas industry participants.  The Company believes this mailing generates
significant seismic equipment lease and sales revenues.  In addition, the
Company placed advertisements of its affiliation with each of I/O, SERCEL and
Pelton in several major geophysical trade journals.  The Company also maintains
a web site at http://www.mitchamindustries.com on which it lists its seismic
equipment for sale and lease.

         The Company works with a network of representatives in several
international markets, including the United Kingdom, Canada and the
Commonwealth of Independent States.  These agents generate equipment sales, and
to a lesser extent, equipment leasing business for the Company and are
compensated on a commission basis.  The Company also expends resources in the
areas of customer service, product support and the maintenance of customer
relationships.  In November 1996, the Company established an office in Calgary,
Alberta, Canada from which it leases and sells seismic equipment.

COMPETITION

         Competition in seismic equipment leasing is fragmented.  The Company
is aware of numerous companies that own seismic equipment that lease such
equipment; however, the Company believes those companies do not lease seismic
equipment of several manufacturers or have as extensive a lease pool as does
the Company.  The Company also believes those companies do not have exclusive
lease referral agreements with suppliers similar to the Company's.  Competition
exists to a lesser extent from seismic data acquisition firms that may lease
equipment that is temporarily idle.  Under the I/O Agreement, I/O and its
subsidiary, Global Charter Corporation, retain the right to continue to (i)
lease channel boxes in certain situations where the Company and a prospective
lessee cannot or do not enter into a lease, as more fully described in the I/O
Agreement; (ii) lease channel boxes with a purchase option in North and South
America; and (iii) lease channel boxes outside of North and South America.
Global owns and operates a lease fleet of rental seismic equipment,  including
3-D  channel boxes.  Global leases  seismic  equipment subject to purchase
options and arranges the financing for such leases.  The Company does not
believe those equipment leases compete with the Company's seismic equipment
leases, as the Company does not typically engage in lease/purchase arrangements
of I/O seismic equipment.

         The Company competes for seismic equipment leases on the basis of (i)
price and delivery, (ii) availability of both peripheral seismic equipment and
complete data acquisition systems which may be configured to meet a customer's
particular needs, and (iii) length of lease term.  The Company competes in the
used equipment sales market with a broad base of seismic equipment owners,
including the major oil and gas exploration companies which use and eventually
dispose of seismic equipment, many of which have substantially greater
financial resources than the Company.  The Company believes there is one
competitor in the used seismic equipment sales business that generates
comparable revenues from such sales, as well as numerous, smaller competitors
who, in the aggregate, generate significant revenue from such sales.

SUPPLIERS

         The Company has several suppliers of the seismic equipment for its
lease fleet.  The Company currently acquires the majority of the 3-D channel
boxes for its lease fleet from I/O and SERCEL and acquires the majority of its
vibrator control electronics from Pelton.  The Company believes that I/O and
SERCEL manufacture most of the land-based seismic systems and equipment in use.
Other suppliers of peripheral seismic equipment include OYO/Geospace
(geophones, cables and seismic cameras), Mark Products (geophones and cables),
Mertz, Inc. (seismic vibrators) and George E. Failing Co.  (seismic vibrators).
From time to time, the Company purchases new and used peripheral seismic
equipment from





                                       8
<PAGE>   11
various other manufacturers.  Management believes that its current
relationships with its suppliers are satisfactory.

EMPLOYEES

         As of January 31, 1997, the Company employed 16 people, none of whom
is covered by a collective bargaining agreement.  Twelve employees are involved
in sales, management and administration and four work in field operations.  The
Company considers its employee relations to be satisfactory.

RECENT DEVELOPMENTS

         During March 1997, the Company completed the successful public
offering (the "Offering") of a total of 3,450,000 shares of its common stock,
par value $0.01 (the "Common Stock"), of which 2,875,000 shares were sold by
the Company and 575,000 shares were sold by the selling shareholders.  The net
proceeds to the Company from the Offering (after deducting underwriting
discounts and commissions and estimated expenses of the Offering) were
approximately $18.2 million.  Approximately (i) $10.0 million of the net
proceeds will be used to purchase additional 3-D seismic data acquisition
equipment, including the $2.35 million remaining purchase requirement under the
I/O Agreement through May 31, 1998, (ii) $4.3 million will be used to pay
outstanding debt to commercial lenders, (iii) $1.0 million used for expenses
related to the opening of the Company's Calgary, Alberta, Canada office, and
(iv) $250,000 will be used to improve computer and inventory tracking systems.
The remainder of the proceeds will be used for other general corporate
purposes.

         Of the $4.3 million that was to be used to pay debt to commercial
lenders, approximately $1.0 million was used to pay the Company's revolving
line of credit (the "Working Capital Revolver") with Bank One, Texas, N.A.
("Bank One") and $3.3 million was used to pay its loan (the "Term Loan") with
Banc One Leasing Corporation ("Banc One Leasing").

ITEM 2.  DESCRIPTION OF PROPERTIES

         The Company owns its corporate office and warehouse facilities in
Huntsville, Texas.  Its headquarters facility consists of 25,000 square feet of
office and warehouse space on approximately six acres. The Company also leases
approximately 10,000 square feet of office and warehouse space at its facility
in Calgary, Alberta, Canada.

ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a party to any legal proceedings.

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

         None





                                       9
<PAGE>   12
                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

MARKET INFORMATION FOR COMMON STOCK

         The Common Stock is traded on the Nasdaq National Market under the
symbol "MIND."  Prior to December 19, 1994, there was no public market for the
Common Stock.  Prior to April 26, 1996, the Common Stock was traded on the
Nasdaq SmallCap Market.

         The following table sets forth, for the periods indicated, the high
and low bid prices of the Company's Common Stock as reported on the Nasdaq
SmallCap Market and the high and low sales prices as reported on the Nasdaq
National Market, as applicable, after April 26, 1996.

<TABLE>
<CAPTION>
                                                                                     High             Low
                                                                                     ----             ---
         <S>                                                        <C>              <C>              <C>     <C>
         Fiscal Year Ended January 31, 1995:
            Fourth Quarter (commencing December 19, 1994)                             $3  1/4          $2 5/8

         Fiscal Year Ended January 31, 1996:
            First Quarter                                                             $3  1/8          $2 5/16
            Second Quarter                                                             4 15/32          2 5/16
            Third Quarter                                                              4  3/4           3 5/8
            Fourth Quarter                                                             5  5/8           3 3/4

         Fiscal Year Ended January 31, 1997:
            First Quarter                                                             $8               $5 1/8
            Second Quarter                                                             8                5 3/4
            Third Quarter                                                              6  1/2           5 3/8
            Fourth Quarter                                                             9  7/8           5 7/8

         Fiscal Year Ended January 31, 1998:
            First Quarter (through April 22, 1997)                                     9  1/4           6 5/8
</TABLE>

         On April 22, 1997, the last reported sale price for the Common Stock
on the Nasdaq National Market was $6 7/8.  As of April 22, 1997, there were 51
shareholders of record of the Common Stock.

                                DIVIDEND POLICY

         The Company has not paid any cash dividends on the Common Stock since
its inception, and the Board of Directors does not contemplate the payment of
cash dividends in the foreseeable future.  It is the present policy of the
Board of Directors to retain earnings, if any, for use in developing and
expanding the Company's business.  In addition, the Company's loan agreements
with Bank One and Banc  One  Leasing  prohibit  the  payment of dividends
without their prior consent.  In the future, payment of dividends by the
Company will also depend on the Company's financial condition, results of
operations and such other factors as the Board of Directors may consider.





                                       10
<PAGE>   13
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

         The Company leases and sells seismic data acquisition equipment to
companies engaged in the oil and gas industry.   The Company provides
short-term leasing of peripheral seismic equipment to meet a customer's
requirements, as well as offering maintenance and support during the lease
term.  The Company leases its seismic equipment primarily to seismic data
acquisition companies and major oil and gas exploration companies conducting
land-based seismic surveys in North and South America.  The Company also sells
and services new and used seismic data acquisition systems and peripheral
equipment to companies engaged in oil and gas exploration.

         All leases at January 31, 1997 were for a term of one year or less.
Seismic equipment held for lease consists primarily of 3-D channel boxes, and
is carried at cost, net of accumulated depreciation.

