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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1997

REGISTRATION NO. 333-19997

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AMENDMENT NO. 1

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

TEXAS 5008 76-0210849
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) No.)

BILLY F. MITCHAM, JR.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342

(409) 291-2277

(Name, address, including zip code and telephone number, including
area code, of Registrant's principal executive offices and agent for service)

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Copies to:

SABRINA A. MCTOPY ALAN P. BADEN
NORTON, JACOBS, KUHN & MCTOPY, L.L.P. VINSON & ELKINS L.L.P.
1111 BAGBY, SUITE 2450 2800 FIRST CITY TOWER
HOUSTON, TEXAS 77002-2546 HOUSTON, TEXAS 77002-6760
(713) 659-1131 (713) 758-2222

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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CALCULATION OF REGISTRATION FEE

- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------

Common Stock, $.01 par value ("Common
Stock").............................. 3,450,000 $8.50 $29,325,000
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Representatives' Warrants.............. 200,000 $.001 $200
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Common Stock underlying the
Representatives' Warrants(3)......... 200,000 $10.20 $2,040,000
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Total........................ $31,365,200 $9,505
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(1) Includes 450,000 shares subject to an option granted to the Underwriters to
cover over-allotments, if any.

(2) Estimated solely for purposes of calculating the registration fee.

(3) The Registration Statement also covers any additional securities that may
become issuable pursuant to the anti-dilution provisions of the
Representatives' Warrants.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
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***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************

SUBJECT TO COMPLETION, DATED JANUARY 31, 1997

3,000,000 SHARES

[MITCHAM LOGO]
COMMON STOCK

Of the 3,000,000 shares of Common Stock offered hereby, 2,500,000 shares
are being offered by Mitcham Industries, Inc. (the "Company"), and 500,000
shares are being offered by the selling shareholders (the "Selling
Shareholders"). The Company will not receive any proceeds from the sale of
shares by the Selling Shareholders.

The Common Stock is quoted on the Nasdaq National Market under the symbol
"MIND." The last reported sale price of the Common Stock on January 22, 1997, as
reported by the Nasdaq National Market, was $8.00 per share. See "Price Range of
Common Stock."

FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE 6 HEREOF.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(2)
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Per share.............................. $ $ $ $
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Total(3)............................... $ $ $ $
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(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. Does not reflect additional compensation
to the Underwriters in the form of (i) a non-accountable expense allowance
of $ ($ if the Underwriters' over-allotment option is
exercised in full) and (ii) warrants to purchase an aggregate of 200,000
shares of Common Stock at 120% of the Price to Public for two years
beginning one year after the effective date of the Registration Statement of
which this Prospectus is a part. For additional information with respect to
the arrangements between the Company and the Representatives, see
"Underwriting."

(2) Before deducting offering expenses payable by the Company, estimated to be
approximately $225,000.

(3) The Company and the Selling Shareholders have granted to the Underwriters a
30-day option to purchase up to 450,000 additional shares of Common Stock
solely to cover over-allotments, if any, on the same terms and conditions as
the shares offered hereby. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, Proceeds to Company
and Proceeds to Selling Shareholders will be $ , $ ,
$ and $ , respectively. See "Underwriting."

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

The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of such
shares will be made at the offices of Rodman & Renshaw, Inc., New York, New
York, on or about , 1997.

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RODMAN & RENSHAW, INC. SIMMONS & COMPANY
INTERNATIONAL

The date of this Prospectus is , 1997.
3

[ILLUSTRATIONS]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS
(IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE
WITH RULE 10B-6A UNDER THE EXCHANGE ACT. SEE "UNDERWRITING."

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PROSPECTUS SUMMARY

The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information and financial statements
(including the notes thereto) appearing elsewhere in this Prospectus and
incorporated herein by reference. The term "Company" refers to Mitcham
Industries, Inc. and its wholly-owned subsidiary, Mitcham Canada Ltd., an
Alberta corporation. Unless otherwise indicated, all financial and share
information set forth in this Prospectus assumes no exercise of the
Underwriters' over-allotment option and a public offering price of $8.00 per
share. See "Glossary of Terms" for certain terms relating to the seismic
industry used in this Prospectus. Investors should carefully consider the
information set forth in "Risk Factors" beginning on page 6.

THE COMPANY

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 formations 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
December 31, 1996, the Company's lease fleet of 3-D channel boxes increased from
85 to approximately 2,000 (or from 510 channels to approximately 12,000
channels). Earnings before interest, taxes, depreciation and amortization
("EBITDA") of approximately $4.0 million for the fiscal year ended January 31,
1996 represented an increase of 90.4% over the fiscal year ended January 31,
1995, and EBITDA of approximately $4.6 million for the nine months ended October
31, 1996 represented an increase of 82.6% over the same prior year period.

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 two
dimensional ("2-D") surveys, thereby providing higher resolution data for a
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 nine months ending October 31, 1996, 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 December 31, 1996, the Company has
met $4.8 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

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SERCEL must refer to the Company all requests it receives to lease its 3-D data
acquisition 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
December 31, 1996, the Company has met $4.5 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. See "Business -- I/O Agreement" and "-- SERCEL
Agreements."

BUSINESS STRATEGY

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:

- 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.

- 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.

- 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.

The Company was formed in January 1987. Its principal offices are located
at 44000 Highway 75 South, (Post Office Box 1175), Huntsville, Texas, and its
telephone number is (409) 291-2277.

THE OFFERING

Common Stock Offered by the Company................ 2,500,000
Common Stock Offered by the Selling Shareholders... 500,000
Common Stock to be Outstanding after the
Offering......................................... 6,974,880 shares (1)
Use of Proceeds.................................... To purchase additional 3-D seismic data
acquisition equipment for the Company's lease
pool, for repayment of debt and for other
working capital purposes. See "Use of Proceeds."
Nasdaq National Market Symbol...................... "MIND"

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

(1) Does not include (i) 293,750 shares of Common Stock issuable upon the
exercise of options granted and an additional 106,250 shares that may be
granted in the future under stock option plans, (ii) 246,723 shares of
Common Stock issuable upon the exercise of certain warrants and (iii)
200,000 shares of Common Stock issuable upon the exercise of the
Representatives' Warrants. See "Description of Capital Stock and Other
Securities." Does not reflect the exercise of a warrant for 8,380 shares of
Common Stock to be sold in the Offering by one of the Selling Shareholders.
See "Principal and Selling Shareholders."

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SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table sets forth selected financial data of the Company for
each of the four fiscal years ended January 31, 1996, which was derived from the
Company's audited financial statements, and the fiscal year ended January 31,
1992, which was derived from unaudited financial statements of the Company. Also
set forth below is selected financial data for the nine months ended October 31,
1995 and 1996 and at October 31, 1996, which was derived from the unaudited
financial statements of the Company. In the opinion of management of the
Company, the unaudited financial statements include all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of the
financial data for such period. The results of operations for the nine months
ended October 31, 1995 and 1996 are not necessarily indicative of results for a
full fiscal year. The data should be read in conjunction with the Financial
Statements (including the notes thereto) and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein.

NINE MONTHS ENDED
FISCAL YEAR ENDED JANUARY 31, OCTOBER 31,
--------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1995 1996
----------- ------ ------ ------ ------ ------ ------
(UNAUDITED) (UNAUDITED)

SELECTED STATEMENTS OF OPERATIONS DATA:
Revenues:
Leases of seismic equipment........ $ 602 $1,266 $1,601 $2,424 $5,157 $3,431 $5,356
Sales of seismic equipment......... 1,510 1,156 2,926 2,860 2,135 1,643 2,007
----------- ------ ------ ------ ------ ------ ------
Total......................... 2,112 2,422 4,527 5,284 7,292 5,074 7,363
Expenses:
Seismic equipment subleases........ 335 915 896 245 251 222 111
Sales of seismic equipment......... 1,002 796 1,772 2,027 1,085 1,000 1,261
General and administrative......... 651 655 655 924 1,344 990 1,199
Depreciation....................... 17 29 62 363 1,331 825 1,951
Provision for doubtful accounts.... -- -- 38 35 627 372 418
----------- ------ ------ ------ ------ ------ ------
Total expenses................ 2,005 2,395 3,423 3,594 4,638 3,409 4,940
----------- ------ ------ ------ ------ ------ ------
Other income (expense)............... (44) 15 4 (149) 17 20 49
----------- ------ ------ ------ ------ ------ ------
Income before income taxes........... 63 42 1,108 1,541 2,671 1,685 2,472
Provision for income taxes........... 19 7 405 541 958 605 854
----------- ------ ------ ------ ------ ------ ------
Net income........................... $ 44 $ 35 $ 703 $1,000 $1,713 $1,080 $1,618
=========== ====== ====== ====== ====== ====== ======
SELECTED PER SHARE DATA:
Net income(1)........................ $ 0.03 $ 0.03 $ 0.51 $ 0.66 $ 0.52 $ 0.34 $ 0.37
=========== ====== ====== ====== ====== ====== ======
Weighted average common shares
outstanding(2)..................... 1,380 1,380 1,380 1,514 3,306 3,170 4,431
SELECTED CASH FLOW AND OTHER DATA:
EBITDA(3)............................ $ 74 $ 75 $1,186 $2,113 $4,023 $2,516 $4,593
Capital expenditures................. $ -- $ 28 $ 900 $4,496 $5,765 $4,099 $8,890

AT JANUARY 31, AT OCTOBER 31, 1996
-------------------------------------------------- -------------------------
1992 1993 1994 1995 1996 ACTUAL AS ADJUSTED(5)
----------- ---- ------ ------ ------- ------- --------------
(UNAUDITED) (UNAUDITED)

SELECTED BALANCE SHEET DATA:
Total assets.................. $ 581 $615 $2,427 $8,199 $12,239 $23,252 $ 36,987
Total liabilities............. 342 341 1,450 2,023 4,191 9,516 5,116
Long-term debt(4)............. -- -- -- 261 1,173 2,910 --
Shareholders' equity.......... 239 274 977 6,176 8,048 13,736 31,871

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(1) There was no dilutive effect to earnings per share for the fiscal years
ended January 31, 1992, 1993, 1994 and 1995 and for the nine months ended
October 31, 1995. Fully diluted earnings per share was $0.50 for the fiscal
year ended January 31, 1996 and $0.36 for the nine months ended October 31,
1996.
(2) The fully diluted weighted average common shares outstanding was 3,403,000
at January 31, 1996 and 4,489,000 at October 31, 1996.
(3) EBITDA is income before interest, taxes, depreciation and amortization.
EBITDA is a financial measure commonly used in the Company's industry and
should not be considered in isolation or as a substitute for net income,
cash flow provided by operating activities or other income or cash flow data
prepared in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.
(4) Long-term debt includes long-term debt net of current maturities and capital
lease obligations net of current portion.
(5) As adjusted to reflect receipt by the Company of estimated net proceeds from
the issuance of 2,500,000 shares of Common Stock and the application of such
proceeds. See "Use of Proceeds" and "Capitalization."

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The discussion in this Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
significantly from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business," as well as
those discussed elsewhere in this Prospectus. Statements contained in this
Prospectus that are not historical facts are forward-looking statements that are
subject to the safe harbor created by the Private Securities Litigation Reform
Act of 1995.

RISK FACTORS

In evaluating an investment in the Common Stock being offered hereby,
prospective investors should consider carefully, among other things, the
following risk factors.

POSSIBLE ADVERSE EFFECT OF INSTABILITY OF OIL AND GAS INDUSTRY AND DEMAND FOR
SERVICES

Demand for the Company's services depends upon the level of spending by oil
and gas companies for exploration, production, and development activities, as
well as on the number of crews for land-based seismic data acquisition operating
in the world, and especially in North America. Fluctuations in the price of oil
and gas in response to relatively minor changes in the supply and demand for oil
and natural gas continue to have a major effect on these activities and thus, on
the demand for the Company's services. Although published industry sources
indicate that the number of seismic crews has decreased in the last five years,
the Company believes that utilization of 3-D seismic equipment has increased.
There can be no assurance of an increased demand for additional 3-D seismic
equipment or as to the level of future demand for the Company's services. See
"Business."

DEPENDENCE UPON ADDITIONAL LEASE CONTRACTS; UNCERTAIN FUTURE RESULTS

The Company's operating risks occur primarily in its seismic equipment
leasing business. The Company's leases typically have a term of three to nine
months and provide gross revenues equal to approximately 20% to 70% of the
original acquisition cost of the equipment, thereby recovering only a portion of
the Company's capital investment. The Company's ability to generate lease
revenues, and thus its profitability, is dependent upon obtaining additional
lease contracts after the termination of an initial lease. However, lessees are
under no obligation to, and frequently do not, continue to lease seismic
equipment after the expiration of a lease. Although the Company has been
successful in obtaining additional lease contracts with other lessees after the
termination of three to nine month equipment leases, there can be no assurance
that it will continue to do so. The Company's failure to obtain additional or
extended leases beyond the initial term would have a material adverse effect on
its operations and financial condition. See "Business -- Operations."

DEPENDENCE ON KEY PERSONNEL

The Company's success is dependent on, among other things, the services of
Billy F. Mitcham, Jr., the Chairman of the Board, President and Chief Executive
Officer of the Company. Mr. Mitcham's employment agreement has an initial term
through January 15, 2002, and is automatically extended on a year-to-year basis
until terminated by either party giving 30 days notice prior to the end of the
current term, (subject to earlier termination upon certain stated events). The
agreement provides for an annual salary of $150,000 and a bonus at the
discretion of the Company's Board of Directors. The agreement also prohibits Mr.
Mitcham from engaging in any business activities that are competitive with the
Company's business and from diverting any of the Company's customers to a
competitor, for two years after the termination of his employment. The Company
has obtained a $1.0 million key employee life insurance policy payable to the
Company in the event of Mr. Mitcham's death. The loss of the services of Mr.
Mitcham could have a material adverse effect on the Company. In particular, the
Exclusive Lease Referral Agreement with I/O (the "I/O Agreement") is terminable
at such time as Mr. Mitcham is no longer the President of the Company and the
Exclusive Equipment Lease Agreement with SERCEL (the "SERCEL Lease Agreement")
is terminable at such time

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he is no longer employed by the Company in a senior management capacity. See
"Management -- Employment Agreement with Billy F. Mitcham, Jr."

CUSTOMER CONCENTRATION AND CREDIT LOSSES

The Company typically leases and sells significant amounts of seismic
equipment to a relatively small number of customers, the composition of which
changes from year to year as leases are negotiated and concluded and equipment
needs vary. Therefore, at any one time, a large portion of the Company's
revenues may be derived from a limited number of customers, and its ability to
maintain profitability includes risks associated with the creditworthiness and
profitability of those customers. In the fiscal years ended January 31, 1994,
1995 and 1996, the single largest customer accounted for approximately 36%, 16%
and 18%, respectively, of the Company's total revenues. The termination of any
large seismic lease could have a material adverse effect on the Company's
operations if the Company does not replace such business on a timely basis. See
"Business -- Customers; Sales and Marketing."

Grant Geophysical, Inc. ("Grant") filed for bankruptcy protection during
December 1996. Revenues derived from Grant amount to 18.5% of total revenues for
the eleven-month period ended December 31, 1996. As of that date, amounts due
from Grant totalled approximately $1.0 million. During December 1996, the
Company increased its allowance for trade accounts receivable from $615,000 at
October 31, 1996 to $1.5 million at December 31, 1996, which amount was intended
to fully reserve all amounts due from Grant and provide for any potential loss
associated with the Company's remaining trade accounts receivable. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

TECHNOLOGICAL OBSOLESCENCE

The Company has a substantial capital investment in 3-D seismic equipment.
In addition, under the I/O Agreement and the SERCEL Lease Agreement, the Company
is required to make a substantial additional investment in 3-D seismic and other
peripheral equipment. The Company believes that the technology represented by
the 3-D equipment in service and to be acquired from I/O and SERCEL will not
become obsolete prior to the Company's recovery of its initial investment.
However, there can be no assurance that manufacturers of seismic equipment will
not develop alternative systems that would have competitive advantages over
seismic systems now in use, thus having a potentially adverse effect on the
Company's ability to profitably lease its existing 3-D seismic equipment. In the
past, the Company has been successful in avoiding material losses caused by
technological obsolescence by selling its older technology 2-D seismic equipment
in the international market and, to a lesser extent, to smaller seismic survey
firms in the domestic market. However, there can be no assurance that the
Company will be able to sell technologically obsolete equipment in the future.
See "Business -- I/O Agreement" and "-- SERCEL Agreements."

VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS

The first and fourth quarters of the Company's fiscal year have
historically accounted for and are expected in the future to account for a
greater portion of the Company's revenues than do the second and third quarters
of its fiscal year. This fluctuation in revenues is primarily due to the
increased seismic survey activity in Canada from October through March, which
significantly affects the Company because about one-half of the Company's total
revenues are historically attributable to Canadian operations. This seasonal
pattern may cause the Company's results of operations to vary significantly from
quarter to quarter. Accordingly, period to period comparisons are not
necessarily meaningful and should not be relied on as indicative of future
results. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Seasonality" and "Business -- Seismic Equipment
Leasing."

DEPENDENCE UPON KEY SUPPLIERS

The Company relies upon and has agreements with I/O, SERCEL and Pelton
Company, Inc. ("Pelton"), a manufacturer and supplier of vibrator control
electronics, to manufacture and sell to the

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Company the seismic equipment that the Company leases and sells to its customers
and, to a lesser extent, to refer leasing customers to the Company. The
termination of the agreements for any reason, including any failure by the
Company to meet the minimum purchase requirements under the I/O Agreement or the
SERCEL Lease Agreement, could materially adversely affect the Company's
business. While the Company does not anticipate any difficulty in obtaining
seismic equipment or lease referrals from I/O, SERCEL or Pelton based upon past
experience or in meeting the minimum purchase requirements under the I/O
Agreement or the SERCEL Lease Agreement, any such occurrence could have a
material adverse effect upon the Company's business, financial condition and
results of operations. See "Business -- I/O Agreement," "-- SERCEL Agreements"
and "-- Pelton Agreement."

COMPETITION

Competition in the leasing of seismic equipment is fragmented, and the
Company is aware of numerous companies that engage in such equipment leasing.
The Company believes that its competitors do not lease seismic equipment of
several manufacturers or have as extensive a seismic equipment lease pool as
does the Company. The Company also believes that its competitors 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
seeking to generate revenue from equipment that is temporarily idle. Under the
I/O Agreement, I/O and its subsidiary, Global Charter Corporation ("Global")
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.

The Company has several competitors engaged in seismic equipment sales,
including companies providing land-based seismic surveys and major oil and gas
exploration companies that use seismic equipment, many of which have
substantially greater financial resources than the Company. There are also
numerous smaller competitors who, in the aggregate, generate significant revenue
from the sale of seismic survey equipment. See "Business -- I/O Agreement,"
" -- SERCEL Agreements" and "-- Competition."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of significant amounts of Common Stock in the public market following
this Offering could adversely affect prevailing market prices. The Company's
executive officers and directors, who collectively own 1,183,070 shares, or
26.4%, of the outstanding Common Stock, have agreed that for a period of 180
days after the date of this Prospectus they will not offer for sale, sell or
otherwise dispose of any shares of Common Stock (other than the 325,000 shares
being sold herein by the executive officers and directors who are Selling
Shareholders) or any securities convertible into or exchangeable for shares of
Common Stock, without the prior written consent of Rodman & Renshaw, Inc. on
behalf of the Underwriters. Upon the expiration of such agreements, all of the
shares held by such persons will be eligible for sale subject to the volume
limitations and other restrictions of Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act"). There are also outstanding under the
Company's 1994 Stock Option Plan and 1994 Non-Employee Director Stock Option
Plan (collectively, the "Stock Option Plans") options to purchase 293,750 shares
of Common Stock, of which 250,250 are currently exercisable. The Company has
registered under the Securities Act the shares issuable upon the exercise of
such options and such shares are eligible for resale in the public market,
except that any such shares issued to affiliates are subject to the volume
limitations and other restrictions of Rule 144. In addition, there are
outstanding warrants to purchase 246,723 shares of Common Stock, of which
warrants to purchase 196,723 shares are currently exercisable. In connection
with this Offering, the Company has agreed to sell warrants to the
Representatives to purchase from the Company up to 200,000 shares of Common
Stock, exercisable in whole or in part at any time during the two-year period
commencing one year after the effective date of the Registration Statement of
which this Prospectus is a part. See "Dilution," "Shares Eligible for Future
Sale" and "Underwriting."

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10

DILUTION

Purchasers of Common Stock in this Offering will experience immediate and
substantial dilution of $3.37 in net tangible book value per share as of October
31, 1996. See "Dilution."