         The following table sets forth, for the periods indicated, the
percentages that certain items in the Company's financial statements bear to
total revenues, and the percentage changes in the dollar amounts of such items
from the comparable prior period:

<TABLE>
<CAPTION>
                                                     PERCENTAGE OF TOTAL REVENUES            PERCENTAGE CHANGE
                                                    -----------------------------            -----------------
                                                        FISCAL YEAR ENDED                       FISCAL YEAR   
                                                              JANUARY 31,                          ENDED      
                                                    -----------------------------               JANUARY 31,        
                                                      1996                  1997                   1997      
                                                    --------             --------            -----------------
<S>                                                 <C>                  <C>                    <C>     
REVENUES:                                                                                               
    Leases of seismic equipment                      70.7%                  56.8%                61.8%  
    Sales of seismic equipment                       29.3%                  43.2%               197.2%  
         Total revenues                             100.0%                 100.0%               101.5%  
COSTS AND EXPENSES:                                                                                     
    Seismic equipment subleases                       3.4%                   1.4%               (19.1)% 
    Sales of seismic equipment                       14.9%                  28.5%               286.8%  
    General and administrative                       18.4%                  12.3%                34.5%  
    Provision for doubtful accounts                   8.6%                   9.2%               114.7%  
    Depreciation                                     18.3%                  21.2%               133.8%  
         Total costs and expenses                    63.6%                  72.6%               130.0%  
</TABLE>                                                                  

         For the years ended January 31, 1996 and 1997, revenues from foreign
customers totaled $3.8 million and $6.8 million, respectively.  All of the
Company's transactions with foreign customers are denominated in United States
dollars.  Therefore, the Company is not subject to material gains or losses
resulting from currency fluctuations and has not engaged in currency hedging
activities.

SEASONALITY

         There is some seasonality to the Company's expected lease revenues
from customers operating in Canada.  Historically, seismic equipment leasing
has been somewhat susceptible to weather patterns in certain geographic
regions.  For example, in Canada, 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 muddy terrain.  This
increased leasing activity by the Company's customers has historically resulted
in increased lease revenues in the Company's first and fourth quarters.





                                       11
<PAGE>   14
RESULTS OF OPERATIONS

   For the Years Ended January 31, 1997 and January 31, 1996

         Revenues of $14,690,000 for fiscal 1997 represented an increase of
101.5% over revenues of $7,292,000 for fiscal 1996.  Leasing services generated
revenues of $8,345,000 for fiscal 1997, an increase of $3,188,000, or 61.8%, as
compared to $5,157,000 for fiscal 1996.  This increase reflected additions of
lease fleet equipment throughout fiscal 1997 to meet lease demand.  In fiscal
1997, the Company maintained a utilization rate on its 3-D channel boxes in
excess of 80%.  Seismic equipment sales for fiscal 1997 were $6,345,000, an
increase of $4,210,000, or 197.2%, as compared to $2,135,000 for fiscal 1996.
The increase in sales was due primarily to the exercise of various lease
purchase options throughout the year totaling $3,536,000.

         While the Company's leasing revenues increased by $3,188,000 during
fiscal 1997 as compared to fiscal 1996, sublease costs decreased by $48,000 and
depreciation, which related primarily to equipment available for lease,
increased by $1,781,000 due to an increase in the lease fleet, resulting in an
increase in net leasing revenues of $1,455,000.

         Gross margins on seismic equipment sales were 33.9% and 49.2% for
fiscal 1997 and 1996, respectively.  Margins on sales of used equipment vary
based upon the size of the transaction, the availability of the product sold
and the means by which the equipment was acquired.  Higher dollar transactions
tend to yield lower margins than do lower dollar transactions, while readily
available equipment yields lower margins than equipment that is difficult to
locate.  In addition, the Company's costs on a specific piece of equipment may
differ substantially based upon whether it was acquired through a bulk purchase
or a discrete search.

         General and administrative expenses increased 34.5% or $464,000 in
fiscal 1997 as compared to fiscal 1996 and were 12.3% and 18.4% of total
revenues for fiscal 1997 and 1996, respectively.  This decrease in general and
administrative expenses as a percent of total expenses was the result of
overhead expenses remaining relatively constant as revenues increased, offset
in part by increases in legal and accounting expenses associated with being a
public company.

         The Company's provision for doubtful accounts expense increased from
$627,000 in fiscal 1996 to $1,346,000 in fiscal 1997.  The increase was a
result of additional provisions for the allowance  account.  Of the increase,
approximately $500,000 was attributable to the bankruptcy filing of one of the
Company's customers, Grant Geophysical, Inc.  As of January 31, 1997, the
Company's allowance for doubtful accounts receivable amounted to $1,500,000,
which was an amount management believed was sufficient to cover any potential
losses in trade accounts receivable as of that date.

         Net income for fiscal 1997 increased by $989,000, as compared to
fiscal 1996.  The increase resulted primarily from the increase in net leasing
and sales revenues offset by increases in general and administrative expenses
and the provision for bad debt expense.





                                       12
<PAGE>   15

LIQUIDITY AND CAPITAL RESOURCES

         Net cash provided by operating activities for fiscal 1997, increased
by $994,000, or 30.8%, as compared to fiscal 1996.  At January 31, 1997, of the
Company's customers with trade receivables more than 90 days past due, two
customers had an aggregate of $1,181,000 more than 90 days past due.  Grant
Geophysical, Inc. ("Grant") filed for bankruptcy protection during December
1996.  Revenues derived from Grant amount to 14.7% of total revenues for fiscal
1997.  As of January 31, 1997, amounts due from Grant totalled $1,200,000.
During December 1996, the Company increased its allowance for trade accounts
receivable to $1,500,000, which amount was intended to provide for any
potential loss associated with Grant and the Company's remaining trade accounts
receivable.

         As of January 31, 1997, the outstanding principal balance of the Term
Loan was approximately $3.3 million and there was $999,000 outstanding under
the Working Capital Revolver.  Approximately $1.0 million of the Term Loan was
advanced to the Company at January 31,1996 and was used primarily to pay
amounts due to I/O for 3-D channel boxes.  In March 1996, an additional
approximately $3.1 million of the Term Loan was advanced and an aggregate of
approximately $1.5 million was used to pay all amounts outstanding under a
previous term loan and revolving credit line and to pay amounts due to I/O for
3-D channel boxes. $1,000,000 of the working Capital Revolver was advanced in
January 1997.  Following the consummation of the Offering, approximately $4.3
million of the net proceeds of the Offering was used to pay the $1.0 million
and $3.3 million outstanding balances of the Working Capital Revolver and the
Term Loan, respectively.

         In January 1997, the Company established a second revolving line of
credit with Bank One of up to $4.0 million (the "Equipment Revolver") to be
used solely for short-term financing of up to 75% of the  seismic equipment
purchased by the Company for approved lease/purchase contracts, and a second
term loan of $1.0 million (the "Second Term Loan") to be used solely for
long-term financing of up to 80% of the purchase price of other seismic
equipment.  Interest on the Equipment Revolver and the Second Term Loan accrues
at a floating rate of interest equal to the Base Rate plus 0.5%.  Interest on
amounts advanced under the Equipment Revolver is payable monthly, and the
principal amount is due six months after the date of the initial advance;
provided, however, that if the lessee under a lease/purchase contract does not
purchase the seismic equipment subject to the lease, and there has been no
default (as defined) under the lease, then the Company may extend the maturity
date for an additional 18 months (the "Extended Term").  In such event, the
principal amount of and interest on the amount advanced under the Equipment
Revolver would be payable in ratable monthly installments over the Extended
Term.  Interest on and the principal amount of the Second Term Loan are payable
in ratable monthly installments over a two-year period through and including
December 1998.

         As of January 31, 1997, capital expenditures for the 1997 fiscal year
totalled approximately $15.0 million and the Company has budgeted capital
expenditures of approximately $16.0 million for the 1998 fiscal year, including
approximately $12.0 million of 3-D seismic data acquisition equipment to be
purchased with the net proceeds of the Offering.  The Company believes that the
net proceeds of the Offering, cash provided by operations and funds available
from its commercial lenders, will be sufficient to fund its operations and
budgeted capital expenditures for the 1998 fiscal year.





                                       13
<PAGE>   16


ITEM 7.  FINANCIAL STATEMENTS

         The information required by this item appears at pages F-1 through
F-18 hereof and incorporated herein by reference.

ITEM 8.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
         DISCLOSURE

         None



                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Information regarding directors and executive officers of the Company
will be set forth in the proxy statement for the 1997 Annual Meeting of
Shareholders under the heading "Election of Directors," and is incorporated
herein by reference.  Information regarding compliance by the officers,
directors and control persons of the Company with Section 16(a) of the
Securities Exchange Act of 1934 will be set forth in the Company's proxy
statement  for  the  1997  Annual Meeting  of Shareholders under the heading
"Other  Matters-Compliance with Section 16(a) of the Exchange Act," and is
incorporated herein by reference.

ITEM 10.  EXECUTIVE COMPENSATION

         Information regarding executive compensation will be set forth in the
Company's proxy statement for the 1997 Annual Meeting of Shareholders under the
heading "Executive Compensation," and is incorporated herein by reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information regarding security ownership of certain beneficial owners
and management will be set forth in the Company's proxy statement for the 1997
Annual Meeting of Shareholders under the heading "Principal Holders of
Securities and Security Ownership of Management," and is incorporated herein by
reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information regarding certain relationships and related transactions
will be set forth in the Company's proxy statement for the 1997 Annual Meeting
of Shareholders under the heading "Certain Transactions," and is incorporated
herein by reference.