NO ANTICIPATED DIVIDENDS

The Company has never paid cash dividends on its Common Stock and does not
presently anticipate paying any cash dividends on the Common Stock in the
foreseeable future. In addition, the loan agreement between the Company and its
commercial lenders prohibits the payment of dividends. See "Dividend Policy."

POSSIBLE ADVERSE EFFECT OF ISSUANCE OF PREFERRED STOCK WITHOUT SHAREHOLDER
APPROVAL

The Company's Articles of Incorporation, as amended, authorize the issuance
of 1,000,000 shares of "blank check" preferred stock, par value $1.00 per share
("Preferred Stock"), with such designations, rights and preferences as may be
determined from time to time by the Board of Directors. No shares of Preferred
Stock will be outstanding as of the consummation of this Offering. However,
because the Board of Directors is empowered to issue Preferred Stock with such
preferences and rights as it determines, it may afford the holders of any series
of Preferred Stock preferences, rights or voting powers superior to those of the
holders of Common Stock. Although the Company has no present intention to issue
any shares of its Preferred Stock, there can be no assurance that the Company
will not do so in the future. See "Description of Capital Stock and Other
Securities -- Preferred Stock."

LIMITATION ON DIRECTOR LIABILITY

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

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11

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock being offered hereby (assuming a public offering price of $8.00 per
share and after deducting underwriting discounts and commissions and estimated
expenses of the Offering) are estimated to be approximately $18.1 million ($20.9
million if the Underwriters' over-allotment option is exercised in full).
Approximately (i) $12.0 million of the net proceeds will be used to purchase
additional 3-D seismic data acquisition equipment, including the $2.35 million
remaining minimum purchase requirement under the I/O Agreement through May 31,
1998, (ii) $4.4 million will be used to pay outstanding debt to commercial
lenders, (iii) $1.0 million will be 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 net
proceeds will be used for other general corporate purposes.

Of the $4.4 million that will be used to pay debt to commercial lenders,
approximately $1.0 million will be used to pay the Company's revolving line of
credit (the "Working Capital Revolver") with Bank One, Texas, N.A. ("Bank One")
and $3.4 million will be used to pay its loan (the "Term Loan") with Banc One
Leasing Corporation ("Banc One Leasing"). Approximately $1.0 million of the Term
Loan was advanced in January 1996 primarily to pay amounts due to I/O for 3-D
channel boxes acquired in the 1996 fiscal year. In March 1996, an additional
approximately $3.1 million of the Term Loan was advanced to the Company, of
which approximately $1.5 million was used to pay all amounts outstanding under a
previous equipment loan and line of credit and to pay amounts due to I/O for
seismic equipment acquired in February and March 1996. Amounts may be advanced
under the Term Loan solely for equipment purchases and are payable in monthly
installments of principal and interest through January 31, 2000 and bear
interest at 9.5%. Amounts borrowed under the Working Capital Revolver bear
interest at a floating rate of interest equal to Banc One's base rate of
interest ("Base Rate") plus 0.5%, payable quarterly, and the outstanding
principal balance is due January 31, 1998. Both the Working Capital Revolver and
the Term Loan are secured by an assignment of the Company's accounts receivable,
inventory, leases and equipment, including its lease pool equipment.

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12

PRICE RANGE OF 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.

HIGH LOW
---- ---

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 (through January 22, 1997)........................... 9 7/8 5 7/8

On January 22, 1997, the last reported sale price for the Common Stock on
the Nasdaq National Market was $8. As of January 22, 1997, there were
approximately 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. See "Management's Discussion of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

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13

CAPITALIZATION

The following table sets forth the capitalization of the Company at October
31, 1996 and as adjusted to reflect the sale and issuance by the Company of
2,500,000 shares of Common Stock at an assumed offering price of $8.00 per
share, and the application of the net estimated proceeds therefrom, as described
under "Use of Proceeds." This table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Financial Statements and notes thereto that are
included elsewhere in this Prospectus.

AT OCTOBER 31, 1996
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)

Long-term debt, less current portion........................ $ 2,910 $ --
Shareholders' 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; 4,378,650 shares issued and outstanding and
6,878,650 shares as adjusted(1)(2)..................... 44 69
Additional paid-in capital................................ 8,398 26,508
Retained earnings......................................... 5,294 5,294
------- -------
Total shareholders' equity........................ 13,736 31,871
------- -------
Total capitalization.............................. $16,646 $31,871
======= =======

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

(1) Does not include (i) 293,750 shares of Common Stock issuable upon the
exercise of options granted and an additional 106,250 shares that may be
granted in the future under stock option plans, (ii) 246,723 shares of
Common Stock issuable upon the exercise of certain warrants, and (iii)
200,000 shares of Common Stock issuable upon the exercise of the
Representatives' Warrants. See "Description of Capital Stock and Other
Securities."

(2) The number of shares issued and outstanding after completion of the Offering
does not reflect the exercise of a warrant for 8,380 shares of Common Stock
to be sold in the Offering by one of the Selling Shareholders. See
"Principal and Selling Shareholders."

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14

DILUTION

The Company's net tangible book value as of October 31, 1996 was
approximately $13.7 million, or $3.14 per share. Net tangible book value per
share is equal to the total tangible assets of the Company minus total
liabilities divided by the number of shares of Common Stock outstanding. After
giving effect to the sale of the 2,500,000 shares of Common Stock offered by the
Company hereby and the receipt of net proceeds of such sale (assuming a public
offering price of $8.00 per share and after deducting underwriting discounts and
commissions and estimated expenses payable by the Company), the net tangible
book value of the Company at October 31, 1996 on a pro forma basis would have
been approximately $31.9 million, or $4.63 per share, representing an immediate
dilution in pro forma net tangible book value of $3.37 per share, or 42.1%, to
new investors. The following table illustrates this per share dilution:

Assumed public offering price per share..................... $8.00
-----
Net tangible book value per share as of October 31, 1996,
before this Offering................................... $3.14
Increase in net tangible book value per share attributable
to new investors....................................... 1.49
-----
Pro forma net tangible book value per share as of October
31, 1996, giving effect to this Offering(1)............... 4.63
-----
Dilution in net tangible book value to new investors........ $3.37
=====

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

(1) Does not reflect the exercise of a warrant for 8,380 shares of Common Stock
to be sold in the Offering by one of the Selling Shareholders. See
"Principal and Selling Shareholders."

If the Underwriters' over-allotment is exercised in full, the pro forma net
tangible book value per share of Common Stock after this Offering would be $4.77
per share, which would result in dilution to new investors of $3.23 per share,

or 40.4%.

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SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

NINE MONTHS
ENDED OCTOBER
FISCAL YEAR ENDED JANUARY 31, 31,
--------------------------------------------------- ----------------
1992 1993 1994 1995 1996 1995 1996
----------- ------ ------ ------ ------ ------ ------
(UNAUDITED) (UNAUDITED)

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

(1) There was no dilutive effect to earnings per share for the fiscal years
ended January 31, 1992, 1993, 1994 and 1995 and for the nine months ended
October 31, 1995. Fully diluted earnings per share was $0.50 for the fiscal
year ended January 31, 1996 and $0.36 for the nine months ended October 31,
1996.

(2) The fully diluted weighted average common shares outstanding was 3,403,000
at January 31, 1996 and 4,489,000 at October 31, 1996.

(3) EBITDA is income before interest, taxes, depreciation and amortization.
EBITDA is a financial measure commonly used in the Company's industry and
should not be considered in isolation or as a substitute for net income,
cash flow provided by operating activities or other income or cash flow data
prepared in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.

(4) Long-term debt includes long-term debt net of current maturities and capital
lease obligations net of current portion.

(5) As adjusted to reflect receipt by the Company of estimated net proceeds from
the issuance of 2,500,000 shares of Common Stock and the application of such
proceeds. See "Use of Proceeds" and "Capitalization."

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16

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to assist in understanding the
Company's historical financial position at January 31, 1994, 1995 and 1996, and
October 31, 1996, and results of operations and cash flows for each of the three
years in the period ended January 31, 1996 and the unaudited nine month periods
ended October 31, 1995 and 1996. The Company's historical financial statements
and notes thereto included elsewhere in this Prospectus contain detailed
financial information that should be referred to in conjunction with the
following discussion.

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 October 31, 1996 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:

PERCENTAGE OF TOTAL REVENUES PERCENTAGE CHANGE
----------------------------------------- -------------------------------------
FISCAL YEAR ENDED NINE MONTHS FISCAL YEAR FISCAL YEAR NINE MONTHS
JANUARY 31, ENDED OCTOBER 31, ENDED ENDED ENDED
----------------------- ----------------- JANUARY 31, JANUARY 31, OCTOBER 31,
1994 1995 1996 1995 1996 1995 1996 1996
----- ----- ----- ------- ------- ----------- ----------- -----------

REVENUES:
Leases of seismic equipment... 35.4% 45.9% 70.7% 67.6% 72.7% 51.4% 112.7% 56.1%
Sales of seismic equipment.... 64.6% 54.1% 29.3% 32.4% 27.3% (2.3)% (25.3)% 22.2%
Total revenues......... 100.0% 100.0% 100.0% 100.0% 100.0% 16.7% 38.0% 45.1%
COSTS AND EXPENSES:
Seismic equipment subleases... 19.8% 4.6% 3.4% 4.4% 1.5% (72.7)% 2.4% (50.0)%
Sales of seismic equipment.... 39.1% 38.4% 14.9% 19.7% 17.1% 14.4% (46.5)% 26.1%
General and administrative.... 14.5% 17.5% 18.4% 19.5% 16.3% 41.1% 45.5% 21.1%
Depreciation.................. 1.4% 6.9% 18.3% 16.3% 26.5% 485.5% 266.7% 136.5%
Provision for doubtful
accounts.................... 0.8% 0.7% 8.6% 7.3% 5.7% (7.9)% 1,691.4% 12.4%
Total costs and
expenses............. 75.6% 68.0% 63.6% 67.2% 67.1% 5.0% 29.0% 44.9%

For the years ended January 31, 1994, 1995 and 1996, revenues from foreign
customers totalled $1.4 million, $1.8 million and $3.8 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 the 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. See
"Business -- Business and Operations" and " -- Seismic Equipment Leasing." This
increased leasing activity

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17

by the Company's Canadian customers has historically resulted in increased lease
revenues in the Company's first and fourth fiscal quarters.

RESULTS OF OPERATIONS

Nine Months Ended October 31, 1996 Compared with Nine Months Ended October 31,
1995

Revenues of $7,363,000 for the nine months ended October 31, 1996
represented an increase of 45.1% over revenues of $5,074,000 for the same prior
year period. Leasing services generated revenues of $5,356,000 for the nine
months ended October 31, 1996, an increase of $1,925,000, or 56.1%, as compared
to $3,431,000 for the same prior year period. This increase reflected additions
of lease fleet equipment throughout fiscal 1996 and the first three fiscal
quarters of fiscal 1997 to meet lease demand. For the nine months ended October
31, 1996, the Company maintained a unitization rate on its 3-D channel boxes of
approximately 81%. Seismic equipment sales for the nine months ended October 31,
1996 were $2,007,000, an increase of $364,000, or 22.2%, as compared to
$1,643,000 for the same prior year period.

While the Company's leasing revenues increased by $1,925,000 for the nine
months ended October 31, 1996 as compared to the same prior year period,
sublease costs decreased by $111,000 and depreciation, which related primarily
to equipment available for lease, increased by $1,126,000 due to increase in the
lease fleet, resulting in an increase in net leasing revenues of $910,000.

Gross margins on seismic equipment sales were 37.2% and 39.1% for the nine
months ended October 31, 1996 and 1995, 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 21.1%, or $209,000, for the
nine months ended October 31, 1996 as compared to the same period in 1995 and
were 16.3% and 19.5% of total revenues for the nine months ended October 31,
1996 and 1995, 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
$372,000 in the fiscal 1996 period to $418,000 in the fiscal 1997 period. The
increase was a result of additional provisions for the allowance account. As of
October 31, 1996, the Company's allowance for doubtful accounts receivable
amounted to $615,000, which was an amount management believed was sufficient to
cover any potential losses in trade accounts receivable as of that date.

Net income for the nine months ended October 31, 1996 increased by
$538,000, as compared to the same 1995 period. The increase resulted primarily
from the increase in net leasing revenues offset by increases in general and
administrative and the provision for bad debt expense.

Fiscal Year Ended January 31, 1996 Compared with Fiscal Year Ended January 31,
1995

Revenues for fiscal 1996 of $7,292,000 represented an increase of 38.0%
over fiscal 1995 revenues of $5,284,000. Leasing services generated revenues of
$5,157,000 for fiscal 1996, an increase of $2,733,000, or 112.7%, as compared to
fiscal 1995. The majority of this increase was attributable to additions of
lease fleet equipment throughout fiscal 1996 to meet lease demand. The Company's
utilization rate in fiscal 1996 on its 3-D channel boxes was approximately 90%.
Seismic equipment sales for the year ended January 31, 1996 were $2,135,000, a
decrease of $725,000, or 25.3%, from fiscal 1995.

While the Company's leasing revenues increased by $2,733,000 during fiscal
1996 as compared to fiscal 1995, sublease costs increased by only $6,000 and
depreciation, which related primarily to equipment available

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18

for lease, increased by $968,000 due to the increase in the lease fleet,
resulting in an increase in net leasing revenues of $1,759,000.

Gross margins on seismic equipment sales were 49.2% and 29.1% for fiscal
1996 and 1995, respectively. The margin for fiscal year 1996 was significantly
higher because of a few high-margin transactions.

General and administrative expenses increased 45.5%, or $420,000, in fiscal
1996 as compared to fiscal 1995 and were 18.4% and 17.5% of total revenues for
fiscal 1996 and 1995, respectively. The increase was due primarily to increased
personnel costs and higher legal and accounting expenses associated with the
Company being a public company. The Company's provision for doubtful accounts
increased from $35,000 in fiscal 1995 to $627,000 in fiscal 1996. The increase
reflected the write-off of amounts due from a leasing customer which became
severely past due and was ultimately settled for $272,000 less than the amount
due from such customer, and additional allowances provided for amounts due from
a second leasing customer with an outstanding receivable of $459,000 at January
31, 1996, the majority of which was past due at that date. The latter
outstanding receivable was ultimately collected in full. As of January 31, 1996,
the Company's allowance for doubtful accounts receivable amounted to $347,000,
which is an amount management believed was sufficient to cover any potential
losses in trade accounts receivable as of that date.

Net income increased in fiscal 1996 by $713,000, as compared to fiscal
1995. The increase resulted primarily from the increase in net leasing revenues.

Fiscal Year Ended January 31, 1995 Compared with Fiscal Year Ended January 31,
1994

Revenues for fiscal 1995 of $5,284,000 represented an increase of 16.7%
over fiscal 1994 revenues of $4,527,000. Leasing services generated revenues of
$2,424,000 for fiscal 1995, an increase of $823,000, or 51.4%, as compared to
fiscal 1994. The majority of this increase was attributable to additions of
lease fleet equipment throughout fiscal 1995 to meet lease demand. The Company's
utilization rate on the I/O equipment during fiscal 1995 was approximately 90%.
Seismic equipment sales for the year ended January 31, 1995 were $2,860,000, a
decrease of $66,000, or 2.3%, from fiscal 1994.

The Company's leasing revenues increased by $823,000 during fiscal 1995 as
compared to fiscal 1994, while sublease costs decreased by $651,000 and
depreciation, which related primarily to equipment available for lease,
increased by $301,000, resulting in an increase in net leasing revenues of
$1,173,000.

Gross margins on seismic equipment sales were 29.1% and 39.4% for fiscal
1995 and 1994, respectively. The Company purchases used seismic equipment for
resale when management determines that such equipment is available at
advantageous prices. Gross margins on the Company's equipment sales fluctuate
from year to year and have historically ranged from 20% to 50%. The margins for
fiscal 1995 and 1994 are consistent with historical margins on seismic equipment
sales.

General and administrative expenses increased 41.1%, or $269,000, in fiscal
1995 as compared to fiscal 1994 and were 17.5% and 14.5% of total revenues for
fiscal 1995 and 1994, respectively. The increase was due primarily to personnel,
legal and accounting expenses. Personnel costs increased as a result of the
Company adding a chief financial officer during the year. Net interest increased
$193,000 to $209,000 in fiscal 1995 due to various equipment and bridge loans
outstanding during fiscal 1995. Legal and accounting costs increased in fiscal
1995 due to legal and accounting costs associated with the Company's initial
public offering consummated in January 1995.

Net income increased in fiscal 1995 by $297,000, as compared to fiscal
1994. The increase resulted primarily from the increase in leasing revenues
combined with a $651,000 decrease in seismic equipment sublease expense, a
$301,000 increase in depreciation, and lower margins on seismic equipment sales.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities for the nine months ended October
31, 1996, increased by $749,000, or 40.2%, as compared to the same 1995 period.
At October 31, 1996, of the Company's customers with trade receivables more than
90 days past due, four customers had an aggregate of $983,000 more than

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19

90 days past due. The Company has historically had an average collection period
of between 60 to 90 days for its trade accounts receivable. Grant Geophysical,
Inc. ("Grant") filed for bankruptcy protection during December 1996. Revenues
derived from Grant amount to 18.5% of total revenues for the eleven-month period
ended December 31, 1996. As of that date, amounts due from Grant totalled
$1,013,000. During December 1996, the Company increased its allowance for trade
accounts receivable from $615,000 at October 31, 1996 to $1,500,000 at December
31, 1996, which amount was intended to fully reserve all amounts due from Grant
and provide for any potential loss associated with the Company's remaining trade
accounts receivable.

As of October 31, 1996, the outstanding principal balance Term Loan was
approximately $3.6 million and there were no amounts outstanding under the
Working Capital Revolver. Approximately $1.0 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. Approximately
$4.4 million of the net proceeds of this Offering will be used to pay the $1.0
million and $3.4 million currently outstanding balances of the Working Capital
Revolver and the Term Loan, respectively.

In January 1997, the Company established with Bank One a second revolving
line of credit of up to $4.0 million to be used solely for short-term financing
of up to 75% of the seismic equipment purchased by the Company under approved
lease/purchase contracts (the "Equipment Revolver") 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 seismic equipment purchased other than
seismic equipment related to lease/purchase contracts. 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 the
lease/purchase contract has not purchased 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 December 31, 1996, capital expenditures for the 1997 fiscal year
totalled $11.3 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 this Offering. The Company believes that the net proceeds of
this 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.

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BUSINESS

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 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 formations 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, I/O
and SERCEL. From January 1, 1994 through December 31, 1996, the Company's lease
fleet of 3-D channel boxes increased from 85 to approximately 2,000 (or from 510
channels to approximately 12,000 channels). EBITDA of approximately $4.0 million
for the fiscal year ended January 31, 1996 represented an increase of 90.4% over
the fiscal year ended January 31, 1995, and EBITDA of approximately $4.6 million
for the nine months ended October 31, 1996 represented an increase of 82.6% over
the same prior year period.

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 a 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.

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 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 December 31, 1996, the Company has met $4.5
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. See "-- I/O Agreement" and
"-- SERCEL Agreements."

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BUSINESS STRATEGY

- Enlarge and diversify its lease pool of seismic equipment. As demanded by
customers, 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.

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 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.

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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 increase drilling success rates and reduce 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
the first nine months of fiscal 1997 was in excess of 80%.

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 3-D channel boxes have ranged
from 6% to 8% of the purchase price. 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 lease term. The lessee must also obtain and
keep in force a minimum of $1.0 million general liability and casualty 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 revenues are attributable to Canadian operations, with the remainder
related to United States business. Management believes that the United States

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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.

I/O AGREEMENT

Under the I/O Agreement, the Company is the exclusive third-party recipient
of requests from I/O customers and others 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 December 31, 1996, the Company had purchased I/O equipment
totalling $4.8 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

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covered by a warranty which covers, with certain exceptions, defects in
workmanship for six months and defects in materials and parts for 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.

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 December 31, 1996, the Company had purchased SERCEL
equipment totalling $4.5 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

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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.

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 October 31, 1996, the Company had 23 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
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.

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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. See "Risk
Factors -- Competition."

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
various other manufacturers. Management believes that its current relationships
with its suppliers are satisfactory.

EMPLOYEES

As of October 31, 1996, the Company employed 13 people, none of whom is
covered by a collective bargaining agreement. Nine employees are involved in
sales, management and administration and four work in field operations. The
Company considers its employee relations to be satisfactory.

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. See "Certain

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Transactions and Relationships." The Company also leases approximately 10,000
square feet of office and warehouse space at its facilities in Calgary, Alberta,
Canada.

LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company:

NAME AGE POSITION(S) WITH THE COMPANY
---- --- ----------------------------

Billy F. Mitcham, 49 Chairman of the Board of Directors, President and Chief
Jr. ................. Executive Officer
Paul C. Mitcham........ 32 Vice-President -- Operations and Director
Roberto Rios........... 38 Vice-President -- Finance, Secretary, Treasurer and
Director
William J. Sheppard.... 49 Vice-President -- International Operations and Director
Gordon M. Greve........ 61 Director
Randal Dean Lewis...... 53 Director
John F. Schwalbe....... 52 Director

Billy F. Mitcham, Jr. has been Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since 1987. He has more
than 20 years of experience in the geophysical industry. From 1979 to 1987, he
served in various management capacities with Mitcham Associates, Inc., an
unrelated equipment leasing company. From 1975 to 1979, Mr. Mitcham served in
various capacities with Halliburton Services, primarily in oilfield services.

Paul C. Mitcham is Vice President -- Operations and a director of the
Company. He is the brother of Billy F. Mitcham, Jr. Mr. Mitcham has been
employed by the Company in various management positions since 1989. Prior to
1989, he worked in various field positions in the geophysical industry.

Roberto Rios was elected Vice-President -- Finance, Secretary and Treasurer
and a director of the Company in September 1994. From 1990 until joining the
Company in September 1994, Mr. Rios held several senior-level positions,
including Vice President and General Manager, with ADVO, Incorporated, a
publicly-traded nationwide direct mail distribution company. From 1980 to 1989,
he held several senior-level financial positions, including Controller, of The
Shoppers' Guide, a company that produces a direct mail advertising guide and
that is a subsidiary of Harte-Hanks Communications, Inc., a multimedia company.
Mr. Rios is a Certified Public Accountant and a member of the American Institute
of Certified Public Accountants.

William J. Sheppard was elected Vice-President -- International Operations
and a director of the Company in October 1994. Mr. Sheppard has more than 25
years of experience in the geophysical industry. From 1987 until October 1994,
Mr. Sheppard was the President of Alberta Supply Company, a Canadian seismic
equipment sales and services company.

Gordon M. Greve was elected a director of the Company in June 1995. He held
various management positions with Amoco Corporation from July 1977 through
September 1994 and has more than 30 years of experience in the geophysical
industry. He served as the Acting Vice-President of Exploration Technology and
Services from February through September 1994. From February 1991 through
February 1994, he was manager of exploration. From July 1986 to February 1991,
he was a manager in geophysics. Mr. Greve served as the President of the Society
of Exploration Geophysicists for the 1995-1996 term, which began in October
1995.

Randal Dean Lewis was elected a director of the Company in November 1994.
Mr. Lewis is the interim Dean of the Business School at Sam Houston State
University and he has served in this capacity since October 1995. From 1987 to
October 1995, Mr. Lewis was the Associate Dean and Professor of Marketing at Sam
Houston State University. Prior to 1987, Mr. Lewis held a number of executive
positions in the banking and finance industries.

John F. Schwalbe was elected a director of the Company in November 1994.
Mr. Schwalbe has been a Certified Public Accountant in private practice since
1978, with primary emphasis on tax planning, consultation, and compliance.

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The Bylaws of the Company authorize the Board of Directors to fix the
number of directors of the Company. The Board of Directors is currently
comprised of seven members. Each director and each executive officer of the
Company serves until the earliest to occur of (i) his death, resignation or
removal; or (ii) the election of his successor. No family relationships exist
among the officers and directors of the Company except among Messrs. Mitcham.
See "Certain Transactions and Relationships."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the Company's executive officers or directors serve on the board of
directors or the compensation committee of any other entity. None of the members
of the Compensation Committee are, or were formerly, officers or employees of
the Company.

BOARD COMMITTEES

The Board of Directors has established an Audit Committee and a
Compensation Committee. The Audit Committee is comprised of Messrs. Schwalbe,
Lewis and Greve. Its functions are to: (i) recommend the appointment of
independent public accountants; (ii) review the scope of the audit by the
independent public accountants; (iii) review the independence of the independent
public accountants; (iv) consider the adequacy of the system of internal
controls and review any proposed corrective actions; (v) review and monitor the
Company's policies regarding business ethics and conflicts of interest; and (vi)
discuss with management and the independent public accountants the Company's
draft of annual financial statement and key accounting and/or reporting matters.
The Compensation Committee, also comprised of Messrs. Schwalbe, Lewis and Greve,
is responsible for (i) reviewing the Company's general compensation strategy;
(ii) establishing the salaries and bonuses of the Company's executive officers;
and (iii) reviewing and administering the Company's 1994 Stock Option Plan.

BOARD COMPENSATION

The Company pays directors who are not employees of the Company $500 for
every meeting attended and reimburses their expenses incurred in attending board
and committee meetings. In addition, the Director Plan provides that each
nonemployee director will receive an option to purchase 1,000 shares of Common
Stock upon becoming a director and on the date of each annual meeting of
shareholders at which he is re-elected as a director. See " -- Stock Option
Plans."

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EXECUTIVE COMPENSATION

The following table sets forth all compensation paid by the Company for the
fiscal years ended January 31, 1994, 1995 and 1996 to Billy F. Mitcham, Jr., the
Chairman of the Board, Chief Executive Officer and President of the Company. No
other executive officer of the Company received compensation that exceeded
$100,000 during any of those fiscal years.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------ -------------
FISCAL YEAR SECURITIES
ENDED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION JANUARY 31 SALARY BONUS OTHER STOCK OPTIONS COMPENSATION
- --------------------------------- ----------- -------- ------- ----- ------------- ------------

Billy F. Mitcham, Jr. ........... 1996 $100,000 $40,685 -- 9,000 --
Chairman of the Board, 1995 72,000(1) -- -- 116,000 --
President and Chief 1994 72,000 25,000 -- --
Executive Officer

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

(1) Mr. Mitcham, Jr. opted to receive a lower salary in the fiscal year ended
January 31, 1995 than he was entitled to under the terms of his Employment
Agreement, described below. Though not specifically stated in the Employment
Agreement, Mr. Mitcham, Jr. felt the intent of the parties was that the
increased salary would not be effective until the consummation of the
Company's initial public offering, which occurred in January 1995. The
$28,000 of his salary that he opted not to receive was not deferred and will
not be paid in a future year. As of February 1, 1995, Mr. Mitcham, Jr. began
receiving his full salary.

Option Grants. The following table sets forth the individual grants of
stock options made by the Company during the fiscal year ended January 31, 1996
to Billy F. Mitcham, Jr. The Company does not grant any stock appreciation
rights.

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS IN 1996 OR BASE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE 0% 5% 10%
- -------------------------- ----------- ----------- ------------ ------------ ----- ----- -----

Billy F. Mitcham, Jr...... 9,000(1) 14.3% $ 3.29(1) Dec. 4, 2005 $3.87 $5.36 $8.53

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

(1) Nonqualified stock option granted on December 4, 1995 under the 1994 Stock
Option Plan. The option may be exercised to purchase the total number of
shares on December 4, 1996. The option price was set at 85% of the fair
market value of the Company's Common Stock. The fair market value of a share
of the Company's Common Stock is the closing price at which the Common Stock
was sold on the date of grant. To the extent the option is not vested on the
optionee's retirement, death or disability, it is forfeited.

(2) The 5% and 10% assumed annual rates of compounded stock prices appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
Common Stock prices. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock and overall stock
market conditions. The amounts reflected in this table may not necessarily
be achieved.

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Option Exercises and Year-End Option Grants. The following table sets forth
the year-end values of unexercised options held by Billy F. Mitcham, Jr. at
January 31, 1996. Billy F. Mitcham, Jr. did not exercise any stock options in
the 1996 fiscal year.

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS AT IN-THE-MONEY OPTIONS
JANUARY 31, 1996 (#) AT JANUARY 31, 1996(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------

Billy F. Mitcham, Jr................... 116,000/9,000 $58,000/$11,160

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

(1) Represents the difference between the closing price of the Company's Common
Stock on January 31, 1996 ($5.50) and the exercise price of the options,
multiplied by number of shares represented by such options.

EMPLOYMENT AGREEMENT WITH BILLY F. MITCHAM, JR.

Billy F. Mitcham, Jr.'s employment agreement with the Company is 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 and a bonus at the discretion of the
Board of Directors. It may be terminated prior to the end of the initial term or
any extension thereof if Mr. Mitcham dies; if it is determined that Mr. Mitcham
has become disabled (as defined); if Mr. Mitcham gives three months prior notice
of resignation; if the Company gives Mr. Mitcham notice of termination "without
cause"; or if the Board of Directors determines that Mr. Mitcham 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 or is convicted of or indicted for any felony
criminal offense or any crime punishable by imprisonment. If Mr. Mitcham
terminates his employment within 60 days following (i) a material reduction in
his duties and responsibilities (without his consent) or (ii) a reduction in, or
failure by the Company to pay when due, any portion of his salary, he 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, Mr. Mitcham 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. The Company has no employment
agreements with any of its other executive officers. See "Risk Factors --
Dependence on Key Personnel."

STOCK OPTION PLANS

The Company has adopted the Mitcham Industries, Inc. 1994 Stock Option Plan
(the "Stock Option Plan"). Options to purchase a maximum of 350,000 shares of
Common Stock may be issued under the Stock Option Plan to officers, employee
directors, key employees and consultants of the Company. As December 31, 1996,
options to purchase an aggregate of 285,750 shares of Common Stock are issued
and outstanding under the Stock Option Plan with a weighted average exercise
price of $4.74 per share. 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. Pursuant to the Stock Option Plan, the Compensation Committee will
determine the persons to whom options are granted, the number of shares of
Common Stock subject to options, the period during which the options vest and
may be exercised, and the option price. The Stock Option Plan places
restrictions on the grant of options under any plan of the Company to persons
who are, at the time of the grant, members of the Compensation Committee. With
respect to incentive stock options, no option may be granted more than 10 years
after the effective date of the Stock Option Plan or exercised more than 10
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 on 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.

The Company has also adopted the Mitcham Industries, Inc. 1994 Non-Employee
Director Stock Option Plan (the "Non-Employee Director Plan"). Options to
purchase a maximum of 50,000 shares of Common

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Stock may be issued under the Non-Employee Director Plan to non-employee
directors of the Company. The Non-Employee Director Plan provides for the grant
of options that do not qualify as "incentive stock options" under the Code.
Pursuant to the Non-Employee Director Plan, options to purchase 1,000 shares of
Common Stock are granted to each person who is not an employee of the Company
upon his election for the first time as a director of the Company and an option
to purchase an additional 1,000 shares of Common Stock will automatically be
granted each year thereafter that such director is re-elected. Options granted
under the Non-Employee Director Plan must be granted at an exercise price of not
less than 100% of the fair market value of the Common Stock on the date of grant
and vest in full one year after their grant. Options granted under the
Non-Employee Director Plan expire 10 years after the date of grant. As of
December 31, 1996, 8,000 options were issued and outstanding under the
Non-Employee Director Plan with a weighted average exercise price of $4.65 per
share.

CERTAIN TRANSACTIONS AND RELATIONSHIPS

Prior to September 1995, the Company leased its facilities located at 44000
Highway 75 South in Huntsville, Texas, consisting of 19,000 square feet, from
Mitcham Properties, Inc., a Texas corporation of which Billy F. Mitcham, Jr. is
the sole shareholder, for $4,000 per month (or approximately $.21 per square
foot), exclusive of the cost of utilities, taxes and insurance. An unrelated
third party rented from Mitcham Properties, Inc. a portion of the facilities
adjacent to the Company's facilities, consisting of 6,000 square feet for $606
per month (or approximately $.10 per square foot), exclusive of the cost of
utilities, taxes and insurance. Therefore, Mitcham Properties, Inc. was leasing
to the Company at approximately twice the cost per square foot being paid by an
unrelated third party for adjacent facilities. The difference in lease terms
amounts to approximately $25,000 of additional lease expense to the Company
annually. In September 1995, the Company purchased the facilities from Mitcham
Properties, Inc. for $325,000; $276,000 of such amount was financed with bank
financing and the remaining amount was paid from cash flows. The bank's
appraisal report reflects an estimated fair value of $325,000 for the
facilities.

In fiscal 1995 and 1996, the Company purchased equipment from corporations
and partnerships which are owned or controlled by Billy F. Mitcham, Jr., the
Company's Chairman, President and Chief Executive Officer. Such purchases
totalled $11,000 and $28,000 in the years ended January 31, 1995 and 1996,
respectively. The Company does not anticipate making any further such purchases.

Effective September 20, 1993, the Company and Billy F. Mitcham, Jr. entered
into a Voting Agreement (the "Voting Agreement") with Billy F. Mitcham, Sr.,
Paul C. Mitcham and two trusts established for the benefit of Mr. Mitcham, Jr.'s
sons. Under the Voting Agreement, the holders of shares subject thereto have
agreed that Mr. Mitcham, Jr. has the authority to vote an additional 445,740
shares of Common Stock, or 10.0%, of the Company's outstanding Common Stock. Mr.
Mitcham, Jr. has voting control of an aggregate of 1,154,370 shares, or 25.8%,
of the Company's outstanding Common Stock, as of December 31, 1996. The Voting
Agreement will terminate on the earlier of the agreement of the parties or the
expiration of 25 years. See "Principal and Selling Shareholders."

Since April 1994, the Company has engaged Billy F. Mitcham, Sr. as a
consultant under a consulting agreement. Mr. Mitcham, Sr. has been involved in
the energy industry since 1952 and was formerly the owner and the President of
Mitcham Associates, Inc. which was also engaged in the leasing and sale of
peripheral seismic equipment. Mr. Mitcham, Sr. has served as an industry expert
and consultant for the Company since 1987 and was engaged on terms similar to
those in his present consulting agreement during that time, though not pursuant
to a written agreement. The agreement calls for monthly payments to Mr. Mitcham,
Sr. of $5,500. The Company paid Mr. Mitcham, Sr. a total of $66,000 under the
agreement in the 1996 fiscal year. The consulting agreement prohibits Mr.
Mitcham, Sr. from providing consulting services to, and from contacting or
soliciting in an effort to provide services to, any competitor of the Company
for two years after the termination of his engagement. The current term of the
agreement expires January 31, 1999, subject to earlier termination on the
occurrence of certain stated events, and is renewable for successive one-year
terms at the Company's option. The Company believes Mr. Mitcham, Sr. could
successfully compete with the Company, given his contacts and extensive
knowledge of the seismic leasing industry. For the above reasons,

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the Company believes the terms of Mr. Mitcham, Sr.'s consulting agreement are no
less favorable than could be obtained from an unaffiliated third party with
similar experience.

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of Common Stock as of December 31, 1996 by (i) each of the
Company's directors; (ii) each Selling Shareholder; (iii) each person who is
known by the Company to own beneficially more than 5% of the Common Stock; and
(iv) all executive officers and directors as a group. Alamo Atlas Group, Inc.
will exercise a warrant for 8,380 shares of Common Stock to be sold in the
Offering. The only percentage for shares owned after the Offering that gives
effect to the exercise of this warrant is the percentage for Alamo Atlas Group.

SHARES OWNED SHARES OWNED
BEFORE OFFERING NUMBER OF AFTER OFFERING
NAMES AND ADDRESS OF -------------------- SHARES --------------------
BENEFICIAL OWNERS(1) NUMBER PERCENT OFFERED NUMBER PERCENT
-------------------- --------- ------- --------- --------- -------

Billy F. Mitcham, Jr. ................... 1,373,062(2) 29.3% 300,000 1,073,062 14.9%
Billy F. Mitcham, Sr. ................... 298,290(3) 6.6% 50,000 248,290 3.5%
Paul C. Mitcham.......................... 149,180(4) 3.3% 25,000 124,180 1.8%
Alamo Atlas Group, Inc. ................. 148,597(5) 3.3% 125,000 23,597 *
16420 Park Ten Place, Suite 300
Houston, Texas 77084-5051
Roberto Rios............................. 33,772(6) * -- 33,772 *
William J. Sheppard...................... 33,772(6) * -- 33,772 *
Gordon M. Greve.......................... 2,000 * -- 2,000 *
14855 Memorial Drive #1014
Houston, Texas 77079
Randall Dean Lewis....................... 3,000 * -- 3,000 *
College of Business Administration
P.O. Box 2056
Sam Houston State University
Huntsville, Texas 77341
John F. Schwalbe......................... 3,000 * -- 3,000 *
10700 Richmond Avenue #219
Houston, Texas 77042
All executive officers and directors as a
group
(7 persons).............................. 1,448,606 30.6% -- 1,070,606 14.8%

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

* Less than 1%

(1) The business address of each shareholder is the same as the address of the
Company's principal executive offices, unless otherwise indicated.

(2) Includes an aggregate of 445,740 shares of Common Stock owned by Billy F.
Mitcham, Sr. (252,540 shares), Paul C. Mitcham (118,680 shares) and two
trusts established for the benefit of Mr. Mitcham, Jr.'s sons (74,520
shares), and as to which shares Mr. Mitcham, Jr. has the right to vote under
the Voting Agreement. Also includes shares underlying currently exercisable
options to purchase an aggregate of 218,692 shares of Common Stock, as
follows: Billy F. Mitcham, Jr. (125,000 shares), Billy F. Mitcham, Sr.
(45,750 shares), Paul C. Mitcham (30,500 shares), and the two trusts (17,442
shares). See "Certain Transactions and Relationships."

(3) Includes shares underlying a currently exercisable option to purchase 45,750
shares of Common Stock.

(4) Includes shares underlying currently exercisable options to purchase 30,500
shares.

(5) Includes shares underlying a currently exercisable warrant to purchase
31,977 shares.

(6) Includes shares underlying currently exercisable options to purchase 21,000
shares and a currently exercisable warrant to purchase 2,422 shares.

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DESCRIPTION OF CAPITAL STOCK AND OTHER SECURITIES

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.01 per share, and 1,000,000 shares of Preferred
Stock, par value $1.00 per share. As of December 31, 1996 there were outstanding
4,474,880 shares of Common Stock, no shares of Preferred Stock, options to
purchase up to 293,750 shares of Common Stock, and warrants to purchase up to
246,723 shares of Common Stock. Upon completion of this Offering, there will be
6,974,880 issued and outstanding shares of Common Stock.

The following description of the Company's capital stock and other
securities and selected provisions of its Amended and Restated Articles of
Incorporation (the "Amended Articles") and Restated Bylaws is a summary and is
qualified in its entirety by the Company's Amended Articles and Restated Bylaws,
copies of which have been filed with the Commission.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share for the
election of directors and other corporate matters. Holders of Common Stock are
not entitled to cumulative voting rights in connection with the election of
directors. Therefore, the holders of a majority of the shares voting for the
election of directors may elect all the directors. The Amended Articles permit
actions to be taken by the shareholders of the Company without a meeting, by
written consent, including a written consent signed by less than all of the
shareholders of the Company. Section 9.10A of the Texas Business Corporation Act
requires that prompt notice of the taking of any action by shareholders without
a meeting by less than unanimous written consent be given to all shareholders
who did not consent in writing to the action.

Subject to the rights of any outstanding shares of Preferred Stock, the
holders of Common Stock are entitled to dividends in such amounts and at such
times as may be declared by the Board of Directors of the Company out of funds
legally available therefor. Upon liquidation or dissolution, holders of the
Common Stock are entitled to share ratably in all assets remaining available for
distribution to them after payment or provision for all liabilities and any
preferential rights of any Preferred Stock then outstanding. The Common Stock
carries no preemptive rights. All outstanding shares of Common Stock are, and
the shares of Common Stock to be sold by the Company in the Offering will be,
upon payment therefor as contemplated herein, validly issued, fully paid and
nonassessable securities of the Company.

WARRANTS

There are currently outstanding warrants issued in connection with the
Company's initial public offering of units ("Units") in January 1995, entitling
the holders to purchase 17,000 Units, each Unit consisting of two shares of
Common Stock and a warrant to purchase one share of Common Stock (an "Underlying
Warrant"). The warrants are exercisable through and including December 19, 1999,
at an exercise price of $7.97 per Unit. The Underlying Warrants are exercisable
through and including December 19, 1997 at an exercise price of $4.20 per share
of Common Stock.

The warrants contain provisions providing for appropriate adjustment in the
event of any merger, consolidation, recapitalization, reclassification, stock
dividend, stock split or similar transaction. The warrants contain net issuance
provisions permitting the holder thereof to elect to exercise the warrants in
whole or in part and instruct the Company to withhold from the Units issuable
upon exercise a number of Units, valued at the current fair market value on the
date of exercise, to pay the exercise price. Such net exercise provision has the
effect of requiring the Company to issue shares of Common Stock without a
corresponding increase in capital. A net exercise of the Underlying Warrants
will have the same dilutive effect on the interests of the Company's
shareholders as will a cash exercise.