                                       14
<PAGE>   17
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

<TABLE>
<CAPTION>
Exhibit Number
--------------
       <S>     <C>      <C>
       3.1     --       Amended and Restated Articles of Incorporation of Mitcham Industries, Inc. (1) (Exhibit 3.1)
       3.2     --       Amended and Restated Bylaws of Mitcham Industries, Inc. (1) (Exhibit 3.2)
       4.1     --       Copy of Specimen stock certificate evidencing Common Stock of Mitcham Industries, Inc. (2)
                        (Exhibit 4.1)
       9       --       Voting Agreement, dated September 20, 1993, between the Company, Billy F. Mitcham, Jr. and
                        certain shareholders (1) (Exhibit 9)
       10.1    --       Exclusive Lease Referral Agreement, dated February 22, 1994, between Mitcham Industries, Inc.
                        and Input/Output, Inc., as amended. (3) (Exhibit 10.1)
       10.2    --       Fifth Amendment to Exclusive Lease Referral Agreement with Input/Output, dated January 9, 1997 (7)
                        (Exhibit 10.2)
       10.3    --       Registration Rights Agreement, dated September 20, 1993, between the Company and certain
                        shareholders (1) (Exhibit 10.14)
       10.4    --       Employment Agreement, dated January 15, 1997, between the Company and Billy F. Mitcham, Jr. (7)
                        (Exhibit 10.4)
       10.5    --       Consulting Agreement, dated April 1, 1994, between the Company and Billy F. Mitcham, Sr. (1)
                        (Exhibit 10.16)
       10.6    --       First Amendment to Consulting Agreement, dated January 15, 1997, between the Company and Billy
                        F. Mitcham, Jr. (7) (Exhibit 10.6)
       10.7    --       Promissory Note, dated September 22, 1995, in the original principal amount of $276,250, made
                        payable by the Company to the order of First National Bank of Huntsville (4) (Exhibit 10.26)
       10.8    --       Deed of Trust, dated September 22, 1995, securing the $276,250 loan (4) (Exhibit 10.27)
       10.9    --       Promissory Note, dated January 31, 1996, in the original principal amount of $1,000,000 made
                        payable by the Company to the order of Bank One, Texas, National Association ("Bank One") (5)
                        (Exhibit 10.8)
       10.10   --       Promissory Note, dated January 31, 1996, in the original principal amount of $4,206,000, made
                        payable by the Company to the order of Bank One Leasing Corporation ("Banc One Leasing") (5)
                        (Exhibit 10.9)
       10.11   --       Letter Loan Agreement, dated January 31, 1996, as amended, between the Company, Bank One and
                        Banc One Leasing Corporation (5) (Exhibit 10.10)
       10.12   --       Assignment of Leases, dated January 31, 1996, between the Company, Bank One and Banc One
                        Leasing (5) (Exhibit 10.11)
       10.13   --       Security Agreement, dated January 31, 1996, between the Company, Bank One, and Banc One Leasing
                        (5) (Exhibit 10.12)
       10.14   --       Exclusive Lease Referral Agreement, dated May 14, 1996, between the Company and Pelton Company,
                        Inc. (6) (Exhibit 10.1)
       10.15   --       Exclusive Equipment Lease Agreement, effective September 20, 1996, between the Company and
                        SERCEL, S.A. (6) (Exhibit 10.2)
       10.16   --       Commercial Representation Agreement, effective September 20, 1996, between Mitcham Canada LTD.,
                        an Alberta corporation, and Georex, Inc. (6) (Exhibit 10.3)
       10.17   --       First Amendment of Exclusive Lease Referral Agreement, dated January 1997,
</TABLE>





                                       15
<PAGE>   18
<TABLE>
         <S>     <C>      <C>
                        between the Company and Pelton.(7) (Exhibit 10.17)
       10.18   --       1994 Stock Option Plan of Mitcham Industries, Inc. (2) (Exhibit 10.9)
       10.19   --       Form of Incentive Stock Option Agreement (2) (Exhibit 10.10)
       10.20   --       Form of Nonqualified Stock Option Agreement (2) (Exhibit 10.11)
       10.21   --       1994 Non-Employee Director Stock Option Plan of Mitcham Industries, Inc. (2) (Exhibit 10.12)
       10.22   --       Form of Nonqualified Stock Option Agreement (2) (Exhibit 10.13)
       10.23   --       Form of Mitcham Industries, Inc. customer lease agreement (1) (Exhibit 10.20)
       10.24   --       Letter Loan Agreement, dated January 16, 1997, between the Company and Bank One (8) (Exhibit
                        10.24)
       10.25   --       Assignment of Leases, dated January 16, 1997, between the Company and Bank One (8) (Exhibit
                        10.25)
       10.26   --       Security Agreement, dated January 16, 1997, between the Company and Bank One (8) (Exhibit
                        10.26)
       10.27   --       Promissory Note, dated January 16, 1997, made payable by the Company to the order of Bank One
                        in the original principal amount of $1,000,000 (8) (Exhibit 10.27)
       10.28   --       First Amendment to Letter Loan Agreement, dated January 16, 1997, among the Company, Bank One
                        and Bank One Leasing (8) (Exhibit 10.28)
       21 --            Subsidiaries of the Company (6) (Exhibit 11)
       23 --            Consent of Hein + Associates LLP
       27 --            Financial Data Schedule
</TABLE>

(1)    Incorporated by reference to the indicated exhibit number of the
       Company's Registration      Statement on Form SB-2 (File No.
       33-81164-D), filed with the SEC on July 5, 1994.
(2)    Incorporated by reference to the indicated exhibit number of the
       Company's Amendment No. 2 to the Registration Statement on Form SB-2,
       filed with the SEC on November 9, 1994.
(3)    Incorporated by reference to the indicated exhibit number of the
       Company's Amendment No. 3 to the Registration Statement on Form SB-2,
       filed with the SEC on December 12, 1994.
(4)    Incorporated by reference to the indicated exhibit number of the
       Company's Post-Effective Amendment No. 2 to its Registration Statement
       on Form SB-2, filed with the SEC on October 30, 1995.
(5)    Incorporated by reference to the indicated exhibit number of the
       Company's Post-Effective Amendment No. 4 to its Registration Statement
       on Form SB-2, filed with the SEC on April 17, 1996.
(6)    Incorporated by reference to the indicated exhibit number of the
       Company's Registration Statement  on Form S-3 (File No. 333-10555),
       filed with the SEC on October 30, 1996.
(7)    Incorporated by reference to the indicated exhibit number of the
       Company's Registration Statement on Form S-1 (File No. 333-19997),
       filed with the SEC on January 17, 1997.
(8)    Incorporated by reference to the indicated exhibit number of the
       Company's Amendment No. 1 to its Registration Statement on Form S-1,
       filed with the SEC on January 31, 1997.

(b) REPORTS ON FORM 8-K

   NONE





                                       16
<PAGE>   19

                                   SIGNATURES

   PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT ON FORM 10-KSB TO BE SIGNED ON
ITS BEHALF THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
HUNTSVILLE, STATE OF TEXAS, ON THE 26TH DAY OF APRIL, 1997.

                             MITCHAM INDUSTRIES, INC.
                             
                             
                             By:            /s/ BILLY F. MITCHAM, JR.          
                                 -----------------------------------------------
                                        Billy F. Mitcham, Jr., Chairman of the
                                 Board, President and Chief Executive Officer
                                          (principal executive officer)

   PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS REPORT ON
FORM 10-KSB HAS BEEN SIGNED BELOW BY THE PERSONS IN THE CAPACITIES AND ON THE
DATE INDICATED.

<TABLE>
<CAPTION>
                 Signature                                  Title/Capacity                    Date
                 ---------                                  --------------                    ----
<S>                                                <C>                               <C>
       /s/ BILLY F. MITCHAM, JR.                            Chairman of the Board,            April 25, 1997
-----------------------------------------------             President and Chief                    
           Billy F. Mitcham, Jr.                            Executive Officer   
                                                                                


           /s/ PAUL C. MITCHAM                              Vice President -                  April 25, 1997
-----------------------------------------------             Operations and Director                         
               Paul C. Mitcham                                          



              /s/ ROBERTO RIOS                              Vice President -                  April 25, 1997
-----------------------------------------------             Finance, Secretary,                             
                  Roberto Rios                              Treasurer and Director 
(principal financial and accounting officer)                                       



          /s/ WILLIAM J. SHEPPARD                           Vice President -                  April 25, 1997
-----------------------------------------------             International Operations                        
              William J. Sheppard                           and Director             
                                                                                     
</TABLE>





                                       17
<PAGE>   20





                            MITCHAM INDUSTRIES, INC.

                              FINANCIAL STATEMENTS
                        AND INDEPENDENT AUDITOR'S REPORT

                                JANUARY 31, 1997
<PAGE>   21
                            MITCHAM INDUSTRIES, INC.


                                     INDEX


<TABLE>
<CAPTION>                                                                      
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
INDEPENDENT AUDITOR'S REPORT  . . . . . . . . . . . . . . . . . . . . . . . . .  F-2
                                                                               
FINANCIAL STATEMENTS:                                                          
    Balance Sheet - January 31, 1997  . . . . . . . . . . . . . . . . . . . . .  F-3
    Statements of Income - Years Ended January 31, 1996 and 1997  . . . . . . .  F-4
    Statements of Changes in Stockholders' Equity - Years ended                
         January 31, 1996 and 1997  . . . . . . . . . . . . . . . . . . . . . .  F-5
    Statements of Cash Flows - Years Ended January 31, 1996 and 1997  . . . . .  F-6
    Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .  F-7
</TABLE>                                                                       





                                      F-1
<PAGE>   22





                          INDEPENDENT AUDITOR'S REPORT



Board of Directors and Stockholders
Mitcham Industries, Inc.
Huntsville, Texas

We have audited the accompanying balance sheet of Mitcham Industries, Inc. as
of January 31, 1997, and the related statements of income, changes in
stockholders' equity and cash flows for the years ended January 31, 1996 and
1997.  These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audits 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 financial statements referred to above present fairly, in
all material respects, the financial position of Mitcham Industries, Inc. as of
January 31, 1997, and the results of its operations and its cash flows for the
years ended January 31, 1996 and 1997, in conformity with generally accepted
accounting principles.





Certified Public Accountants

Houston, Texas
March 12, 1997





                                      F-2
<PAGE>   23
                                 BALANCE SHEET
                                JANUARY 31, 1997


<TABLE>
<S>                                                                               <C>
                                    ASSETS


CURRENT ASSETS:

    Cash                                                                          $   301,000
    Accounts receivable, net of allowance for doubtful accounts of $1,500,000       3,598,000
    Installment notes receivable, trade                                             1,141,000
    Inventory                                                                         473,000
    Prepaid expenses and other current assets                                         100,000
                                                                                  -----------
             Total current assets                                                   5,613,000
Seismic equipment lease pool, net of accumulated depreciation                      17,963,000
Property and equipment, net of accumulated depreciation                               619,000
Other assets                                                                           98,000
                                                                                  -----------
             Total assets                                                         $24,293,000
                                                                                  ===========
                                                                                  
                     LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                                  
CURRENT LIABILITIES:                                                              
    Notes payable to bank                                                         $   999,000
    Current installments of long-term debt                                            938,000
    Accounts payable                                                                1,941,000
    Income taxes payable                                                              267,000
    Deferred income taxes payable                                                     902,000
    Accrued liabilities and other current liabilities                                 685,000
                                                                                  -----------
             Total current liabilities                                              5,732,000
LONG-TERM DEBT, NET OF CURRENT INSTALLMENTS                                         2,674,000
DEFERRED INCOME TAXES                                                                 645,000
                                                                                  -----------
             Total liabilities                                                      9,051,000
COMMITMENTS AND CONTINGENCIES (notes 5, 9 and 11)                                 
STOCKHOLDERS' EQUITY:                                                             
    Preferred stock, $1.00 par value; 1,000,000 shares authorized; none           
         issued and outstanding                                                             -
    Common stock, $.01 par value; 20,000,000                                      
         shares authorized; 4,474,880 shares issued and outstanding                    45,000
    Additional paid-in capital                                                      8,819,000
    Retained earnings                                                               6,378,000
                                                                                  -----------
             Total stockholders' equity                                            15,242,000
                                                                                  -----------
             Total liabilities and stockholders' equity                           $24,293,000
                                                                                  ===========
</TABLE>





  The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>   24
                           MITCHAM INDUSTRIES, INC.

                             STATEMENTS OF INCOME


<TABLE>
<CAPTION>                                                                      
                                                   Years Ended January 31,  
                                            -----------------------------------
                                                 1996                  1997   
                                            -------------          ------------
<S>                                           <C>                    <C>
REVENUES:                              
  Leases of seismic equipment               $   5,157,000          $  8,345,000
  Sales of seismic equipment                    2,135,000             6,345,000
                                            -------------          ------------
                                       
        Total revenues                          7,292,000            14,690,000
                                            -------------          ------------
                                       
COSTS AND EXPENSES:                    
  Seismic equipment subleases                     251,000               203,000
  Sales of seismic equipment                    1,085,000             4,197,000
  General and administrative                    1,344,000             1,808,000
  Provision for doubtful accounts                 627,000             1,346,000
  Depreciation                                  1,331,000             3,112,000
                                            -------------          ------------
                                       
        Total costs and expenses                4,638,000            10,666,000
                                            -------------          ------------
                                       
OTHER INCOME (EXPENSE):                
  Interest, net                                   (21,000)             (240,000)
  Other, net                                       38,000               367,000
                                            -------------          ------------
                                       
        Total other income                         17,000               127,000
                                            -------------          ------------
                                       
INCOME BEFORE INCOME TAXES                      2,671,000             4,151,000
                                       
INCOME TAXES                                      958,000             1,449,000
                                            -------------          ------------
                                       
NET INCOME                                  $   1,713,000          $  2,702,000
                                            =============          ============
                                       
                                       
EARNINGS PER COMMON AND COMMON         
  EQUIVALENT SHARE:                    
  Primary                                   $        0.52          $       0.60
  Assuming full dilution                    $        0.50          $       0.59
                                            =============          ============

SHARES USED IN COMPUTING EARNINGS PER  
  COMMON AND COMMON EQUIVALENT SHARE:  
  Primary                                       3,306,000             4,522,000
  Assuming full dilution                        3,403,000             4,581,000
                                            =============          ============
</TABLE>                               





   The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>   25
                           MITCHAM INDUSTRIES, INC.

                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY



<TABLE>
<CAPTION>
                                                                                  
                                              Common Stock             Additional                 
                                       -------------------------        Paid-in         Retained                     
                                        Shares           Amount         Capital         Earnings           Total     
                                       ---------       ---------      -----------     -----------       -----------
<S>                                    <C>             <C>            <C>             <C>               <C>
BALANCES, FEBRUARY 1, 1995             3,170,000       $  32,000      $ 4,181,000     $ 1,963,000       $ 6,176,000

  Compensation on stock options
     issued to employees                       -               -           37,000               -            37,000

  Issuance of common stock upon
     exercise of warrants                 51,000               -          122,000               -           122,000

  Net income                                   -               -                -       1,713,000         1,713,000
                                       ---------       ---------      -----------     -----------       -----------

BALANCES, JANUARY 31,1996              3,221,000          32,000        4,340,000       3,676,000         8,048,000
                                                                                                                    
                                                                  
  Issuance of common stock upon                                   
     exercise of warrants              1,254,000          13,000        4,479,000               -         4,492,000
                                                                                                                    

  Net income                                   -               -                -       2,702,000         2,702,000
                                       ---------       ---------      -----------     -----------       -----------

BALANCES, JANUARY 31, 1997             4,475,000       $  45,000      $ 8,819,000     $ 6,378,000       $15,242,000
                                       =========       =========      ===========     ===========       ===========
</TABLE>





      The accompanying notes are an integral part of these financial statements.

                                      F-5
<PAGE>   26
                           MITCHAM INDUSTRIES, INC.

                           STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>                                             
                                                        Years Ended January 31,          
                                                     ---------------------------       
                                                         1996           1997          
                                                     -----------    ------------       
<S>                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                               
  Net income                                         $ 1,713,000    $  2,702,000
  Adjustments to reconcile net income to net                         
     cash flows provided by operating activities:                    
     Receivables, net                                   (485,000)     (2,269,000)
     Accounts payable and other current liabilities      554,000         193,000
     Depreciation                                      1,331,000       3,112,000
     Deferred income taxes                               284,000         608,000
     Other, net                                         (171,000)       (126,000)
                                                     -----------    ------------ 
     Net cash provided by operating activities         3,226,000       4,220,000
                                                     ------------   ------------
                                                                     
CASH FLOWS FROM INVESTING ACTIVITIES:                                
  Purchases of seismic equipment held for lease       (5,321,000)    (14,011,000)
  Purchases of property and equipment                   (444,000)       (231,000)
  Proceeds from sale of lease pool equipment             796,000       2,603,000
  Proceeds from sale of equipment                         50,000               -
                                                     -----------    ------------
  Net cash used in investing activities               (4,919,000)    (11,639,000)
                                                     -----------    ------------ 
                                                                     