There are also outstanding currently exercisable warrants to acquire up to
60,723 shares of Common Stock held by seven holders, at $3.87 per share, May 9,
1999; currently exercisable warrants to acquire 35,000 shares of Common Stock at
$3.50 per share, exercisable to purchase 17,500 shares through July 17, 2000 and
the remaining 17,500 shares through January 17, 2001; currently exercisable
warrants to acquire 50,000 shares of Common Stock at $6.43 per share,
exercisable through August 22, 2000; and warrants to acquire 50,000

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35

shares of Common Stock at $9.28 per share, exercisable beginning December 31,
1997 through December 31, 2001.

The Company will issue warrants to the Representatives ("Representatives'
Warrants") to purchase 200,000 shares of Common Stock in connection with the
Offering, with an exercise price equal to 120% of the price of the Common Stock
to the public in the offering. The Representatives' Warrants will be exercisable
for a two-year period beginning one year after the effective date of the
Registration Statement of which this Prospectus is a part. See "Underwriting."

OPTIONS

As of December 31, 1996, options to purchase an aggregate of 293,750 shares
of Common Stock had been granted pursuant to the Plans, 250,250 of which are
currently exercisable. See "Management -- Stock Option Plans."

PREFERRED STOCK

The Board of Directors of the Company is empowered, without approval of the
Company's shareholders, to cause shares of Preferred Stock to be issued in one
or more series and to establish the number of shares to be included in each such
series and the designations, preferences, limitations and relative rights,
including voting rights, of the shares of any series. Because the Board of
Directors has the power to establish the preferences and rights of each series,
it may afford the holders of any series of Preferred Stock preferences, powers
and rights, voting or otherwise, senior to the rights of holders of Common
Stock. This includes, among other things, voting rights, conversion privileges,
divided rates, redemption rights, sinking fund provisions and liquidation rights
which shall be superior to the Common Stock. The issuance of shares of Preferred
Stock could have the effect of delaying or preventing a change in control of the
Company. No shares of Preferred Stock will be outstanding at the consummation of
this Offering, and the Board of Directors has no current plans to issue any
shares of Preferred Stock.

LIMITATION ON DIRECTORS' LIABILITY

The Amended Articles limit the liability of the Company's directors to the
Company or its shareholders (in their capacity as directors but not in their
capacity as officers) to the fullest extent permitted by Texas law.
Specifically, directors of the Company will not be personally liable for
monetary damages for an act or omission in the director's capacity as a director
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its shareholders; (ii) for acts or omissions not in good faith that
constitute a breach of duty of the director to the Company or that involve
intentional misconduct or a knowing violation of law; (iii) for any transaction
from which the director derived an improper personal benefit; or (iv) an act or
omission for which the liability of the director is expressly provided for by an
applicable statute.

The inclusion in the Company's Amended Articles of the limitation of the
personal liability of the Company's directors to the Company may have the effect
of reducing the likelihood of derivative litigation against those directors, and
may deter shareholders or management from bringing a lawsuit against those
directors for breach of their duty of care, even though such an action, if
successful, might otherwise have benefitted the Company and its shareholders.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is North American
Transfer Co. Its address is 147 West Merrick Road, Freeport, New York 11520.

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SHARES ELIGIBLE FOR FUTURE SALE

As of December 31, 1996, there were 4,474,880 shares of Common Stock
outstanding. In addition, the Company has reserved for issuance 400,000 shares
upon the exercise of options granted under the Stock Option Plans, 246,723
shares for issuance upon exercise of outstanding warrants and up to 200,000
shares for issuance upon exercise of the Representatives' Warrants. Of the
6,974,880 shares of Common Stock to be outstanding after the completion of this
Offering, approximately 5,594,880 shares will be freely tradable without
restriction or further registration under the Securities Act, unless held by
"affiliates" of the Company, as that term is defined in Rule 144 under the
Securities Act (whose sales would be subject to certain volume limitations and
other restrictions described below.) The remaining 1,380,000 shares of Common
Stock are "restricted securities" as defined in Rule 144 promulgated under the
Securities Act, and may only be sold in the public market if such shares are
registered under the Securities Act or sold in accordance with Rule 144 or
another exemption from registration under the Securities Act. The number of
shares issued and outstanding after completion of the Offering does not reflect
the exercise of a warrant for 8,380 shares of Common Stock to be sold in the
Offering by one of the Selling Shareholders. See "Principal and Selling
Shareholders."

In general, under Rule 144 as currently in effect, a person who has
beneficially owned his or her Common Stock for at least two years, including
persons who may be deemed "affiliates" of the Company, is entitled to sell
within any three-month period a number of shares that does not exceed the
greater of 1% of the then-outstanding shares of Common Stock (approximately
69,750 shares immediately after this Offering) or the average weekly trading
volume of such shares in the over-the-counter market during the four calendar
weeks preceding the date on which notice of the proposed sale is filed with the
Commission. A person who is not deemed an "affiliate" of the Company and who has
beneficially owned his or her shares of Common Stock for at least three years
would be entitled to sell such shares under Rule 144 without regard to the
volume limitations described above. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements, and the availability of
current public information about the Company. A person who has not been an
"affiliate" of the Company for the 90 days preceding a sale and who has
beneficially owned restricted securities for at least three years will be
entitled to sell such shares in the public market without restriction.
Restricted securities properly sold in reliance upon Rule 144 are thereafter
freely tradeable without restrictions or registration under the Securities Act,
unless thereafter held by an "affiliate" of the Company.

The Company has filed a registration statement under the Securities Act
covering 400,000 shares of Common Stock reserved for issuance under the Stock
Option Plans. Accordingly, shares issued under such registration statement upon
the exercise of options will be available for sale in the open market subject to
the agreements not to sell described below. See "Management -- Stock Option
Plans."

The Company is unable to estimate the amount, timing or nature of future
sales of outstanding Common Stock. Of the 880,000 restricted shares that will be
outstanding upon completion of this Offering, executive officers and directors,
holding an aggregate of 800,070 shares, have agreed that for a period of 180
days from the date of this Prospectus, they will not offer for sale, sell,
solicit an offer to buy, contract to sell, distribute, grant any option for the
sale of or otherwise transfer of dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into, exercisable for or
exchangeable for any shares of Common Stock without the prior written consent of
Rodman & Renshaw, Inc. on behalf of the Underwriters. All of the remaining
79,930 restricted shares are eligible for sale under Rule 144. See
"Underwriting."

In connection with this Offering, the Company has agreed to sell warrants
to the Representatives to purchase from the Company up to 200,000 shares of
Common Stock, exercisable in whole or in part at any time during the two-year
period commencing one year after the effective date of the Registration
Statement of which this Prospectus is a part.

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UNDERWRITING

The Underwriters named below, for whom Rodman & Renshaw, Inc. and Simmons &
Company International are acting as representatives (the "Representatives"),
have severally agreed to purchase from the Company the respective number of
shares of Common Stock set forth opposite their names:

NUMBER OF
UNDERWRITER SHARES
--------------------------------------------------------------------------- ---------

Rodman & Renshaw, Inc......................................................
Simmons & Company International............................................

---------
Total.................................................................... 3,000,000
=========

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other considerations. The nature of the Underwriters'
obligations is such that they are committed to purchase and pay for all of the
above shares of Common Stock if any are purchased.

The Underwriters, through the Representatives, have advised the Company
that they propose to offer the Common Stock initially at the public offering
price set forth on the cover page of this Prospectus; that the Underwriters may
allow to selected dealers a concession of $ per share; and that such
dealers may reallow a concession of $ per share to certain other
dealers. After the public offering, the offering price and other selling terms
may be changed by the Underwriters. The Common Stock is included for quotation
on the Nasdaq National Market.

The Company and the Selling Shareholders have granted to the Underwriters a
30-day over-allotment option to purchase up to 375,000 and 75,000 additional
shares of Common Stock, respectively, exercisable at the public offering price
less the underwriting discount. If the Underwriters exercise such over-allotment
option, then each of the Underwriters will have a firm commitment, subject to
certain conditions, to purchase approximately the same percentage thereof as the
number of shares of Common Stock to be purchased by it as shown in the above
table bears to the 3,000,000 shares of Common Stock offered by the Company and
the Selling Shareholders hereby. The Underwriters may exercise such option only
to cover over-allotments made in connection with the sale of the shares of
Common Stock offered hereby.

The Company and the officers and directors of the Company have agreed that
they will not sell or dispose of any shares of Common Stock of the Company for a
period of 180 days after the later of the date on which the Registration
Statement is declared effective by the Commission or the first date on which the
shares are bona fide offered to the public, without the prior written consent of
Rodman & Renshaw, Inc.

In connection with the Offering made hereby, the Company has agreed to sell
to the Representatives, for nominal consideration, Representatives' Warrants to
purchase from the Company up to 200,000 shares of Common Stock. The
Representatives' Warrants are exercisable, in whole or in part, at an exercise
price of 120% of the price to public at any time during the two-year period
commencing one year after the effective date of the Registration Statement of
which this Prospectus is a part. The Representatives' Warrants contain
provisions providing for adjustment of the exercise price and the number and
type of securities issuable upon exercise of the Representatives' Warrants
should any one or more of certain specified events occur. The

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Representatives' Warrants grant to the holders thereof certain rights of
registration for the securities issuable upon exercise of the Representatives'
Warrants.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, losses and expenses, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act"),
or to contribute to payments that the Underwriters may be required to make in
respect thereof. The Company has agreed to pay to the Representatives a
non-accountable expense allowance of 1.0% of the gross proceeds derived from the
sale of Common Stock (including the sale of any Common Stock subject to the
Underwriters' over-allotment option).

In connection with the Offering, certain Underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq National Market may engage in passive market making
transactions in the Common Stock on the Nasdaq National Market in accordance
with Rule 10b-6A under the Securities Exchange Act of 1934 (the "Exchange Act"),
during a specified period before commencement of offers or sales of the Common
Stock. The passive market making transactions must comply with applicable volume
and price limits and be identified as such. In general, a passive market maker
may display its bid at a price not in excess of the highest independent bid for
such security; if all independent bids are lowered below the passive market
maker's bid, however such bid must then be lowered when certain purchase limits
are exceeded.

LEGAL MATTERS

The validity of the issuance of shares of Common Stock offered hereby will
be passed upon for the Company by Norton, Jacobs, Kuhn & McTopy, L.L.P.,
Houston, Texas. Certain legal matters in connection with the sale of such
securities will be passed upon for the Underwriters by Vinson & Elkins L.L.P.,
Houston, Texas. Members of Norton, Jacobs, Kuhn & McTopy, L.L.P. own an
aggregate of 38,681 shares of Common Stock. The Norton Family Trust, of which
Carl L. Norton is a beneficiary, and Sabrina A. McTopy own warrants to acquire
an additional 103,230 shares of Common Stock. Carl L. Norton and Sabrina A.
McTopy are partners in Norton, Jacobs, Kuhn & McTopy, L.L.P.

EXPERTS

The financial statements of the Company as of January 31, 1994, 1995 and
1996 and for each of the years in the three-year period ended January 31, 1996
included in this Prospectus have been audited by Hein + Associates LLP,
independent certified public accountants, as set forth in their report appearing
elsewhere herein, and is included herein in reliance upon such report and upon
the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the Common Stock offered by this Prospectus. This Prospectus does not
contain all of the information set forth in such Registration Statement, certain
parts of which were omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and to the
securities offered hereby, reference is made to such Registration Statement,
including the exhibits thereto. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy and information
statements and other information filed with the Commission. Reports, proxy
statements, and other information filed by the Company with the Commission are
available at the web site that the Commission maintains at http://www.sec.gov.
and can be inspected and

37
39

copied at the public reference facilities maintained by the Commission at its
principal offices at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549 and at the regional offices of the Commission located at 7
World Trade Center, New York, New York, 10048, and the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Common Stock is quoted on the Nasdaq National Market
and such reports, proxy and information statements and other information
concerning the Company are available at the offices of the Nasdaq National
Market located at 1735 K Street, N.W., Washington, D.C. 20006.

38
40

GLOSSARY OF TERMS

Certain words and terms commonly used in the seismic business which are
used throughout this Prospectus are defined below.

Acoustic wave. A sonic wave travelling through the earth's subsurface
induced by a release of energy, normally dynamite or vibroseis.

CEU. Central Electronics unit that records and stores seismic data.

Channel. A set of geophones recording acoustic waves reflected from
formations below the earth's surface.

Channel box. A remote data acquisition unit that collects seismic data
from a multi-conductor geophysical cable attached to the geophones and transmits
the data to the CEU.

Data acquisition system. The electronic field instruments and associated
equipment required for seismic acquisition.

Geophones. Electro-magnetic coils placed on the earth's surface to receive
the acoustic waves reflected by subsurface geological layers.

Seismic processing system. The computer hardware and software required to
convert seismic records to seismic cross-sections.

2-D seismic. Seismic data representing a vertical plane of subsurface
information.

3-D seismic. Seismic data representing a cube of subsurface information
that can be sliced into numerous planes offering a different view of the target.

39
41

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Independent Auditor's Report.......................................................... F-2
Balance Sheets as of January 31, 1995 and 1996 and October 31, 1996 (unaudited)....... F-3
Statements of Income for the Years Ended January 31, 1994, 1995 and 1996 and the Nine
Months Ended October 31, 1995 (unaudited) and 1996 (unaudited)...................... F-4
Statements of Changes in Stockholders' Equity for the Years Ended January 31, 1994,
1995 and 1996 and the Nine Months Ended October 31, 1996 (unaudited)................ F-5
Statements of Cash Flows for the Years Ended January 31, 1994, 1995 and 1996 and the
Nine Months Ended October 31, 1995 (unaudited) and 1996 (unaudited)................. F-6
Notes to Financial Statements......................................................... F-7

F-1
42

INDEPENDENT AUDITOR'S REPORT

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

We have audited the accompanying balance sheets of Mitcham Industries, Inc. as
of January 31, 1995 and 1996, and the related statements of income, changes in
stockholders' equity and cash flows for each of the years in the three year
period ended January 31, 1996. 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, 1995 and 1996, and the results of its operations and its cash flows
for each of the years in the three year period ended January 31, 1996, in
conformity with generally accepted accounting principles.

/s/ HEIN + ASSOCIATES LLP

HEIN + ASSOCIATES LLP
Certified Public Accountants

Houston, Texas
February 23, 1996

F-2
43

MITCHAM INDUSTRIES, INC.

BALANCE SHEETS

ASSETS

JANUARY 31,
-------------------------- OCTOBER 31,
1995 1996 1996
---------- ----------- -----------
(UNAUDITED)

Current assets:
Cash................................................ $ 874,000 $ 637,000 $ 3,330,000
Accounts receivable, net of allowance for doubtful
accounts of $90,000, $347,000 and $615,000 at
January 31, 1995 and 1996 and October 31, 1996,
respectively..................................... 1,792,000 2,277,000 3,288,000
Installment notes receivable, trade................. 289,000 193,000 72,000
Inventory........................................... 84,000 206,000 630,000
Prepaid expenses and other current assets........... 69,000 274,000 103,000
---------- ----------- -----------
Total current assets........................ 3,108,000 3,587,000 7,423,000
Seismic equipment lease pool, net of accumulated
depreciation..................................... 4,979,000 8,115,000 15,247,000
Property and equipment, net of accumulated
depreciation..................................... 73,000 472,000 530,000
Other assets........................................ 39,000 65,000 52,000
---------- ----------- -----------
Total assets................................ $8,199,000 $12,239,000 $23,252,000
========= ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Notes payable to bank............................... $ 256,000 $ 400,000 $ --
Current installments of long-term debt.............. 167,000 447,000 938,000
Obligation under capital lease...................... 6,000 -- --
Accounts payable.................................... 614,000 491,000 3,370,000
Income taxes payable................................ 28,000 311,000 --
Deferred income taxes payable....................... 505,000 544,000 916,000
Accrued liabilities and other current liabilities... 80,000 474,000 737,000
---------- ----------- -----------
Total current liabilities................... 1,656,000 2,667,000 5,961,000
---------- ----------- -----------
Long-term debt:
Long-term debt, net of current installments......... 234,000 1,155,000 2,910,000
Capital lease obligations, net of current portion... 27,000 18,000 --
Deferred income taxes................................. 106,000 351,000 645,000
---------- ----------- -----------
Total liabilities........................... 2,023,000 4,191,000 9,516,000
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; 3,170,000, 3,221,000 and 4,378,650
shares, respectively, issued and outstanding..... 32,000 32,000 44,000
Additional paid-in capital.......................... 4,181,000 4,340,000 8,398,000
Retained earnings................................... 1,963,000 3,676,000 5,294,000
---------- ----------- -----------
Total stockholders' equity.................. 6,176,000 8,048,000 13,736,000
---------- ----------- -----------
Total liabilities and stockholders' equity............ $8,199,000 $12,239,000 $23,252,000
========= ========== ==========

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

F-3
44

MITCHAM INDUSTRIES, INC.

STATEMENTS OF INCOME

NINE MONTHS
YEARS ENDED JANUARY 31, ENDED OCTOBER 31,
------------------------------------ -----------------------
1994 1995 1996 1995 1996
---------- ---------- ---------- ---------- ----------
(UNAUDITED)

Revenues:
Leases of seismic equipment........ $1,601,000 $2,424,000 $5,157,000 $3,431,000 $5,356,000
Sales of seismic equipment......... 2,926,000 2,860,000 2,135,000 1,643,000 2,007,000
---------- ---------- ---------- ---------- ----------
Total revenues............. 4,527,000 5,284,000 7,292,000 5,074,000 7,363,000
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Seismic equipment subleases........ 896,000 245,000 251,000 222,000 111,000
Sales of seismic equipment......... 1,772,000 2,027,000 1,085,000 1,000,000 1,261,000
General and administrative......... 655,000 924,000 1,344,000 990,000 1,199,000
Provision for doubtful accounts.... 38,000 35,000 627,000 372,000 418,000
Depreciation....................... 62,000 363,000 1,331,000 825,000 1,951,000
---------- ---------- ---------- ---------- ----------
Total costs and expenses... 3,423,000 3,594,000 4,638,000 3,409,000 4,940,000
---------- ---------- ---------- ---------- ----------
Other income (expense):
Interest, net...................... (16,000) (209,000) (21,000) (6,000) (170,000)
Other, net......................... 20,000 60,000 38,000 26,000 219,000
---------- ---------- ---------- ---------- ----------
Total other income
(expense)................ 4,000 (149,000) 17,000 20,000 49,000
---------- ---------- ---------- ---------- ----------
Income before income taxes........... 1,108,000 1,541,000 2,671,000 1,685,000 2,472,000
Provision for income taxes........... 405,000 541,000 958,000 605,000 854,000
---------- ---------- ---------- ---------- ----------
Net income........................... $ 703,000 $1,000,000 $1,713,000 $1,080,000 $1,618,000
========== ========== ========== ========== ==========
Earnings per common and common
equivalent share:
Primary............................ $ 0.51 $ 0.66 $ 0.52 $ 0.34 $ 0.37
Assuming full dilution............. $ 0.51 $ 0.66 $ 0.50 $ 0.34 $ 0.36
========== ========== ========== ========== ==========
Shares used in computing earnings per
common and common equivalent share:
Primary............................ 1,380,000 1,514,000 3,306,000 3,170,000 4,431,000
Assuming full dilution............. 1,380,000 1,514,000 3,403,000 3,170,000 4,489,000
========== ========== ========== ========== ==========

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

F-4
45

MITCHAM INDUSTRIES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

COMMON STOCK ADDITIONAL
------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
--------- ------- ---------- ---------- -----------

Balances, February 1, 1993............. 1,380,000 $14,000 $ -- $ 260,000 $ 274,000
Net income........................... -- -- -- 703,000 703,000
--------- ------- ---------- ---------- -----------
Balances, February 1, 1994............. 1,380,000 14,000 -- 963,000 977,000
Issuance of common stock, net of
offering expenses................. 1,790,000 18,000 4,181,000 -- 4,199,000
Net income........................... -- -- -- 1,000,000 1,000,000
--------- ------- ---------- ---------- -----------
Balances, January 31, 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
(unaudited)....................... 1,158,000 12,000 4,058,000 -- 4,070,000
Net income (unaudited)............... -- -- -- 1,618,000 1,618,000
--------- ------- ---------- ---------- -----------
Balances, October 31, 1996
(unaudited).......................... 4,379,000 $44,000 $8,398,000 $5,294,000 $13,736,000
========= ======= ========== ========== ===========

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

F-5
46

MITCHAM INDUSTRIES, INC.

STATEMENTS OF CASH FLOWS

NINE MONTHS
YEARS ENDED JANUARY 31, ENDED OCTOBER 31,
--------------------------------------- --------------------------
1994 1995 1996 1995 1996
--------- ----------- ----------- ----------- -----------
(UNAUDITED)

Cash flows from operating activities:
Net income.............................. $ 703,000 $ 1,000,000 $ 1,713,000 $ 1,080,000 $ 1,618,000
Adjustments to reconcile net income to
net cash provided by operating
activities:
Trade accounts receivable, net........ (318,000) (1,404,000) (742,000) (316,000) (1,158,000)
Accounts payable and other current
liabilities......................... 428,000 71,000 554,000 20,000 (193,000)
Depreciation.......................... 62,000 363,000 1,331,000 825,000 1,951,000
Provision for doubtful accounts, net
of chargeoffs....................... -- (3,000) 257,000 -- 268,000
Loss on disposal of assets............ -- 12,000 -- -- --
Deferred income taxes................. 94,000 467,000 284,000 109,000 666,000
Other, net............................ (23,000) (46,000) (171,000) 145,000 (540,000)
--------- ----------- ----------- ----------- -----------
Net cash provided by operating
activities..................... 946,000 460,000 3,226,000 1,863,000 2,612,000
--------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchases of seismic equipment held for
lease................................. (875,000) (1,938,000) (5,321,000) (2,547,000) (5,750,000)
Purchases of property and equipment..... (7,000) (22,000) (444,000) (377,000) (131,000)
Proceeds from sale of property and
equipment............................. -- -- 846,000 797,000 --
--------- ----------- ----------- ----------- -----------
Net cash used in investing
activities..................... (882,000) (1,960,000) (4,919,000) (2,127,000) (5,881,000)
--------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Proceeds from short-term borrowings..... 709,000 1,413,000 400,000 400,000 --
Payments on short-term borrowings....... (146,000) (4,242,000) (256,000) (256,000) (400,000)
Proceeds from long-term debt............ 500,000 1,372,000 326,000 3,126,000
Payments on long-term debt and
capitalized lease obligations......... (6,000) (97,000) (182,000) (134,000) (834,000)
Capitalized stock issuance costs and
deferred financing charges............ (109,000) (25,000) -- (36,000) --
Proceeds from issuance of common stock,
net of offering expenses.............. -- 4,186,000 122,000 -- 4,070,000
--------- ----------- ----------- ----------- -----------
Net cash provided by financing
activities..................... 448,000 1,735,000 1,456,000 300,000 5,962,000
--------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash........... 512,000 235,000 (237,000) 36,000 2,693,000
Cash, beginning of period................. 127,000 639,000 874,000 874,000 637,000
--------- ----------- ----------- ----------- -----------
Cash, end of period....................... $ 639,000 $ 874,000 $ 637,000 $ 910,000 $ 3,330,000
========= =========== =========== =========== ===========
Supplemental cash flow information:
Cash paid for:
Interest.............................. $ 17,000 $ 196,000 $ 78,000 $ 79,000 $ 289,000
Taxes................................. $ 8,000 $ 800 -- $ 300,000 $ 515,000
========= =========== =========== =========== ===========
Equipment acquired under capital
lease................................. $ 18,000 $ 36,000 -- -- --
Equipment purchases in accounts
payable............................... $ -- -- $ -- $ 1,175 $ 3,009
Equipment purchased with vendor
financing............................. -- $ 2,500,000 -- -- --
========= =========== =========== =========== ===========

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

F-6
47

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

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 October
31, 1996 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.

Inventories -- Inventories consist primarily of used seismic equipment
purchased in bulk liquidation sales. 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 FASB 109 under
which 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.

Cash equivalents -- For purposes of presenting cash flows, the Company
considers all highly liquid investments with remaining maturities of 90 days or
less on the purchase date to be cash equivalents.

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

F-7
48

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

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 FASB 121 entitled "Impairment of Long-Lived Assets". FASB 121, which
became effective beginning February 1, 1996, provides that in the event that
facts and circumstance 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. FASB 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.

Unaudited Interim Information -- The accompanying financial information as
of October 31, 1996 and for the nine month periods ended October 31, 1995 and
1996 has been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
reflect all adjustments, consisting of normal recurring accruals, which are, in
the opinion of management, necessary to fairly present such information in
accordance with generally accepted accounting principles.

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

JANUARY 31,
--------------------- OCTOBER 31,
1995 1996 1996
-------- -------- -----------

Land................................ $ -- $ 25,000 $ 25,000
Building and improvements........... -- 346,000 331,000
Furniture and fixtures.............. 80,000 153,000 234,000
Autos and trucks.................... 37,000 37,000 86,000
-------- --------- ----------
117,000 561,000 676,000
Less accumulated depreciation....... (44,000) (89,000) (146,000)
-------- --------- ----------
$ 73,000 $472,000 $ 530,000
======== ========= ==========

3. NOTES PAYABLE TO BANK

The Company has a $1,000,000 line of credit pursuant to a loan agreement.
Borrowings under this line of credit bear interest at the prime rate plus .5%
(totaling 9% at January 31, 1996). $400,000 was outstanding under this line at
January 31, 1996. The line of credit is collateralized by accounts receivable,
inventory and lease pool equipment.

On January 31, 1996, the Company executed a new line of credit with a bank
to replace the aforementioned line of credit. The Company may borrow up to
$1,000,000 under the new line of credit which will bear interest at prime plus
.5% (9% at January 31, 1996). Advances under the line of credit will be
collateralized by accounts receivable and inventory. Borrowings under the line
will be limited to 80% of eligible accounts receivable and 50% of eligible
inventory.

F-8
49

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

The Company had a demand note payable to a bank with interest at 1.5% over
its base lending rate (total of 11% at January 31, 1995). If no demand is made,
the note is due in monthly installments of $28,475 plus interest, through
October 1995. The note is collateralized by lease fleet equipment and
assignments of leases. The Company was required to maintain compensating
balances with the bank of approximately $97,000. At January 31, 1995, $256,000
was outstanding under the note. This note expired during fiscal 1996.

4. LONG-TERM DEBT

Long-term debt consists of the following:

JANUARY 31,
----------------------- OCTOBER 31,
1995 1996 1996
--------- ---------- -----------

Note payable to bank, due in monthly installments of
$13,889 plus interest at 1% over its base lending
rate (10.5% and 10.75% at January 31, 1995 and 1996),
due June 1997, collateralized by lease pool
equipment............................................ $ 401,000 $ 234,000 $ --
Note payable to bank, due in monthly installments of
$2,803 including interest at 9%, due September 1998,
collateralized by land and a building................ -- 274,000 266,000
Note payable to bank, due in monthly installments of
$833 plus interest at its base lending rate plus 1%
(9.75% at January 31, 1996), due September 2000,
collateralized by land and a building................ -- 48,000 --
Note payable to bank under $4,206,000 term loan
facility, due in monthly installments of $26,270,
including interest at 9.5%, through January 2000,
collateralized primarily by lease pool equipment and
an assignment of leases.............................. -- 1,046,000 3,582,000
--------- ---------- ----------
401,000 1,602,000 3,848,000
Less current maturities................................ (167,000) (447,000) (938,000)
--------- ---------- ----------
$ 234,000 $1,155,000 $2,910,000
========= ========== ==========

Aggregate maturities of long-term debt at January 31, 1996 are as follows:

YEAR ENDING JANUARY 31,
- -----------------------

1997............................................................ $ 447,000
1998............................................................ 350,000
1999............................................................ 525,000
2000............................................................ 271,000
2001............................................................ 9,000
----------
$1,602,000
==========

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 each quarter thereafter, 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.

F-9
50

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

In January 1997, the Company established a second revolving line of credit
of up to $4.0 million to be used solely for short-term financing of up to 75% of
the seismic equipment purchased by the Company under approved lease/purchase
contracts (the "Equipment Revolver") 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 seismic equipment purchased other than seismic equipment
related to lease/purchase contracts. Interest on the Equipment Revolver and the
Second Term Loan accrues at a floating rate of interest equal to the bank's base
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 the lease/purchase contract has not purchased 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.

5. LEASES

The Company leases and subleases seismic equipment to customers under
operating leases with non-cancellable 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 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 October 31, 1996.

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 $896,000, $245,000 and $251,000 for the years ended January
31, 1994, 1995 and 1996, respectively and $222,000 and $111,000 for the nine
months ended October 31, 1995 and 1996, respectively.

A summary of the equipment held for lease to others is as follows:

JANUARY 31,
------------------------- OCTOBER 31,
1995 1996 1996
---------- ----------- -----------

Remote signal conditioners (channel boxes)
and other equipment........................ $5,395,000 $ 9,580,000 $18,589,000
Less: accumulated depreciation............... (416,000) (1,465,000) (3,342,000)
---------- ----------- -----------
$4,979,000 $ 8,115,000 $15,247,000
========== =========== ===========

F-10
51

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

6. INCOME TAXES

The components of income tax expense are as follows:

YEAR ENDED JANUARY 31,
-----------------------------------
1994 1995 1996
--------- --------- ---------

Current:
Federal....................................... $ 301,000 $ 71,000 $ 698,000
State......................................... 10,000 3,000 (24,000)
--------- --------- ---------
311,000 74,000 674,000
Deferred........................................ 94,000 467,000 284,000
--------- --------- ---------
$ 405,000 $ 541,000 $ 958,000
========= ========= =========

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

JANUARY 31,
----------------------
1995 1996
--------- ---------

Deferred Tax asset -- allowance for doubtful
accounts.................................................. $ 31,000 $ 123,000
Deferred tax liabilities:
Conversion from accrual to cash method of accounting...... (536,000) (667,000)
Depreciation.............................................. (106,000) (351,000)
--------- ---------
Deferred tax liability, net............................... $(611,000) $(895,000)
========= =========

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.

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

YEAR ENDED JANUARY 31,
--------------------------------------
1994 1995 1996
---------- ---------- ----------

Federal income tax expense at 34%.............. $ 377,000 $ 524,000 $ 913,000
State income taxes and nondeductible
expenses..................................... 29,000 17,000 45,000
Other, net..................................... (1,000) -- --
---------- ---------- ----------
$ 405,000 $ 541,000 $ 958,000
========== ========== ==========

7. RELATED PARTY TRANSACTIONS

The Company engages in 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:

YEAR ENDED JANUARY 31,
-------------------------------
1994 1995 1996
-------- ------- --------

Office and warehouse rent expense................... $ 48,000 $48,000 $ 32,000
Equipment lease expense and purchases............... $270,000 $11,000 $ 28,000
Seismic equipment sales............................. $ 8,000 $ -- $ --
Purchase of office and warehouse.................... $ -- $ -- $325,000
======== ======= ========

F-11
52

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

See Note 11 for discussion of the employment agreement with the Company's
President.

In September 1994, the Company entered into an equipment lease whereby the
lessors acquired $250,000 of channel boxes from the Company and leased them back
to the Company. In October 1994, the Company exercised its right to purchase the
equipment for $250,000. The Company's legal counsel was one of the lessors in
this transaction and provided $50,000 of the consideration for the acquisition
of the equipment by the lessors.

8. EXPORT SALES AND MAJOR CUSTOMERS

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

YEAR ENDED JANUARY 31,
--------------------------------------
1994 1995 1996
---------- ---------- ----------

Canada......................................... $ 876,000 $ 346,000 $1,022,000
Columbia....................................... -- -- 949,000
China.......................................... -- 885,000 943,000
Europe......................................... 293,000 339,000 699,000
Other.......................................... 240,000 222,000 213,000
---------- ---------- ----------
Totals............................... $1,409,000 $1,792,000 $3,826,000
========== ========== ==========

One customer represented 36%, 16% and 18% of the Company's total revenues
for the years ended January 31, 1994, 1995 and 1996, respectively. No other
customer exceeded 10% of revenues for fiscal 1994, 1995 and 1996.

9. CONCENTRATIONS OF CREDIT RISK

As of January 31, 1995 and 1996, and October 31, 1996, amounts due from
customers which exceeded 10 percent of accounts receivable, amounted to an
aggregate of $1,298,000 (four customers) $1,138,000 (three customers) and
$1,663,000 (three customers), respectively.

One of the Company's significant customers filed for bankruptcy protection
during December 1996. Revenues derived from this customer amount to 18.5% of
total revenues for the eleven-month period ended December 31, 1996. As of that
date, amounts due from this customer totalled approximately $1.0 million. During
December 1996, the Company increased its allowance for trade accounts receivable
from $615,000 at October 31, 1996 to $1.5 million at December 31, 1996, 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 exceed the 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 October 31, 1996. 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 4,378,650 are issued and outstanding as of October 31, 1996. In connection
with the Company's initial public offering, 1,790,000 shares of the Company's
common stock were issued during fiscal 1995. Proceeds of the offering amounted
to $4,185,000, net of offering costs of $1,283,000. Warrants to acquire 895,000
shares of

F-12
53

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

the Company's commons stock at $3.50 per share were issued in connection with
this offering. 892,750 of these warrants had been exercised as of October 31,
1996.

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 was increased to 63,953 and
$3.87, respectively, during fiscal 1996 as a result of the anti-dilution
provisions of the warrants.

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. The warrants were exercisable beginning December 29, 1994, and unless
exercised, automatically expire five years from the date of their issuance. All
these warrants have been exercised as of October 31, 1996.

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 and are unexercised at October 31, 1996.

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 October 31,
1996, 68,000 of these warrants had been exercised.

11. COMMITMENTS AND CONTINGENCIES

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 agreement, which expired December 1996, was
contingent upon the Company purchasing a minimum of $10,000,000 of I/O remote
signal conditioners as follows: $1,000,000 on or before June 30, 1994;
$2,500,000 on or before August 31, 1994; an additional $2,500,000 through
February 22, 1996; and a further $4,000,000 through December 31, 1996. In the
event the Company had not made the required amount of purchases, it would have
lost its exclusivity as recipient of lease requests for I/O channel boxes.

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 from June 1,
1997 through May 31, 1998, 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 October 31, 1996, the Company believes it has
fulfilled the terms of the agreement, including the minimum purchase
commitments.

F-13
54

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

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 data acquisition equipment and
other field equipment from SERCEL at favorable prices, $800,000 of which will
consist of SERCEL's existing lease pool of primarily 3-D channel boxes. 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 October 31, 1996,
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 (as
defined); 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 or is convicted of or indicted for any felony
criminal offense or any crime 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 agreement:

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 300,000 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.

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

F-14
55

MITCHAM INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION SUBSEQUENT TO JANUARY 31, 1996 IS UNAUDITED)

is in the service of the Company. As of October 31, 1996, 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 and 1,000 of which are exercisable at $6.00 per share.

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 his election to the Board and every year thereafter so long as he is
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 October 31, 1996, 8,000 options have been granted under this
Plan.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of trade receivables and
payables and notes payable to banks. The Company believes the carrying value of
these financial instruments approximate their estimated fair value.

14. SECONDARY PUBLIC OFFERING

The Company is preparing to register with the Securities and Exchange
Commission 2,500,000 shares of its common stock. The Company has granted an
option to the underwriters to purchase up to 375,000 shares on the same terms to
satisfy over-allotments in the sale of the 2,500,000 shares.

F-15
56

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF ANY OFFER TO BUY BY ANY ONE IN ANY JURISDICTION IN
WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary.................... 3
Cautionary Statement Regarding
Forward-Looking Statements.......... 6
Risk Factors.......................... 6
Use of Proceeds....................... 10
Price Range of Common Stock........... 11
Dividend Policy....................... 11
Capitalization........................ 12
Dilution.............................. 13
Selected Financial Data............... 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 15
Business.............................. 19
Management............................ 26
Certain Transactions and
Relationships....................... 30
Principal and Selling Shareholders.... 31
Description of Capital Stock and Other
Securities.......................... 32
Shares Eligible for Future Sale....... 34
Underwriting.......................... 35
Legal Matters......................... 36
Experts............................... 36
Available Information................. 36
Glossary of Terms..................... 38
Index to Financial Statements......... F-1

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

LOGO

3,000,000 SHARES

COMMON STOCK

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

PROSPECTUS
---------------------
RODMAN & RENSHAW, INC.

SIMMONS & COMPANY
INTERNATIONAL
, 1997

- ------------------------------------------------------
- ------------------------------------------------------
57

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Expenses payable in connection with the issuance and distribution of the
securities to be registered, other than underwriting discounts and commissions,
are estimated as follows:

Securities and Exchange Commission filing fee............................. $ 9,505
Nasdaq filing fee......................................................... 3,650
Printing expenses......................................................... 75,000
Legal fees and expenses................................................... 80,000
Accounting fees and expenses.............................................. 25,000
Blue Sky fees and expenses................................................ 5,000
Transfer Agent fees....................................................... 3,500
Miscellaneous expenses.................................................... 23,345
--------
TOTAL........................................................... $225,000
========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Nine of the Company's Amended and Restated Articles of
Incorporation (the "Articles") eliminates or limits the personal liability of
directors for damages for an act or omission in the director's capacity as a
director, except for (i) a breach of a director's duty of loyalty to the Company
or its shareholders; (ii) an act or omission not in good faith that constitutes
a breach of duty of the director to the Company or that involves intentional
misconduct or a knowing violation of the law; (iii) a transaction from which a
director received an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the directors' office; or (iv) an act or
omission for which the liability of a director is expressly provided for by an
applicable statute.

Article Eleven of the Articles makes mandatory the indemnification of
directors permitted under Section B of Article 2.02-1 of the Texas Business
Corporation Act ("TBCA") and permits the Company to advance the reasonable
expenses of a director upon compliance with the requirements of Sections K and L
thereof.

Article 2.02-1 of the TBCA provides as follows:

A. In this article:

(1) "Corporation" includes any domestic or foreign predecessor entity
of the corporation in a merger, consolidation, or other transaction in
which the liabilities of the predecessor are transferred to the corporation
by operation of law and in any other transaction in which the corporation
assumes the liabilities of the predecessor but does not specifically
exclude liabilities that are the subject matter of this article.

(2) "Director" means any person who is or was a director of the
corporation and any person who, while a director of the corporation, is or
was serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise.

(3) "Expenses" include court costs and attorneys' fees.

II-1
58

(4) "Official capacity" means

(a) when used with respect to a director, the office of director in
the corporation, and

(b) when used with respect to a person other than a director, the
elective or appointive office in the corporation held by the
officer or the employment or agency relationship undertaken by
the employee or agent in behalf of the corporation, but

(c) in both Paragraphs (a) and (b) does not include service for any
other foreign or domestic corporation or any partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or
other enterprise.

(5) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative,
or investigative, any appeal in such an action, suit, or proceeding, and
any inquiry or investigation that could lead to such an action, suit, or
proceeding.

B. A corporation may indemnify a person who was, is or is threatened to be
a made a named defendant or respondent in a proceeding because the person is or
was a director only if it is determined in accordance with Section F of this
article that the person:

(1) conducted himself in good faith;

(2) reasonably believed:

(a) in the case of conduct in his official capacity as a director
of the corporation, that his conduct was in the corporation's
best interests; and

(b) in all other cases, that his conduct was at least not opposed
to the corporation's best interests; and

(3) in the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.

C. Except to the extent permitted by Section E of this article, a director
may not be indemnified under Section B of this article in respect of a
proceeding:

(1) in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity; or

(2) in which the person is found liable to the corporation.

D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of itself
determinative that the person did not meet the requirements set forth in Section
B of this article. A person shall be deemed to have been found liable in respect
of any claim, issue or matter only after the person shall have been so adjudged
by a court of competent jurisdiction after exhaustion of all appeals therefrom.

E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding; but if the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the person,
the indemnification (1) is limited to reasonable expenses actually incurred by
the person in connection with the proceeding and (2) shall not be made in
respect of any proceeding in which the person shall have been found liable for
willful or intentional misconduct in the performance of his duty to the
corporation.

F. A determination of indemnification under Section B of this article must
be made:

(1) by a majority vote of a quorum consisting of directors who at the
time of the vote are not named defendants or respondents in the proceeding;

II-2
59

(2) if such a quorum cannot be obtained, by a majority vote of a
committee or the board of directors, designated to act in the matter by a
majority vote of all directors, consisting solely of two or more directors
who at the time of the vote are not named defendants or respondents in the
proceeding;

(3) by special legal counsel selected by the board of directors of a
committee of the board by vote as set forth in Subsection (1) or (2) of
this section, or if such a quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors; or

(4) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.