CASH FLOWS FROM FINANCING ACTIVITIES:                                
  Proceeds from short-term borrowings                    400,000       1,000,000
  Payments on short-term borrowings                     (256,000)       (401,000)
  Proceeds from long-term debt                         1,372,000       3,126,000
  Payments on long-term debt and capitalized lease                   
     obligations                                        (182,000)     (1,134,000)
  Proceeds from issuance of common stock, net of                     
     offering expenses                                   122,000       4,492,000
                                                     -----------    ------------
  Net cash provided by financing activities            1,456,000       7,083,000
                                                     -----------    ------------
                                                                     
NET DECREASE IN CASH                                    (237,000)       (336,000)
                                                                     
CASH AND CASH EQUIVALENTS, beginning of year             874,000         637,000
                                                     -----------    ------------
                                                                     
CASH AND CASH EQUIVALENTS, end of year               $   637,000    $    301,000
                                                     ===========    ============
                                                                     
SUPPLEMENTAL CASH FLOW INFORMATION:                                  
  Cash paid for:                                                     
      Interest                                       $    78,000    $    385,000
      Taxes                                          $   384,000    $    865,000
                                                     ===========    ============
                                                                     
  Equipment purchases in accounts payable            $   226,000    $  1,468,000
                                                     ===========    ============
</TABLE>                                                              





   The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>   27
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS


1.     ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

       Organization - Mitcham Industries, Inc. (the Company), is a Texas
       corporation formed on January 29, 1987. The Company provides
       full-service equipment leasing to the seismic industry, primarily in
       North and South America.  The Company also sells and services new and
       used seismic data acquisition equipment on a worldwide basis.

       Description of leasing arrangements - The Company leases various types
       of seismic equipment to seismic data acquisition companies.  All leases
       at January 31, 1997 are for one year or less.  Lease revenue is
       recognized ratably over the term of the lease.

       Equipment sold on the installment basis - The Company periodically sells
       seismic equipment on an installment basis.  The terms of the sale
       agreements generally require twelve payments, with two payments due upon
       delivery of the equipment and the remaining payments due over the
       succeeding ten months.  To the extent a down payment equal to at least
       16.5% of the sales price is not received, the gross profit from the sale
       is deferred until sufficient payments have been received to warrant full
       revenue recognition.

       Lease purchase transactions - The Company periodically leases equipment
       with an option to purchase.  The percent of the lease payment that is
       credited towards the purchase is deferred until the customer exercises
       the option to purchase the equipment; at which time the transaction is
       recorded as a sale.

       Inventories - Inventories consist primarily of used seismic equipment
       purchased in bulk liquidation sales for purposes of resale. Inventories
       are valued at the lower of cost or market using the average cost method.

       Seismic equipment held for lease - Seismic equipment held for lease
       consists primarily of remote signal conditioners (channel boxes) and
       peripheral equipment and is carried at cost, net of accumulated
       depreciation.  Depreciation is computed on the straight-line method over
       the estimated useful lives of the equipment, which range from three to
       seven years.

       Property and equipment - Property and equipment is carried at cost, net
       of accumulated depreciation. Depreciation is computed on the
       straight-line method over the estimated useful lives of the property and
       equipment.  The estimated useful lives of equipment range from three to
       seven years.  Buildings are depreciated over 40 years and property
       improvements over 10 years.

       Income taxes - The Company accounts for its taxes under the liability
       method, whereby the Company recognizes  on a current and long-term
       basis, deferred tax assets and liabilities which represent differences
       between the financial and income tax reporting bases of its assets and
       liabilities.  Historically the Company has paid income taxes on the cash
       basis of accounting.  Beginning in fiscal 1998, the Company will no
       longer be eligible to report on the cash basis of accounting for federal
       income tax reporting purposes.

       Cash equivalents - For purposes of presenting cash flows, the Company
       considers all highly liquid investments with an original maturity of
       three months or less to be cash equivalents.





                                      F-7
<PAGE>   28
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS


1.     ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)

       Earnings per share -  Primary earnings per common and common equivalent
       share and earnings per common and common equivalent share assuming full
       dilution are computed on the weighted average number of shares
       outstanding adjusted for the incremental shares attributed to
       outstanding options and warrants to purchase common stock.

       Use of estimates - The preparation of the Company's financial statements
       in conformity with generally accepted accounting principles requires the
       Company's management to make estimates and assumptions that affect the
       amounts reported in these financial statements and accompanying notes.
       Actual results could differ from these estimates.

       Industry Concentration - The Company's lease revenues are derived from
       seismic equipment leased to seismic companies providing 3-D seismic
       acquisition services.  The seismic industry has rapidly expanded its 3-D
       seismic acquisition capabilities over the past few years as this
       technology has gained broader market acceptance from the oil and gas
       exploration companies.  With this expansion, many of the seismic
       acquisition companies in North America, while experiencing rapid growth
       in 3-D seismic acquisition revenues, have not experienced corresponding
       increases in profitability and have become increasingly leveraged.
       Should the financial performance of the companies in this industry not
       improve, the Company could be exposed to additional credit risk and
       subjected to declining demand for its leased products.

       New Accounting Pronouncements - The Financial Accounting Standards Board
       issued SFAS No. 121 entitled "Impairment of Long-Lived Assets". SFAS No.
       121, which became effective beginning February 1, 1996, provides that in
       the event that facts and circumstances indicate that the cost of assets
       or other assets may be impaired, an evaluation of recoverability would
       be performed.  If an evaluation is required, the estimated future
       undiscounted cash flows associated with the asset would be compared to
       the assets carrying amount to determine if a writedown to market value
       or discounted cash flow is required.  SFAS No. 121 did not have a
       material impact on the operating results or financial condition of the
       Company upon implementation.

       The FASB also issued SFAS No. 123, "Accounting for Stock Based
       Compensation", effective for fiscal years beginning after December 15,
       1995.  This statement allows companies to choose to adopt the
       statement's new rules for accounting for employee stock-based
       compensation plans.  For those companies which choose not to adopt the
       new rules, the statement requires disclosures as to what earnings per
       share would have been if the new rules had been adopted.  Management
       adopted the disclosure requirements of this statement during fiscal
       1997; see note 12 for further discussion.

       The FASB also issued Statement of Financial Accounting Standards No.
       128, entitled "Earnings Per Share", during February 1997.  The new
       statement, which is effective for financial statements issued after
       December 31, 1997, including interim periods, establishes standards for
       computing and presenting earnings per share.  The new statement requires
       retroactive restatement of all prior-period earnings per share data
       presented.  The Company does not believe the new statement will have a
       material impact upon previously presented earnings per share
       information.





                                      F-8
<PAGE>   29
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS


2.  PROPERTY AND EQUIPMENT:

       Property and equipment consists of the following:

<TABLE>
<CAPTION>                                     
                                                          January 31,
                                                             1997     
                                                          ------------  
<S>                                                       <C>
         Land                                             $     25,000
         Building and improvements                             360,000
         Furniture and fixtures                                288,000
         Autos and trucks                                      122,000
                                                          ------------
                                                               795,000
         Less accumulated depreciation                        (176,000)
                                                          ------------ 
                                                          $    619,000
                                                          ============
</TABLE>

3.  NOTES PAYABLE TO BANK:

       On January 31, 1996, the Company executed a line of credit with a bank.
       The Company may borrow  up to $1,000,000 under this line of credit which
       bears interest at prime plus .5% (9% at January 31, 1997).  $999,000 was
       outstanding under this line at January 31, 1997.  Advances under the
       line of credit are collateralized by accounts receivable and inventory.
       Borrowings under the line are limited to 80% of eligible accounts
       receivable and 50% of eligible inventory, as defined.

4.  LONG-TERM DEBT:

      Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                     January 31,
                                                                         1997     
                                                                     -----------
 <S>                                                                   <C>
  Note payable to bank, due in monthly installments of             
  $2,803, including interest at 9%, due September 1998,            
  collateralized by land and a building.                              $  264,000
                                                                   
  Note payable to bank under a $4,206,000 term loan                
  facility, due in monthly installments of $26,270,  including     
  interest  at 9.5%, through March 2000, collateralized primarily  
  by lease pool equipment and an assignment of leases.                 3,348,000
                                                                      ----------
                                                                       3,612,000
  Less current maturities                                               (938,000)
                                                                      ---------- 
                                                                     
                                                                      $2,674,000
                                                                      ==========
</TABLE>





                                      F-9
<PAGE>   30
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS



4.  LONG TERM DEBT: (continued)

         Scheduled maturities of long-term debt at January 31, 1997 are as
follows:

<TABLE>
<CAPTION>
           Years Ending January 31,              
           ------------------------          
                      <S>                          <C>
                      1998                         $      938,000
                      1999                              1,374,000
                      2000                              1,196,000
                      2001                                104,000
                                                   --------------
                                                   $    3,612,000
                                                   ==============
</TABLE>                                     


The term loan facility includes various financial covenants, the most
significant of which require the Company to maintain its tangible net worth at
90% of tangible net worth at October 31, 1995, and to increase quarterly by 50%
of net income for that quarter, maintain a ratio of total liabilities to
tangible net worth of not more than 1.25 to 1.0, and to maintain a ratio of
cash flow from operations, as defined, to current maturities of long-term debt
of not less than 1.25 to 1.0.