G. Authorization of indemnification and determination as to reasonableness
of expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision obtained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, or an
agreement that makes mandatory the indemnification permitted under Section B of
this article shall be deemed to constitute authorization of indemnification in
the manner required by this section even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible.

H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named defendant
or respondent because he is or was a director if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.

I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, that court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.

J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not he has met the requirements set forth in
Section B of this article or has been adjudged liable in the circumstances
described by Section C of this article, the court may order the indemnification
that the court determines is proper and equitable; but if the person is found
liable to the corporation or is found liable on the basis that personal benefit
was improperly received by the person, the indemnification shall be limited to
reasonable expenses actually incurred by the person in connection with the
proceeding.

K. Reasonable expenses incurred by a director who was, is, or is threatened
to be made a named defendant or respondent in a proceeding may be paid or
reimbursed by the corporation, in advance of the final disposition of the
proceeding and without any of the determinations specified in Sections F and G
of this article, after the corporation receives a written affirmation by the
director of his good faith belief that he has met the standard of conduct
necessary for indemnification under this article and a written undertaking by or
on behalf of the director to repay the amount paid or reimbursed if it is
ultimately determined that he has not met that standard or if it is ultimately
determined that indemnification of the director against expenses incurred by him
in connection with that proceeding is prohibited by Section E of this article. A
provision contained in the articles of incorporation, the bylaws, a resolution
of shareholders or directors, or an agreement that makes mandatory the payment
or reimbursement permitted under this section shall be deemed to constitute
authorization of that payment or reimbursement.

L. The written undertaking required by Section K of this article must be an
unlimited general obligation of the director but need not be secured. It may be
accepted without reference to financial ability to make repayment.

M. A provision for a corporation to indemnify or to advance expenses to a
director who was, is or is threatened to be made a named defendant or respondent
in a proceeding, whether contained in the articles of incorporation, the bylaws,
a resolution of shareholders or directors, an agreement, or otherwise, except in

II-3
60

accordance with Section R of this article, is valid only to the extent it is
consistent with this article as limited by the articles of incorporation, if
such a limitation exists.

N. Notwithstanding any other provision of this article, a corporation may
pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when he
is not a named defendant or respondent in the proceeding.

O. An officer of the corporation shall be indemnified as, and to the same
extent, provided by Sections H, I, and J of this article for a director and is
entitled to seek indemnification under those sections to the same extent as a
director. A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors under this article.

P. A corporation may indemnify and advance expenses to persons who are or
were not officers, employees, or agents of the corporation but who are or were
serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise to the same
extent that it may indemnify and advance expenses to directors under this
article.

Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Section P of this article and who is
not a director such further extent, consistent with law, as may be provided by
its articles of incorporation, bylaws, general or specific action of its board
of directors, or contract or as permitted or required by common law.

R. A corporation may purchase and maintain insurance or another arrangement
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or who is or was serving at the request of the corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, against any liability asserted against him and incurred by him in
such a capacity or arising out of his status as such a person, whether or not
the corporation would have the power to indemnify him against that liability
under this article. If the insurance or other arrangement is with a person or
entity that is not regularly engaged in the business of providing insurance
coverage, the insurance or arrangement may provide for payment of a liability
with respect to which the corporation would not have the power to indemnify the
person only if including coverage for the additional liability has been approved
by the shareholders of the corporation. Without limiting the power of the
corporation to procure or maintain any kind of insurance or other arrangement, a
corporation may, for the benefit of persons indemnified by the corporation, (1)
create a trust fund; (2) establish any form of self-insurance; (3) secure its
indemnity obligation by grant of a security interest or other lien on the assets
of the corporation; or (4) establish a letter of credit, guaranty, or surety
arrangement. The insurance or other arrangement may be procured, maintained, or
established within the corporation or with any insurer or other person deemed
appropriate by the board of directors regardless of whether all or part of the
stock or other securities of the insurer or other person are owned in whole or
part by the corporation. In the absence of fraud, the judgment of the board of
directors as to the terms and conditions of the insurance or other arrangement
and the identity of the insurer or other person participating in an arrangement
shall be conclusive and the insurance or arrangement shall not be voidable and
shall not subject the directors approving the insurance or arrangement to
liability, on any ground, regardless of whether directors participating in the
approval are beneficiaries of the insurance or arrangement.

S. Any indemnification of or advance of expenses to a director in
accordance with this article shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
without a meeting pursuant to Section A, Article 9.10, of this Act and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

T. For purposes of this article, the corporation is deemed to have
requested a director to serve an employee benefit plan whenever the performance
by him of his duties to the corporation also imposes duties on or otherwise
involves services by him to the plan or participants or beneficiaries of the
plan. Excise taxes assessed on a director with respect to an employee benefit
plan pursuant to applicable law are deemed fines.

II-4
61

Action taken or omitted by him with respect to an employee benefit plan in the
performance of his duties for a purpose reasonably believed by him to be in the
interest of the participants and beneficiaries of the plan is deemed to be for a
purpose which is not opposed to the best interests of the corporation.

U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to indemnify
a person under Section H, I, J, O, P, or Q of this article.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

During the past three years, the Company had made the following sales of
unregistered securities, all of which sales were exempt from the negotiation
requirements of the Securities Act pursuant to Section 4(2) thereof:

In connection with the Company's bridge financing consummated in June 1994,
the Company issued to the following investors a promissory note in the original
principal amount of $500,000 (in which the investors have undivided interests
therein as indicated below) and for an aggregate consideration of $200, Bridge
Warrants to purchase an aggregate of 200,000 shares of Common Stock for $3.50
per share:

INTEREST IN BRIDGE PURCHASE
NAME OF INVESTOR THE NOTE WARRANTS PRICE
---------------- ----------- -------- --------

Heptagon Investments Limited................ 80% 160,000 $160
Carl L. Norton.............................. 20% 40,000 $ 40

On March 19, 1996, the Company issued 4,900 shares of Common Stock to
Norton, Jacobs, Kuhn & McTopy, L.L.P. for services rendered in connection with
the Company obtaining a $1,000,000 revolving line of credit and a $4,200,000
term loan from Bank One, Texas, N.A. and Bank One Leasing Corporation,
respectively.

On August 22, 1996, the Company issued warrants to purchase 40,000 and
10,000 shares of Common Stock for $6.43 per share (110% of the average closing
price of a share of Common Stock for the 20 trading days preceding their
issuance) to Norton Family Trust (the "Trust") and Sabrina A. McTopy ("McTopy"),
respectively. Such warrants were acquired by the Trust and McTopy for $40.00 and
$10.00, respectively. The warrants are exercisable at any time after their
issuance through August 22, 2000.

On December 13, 1996, the Company issued warrants to purchase 40,000 and
10,000 shares of Common Stock for $9.28 per share (110% of the average closing
price of a share of Common Stock for the 20 trading days preceding their
issuance) to the Trust and McTopy, respectively. Such warrants were acquired by
the Trust and McTopy for $40.00 and $10.00, respectively. The warrants are
exercisable at any time after December 14, 1997 through December 12, 2001.

II-5
62

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

EXHIBIT NO. DESCRIPTION
----------- -----------

1** -- Form of Underwriting Agreement
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)
5** -- Opinion of Norton, Jacobs, Kuhn & McTopy, L.L.P. as to
the legality of the securities being registered
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
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.
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.
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 Banc 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)

II-6
63

EXHIBIT NO. DESCRIPTION
----------- -----------

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, between the Company and Pelton
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
10.25* -- Assignment of Leases, dated January 16, 1997, between the
Company and Bank One
10.26* -- Security Agreement, dated January 16, 1997, between the
Company and Bank One
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
10.28* -- First Amendment to Letter Loan Agreement, dated January
16, 1997, among the Company, Bank One and Bank One
Leasing
21 -- Subsidiaries of the Company (6) (Exhibit 11)
23.1* -- Consent of Hein + Associates LLP
23.2** -- Consent of Norton, Jacobs, Kuhn & McTopy, L.L.P.
(included in Exhibit 5).

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

* Filed herewith.

** To be filed by amendment.

+ Previously filed.

(1) Incorporated by reference to the indicated exhibit number of the
Registrant'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
Registrant'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
Registrant'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
Registrant'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
Registrant'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
Registrant's Registration Statement on Form S-3 (File No. 333-10555), filed
with the SEC on October 30, 1996.

(b) Financial Statement Schedules

SCHEDULE DESCRIPTION
-------- -----------

Schedule II, including Independent Statement of Valuation and
Auditor's Report on Financial Qualifying Accounts
Statement Schedule

II-7
64

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser. In addition, the undersigned
Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933 Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(d) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-8
65

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form S-1 and has duly authorized
this Amendment No. 1 to be signed on its behalf by the undersigned, thereto duly
authorized in the City of Huntsville, State of Texas, on January 31, 1997.

MITCHAM INDUSTRIES, INC.

By: /s/ BILLY F. MITCHAM, JR.
------------------------------------
Billy F. Mitcham, Jr.,
Chairman of the Board, President
and Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, as
amended, this Amendment No. 1 has been signed by the following persons in the
capacities indicated on January 31, 1997.

SIGNATURE TITLE/CAPACITY
--------- --------------

/s/ BILLY F. MITCHAM, JR. Chairman of the Board, President and Chief Executive
- -------------------------------------------- Officer
Billy F. Mitcham, Jr.

/s/ PAUL C. MITCHAM* Vice President -- Operations and Director
- --------------------------------------------
Paul C. Mitcham

/s/ ROBERTO RIOS Vice President -- Finance, Secretary, Secretary,
- -------------------------------------------- Treasurer and Director
Roberto Rios

/s/ WILLIAM J. SHEPPARD* Vice President -- International Operations and
- -------------------------------------------- Director
William J. Sheppard

/s/ JOHN F. SCHWALBE* Director
- --------------------------------------------
John F. Schwalbe

/s/ BILLY F. MITCHAM, JR.
- --------------------------------------------
Billy F. Mitcham, Jr.,
Attorney-in-fact

II-9
66

INDEPENDENT AUDITOR'S REPORT
ON FINANCIAL STATEMENT SCHEDULE

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

We have audited in accordance with generally accepted auditing standards, the
financial statements of Mitcham Industries, Inc. included in this Registration
Statement and have issued our report thereon dated February 23, 1996. Our audit
was made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The financial statement schedule listed in Item 16(b) herein
(Schedule II -- Valuation and Qualifying Accounts) is the responsibility of the
Company's management and is presented for purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. The financial statement schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respect with the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

/s/ HEIN + ASSOCIATES LLP

HEIN + ASSOCIATES LLP
Certified Public Accountants

Houston, Texas
February 23, 1996

II-10
67

SCHEDULE II

MITCHAM INDUSTRIES, INC.

VALUATION AND QUALIFYING ACCOUNTS

===================================================================================================
COL. A COL. B COL. C(1) COL. D COL. E
- ---------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND DEDUCTIONS - AT END
DESCRIPTION OF PERIOD EXPENSES DESCRIBE OF PERIOD
- ---------------------------------------------------------------------------------------------------

January 31, 1994
Allowance for doubtful accounts........... $58,000 $ 38,000 3,000(A) $ 93,000
January 31, 1995
Allowance for doubtful accounts........... $93,000 $ 35,000 $ 38,000(A) $ 90,000
January 31, 1996
Allowance for doubtful accounts........... $90,000 $627,000 $370,000(A) $347,000

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

(A) Represents recoveries and uncollectible accounts written off.

Column C(2) has been omitted, as all answers would be "none."

II-11
68

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
----------- -----------

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

* Filed herewith.

** To be filed by amendment.

+ Previously filed.

(1) Incorporated by reference to the indicated exhibit number of the
Registrant'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
Registrant'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
Registrant'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
Registrant'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
Registrant'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
Registrant's Registration Statement on Form S-3 (File No. 333-10555), filed
with the SEC on October 30, 1996.

   1


                       [BANK ONE, TEXAS, N.A. LETTERHEAD]

================================================================================

                             LETTER LOAN AGREEMENT

   
                                January 16, 1997
    


Mitcham Industries, Inc.
P.O. Box 1175
Huntsville, Texas  77342

Attn:  Billy F. Mitcham, Jr., President

Ladies and Gentlemen:

         This Letter Loan Agreement (the "Loan Agreement") will serve to set
forth the terms of the financing transactions by and between Mitcham
Industries, Inc., a Texas corporation ("Borrower") and Bank One, Texas, N.A.
("Bank"):

         1.      Loan.    Subject to the terms and conditions set forth in this
Loan Agreement and the other agreements, instruments and documents at any time
evidencing, securing, governing, guaranteeing and/or pertaining to the
Indebtedness, as hereinafter defined (collectively, together with this Loan
Agreement, referred to hereinafter as the "Loan Documents"), Bank and Borrower
hereby agree as follows:

                 1.(a)    Revolving Line of Credit.  Subject to the terms and
         conditions set forth herein, Bank agrees to lend to Borrower, on a
         revolving basis from time to time during the period commencing on the
         date hereof and continuing through and including 11:00 a.m. on January
         ______, 1998 (the "Commitment Termination Date"), such amounts as
         Borrower may request hereunder (the "Revolving Line of Credit");
         provided, however, the total principal amount outstanding at any time
         shall not exceed $4,000,000.00 (the "Committed Sum").  Subject to the
         terms and conditions hereof, Borrower may borrow, repay and reborrow
         hereunder.  Each advance under the Revolving Line of Credit (each, a
         "Traunch") shall be made pursuant to an Advance Note (as hereinafter
         described.  The sums advanced under each Traunch shall be used solely
         for short term financing of up to 75% of the purchase price of
         equipment for Borrower's placement for lease and sale under
         lease/purchase
   2
         contracts approved by Bank, after Bank review.  Borrower may not use
         all or any part of each Traunch to pay interest or principal on an
         existing Traunch or any other indebtedness.  Borrower shall give Bank
         not less than two (2) business days' prior written notice of each
         requested advance hereunder, which written notice shall (i) specify
         the aggregate amount of such requested advance, (ii) specify the
         requested date of such advance, (iii) contain a listing of the
         equipment to be purchased under such advance, and (iv) have attached
         thereto a copy of the proposed lease/purchase contract covering such
         equipment and which shall contain (i) the lessee's name and address,
         (ii) the destination of such equipment as either inside or outside the
         continental United States and Canada, and (iii) all other material
         provisions, with such advances to be requested in a form satisfactory
         to Bank.

                 1.(b)    Term Loan Facility.  Subject to the terms and
         conditions set forth herein, Bank agrees to lend to Borrower an amount
         equal to $1,000,000.00 (the "Term Loan").  The Term Loan will be an
         amortizing loan in the principal amount advanced with a two (2) year
         amortization schedule.  All sums advanced hereunder, together with all
         accrued but unpaid interest thereon, shall be due and payable in full
         on December 31, 1998.  The sums advanced under the Term Loan shall be
         used solely for long term financing of up to 80% of the purchase price
         of equipment not related to approved lease/purchase contacts.

The advances under the Revolving Line of Credit and the Term Loan shall be
collectively called the "Loan".  The term "Indebtedness", as used herein, shall
mean the Loan and all other indebtedness owing from time to time to Bank by
Borrower.

         2.      Promissory Notes.  The Loan shall be evidenced by promissory
notes (herein collectively called, together with any renewals, extensions and
increases thereof, the "Notes") as follows:

                 2.(a)    Revolving Line of Credit.  Each advance under the
         Revolving Line of Credit shall be evidenced by a note (an "Advance
         Note") executed by Borrower and payable to the order of Bank in the
         form attached hereto as Exhibit "A".  All sums advanced under each
         Advance Note, together with all accrued but unpaid interest thereon,
         shall be due and payable in full on the Maturity Date or Extended
         Maturity Date as set forth in the applicable Advance Note.

                 2.(b)    Term Loan.  The Term Loan shall be evidenced by that
         certain Promissory Note, of even date herewith, duly executed by
         Borrower, in the stated principal amount of $1,000,000, and in form
         and substance acceptable to Bank.





                                     - 2 -
   3
         Interest on the Notes shall accrue at the rates set forth therein.
The principal of and interest on the Notes shall be due and payable in
accordance with the terms and conditions set forth in the Notes and in this
Loan Agreement.

         3.      Collateral.

                 As collateral and security for the Loan and any and all other
Indebtedness, Borrower shall grant, and hereby grants to Bank, and its
respective successors and assigns, a lien and security interest (which shall be
a first and prior lien and security interest therein except as indicated
therein), in and to the following described property, together with any and all
PRODUCTS and PROCEEDS thereof (the "Collateral"):

                 (i) All present and future accounts, chattel paper, contract
         rights, documents, instruments, deposit accounts and general
         intangibles (including any right to payment for goods sold or leased
         or services rendered arising out of the sale or delivery of personal
         property or work done or labor performed by Borrower), now or
         hereafter owned, held, or acquired by Borrower, together with any and
         all books of account, customer lists and other records relating in any
         way to the foregoing (including, without limitation, computer
         software, whether on tape, disk, card, strip, cartridge or any other
         form), and in any case where an account arises from the sale or lease
         of goods or equipment.

                 (ii) All finished goods, equipment, fixtures and machinery of
         whatsoever kind and character now or hereafter possessed, held,
         acquired or owned by Borrower and held for resale, lease or ordinary
         disposition in the course of Borrower's business, together with all
         replacements, accessories, additions, substitutions and accessions to
         all of the foregoing, all records relating in any way to the foregoing
         (including, without limitation, any computer software, whether on
         tape, disk, card, strip, cartridge or any other form).

                 (iii) All of Borrower's right, title and interest in, to and
         under (a) present or future leases, rental contracts and any other
         contracts for the use or operation of any equipment owned by Borrower
         (each a "Lease" collectively, "Leases") for and all rental payments
         and other monies from time to time payable to or receivable by
         Borrower under the Leases, including all proceeds thereof, and (b) all
         of Borrower's rights, powers and remedies under the Leases.

Borrower agrees to execute such security agreements, assignments, deeds of
trust and other agreements and documents as Bank shall deem appropriate and
otherwise require from time to time to more





                                     - 3 -
   4
fully create and perfect Bank's liens and security interests in the Collateral.

         4.      Representations and Warranties.  Borrower represents and
warrants, and, upon each request for an advance under the Revolving Line of
Credit and under the Term Loan, further represents and warrants, to Bank as
follows:

                 4.(a) Borrower is a corporation duly organized, validly
         existing and in good standing under the laws of the State of Texas and
         all other states where it is doing business, and has all requisite
         power and authority to execute and deliver this Loan Agreement and the
         other Loan Documents; and

                 4.(b) The execution, delivery, and performance of this Loan
         Agreement and all of the other Loan Documents by Borrower have been
         duly authorized by all necessary corporate action by Borrower, and
         constitute legal, valid and binding obligations of Borrower,
         enforceable in accordance with their respective terms, except as
         limited by bankruptcy, insolvency or similar laws of general
         application relating to the enforcement of creditors' rights and
         except to the extent specific remedies may generally be limited by
         equitable principles; and

                 4.(c) The execution, delivery and performance of this Loan
         Agreement and the other Loan Documents, and the consummation of the
         transactions contemplated hereby and thereby, do not (i) conflict
         with, result in a violation of, or constitute a default under (A) any
         provision of Borrower's articles or certificate of incorporation or
         bylaws, or any agreement or other instrument binding upon Borrower, or
         (B) any law, governmental regulation, court decree or order applicable
         to Borrower, or (ii) require the consent, approval or authorization of
         any third party; and

                 4.(d) Each financial statement of Borrower supplied to the
         Bank was prepared in accordance with generally accepted accounting
         principles, consistently applied, in effect on the date such
         statements were prepared and truly discloses and fairly presents
         Borrower's financial condition as of the date of each such statement,
         and there has been no material adverse change in such financial
         condition or results of operations of Borrower subsequent to the date
         of the most recent financial statement supplied to the Bank; and

                 4.(e) There are no actions, suits or proceedings, pending or,
         to the knowledge of Borrower, threatened against or affecting Borrower
         or the properties of Borrower, before any court or governmental
         department, commission or board, which, if determined adversely to
         Borrower, would have a material





                                     - 4 -
   5
         adverse effect on the financial condition, properties, or operations
         of Borrower; and

                 4.(f) Borrower has filed all federal, state and local tax
         reports and returns required by any law or regulation to be filed by
         them and has either duly paid all taxes, duties and charges indicated
         due on the basis of such returns and reports, or made adequate
         provision for the payment thereof, and the assessment of any material
         amount of additional taxes in excess of those paid and reported is not
         reasonably expected; and

                 4.(g) There is no fact known to Borrower that Borrower has not
         disclosed to the Bank in writing which may result in any material
         adverse change in Borrower's business, properties or operations; and

                 4.(h) Borrower owns all of the assets reflected on its most
         recent balance sheet free and clear of all liens, security interests
         or other encumbrances, except as previously disclosed in writing to
         the Bank; and

                 4.(i) No certificate or statement herewith or heretofore
         delivered by Borrower to the Bank in connection herewith, or in
         connection with any transaction contemplated hereby, contains any
         untrue statement of a material fact or fails to state any material
         fact necessary to keep the statements contained therein from being
         misleading; and

                 4.(j) Borrower is in compliance in all material respects with
         all laws, rules, regulations, orders and decrees which are applicable
         to Borrower.