In January 1997, the Company established a second revolving line of credit of
up to $4.0 million (the "Equipment Revolver") to be used solely for short-term
financing of up to 75% of the seismic equipment purchased by the Company for
approved lease/purchase contracts, and a second term loan of $1.0 million (the
"Second Term Loan") to be used solely for long-term financing of up to 80% of
the purchase price of other seismic equipment.  Interest on the Equipment
Revolver and the Second Term Loan accrues at a floating rate of interest equal
to the bank's rate of interest ("Base Rate") plus 0.5%.  Interest on amounts
advanced under the Equipment Revolver is payable monthly, and the principal
amount is due six months after the date of the initial advance; provided,
however, that if the lessee under a lease/purchase contract does not purchase
the seismic equipment subject to the lease, and there has been no default (as
defined) under the lease, then the Company may extend the maturity date for an
additional 18 months (the "Extended Term").  In such event, the principal
amount of and interest on the amount advanced under the Equipment Revolver
would be payable in ratable monthly installments over the Extended Term.
Interest on the principal amount of the Second Term Loan is payable in ratable
monthly installments over a two-year period through and including December
1998.  No advances had been made on either of these two credit facilities at
January 31, 1997.

5.  LEASES:

The Company leases and subleases seismic equipment to customers under operating
leases with non-cancelable terms of one year or less.  These leases are
generally renewable on a month-to-month basis.  All taxes (other than U.S.
federal income taxes) and assessments are the contractual responsibility of the
lessee.  To the extent the foreign taxes are not paid by the lessee, the
relevant foreign taxing authorities might seek to collect such taxes from the
Company.  Under the terms of its lease agreements, any amounts





                                      F-10
<PAGE>   31
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS



5.  LEASES: (continued)

paid by the Company to such foreign taxing authorities may be billed and
collected from the lessee.  If the Company is unable to collect the foreign
taxes it paid on behalf of its lessees, the Company may have foreign tax
credits in the amounts paid which could be applied against its U.S. income tax
liability, subject to certain limitations.  The Company is not aware of any
foreign tax obligations as of January 31, 1997.

The Company leases seismic equipment from others under month-to-month operating
leases.  Lease expense incurred by the Company in connection with such leases
amounted to  $251,000 and $203,000 for the years ended January 31, 1996 and
1997, respectively.


         A summary of the equipment held for lease to others is as follows:
<TABLE>
<CAPTION>
                                                                       January 31,
                                                                          1997     
                                                                       -----------
         <S>                                                           <C>
         Remote signal conditioners (channel boxes)                    
               and other equipment                                     $21,745,000
         Less: accumulated depreciation                                 (3,782,000)
                                                                       ----------- 
                                                                       $17,963,000
                                                                       ===========
</TABLE>

6.  INCOME TAXES:                                                   

         The components of income tax expense are as follows:

<TABLE>
<CAPTION>
                                                           January 31,      
                                                --------------------------------
                                                    1996                1997    
                                                -----------        -------------
         <S>                                    <C>                 <C>
              Current:                          
                Federal                         $   698,000         $    775,000
                State                               (24,000)              22,000
                                                -----------         ------------
                                                    674,000              797,000
              Deferred                              284,000              652,000
                                                -----------         ------------
                                                
                                                $   958,000         $  1,449,000
                                                ===========         ============
</TABLE>                        

         The components of the Company's deferred tax liability are as follows:


<TABLE>
<CAPTION>
                                                                       January 31,                   
                                                                          1997                      
                                                                      -------------                 
<S>                                                                 <C>                                  
Deferred tax asset - allowance for doubtful accounts                  $     536,000                  
           Deferred tax liabilities:                                                                
           Conversion from accrual to cash method of                                                
             accounting                                                  (1,660,000)                
           Depreciation                                                    (423,000)                
                                                                      -------------                 
           Deferred tax liability, net                                $  (1,547,000)                
                                                                                      

</TABLE>      




                                      F-11
<PAGE>   32
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS


6.  INCOME TAXES: (continued)

The following is a reconciliation of expected to actual income tax expense:

<TABLE>
<CAPTION>
                                                      Years Ended January 31,    
                                                 ----------------------------------
                                                      1996                  1997    
                                                 -------------         ------------
<S>                                              <C>                   <C>
Federal income tax expense at 34%                $     913,000         $  1,411,000
State income taxes and nondeductible expenses           45,000               38,000
                                                 -------------         ------------
                                                 $     958,000         $  1,449,000
                                                 =============         ============
</TABLE>

7.  RELATED PARTY TRANSACTIONS:

    The Company had transactions with companies controlled by a stockholder of
    the Company, or in which a stockholder of the Company has a substantial
    ownership interest.  The following is a summary of transactions with these
    companies:

<TABLE>
<CAPTION>
                                                      Years Ended January 31,   
                                                -----------------------------------
                                                     1996                1997    
                                                -------------         -------------
<S>                                             <C>                   <C>        
Office and warehouse rent                       $      32,000         $          -
Equipment lease expense and purchases                  28,000                    -
Purchase of office and warehouse                $     325,000         $          -
</TABLE>                                 


8.  EXPORT SALES AND MAJOR CUSTOMERS:

    A summary of the Company's revenues from foreign customers by geographic
region is as follows:

<TABLE>
<CAPTION>
                                             Years Ended January 31,    
                                       ----------------------------------
                                            1996                  1997     
                                       -------------         ------------
<S>                                    <C>                     <C>
Canada                                 $   1,022,000         $  3,287,000
UK/Europe                                    699,000            1,657,000
South America                                949,000            1,271,000
Asia                                         943,000              393,000
Other                                        213,000              178,000
                                       -------------         ------------
   Totals                              $   3,826,000         $  6,786,000
                                       =============         ============
</TABLE>                    


One customer represented 18% of the Company's total revenues for fiscal 1996
and three customers represented 15%, 14% and 12%, respectively, of total fiscal
1997 revenues.  No other customer exceeded 10% of revenues for fiscal 1996 and
1997.





                                      F-12
<PAGE>   33
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS




9.  CONCENTRATIONS OF CREDIT RISK:

As of January 31, 1997 amounts due from customers which exceeded 10 percent of
accounts receivable, amounted to an aggregate of $1,748,000.  The amounts per
customer were $1,200,000 and $548,000, respectively.

One of the Company's significant customers filed for bankruptcy protection
during December 1996.  Revenues derived from this customer amount to 15% of
total revenues for the fiscal year ended January 31, 1997.  As of that date,
amounts due from this customer totaled approximately $1.2 million. As of
January 31, 1997, the Company's allowance for trade accounts receivable was
$1.5 million, which amount was intended to fully reserve all amounts due from
this customer and provide for any potential loss associated with the Company's
remaining trade accounts receivable.

The Company maintains deposits with banks which at times may exceed the Federal
Deposit Insurance Corporation (FDIC) insured limit and has a money market
account included in its cash balances which is not FDIC insured.  Management
believes the risk of loss in connection with these accounts is minimal.

10.  STOCKHOLDERS' EQUITY:

The Company has 1,000,000 shares of preferred stock authorized, none of which
are outstanding as of January 31, 1997.  The preferred stock may be issued in
multiple series with various terms, as authorized by the Company's Board of
Directors.  The Company has 20,000,000 shares of common stock authorized, of
which 4,474,880 are issued and outstanding as of January 31, 1997.  Warrants to
acquire 892,750 shares of the Company's common stock at $3.50 per share issued
in connection with the Company's 1995 initial public offering were exercised
during fiscal 1997.  During March 1997, the Company consummated a second public
offering of its common stock, as more fully discussed in Note 13.  In
connection with this offering, the Company sold to the underwriters 2,875,000
shares of its common stock.

The Company issued warrants to various stockholders during fiscal 1995 to
acquire 49,500 shares of the Company's common stock at $5.00 per share.  The
number of shares and exercise price of the warrants were adjusted to 63,953 and
$3.87, respectively, during fiscal 1996 as a result of the anti-dilution
provisions of the warrants.  Warrants to acquire 60,723 shares are unexercised
at January 31, 1997.

In connection with bridge financing during 1994, the Company issued warrants to
the bridge note holders to purchase 200,000 shares of its common stock for
$3.75 per share.  The exercise price of the warrants was later decreased to
$3.50 per share in connection with the Company's sale and leaseback of channel
boxes and subsequent exercise of an option to purchase such channel boxes.  All
such warrants had been exercised as of January 31, 1997.

In July 1995, the Company issued warrants to acquire 35,000 shares of  its
common  stock  to  a  public relations firm engaged by the Company.  The
warrants are exercisable at $3.50 per share for a period of five years from
their issuance and are unexercised at January 31, 1997.