         5.      Conditions Precedent to Advances.  The obligations of Bank to
make any advance under this Loan Agreement and the other Loan Documents shall
be subject to the conditions precedent that, as of the date of such advance and
after giving effect thereto (i) all representations and warranties made to Bank
by Borrower in this Loan Agreement and the other Loan Documents shall be true
and correct, as of and as if made on such date, (ii) no material adverse change
in the financial condition of Borrower as of the effective date of the most
recent financial statements furnished to Bank by Borrower shall have occurred
and be continuing, (iii) no event has occurred and is continuing, or would
result from the requested advance, which with notice or lapse of time, or both,
would constitute an Event of Default, (iv) Bank has received all Loan Documents
appropriately executed by Borrower and all other proper parties, (v) Bank has
received a one-time fee equal to $10,000.00 in consideration for the Revolving
Line of Credit, and a one-time fee equal to $2,500.00 in consideration for the
Term Loan Facility, (vi) Bank has received a notice of borrowing with





                                     - 5 -
   6
respect to such requested advance, and (vii) Bank has received that certain
First Amendment to Letter Loan Agreement, of even date herewith, appropriately
executed by Borrower, which amends that certain Letter Loan Agreement dated
January 31, 1996 by and among Borrower, Bank and Banc One Leasing Corporation.

         6.      Affirmative Covenants.  Until (i) the Notes and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) Bank has any further
commitment to lend hereunder, Borrower agrees and covenants that it will,
unless Bank shall otherwise consent in writing:

                 6.(a) Maintain its books and records in accordance with
         generally accepted accounting principles, applied on a consistent
         basis, and permit Bank to visit its properties and installations to
         examine, audit and make and take away copies or reproductions of
         Borrower's books and records, at all reasonable times; and

                 6.(b) Furnish Bank with all financial statements and reports
         required by this Loan Agreement within the time periods prescribed
         therein; and

                 6.(c) Furnish Bank with such additional information and
         statements, lists of assets and liabilities, tax returns, and other
         reports with respect to Borrower's financial condition and business
         operations as Bank may request from time to time; and

                 6.(d) Pay and discharge when due all of its indebtedness and
         obligations, including without limitation, all assessments, taxes,
         governmental charges, levies and liens, of every kind and nature,
         imposed upon Borrower or its properties, income, or profits, prior to
         the date on which penalties would attach, and all lawful claims that,
         if unpaid, might become a lien or charge upon any of Borrower's
         properties, income, or profits; provided, however, Borrower will not
         be required to pay and discharge any such assessment, tax, charge,
         levy, lien or claim so long as (i) the legality of the same shall be
         contested in good faith by appropriate judicial, administrative or
         other legal proceedings, and (ii) Borrower shall have established on
         its books adequate reserves with respect to such contested assessment,
         tax, charge, levy, lien or claim in accordance with generally accepted
         accounting principles, consistently applied; and

                 6.(e) Perform and comply with all terms, conditions, and
         provisions set forth in this Loan Agreement and in all other
         instruments and agreements between Borrower and Bank, including
         without limitation, the other Loan Documents; and





                                     - 6 -
   7
                 6.(f) Conduct its business in an orderly and efficient manner
         consistent with good business practices, and perform and comply with
         all statutes, rules, regulations and/or ordinances imposed by any
         governmental unit upon Borrower or its businesses, operations and
         properties (including without limitation, all applicable environmental
         statutes, rules, regulations and ordinances); and

                 6.(g) Maintain its Tangible Net Worth at not less than
         $11,000,000.00, such Tangible Net Worth to increase quarterly by 50%
         of Borrower's net income after January 31, 1997.  As used herein,
         "Tangible Net Worth" means, as of any date, the total shareholders'
         equity (including capital stock, additional paid-in capital and
         retained earnings after deducting treasury stock) which would appear
         on a balance sheet of Borrower prepared as of such date in accordance
         with generally accepted accounting principles, consistently applied,
         lessthe aggregate book value of intangible assets shown on such
         balance sheet, as determined in accordance with generally accepted
         accounting principles, consistently applied; and

                 6.(h)  Maintain a ratio of total liabilities to Tangible Net
         Worth of not more than 1.50 to 1.0.  As used in this definition, total
         liabilities shall mean, at a particular date, all amounts which, in
         accordance with generally accepted accounting principles consistently
         applied, would be included as liabilities on a balance sheet of the
         Borrower and Tangible Net Worth shall have the meaning assigned
         thereto in Subsection 6.(g).

                 6.(i) Maintain, as of the last day of each calendar quarter, a
         ratio of (i) net income, plus depreciation, plus interest expense, and
         other non-cash changes or income for the 12 month period ending with
         such fiscal quarter, to (ii) current maturities of long-term debt,
         plus interest expense, plus the current portion of capital lease
         obligations, plus one-half (1/2) outstandings under the Revolving Line
         of Credit, for such 12 month period of not less than 1.25 to 1.0.

                 6.(j) At all times keep all Collateral insured against loss,
         damage, theft and other risks, in such amounts and with such companies
         and under such policies and in such term as is customarily maintained
         by well-insured companies similarly situated and operating like
         property or assets which policies shall show Bank as loss payee.

                 6.(k) Maintain insurance, including but not limited to, fire
         insurance, comprehensive property damage, public liability, and other
         insurance deemed necessary or otherwise required by Bank; and





                                     - 7 -
   8
                 6.(l) Promptly cure any defects in the execution and delivery
         of any of the other Loan Documents and all other instruments executed
         in connection with this transaction; and

                 6.(m) Provide Bank with quarterly consolidated financial
         statements prepared in accordance with generally accepted accounting
         principles consistently applied within forty-five (45) days of the
         last day of each calendar quarter;

                 6.(n) Execute and deliver, or cause to be promptly executed
         and delivered, any and all other agreements, instruments or documents
         which Bank may reasonably request in order to give effect to the
         transactions contemplated under this Loan Agreement and the other Loan
         Documents including, but not limited to, any and all financing
         statements required to perfect Bank's security interest in the
         Collateral; and

                 6.(o) Permit such persons as Bank may designate to visit its
         properties and installations and examine its records in order to
         conduct a collateral audit, so long as Bank has a reasonable basis for
         the necessity of such audit.  Such audit(s) shall be conducted at the
         expense of Borrower, but shall not exceed the sum of $4,000.00 per
         audit.

         7.      Negative Covenants.  Until (i) the Note and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) Bank has no any further
commitment to lend hereunder, Borrower will not, without the prior written
consent of Bank:

                 7.(a) Make any material change in the nature of its business
         as carried on as of the date hereof; or

                 7.(b) Liquidate, merge or consolidate with or into any other
         entity; or

                 7.(c) Sell, transfer or otherwise dispose of any of its assets
         or properties, other than in the ordinary course of business; or

                 7.(d) Create, incur or assume any lien or encumbrance on any
         of its assets or properties, including without limitations, the
         Collateral; or

                 7.(e) Create, incur or assume any indebtedness for borrowed
         money or issue or assume any other note, debenture, bond or other
         evidences of indebtedness, or guarantee any such indebtedness or such
         evidences of indebtedness of others, other than (i) borrowings from
         Bank, (ii) borrowings outstanding on the date hereof and disclosed in
         writing to





                                     - 8 -
   9
         Bank, and (iii) unsecured debt not to exceed, in the aggregate, 
         $4,000,000; or

                 7.(f) Permit the sale or other transfer of any of the
         ownership interest in Borrower held by Billy F. Mitcham, Jr., which
         sale or other transfer would reduce the stock ownership interest of
         Billy F. Mitcham, Jr. to an amount less than Two Million Five Hundred
         Thousand Dollars ($2,500,000.00), without prior approval of Bank; or

                 7.(g) Permit a change in the position of President held by
         Billy F. Mitcham, Jr., without prior approval of Bank; or

                 7.(h) Enter into any capital leases except for leases of the
         Equipment that are disclosed to Bank in writing; or

                 7.(i) Declare or pay any dividends on any shares of Borrower's
         capital stock, make any other distributions with respect to any
         payment on account of the purchase, redemption, or other acquisition
         or retirement of any shares of Borrower's capital stock, or make any
         other distribution, sale, transfer or lease of any of Borrower's
         assets other than in the ordinary course of business, unless any such
         amounts are directly utilized for the payment of principal or interest
         on indebtedness and obligations owing from time to time by Borrower to
         Bank; or

                 7.(j) Make, or agree to make or allow to remain outstanding,
         any loans or advanced to any person or entity except advances or
         extensions of credit in the form of accounts receivable incurred in
         the ordinary course of business; or

                 7.(k) Pay or cause to be paid any advance rentals for any
         leased property except those rentals due to Bank, real or personal,
         utilized by Borrower in the conduct and operation of its business; or

                 7.(l) Sustain a net loss for any two consecutive calendar
         quarters as shown by the financial statements required under Section
         6.(m), 8(b) and 8(c) hereof; or

                 7.(m) Cause or permit the removal of greater than fifty
         percent (50%) of equipment being leased to third parties pursuant to
         any Lease from the continental United States of America and Canada.

         8.      Reporting Requirements.  Until (i) the Note and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii)





                                     - 9 -
   10
Bank has no further commitment to lend hereunder Borrower will, unless Bank
shall otherwise consent in writing, furnish to Bank;

                 8.(a) As soon as possible and in any event within thirty (30)
         days after the occurrence of each Event of Default (under Section 9(b)
         hereof), as defined herein, or each event which, with the giving of
         notice or lapse of time or both, would constitute an Event of Default,
         continuing on the date of such statement, the written statement of the
         President and/or the Chief Financial Officer of Borrower setting forth
         the details of such Event of Default or event and the action which
         Borrower proposes to take with respect thereto;

                 8.(b) As soon as available, and in any event within forty-five
         (45) days after the end of each fiscal quarter of Borrower, a balance
         sheet and income statement of Borrower as of the end of such fiscal
         quarter, all in form and substance and in reasonable detail
         satisfactory to Bank and duly certified (subject to normal recurring
         adjustments) by the President and/or Chief Financial Officer of
         Borrower (i) as being true and correct in all material aspects to the
         best of his or her knowledge and (ii) as having been prepared in
         accordance with generally accepted accounting principles, consistently
         applied, except that such financial statements will not include
         footnotes;

                 8.(c) As soon as available and in any event within one hundred
         twenty (120) days after the end of each fiscal year of Borrower, a
         balance sheet and income statement of Borrower as of the end of such
         fiscal year, in each case audited by independent public accountants of
         recognized standing acceptable to Bank, together with a certificate of
         such accountants to Bank stating that in the course of the regular
         audit of the business of Borrower, which audit compilation was
         conducted by such accountants in accordance with generally accepted
         standards, such accountants obtained no knowledge that an Event of
         Default or an event which, with notice or lapse of time or both, would
         constitute an Event of Default, has occurred and is continuing, or if,
         in the opinion of such accountants, an Event of Default or such an
         event has occurred and is continuing, a statement as to the nature
         thereof;

                 8.(d) Promptly after the commencement thereof, notice of all
         actions, suits and proceedings before any court or any governmental
         department, commission or board affecting Borrower or any of its
         properties;

                 8.(e) Promptly inform Bank of (i) any and all material adverse
         changes in Borrower's financial condition, and (ii) all claims made
         against Borrower which could materially affect the financial condition
         of Borrower;





                                     - 10 -
   11
                 8.(f) Promptly inform Bank of the creation, incurrence or
         assumption by Borrower of any actual or contingent liabilities not
         permitted under this Loan Agreement;

                 8.(g) Within forty-five (45) days after the end of each
         calendar quarter, a certificate from the President or Chief Financial
         Officer of Borrower stating that Borrower is in full compliance with
         all of its obligations under this Loan Agreement and the other Loan
         Documents and is not in default of any term or provision hereof or
         thereof, and demonstrating compliance with all financial ratios and
         covenants set forth in this Loan Agreement;

                 8.(h) Within forty-five (45) days after the end of each
         calendar quarter, an equipment utilization report, in form and
         substance satisfactory to Bank, and as attached hereto as Exhibit "B";

                 8.(i) Within forty-five (45) days after the end of each
         calendar quarter, a current aging analysis of Borrower's accounts
         receivable and accounts payable, in form and substance satisfactory to
         Bank, and as attached hereto as Exhibit "C";

                 8.(j) Upon demand of Bank, provide Bank with evidence of
         payment of all assessments, taxes, charges, levies, liens and claims
         on or against Borrower's properties, income or profits, and authorize
         the appropriate governmental official to deliver to Bank at any time a
         written statement of any assessments, taxes, charges, levies, liens
         and claims against Borrower's properties, income or profits; and

                 8.(k) Such other information respecting the business,
         properties or condition or the operations, financial or otherwise, of
         Borrower as Bank may from time to time reasonably request.

         9.      Events of Default.  Each of the following shall constitute an
"Event of Default" under this Loan Agreement:

                 9.(a) The failure, refusal or neglect of Borrower to make any
         payment of principal or interest on the Indebtedness or any other
         amounts owing by Borrower to Bank, or any portion thereof, as the same
         shall become due and payable; or

                 9.(b) The failure of Borrower to timely and properly observe,
         keep or perform any covenant, agreement, warranty or condition
         required herein or in any of the other Loan Documents and such failure
         continues for a period of ten (10) days; or





                                     - 11 -
   12
                 9.(c) The occurrence of an event of default under any of the
         other Loan Documents or under any other agreement between Borrower and
         Bank; or

                 9.(d) Any representation contained herein or in any of the
         other Loan Documents made by Borrower is false or misleading in any
         material respect; or

                 9.(e) The occurrence of any event which permits the
         acceleration of the maturity of any indebtedness owing by Borrower to
         any third party under any agreement or understanding; or

                 9.(f) If Borrower: (i) becomes insolvent, or makes a transfer
         in fraud of creditors, or makes an assignment for the benefit of
         creditors, or admits in writing its inability to pay its debts as they
         become due; (ii) generally is not paying its debts as such debts
         become due; (iii) has a receiver or custodian appointed for, or take
         possession of, all or substantially all of the assets of such party,
         either in a proceeding brought by such party or in a proceeding
         brought against such party and such appointment is not discharged or
         such possession is not terminated within thirty (30) days after the
         effective date thereof or such party consents to or acquiesces in such
         appointment or possession; (iv) files a petition for relief under the
         United States Bankruptcy Code or any other present or future federal
         or state insolvency, bankruptcy or similar laws (all of the foregoing
         hereinafter collectively called "Applicable Bankruptcy Law") or an
         involuntary petition for relief is filed against such party under any
         Applicable Bankruptcy Law and such involuntary petition is not
         dismissed within thirty (30) days after the filing thereof, or an
         order for relief naming such party is entered under any Applicable
         Bankruptcy Law, or any composition, rearrangement, extension,
         reorganization or other relief of debtors now or hereafter existing is
         requested or consented to by such party; (v) fails to have discharged
         within a period of thirty (30) days any attachment, sequestration or
         similar writ levied upon any property of such party; or (vi) fails to
         pay within thirty (30) days any final money judgment against such
         party; or

                 9.(g) The liquidation, dissolution, merger or consolidation of
         Borrower; or

                 9.(h) The entry of any judgment against Borrower or the
         issuance or entry of any attachment or other lien against any of the
         property of Borrower for an amount in excess of $50,000.00, if
         undischarged, unbonded or undismissed within thirty (30) days after
         such entry.





                                     - 12 -
   13
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.

         10.     Remedies.  Upon the occurrence of any one or more of the
foregoing Events of Default, (a) the entire unpaid balance of principal of the
Notes and all other Indebtedness, together with all accrued but unpaid interest
thereon, and all other Indebtedness shall, at the option of Bank become
immediately due and payable without further notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
protest or notice of protest of any kind, all of which are expressly waived by
Borrower, and (b) Bank may, at its option, cease further advances under the
Revolving Line of Credit; provided, however, concurrently and automatically
with the occurrence of an Event of Default under subparagraph (f) in the
immediately preceding paragraph (i) further advances under the Revolving Line
of Credit shall cease, and (ii) the Notes and all other Indebtedness shall,
without any action by Bank, become due and payable, without further notice,
demand, presentation, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest or notice of protest of any kind, all of which
are expressly waived by Borrower.  All rights and remedies of Bank set forth in
this Loan Agreement and in any of the other Loan Documents may also be
exercised by Bank, at its option to be exercised in its sole discretion, upon
the occurrence of an Event of Default.

         11.     Rights Cumulative.  All rights of Bank under the terms
of this Loan Agreement shall be cumulative of, and in addition to, the rights
of Bank under any and all other agreements between Borrower and Bank
(including, but not limited to, the other Loan Documents), and not in
substitution or diminution of any rights now or hereafter held by Bank under
the terms of any other agreement.

         12.     Waiver and Agreement.  Neither the failure nor any delay on
the part of Bank to exercise any right, power or privilege herein or under any
of the other Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of such right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.  No waiver of any provision in this Loan Agreement or in any of the
other Loan Documents and no departure by Borrower therefrom shall be effective
unless the same shall be in writing and signed by Bank, and then shall be
effective only in the specific instance and for the purpose for which given and
to the extent specified in such writing.  No modification or amendment to this
Loan Agreement or to any of the other Loan Documents shall be valid or
effective unless the same is signed by the party against whom it is sought to
be enforced.





                                     - 13 -
   14
         13.     Benefits.  This Loan Agreement shall be binding upon and
inure to the benefit of Bank and Borrower, and their respective successors and
assigns, provided, however, that Borrower may not, without the prior written
consent of Bank, assign any rights, powers, duties or obligations under this
Loan Agreement or any of the other Loan Documents.

         14.     Notices.  All notices, requests, demands or other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and given by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, return receipt requested, sent to the intended
addressee at the address set forth on the signature page hereof (if to Bank, to
the attention of Walter F. Rodee, III) and shall be deemed to have been
received either, in the case of expedited delivery service, as of the date of
first attempted delivery at the address and in the manner provided herein, or
in the case of mail, upon deposit in a depository receptacle under the care and
custody of the United States Postal Service.  Any party shall have the right to
change its address for notice hereunder to any other location within the
continental United States by notice to the other party of such new address at
least thirty (30) days prior to the effective date of such new address.

         15.     Construction.  This Loan Agreement and the other Loan
Documents have been executed and delivered in the State of Texas, shall be
governed by and construed in accordance with the laws of the State of Texas,
and shall be performable by the parties hereto in Houston, Harris County,
Texas.

         16.     Invalid Provisions.  If any provision of this Loan Agreement
or any of the other Loan Documents is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable and the remaining provisions of this Loan Agreement or any of the
other Loan Documents shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance.

         17.     Expenses.  Borrower shall pay all costs and expenses
(including, without limitation, reasonable attorneys' fees) in connection with
(i) the preparation of this Loan Agreement and the other Loan Documents, and
any and all extensions, renewals, amendments, supplements, extensions or
modifications thereof, (ii) any action required in the course of administration
of the indebtedness and obligations evidenced by the Loan Documents, and (iii)
any action in the enforcement of Bank's rights upon the occurrence of Event of
Default.

         18.     Entire Agreement.  This Loan Agreement (together with the
other Loan Documents) contains the entire agreement among the





                                     - 14 -
   15
parties regarding the subject matter hereof and supersedes all prior written
and oral agreements and understandings among the parties hereto regarding same.

         19.     Counterparts.  This Loan Agreement may be separately executed
in any number of counterparts, each of which shall be an original, but all of
which, taken together, shall be deemed to constitute one and the same
agreement.

         If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.

                                        Very truly yours,

                                        BANK ONE, TEXAS, N.A.



   
                                        By:  /s/ WALTER F. RODEE
                                           -------------------------------------
                                           Walter F. Rodee, III, Vice President
    

                                        Bank's Address:

                                        910 Travis
                                        Houston, Texas 77002
                                        Attn:  Walter F. Rodee, III




ACCEPTED as of the date
first written above.

BORROWER:

MITCHAM INDUSTRIES, INC.