                                      F-13
<PAGE>   34
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS



10.  STOCKHOLDERS' EQUITY: (continued)

Warrants to acquire 85,000 units (consisting of two shares of common stock and
one warrant to purchase one share of common stock at $4.20 per share) at $7.97
per unit were issued to underwriters in connection with the Company's initial
public offering.  The securities underlying these warrants, as well as the
common stock underlying currently outstanding options and warrants, are subject
to certain demand and piggy-back registration rights.  As of January 31, 1997,
68,000 of these warrants have been exercised.

In connection with the Company's offering of its common stock in March 1997
discussed above, the Company issued warrants to acquire 200,000 shares of the
Company's common stock to the representatives of the underwriters of the
offering.  The warrants have an exercise price of $8.40 per share, may not be
exercised for a period of one year following the offering, and expire two years
after the offering.

In connection with some special projects in 1996, the Company issued warrants
to the Company's legal counsel.  In August 1996, the Company issued warrants to
purchase 50,000 shares of its common stock for $6.43 per share, exercisable for
a period of four years from their issuance.  In December 1996, the Company
issued warrants to purchase 50,000 shares of its common stock at $9.28 per
share, exercisable beginning December 14, 1997 for a period of four years from
their issuance.  These warrants are unexercised at January 31, 1997.

11.  COMMITMENTS:

Equipment purchases - On February 22, 1994, the Company executed an agreement
with Input/Output, Inc. (I/O) under which I/O will notify the Company of any
inquiries it receives to lease I/O's remote signal conditioners in North and
South America and will allow the Company the  opportunity to provide such
leasing. In the event the Company and a prospective customer are unable to
reach agreement on such leases in a 72-hour period, I/O shall have the right to
offer the equipment for lease to the prospective customer.  The Company
purchased $10,000,000 of I/O remote signal conditioners by December 31, 1996 in
compliance with the terms of the agreement.

Effective June 1, 1996, the Company entered into an agreement with I/O to amend
the terms of and extend the Exclusive Lease Referral Agreement through May 31,
2000.  Under the I/O Agreement as amended, the Company must purchase an
aggregate of $13.25 million of I/O equipment as follows: $3.0 million of I/O
equipment between June 1 and November 30, 1996 (the "Renewal Purchase"), with a
minimum of $1.5 million to be purchased by August 31, 1996.  Thereafter, from
January 1, 1997 through May 31, 1997, the Company must purchase at least an
aggregate of $1.25 million of I/O equipment.  In each of the years form June 1,
1997 through May 31, 1999, June 1 through May 31, 1999 and June 1, 1999 through
May 31, 2000, the Company must purchase at least an aggregate of $3.0 million
of I/O equipment (or an aggregate additional $10.25 million after the $3.0
million Renewal Purchase is made).  As of January 31, 1997, the Company
believes it has fulfilled the terms of the agreement, including the minimum
purchase commitments.





                                      F-14
<PAGE>   35
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS



11.  COMMITMENTS: (continued)

In September 1996, the Company entered into two agreements with SERCEL, S.A.
("SERCEL") a designer and manufacturer of land/shallow water seismic data
acquisition systems and related equipment.  One agreement, the Exclusive
Equipment Lease Agreement provides that until December 31, 1999, the Company
will be SERCEL's short-term leasing agency throughout the world and that SERCEL
will refer to the Company all requests it receives from its customers to lease
its 3-D data acquisition equipment and other field equipment; and the Company
will acquire up to $10.2 million of SERCEL's 3-D existing data acquisition
equipment lease pool, consisting primarily 3-D channel boxes.  A condition of
the SERCEL Lease Agreement is that the Company must purchase an aggregate of
$10.2 million of SERCEL data acquisition and other field equipment on or before
December 31, 1999 in six installments of $1.7 million as follows; (i) by June
30, 1997 , and (ii) from July 1, 1997 to December 31, 1997 and each succeeding
six-month period thereafter through December 31, 1999.   The second agreement,
the Commercial Representation Agreement, provides that until September 19,
1999, the Company will be SERCEL's exclusive sales agent in Canada.  In
connection with entering into this agreement, the Company established an office
in Calgary, Alberta, Canada in November 1996.  As of January 31, 1997, the
Company believes it has fulfilled the terms of the agreement, including the
minimum purchase commitments.

Employment Agreement - Effective January 15, 1997, the Company entered into an
employment agreement with the Company's President for a term of five years,
beginning January 15, 1997, which term is automatically extended for successive
one- year periods unless either party gives written notice of termination at
least 30 days prior to the end of the current term.  The agreement provides for
an annual salary of $150,000, subject to increase by the Board of Directors.
It may be terminated prior to the end of the initial term or any extension
thereof if the President dies; if it is determined that the President has
become disabled; if the Board of Directors determines that the President has
breached the employment agreement in any material respect, has appropriated a
material business opportunity of the Company or has engaged in fraud or
dishonesty with respect to the Company's business that is punishable by
imprisonment.  If the President's employment is terminated by the Company prior
to the end of the initial five-year term other than for a reason enumerated
above, the President will be entitled to payments equal to $450,000, payable
ratably over the 24 months following such termination.  For a period of two
years after the termination of the agreement, the President is prohibited 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.

Consulting agreements - The Company has a contract with the father of the
Company's President, to provide sales consulting services.  The agreement calls
for payments of $5,500 per month through April 1999, subject to earlier
termination on the occurrence of certain events.

12.  STOCK OPTION PLANS:

The Company has a stock option plan under which options to purchase a maximum
of 400,000 shares of common stock may be issued to officers, employee
directors, key employees and consultants of the Company. The stock option plan
provides both for the grant of options intended to qualify as "incentive stock
options" under the Internal Revenue Code of 1986, as amended (the Code), as
well as options that do not so qualify.





                                      F-15
<PAGE>   36
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS



12.  STOCK OPTION PLANS: (continued)

Activity in the 1995 Stock Option Plan for the years ended December 31, 1995
and 1996 was as follows:


<TABLE>
<CAPTION>                                                        Weighed Average
                                                Number of         Exercise Price
                                                 Shares             Per Share
                                                --------            ---------                                                
<S>                                             <C>                 <C>
Outstanding, January 31, 1995                    183,250            $    5.00 
Exercised                                              -                    -
Granted                                           67,000            $    3.27 
Expired                                                -                    -
                                                --------            ---------                                                
                                                                     
Outstanding, January 31, 1996                    250,250            $    4.54 
Exercised                                              -                    -
Granted                                           43,500            $    5.87 
Expired                                                -                    -
                                                --------            ---------                                                
Outstanding,  January 31, 1997                   293,750            $    4.73

</TABLE>

As of January 31, 1997, options to acquire 250,250 shares of the Company's
common stock were fully vested and exercisable at a weighted average exercise
price of $4.54 per share.  The remaining options, which have a weighted average
exercise price of $5.87 per share, will vest in fiscal 1998.

If not previously exercised, options outstanding at January 31, 1997, will
expire as follows: 116,000 options expire on May 9, 1999; 9,000 options expire
on December 24, 2000; 9,000 options expire on August 14, 2001; 67,250 options
expire on May 9, 2004; 2,000 options expire on March 16, 2005; 3,000 options
expire on June 8, 2005; 53,000 options expire on December 24, 2005; 3,000
options expire on June 12, 2006; and 31,500 options expire on August 14, 2006.

With respect to incentive stock options, no option may be granted more than ten
years after the effective date of the stock option plan or exercised more than
ten years after the date of grant (five years if the optionee owns more than
10% of the common stock of the Company).  Additionally, with regard to
incentive stock options, the exercise price of the option may not be less than
100% of the fair market value of the common stock at the date of grant (110% if
the optionee owns more than 10% of the common stock of the Company).  Subject
to certain limited exceptions, options may not be exercised unless, at the time
of exercise, the optionee is in the service of the Company.  As of January 31,
1997, options to purchase an aggregate of 285,750 shares of common stock are
issued and outstanding under the Stock Option Plan, 183,250 of which are
exercisable  at a price of $5.00 per share, 62,000 of which are exercisable at
$3.29 per share, 39,500 of which are  exercisable at $5.75 per share and 1,000
of which are exercisable at $6.00 per share.





                                      F-16
<PAGE>   37
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS



12.  STOCK OPTION PLANS: (continued)

The Company has a non-employee director stock option plan (the Director Plan)
which provides for the grant of options that do not qualify as "incentive stock
options" under the Code.  Options granted under the Director Plan are to have
an exercise price at least equal to the fair market value of the Company's
common stock on the date of grant.  Pursuant to the Director Plan, options to
purchase 1,000 shares of common stock are granted to each non-employee director
upon election to the Board and every year thereafter so long as they are
re-elected to the Board of Directors.  Options granted under the Director Plan
are fully vested one year after their grant and expire ten years after the date
of the grant.  As of January 31, 1997, 8,000 options have been granted under
this Plan at exercise prices ranging from $2.88 to $7.38 and none have been
exercised as of January 31, 1997.

The Company applies APB Opinion 25, Accounting for Stock Issued to Employees,
and related Interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized for its stock option plans.  Had
compensation expense for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans, consistent with the method of SFAS No. 123, the Company's net income and
income per common share would have been decreased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                    1996               1997    
                                                -----------         -----------                                                
  <S>                            <C>            <C>                 <C>
  Net income                     As reported    $ 1,713,000         $ 2,702,000 
                                 Pro forma      $ 1,657,000         $ 2,443,000

  Net income  per common share   As reported    $       .52         $       .60 
                                 Pro forma      $       .50         $       .54

</TABLE>

The fair value of each option grant was estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions; risk
free rates of 5.4% to 7%: volatility of 48.4%: no assumed dividend yield: and
expected lives of five to ten years.

13.  SECOND PUBLIC OFFERING:

During March 1997, the Company completed the successful public offering of a
total of 3,450,000 shares of its common stock, par value $0.01, of which
2,875,000 shares were sold by the Company and 575,000 shares were sold by the
selling shareholders.  The net proceeds to the Company from the offering (after
deducting underwriting discounts and commissions and estimated expenses of the
offering) were approximately $18.2 million.





                                      F-17
<PAGE>   38
                            MITCHAM INDUSTRIES, INC.

                         NOTES TO FINANCIAL STATEMENTS



14.  SALES REVENUE:

    The components of sales revenue are as follows:


<TABLE>
<CAPTION>
                                                   Years Ended January 31,  
                                                   -----------------------  
                                                      1996         1997     
                                                   ----------   ----------  
         <S>                                       <C>          <C>
         Sales - seismic equipment                 $2,135,000   $2,809,000 
         Sales - sold under lease purchase options       -       3,536,000
                                                   ----------   ----------  
                                                   $2,135,000   $6,345,000

</TABLE>





                                      F-18
<PAGE>   39


                             EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit Number       Description
--------------       -----------
    <S>     <C>      <C>
    3.1     --       Amended and Restated Articles of Incorporation of Mitcham Industries, Inc. (1) (Exhibit 3.1)
    3.2     --       Amended and Restated Bylaws of Mitcham Industries, Inc. (1) (Exhibit 3.2)
    4.1     --       Copy of Specimen stock certificate evidencing Common Stock of Mitcham Industries, Inc. (2)
                     (Exhibit 4.1)
    9       --       Voting Agreement, dated September 20, 1993, between the Company, Billy F. Mitcham, Jr. and
                     certain shareholders (1) (Exhibit 9)
    10.1    --       Exclusive Lease Referral Agreement, dated February 22, 1994, between Mitcham Industries, Inc.
                     and Input/Output, Inc., as amended. (3) (Exhibit 10.1)
    10.2    --       Fifth Amendment to Exclusive Lease Referral Agreement with Input/Output,  dated January 9, 1997 (7)
                     (Exhibit 10.2)
    10.3    --       Registration Rights Agreement, dated September 20, 1993, between the Company and certain
                     shareholders (1) (Exhibit 10.14)
    10.4    --       Employment Agreement, dated January 15, 1997, between the Company and Billy F. Mitcham, Jr. (7)
                     (Exhibit 10.4)
    10.5    --       Consulting Agreement, dated April 1, 1994, between the Company and Billy F. Mitcham, Sr. (1)
                     (Exhibit 10.16)
    10.6    --       First Amendment to Consulting Agreement, dated January 15, 1997, between the Company and Billy
                     F. Mitcham, Jr. (7) (Exhibit 10.6)
    10.7    --       Promissory Note, dated September 22, 1995, in the original principal amount of $276,250, made
                     payable by the Company to the order of First National Bank of Huntsville (4) (Exhibit 10.26)
    10.8    --       Deed of Trust, dated September 22, 1995, securing the $276,250 loan (4) (Exhibit 10.27)
    10.9    --       Promissory Note, dated January 31, 1996, in the original principal amount of  $1,000,000 made
                     payable by the Company to the order of Bank One, Texas, National Association ("Bank One") (5)
                     (Exhibit 10.8)
    10.10   --       Promissory Note, dated January 31, 1996, in the original principal amount of $4,206,000, made
                     payable by the Company to the order of Bank One Leasing Corporation ("Banc One Leasing") (5)
                     (Exhibit 10.9)
    10.11   --       Letter Loan Agreement, dated January 31, 1996, as amended, between the Company, Bank One and
                     Banc One Leasing Corporation (5) (Exhibit 10.10)
    10.12   --       Assignment of Leases, dated January 31, 1996, between the Company, Bank One and Banc One
                     Leasing (5) (Exhibit 10.11)
    10.13   --       Security Agreement, dated January 31, 1996, between the Company, Bank One, and Banc One Leasing
                     (5) (Exhibit 10.12)
    10.14   --       Exclusive Lease Referral Agreement, dated May 14, 1996, between the Company and Pelton Company,
                     Inc. (6) (Exhibit 10.1)
    10.15   --       Exclusive Equipment Lease Agreement, effective September 20, 1996, between the Company and
                     SERCEL, S.A. (6) (Exhibit 10.2)
    10.16   --       Commercial Representation Agreement, effective September 20, 1996, between Mitcham Canada LTD.,
                     an Alberta corporation, and Georex, Inc. (6) (Exhibit 10.3)
    10.17   --       First Amendment of Exclusive Lease Referral Agreement, dated January 1997,
</TABLE>




    



<PAGE>   40
<TABLE>
<CAPTION>
Exhibit Number
-------------
     <S>     <C>      <C>
                       between the Company and Pelton.(7) (Exhibit 10.17)
     10.18   --       1994 Stock Option Plan of Mitcham Industries, Inc. (2) (Exhibit 10.9)
     10.19   --       Form of Incentive Stock Option Agreement (2) (Exhibit 10.10)
     10.20   --       Form of Nonqualified Stock Option Agreement (2) (Exhibit 10.11)
     10.21   --       1994 Non-Employee Director Stock Option Plan of Mitcham Industries, Inc. (2) (Exhibit 10.12)
     10.22   --       Form of Nonqualified Stock Option Agreement (2) (Exhibit 10.13)
     10.23   --       Form of Mitcham Industries, Inc. customer lease agreement (1) (Exhibit 10.20)
     10.24   --       Letter Loan Agreement, dated January 16, 1997, between the Company and Bank One (8) (Exhibit
                      10.24)
     10.25   --       Assignment of Leases, dated January 16, 1997, between the Company and Bank One (8) (Exhibit
                      10.25)
     10.26   --       Security Agreement, dated January 16, 1997, between the Company and Bank One (8) (Exhibit
                      10.26)
     10.27   --       Promissory Note, dated January 16, 1997, made payable by the Company to the order of Bank One
                      in the original principal amount of $1,000,000 (8) (Exhibit 10.27)
     10.28   --       First Amendment to Letter Loan Agreement, dated January 16, 1997, among the Company, Bank One
                      and Bank One Leasing (8) (Exhibit 10.28)
     21 --            Subsidiaries of the Company (6) (Exhibit 11)
     23 --            Consent of Hein + Associates LLP
     27 --            Financial Data Schedule
</TABLE>

(1)  Incorporated by reference to the indicated exhibit number of the
     Company's Registration Statement on Form SB-2 (File No.
     33-81164-D), filed with the SEC on July 5, 1994.
(2)  Incorporated by reference to the indicated exhibit number of the
     Company's Amendment No. 2 to the Registration Statement on Form SB-2,
     filed with the SEC on November 9, 1994.
(3)  Incorporated by reference to the indicated exhibit number of the
     Company's Amendment No. 3 to the Registration Statement on Form SB-2,
     filed with the SEC on December 12, 1994.
(4)  Incorporated by reference to the indicated exhibit number of the
     Company's Post-Effective Amendment No. 2 to its Registration Statement
     on Form SB-2, filed with the SEC on October 30, 1995.
(5)  Incorporated by reference to the indicated exhibit number of the
     Company's Post-Effective Amendment No. 4 to its Registration Statement
     on Form SB-2, filed with the SEC on April 17, 1996.
(6)  Incorporated by reference to the indicated exhibit number of the
     Company's Registration Statement  on Form S-3 (File No. 333-10555),
     filed with the SEC on October 30, 1996.
(7)  Incorporated by reference to the indicated exhibit number of the
     Company's Registration Statement on Form S-1 (File No. 333-19997),
     filed with the SEC on January 17, 1997.
(8)  Incorporated by reference to the indicated exhibit number of the
     Company's Amendment No. 1 to its Registration Statement on Form S-1,
     filed with the SEC on January 31, 1997.