   
By:  /s/ BILLY F. MITCHAM, JR.
   ---------------------------------
Name:  Billy F. Mitcham, Jr.
     -------------------------------
Title:  President
      ------------------------------
    


Borrower's Address:

P.O. Box 1175
Huntsville, Texas  77342





                                     - 15 -
   16
                                  EXHIBIT "A"


                                  ADVANCE NOTE

$______________________                                   ______________, 199___

         FOR VALUE RECEIVED, the undersigned and if more than one, each of
them, jointly and severally (hereinafter referred to as "Borrower"), promises
to pay to the order of BANK ONE, TEXAS, N.A. ("Bank") at its offices in Harris
County, Texas, at 910 Travis, Houston, Texas 77002, the principal amount of
___________________________________________ AND ____/100 DOLLARS
($_________________) ("Total Principal Amount"), or such amount less than the
Total Principal Amount which has been advanced to Borrower if the total amount
advanced under this Promissory Note ("Note") is less than the Total Principal
Amount, together with interest on such portion of the Total Principal Amount
which has been advanced to Borrower from the date advanced until paid at a
fluctuating rate per annum which shall from day to day be equal to the lesser
of (a) the Maximum Rate (as hereinafter defined), or (b) a rate ("Contract
Rate"), calculated on the basis of actual days elapsed but computed as if each
year consisted of 365 days, equal to the sum of (i) the Bank One Base Rate of
interest ("Base Rate") as established from time to time by Bank (which may not
be the lowest, best or most favorable rate of interest which Bank may charge on
loans to its customers) plus (ii) one-half of one percent (0.5%), each change
in the rate to be charged on this Note to become effective without notice to
Borrower on the effective date of each change in the Maximum Rate or the Base
Rate, as the case may be; provided, however that if at any time the Contract
Rate shall exceed the Maximum Rate, thereby causing the interest on this Note
to be limited to the Maximum Rate, then any subsequent reduction in the Base
Rate shall not reduce the rate of interest on this Note below the Maximum Rate
until the total amount of interest accrued on this Note equals the amount of
interest which would have accrued on this Note if the Contract Rate had at all
times been in effect.

         The principal of and all accrued but unpaid interest on this Note
shall be due and payable as follows:

                 (a)      interest only shall be due and payable monthly
         commencing on the ______ day of _______________, 1997 and continuing
         monthly and regularly thereafter on the _____ day of each and every
         month thereafter for five (5) months; and

                 (b)      unless this note is extended to the Extended Maturity
         Date (as defined herein) pursuant to the terms hereof, the outstanding
         principal balance of this Note,





                                     - 1 -
   17
         together with all accrued but unpaid interest, shall be due and
         payable on the date that is six (6) months from the date hereof (the
         "Maturity Date"), and which Maturity Date will coincide with the
         maturity date of the equipment lease/purchase contract attached hereto
         as Exhibit "A" (the "Contract").

         On the Maturity Date, Borrower shall have the right to extend the
Maturity Date of this Note for an additional eighteen (18) months (the
"Extended Maturity Date") upon the following terms and conditions:

         (a)     The lessee under the Contract does not purchase the equipment
                 as of the Maturity Date;

         (b)     An Event of Default (as defined in the Loan Agreement) has not
                 occurred; and

         (c)     From and after the Maturity Date, the principal of and all
                 accrued but unpaid interest on this Note shall be due and
                 payable as follows:

                 (1)      the interest rate will be the Contract Rate;

                 (2)      principal and interest at the Contract Rate will be
                          payable in monthly installments sufficient to fully
                          amortize the loan evidenced by the Note over a term
                          of eighteen (18) months, to commence on the same day
                          of the following month after the Maturity Date;

                 (3)      the final payment of all outstanding principal and
                          accrued but unpaid interest will be due on the
                          Extended Maturity Date.

         All payments of principal and interest hereunder shall be made in
lawful money of the United States of America in freely transferable United
States Dollars.

         "Highest Lawful Rate" shall mean the maximum nonusurious interest
rate, if any, that any time or from time to time may be contracted for, taken,
reserved, charged or received on this Note under laws applicable to the payee
which are presently in effect or, to the extent allowed by applicable law,
under such laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
Determination of the rate of interest for the purpose of determining whether
the Loans represented hereby are usurious under all applicable laws shall be
made by amortizing, prorating, allocating, and spreading, in equal parts during
the period of the full stated term of the Loans represented hereby, all
interest at





                                     - 2 -
   18
any time contracted for, charged, or received from the undersigned in
connection with such Loans.

         It is the intention of the payee to conform strictly to usury laws
applicable to it.  Accordingly, if the transactions contemplated hereby or the
Loans represented hereby would be usurious as to the payee under laws
applicable to it (including the laws of the United States of America and the
State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such payee notwithstanding the other provisions of this Note or
the Loan Agreement), then, in that event, notwithstanding anything to the
contrary in this Note, the Loan Agreement or any other instrument or agreement
entered into in connection with this Note, it is agreed as follows:  (i) the
aggregate of all consideration which constitutes interest under laws applicable
to the payee that is contracted for, taken, reserved, charged or received by
the payee under this Note, the Loan Agreement or under any of the aforesaid
agreements or instruments entered into in connection with this Note or
otherwise shall under no circumstances exceed the Highest Lawful Rate, and any
excess shall be credited by the payee on the principal amount of this Note (or,
if the principal amount of this Note shall have been paid in full, refunded by
the payee to the undersigned); and (ii) in the event that the maturity of this
Note is accelerated by reason of an election of the holder or holders thereof
resulting from any Event of Default under the Loan Agreement or otherwise, or
in the event of any required or permitted prepayment, then such consideration
that constitutes interest under laws applicable to the payee may never include
more than the Highest Lawful Rate, and excess interest, if any, provided for in
this Note, the Loan Agreement or otherwise shall be automatically canceled by
the payee as of the date of such acceleration or prepayment and, if theretofore
paid, shall be credited by the payee on the principal amount of this Note (or
if the principal amount of this Note shall have been paid in full, refunded by
the payee to the undersigned), and in each case, to the extent permitted by
applicable law, the payee shall not be subject to any of the penalties provided
by law for contracting for, taking, reserving, charging or receiving interest
in excess of the Highest Lawful Rate.  Payee hereby elects to determine the
applicable rate ceiling under Article 5069-1.04 of the Texas Revised Civil
Statutes by the indicated (weekly) rate ceiling from time to time in effect,
subject to payee's right subsequently to change such method in accordance with
applicable law.  Chapter 15 of Article 5069 of the Texas Revised Civil
Statutes, which regulates certain revolving credit loan accounts and revolving
tri-party accounts, shall not apply to this Note.

         This Note is one of the Advance Notes referred to in and is entitled
to the benefits of that certain Letter Loan Agreement of even date herewith (as
the same may be amended, modified, supplemented, extended, rearranged and/or
restated from time to





                                     - 3 -
   19
time, the "Loan Agreement"), entered into by and between the Borrower and
Lender.  Reference is hereby made to the Loan Agreement for a statement of the
prepayment rights and obligations of the Borrower, and for a statement of the
terms and conditions under which the due date of this Note may be accelerated.
Upon the occurrence of any Event of Default as specified in the Loan Agreement,
the principal balance hereof and the interest accrued hereon may be declared to
be forthwith due and payable in accordance with the Loan Agreement, and any
indebtedness of the holder hereof to the Borrower may be appropriated and
applied hereon.

         In addition to and not in limitation of the foregoing, the undersigned
further agrees, subject only to any limitation imposed by applicable laws, to
pay all reasonable expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder of this Note in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by acceleration
or otherwise.

         All parties hereto, whether as makers, endorsees, or otherwise,
severally waive presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration, notice of dishonor and all other notices
whatsoever.

         THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF TEXAS AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

                                        MITCHAM INDUSTRIES, INC.



                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------




                                     - 4 -
   20
                                  EXHIBIT "A"


                        COPY OF LEASE/PURCHASE CONTRACT
   21
MITCHAM INDUSTRIES, INC.
CHANNEL BOX UTILIZATION SCHEDULE
February, 1996 - October, 1996




===============================================================================================================
COMPANY                 CONTRACT   ITEM       QTY                            FEB       MAR       APR     1ST QTR        
===============================================================================================================
                                                                                         
CAPILANO                   92       RSX        18       DONE                 18        18        18        54       
                                    MRX        62       DONE                 62        62        62       186       
                                                                                                                    
                                                                                                                    
DIGICON                   536       MRX        25       DONE                                                0       
                          535       MRX        60                                                           0       
                                                                                                                    
                                                                                                                    
GAPS                       88       RSC        20       DONE                 20        20        20        60       
                           94       RSX        15       DONE                 15        15        15        45       
                          138       RSX         2       DONE                  2         2         2         6       
                                    MRX        63       DONE                 63        63        63       189       
                                                                                                                    
                                                                                                                    
GECO/PRAKLA               153       MRX        88       DONE                 88        88                 176       
CANADA                              MRX        33       DONE                 33                            33       
                                    MRX        17       DONE                 17                            17       
                          572       MRX       110                                                                   
                          637       MRX       110                                                                   
                                                                                                                    
                                                                                                                    
GECO/PRAKLA               567       MRX        50                                                                   
USA                       567       MRX        50                                                                   
                          659       MRX        67                                                                   
                                                                                                                    
                                                                                                                    
GRANT                     149       MRX        40                            40        40        40       120       
                           27       MRX        14                            14        14        14        42       
                           64       RSC        35                            35        35        35       105       
                           54       MRX        50                            50        50        50       150       
                          509       MRX        60                                      60        60       120       
                          594       RSC        15                                                                   
                          601      SU 368      50                                                                   
                          626       MRX        63                                                                   
                          649       MRX        63                                                                   
                          651       RSC        15                                                                   
                          650       MRX        50                                                                   
                                                                                                                    
                                                                                                                    
NORTHERN                   66       RSX         5       DONE                  5         5                  10       
                                    MRX        25       DONE                 25        25                  50       
                           87       MRX        25       DONE                 25        25                  50       
                           91       MRX        28       DONE                 28        28                  56       
                          581       MRX        90                                                                   
                            ?       MRX        55                                                                   
                                                                                                                    
                                                                                                                    
SCHLUMBERGER G.S.         136       MRX        18       DONE                 18        18        18        54       
                          120       MRX        26       DONE                 26        26        26        78       
                          127       MRX        67       DONE                 67        67        67       201       
                          116       MRX        20       DONE                 20        20        20        60       
                                                                                                                    
                                                                                                                    
SOLID STATE                90       MRX         2       DONE                  2         2         2         6       
                                    MRX         1       DONE                  1         1         1         3       
                                    MRX         4       DONE                  4         4                   8       
                                    MRX        43       DONE                 43                            43       
                           80       MRX         3       DONE                  3         3                   6       
                                    MRX        17       DONE                 17                            17       
                          158       MRX         5       DONE                  5         5                  10       
                                                                                                                    
                                                                                                                    
UNION GEOFISICA            1A       MRX        80       DONE                           80        80       160       
                          147       MRX        20                            20        20        20        60       
                          527       MRX        85                                                           0       
                                                                                                                    
USA                       542       MRX        15                                                           0       
                                                                                                                    
                                         


==============================================================================================================
COMPANY                   MAY      JUNE     JULY    2ND QTR               AUG       SEP       OCT     3RD QTR
==============================================================================================================
                                                                                
CAPILANO            
                    
                    
                    
DIGICON                    25                          25
                           60      60        60       180
                              
                              
GAPS                          
                              
                              
                              
                              
                              
GECO/PRAKLA                   
CANADA                        
                              
                                                                                    110       110       220
                              
                              
                              
GECO/PRAKLA                                  50        50                  50        50        50       150
USA                                          50        50                  50        50        50       150
                              
                              
                              
GRANT                      40      40        40       120                  40        40        40       120
                           14      14         3        31                   5         2         2         9
                           35      35        35       105                  35        35        35       105
                           50      50         3       103                   3         3         3         9
                           60      60        51       171                  51        51        51       153
                                                                                     15        15        30
                                                                                               50        50
                              
                              
                              
                              
                              
                              
NORTHERN                      
                              
                              
                              
                                                                           90        90        90       270
                                             55        55                  55        55                 110
                              
                              
SCHLUMBERGER G.S.             
                              
                              
                              
                              
                              
SOLID STATE                 2                           2
                              
                              
                              
                              
                              
                              
                              
                              
UNION GEOFISICA               
                           20      20        20        60                  20        20        20        60
                           85      85        85       255                  85        85                 170
                              
USA                        15      15                  30
            

   22




===============================================================================================================
COMPANY               CONTRACT    ITEM        QTY                           FEB       MAR       APR     1ST QTR        
===============================================================================================================
                                                                                              
                                                                                                                      
                          579      RSX         23                                                                       
                          588      MRX         35                                                                       
                                                                                                                      
                                                                                                                      
VERITAS                   133      MRX         12    DONE                    12        12                  24           
                          503      RSC         50                                      50        50       100           
                            ?      MRX         30                                                                       
                          533      MRX         35    DONE                                                               
                          596      MRX         20                                                                       
                            ?      MRX         50                                                                       
                            ?      MRX         20                                                                       
                                                                                                                      
                                                                                                                      
GEOITALIA                 569       SU        295                                                                       
                            ?       SU        200                                                                       
                                                                                                                      
                                                                                                                      
TIDELANDS                   ?   SU 348         80                                                                       
                                                                                                                      
                                                                                                                      
GLOBAL CHARTER            595      RSR        156                                                                       
                                                                                                                      
                                                                                                                      
DUNCAN                    607     SU-6         32                                                                       
                                                                                                                      
                                                                                                                      
PETROL DEV.               620     SU-6         19                                                                       
                          652     SU-6         15                                                                       
                                                                                                                      
                                                                                                                      
CGG                       623     SU-6         40                                                                       
                                                                                                                      
                                                                                                                      
TERRA-SCAN                630     SU-6         85                                                                       
                                                                                                                      
                                                                                                                      
PERFORADATA               612     SU-1          2                                                                       
                          660     SU-1         68                                                                       
                                                                                                                      
                                                                                                                      
JRS EXPLORATION           643     SU-6         50                                                                       
                                                                                                                      
                                                                                                                      
DAWSON                    658      MRX        140                                                                       
                                                                                                                      
                                                                                                                      
SCHEDULE TOTAL                                                              778       858       663     2,299           
LEASE POOL TOTAL                                                            867       867       867     2,601           
                                                                                                                      
UTILIZATION                                                                  90%       99%       76%       90%          
                                                                                                                        
                                                                                                                        
                                                                                                                        
                                                                                                               
============================================================================================================  
COMPANY                MAY       JUNE      JULY    2ND QTR               AUG       SEP       OCT     3RD QTR
============================================================================================================  
                                                                              
                       
                                                                           23        23        23        69
                                                                                     35        35        70
                       
                       
VERITAS                
                           50       50         50       150                50                            50
                                                                           30                            30
                           35                            35
                                                                                     20        20        40
                       
                       
                       
                       
GEOITALIA                                     295       295               295       295       295       885
                                                                                    200       200       400
                       
                       
TIDELANDS                                      80        80                80                            80
                       
                       
GLOBAL CHARTER                                                            156       156       156       468
                       
                       
DUNCAN                                                                               32        32        64
                       
                       
PETROL DEV.            
                       
                       
                       
CGG                    
                       
                       
TERRA-SCAN             
                       
                       
PERFORADATA            
                       
                       
                       
JRS EXPLORATION        
                       
                       
DAWSON                 
                       
                       
SCHEDULE TOTAL            491      429        877     1,797             1,118     1,367     1,277     3,762
LEASE POOL TOTAL          867      867        867     2,601             1,452     1,551     1,551     4,554
                       
UTILIZATION                57%      49%       101%       69%               77%       88%       82%       83%

   23
Date: Jan 21 97               Mitcham Industries, Inc.                  Page:  1

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 


                                                                                                    

Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number     Customer Name              Number   Date      TP       Current      Days          Days          Days           Total
- ------     -------------              -------  ----      --       -------    -------       -------      --------          -----
                                                                                             
 A0010 A & M CABLE                        4249 Apr 01 95 IN                                                 375.00 
                                          4673 Dec 29 95 IN                                               4,000.00 
                                          4674 Jan 28 96 IN                                               4,000.00 
                                          4708 Mar 13 96 IN                                               4,000.00 
                                          Customer Totals:          0.00          0.00          0.00     12,375.00      12,375.00  

 A0022 ALPHA TECH INTER. INC.             5196 Jan 08 97 IN     5,080.00 
                                          Customer Totals:      5,080.00          0.00          0.00          0.00       5,080.00  

 A0064 ASSOCIATED INT. TECHNOLOGY         4892 Jul 21 96 IN                                                  81.19 
                                          Customer Totals:          0.00          0.00          0.00         81.19          81.19  

 B0105 BISON INSTRUMENTS, INC             5167 Dec 31 96 IN       811.88 
                                         50277 Oct 07 96 IN                     750.00 
                                         50283 Oct 03 96 IN                   6,250.00 
                                         50340 Oct 29 96 IN                     750.00 
                                         50354 Nov 02 96 IN     4,550.00 
                                         50419 Nov 28 96 IN       750.00 
                                         50429 Dec 02 96 IN     4,550.00 
                                         50519 Jan 01 97 IN     4,550.00 
                                          Customer Totals:     15,211.88      7,750.00          0.00          0.00      22,961.88  

 B0109 BURNS & ROE ENTERPRISES, INC.      5169 Dec 31 96 IN       615.00 
                                          Customer Totals:        615.00          0.00          0.00          0.00         615.00  

 B0110 BOONE GEOPHYSICAL                  4920 Jul 30 96 IN                                               2,952.24 
                                          5164 Dec 23 96 IN     5,396.00 
                                         50298 Oct 14 96 IN                  16,237.50 
                                         50374 Nov 14 96 IN     8,605.87 
                                         50428 Dec 01 96 IN    25,275.00 
                                         50471 Dec 14 96 DR       974.25 
                                         5107A Dec 23 96 DR     5,100.00 
                                          Customer Totals:     45,351.12     16,237.50          0.00      2,952.24      64,540.86  

 B0126 BOLTON, ROBERT C.                  4683 Feb 19 96 IN                                               1,621.05 
                                          Customer Totals:          0.00          0.00          0.00      1,621.05       1,621.05  

 C0202 C G G                              5100 Nov 21 96 IN       100.00 
                                         50335 Oct 27 96 IN                  24,610.64-
                                         50473 Dec 15 96 IN    39,814.35 
                                         50473 Jan 14 97 CR    39,814.35-
                                          Customer Totals:        100.00     24,610.64-         0.00          0.00      24,510.64- 

 C0206 COCHRANE TECHNOLOGIES, INC.        5117 Dec 12 96 IN     1,500.00 
                                          5117 Jan 17 97 CA     1,500.00-
                                          Customer Totals:          0.00          0.00          0.00          0.00           0.00  

 C0212 COMPANIA DE INVESTIGACIONES       50393 Nov 22 96 IN     1,180.00 
                                          Customer Totals:      1,180.00          0.00          0.00          0.00       1,180.00  




   24

Date: Jan 21 97                  Mitcham Industries, Inc.               Page:  2

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days           Total
- ------    -------------               -------  ----      --       -------    -------       -------      --------          -----
                                                                                                     

 C0214 CHEVRON PETROLEUM                  5104 Nov 27 96 IN       500.00 
                                          5104 Jan 13 97 CA       500.00-
                                          Customer Totals:          0.00          0.00          0.00          0.00           0.00  

 C0216 COLORADO HELICOPTERS, INC.         5133 Dec 09 96 IN    55,280.00 
                                          5133 Jan 02 97 CA    42,000.00-
                                          Customer Totals:     13,280.00          0.00          0.00          0.00      13,280.00  

 C0217 CHEVRON NIUGINI PTY LTD            5138 Dec 13 96 IN   153,750.00 
                                          Customer Totals:    153,750.00          0.00          0.00          0.00     153,750.00  

 C0219 COMPANIA MEXICANA DE GEOFISICA     5010 Oct 07 96 IN                  40,000.00 
                                          5094 Nov 21 96 IN       130.00 
                                          5126 Dec 16 96 CR     1,001.00-
                                          5144 Dec 19 96 IN       140.00 
                                          5144 Jan 17 97 CA       140.00-
                                         50416 Nov 27 96 IN     1,100.00 
                                          Customer Totals:        229.00     40,000.00          0.00          0.00      40,229.00  

 C0222 COMPANIA MEXICAN DE EXPLOR         5126 Dec 16 96 IN    79,289.01 
                                          Customer Totals:     79,289.01          0.00          0.00          0.00      79,289.01  

 C0248 CAPILANO GEOPHYSICAL, INC.         4772 May 13 96 IN                                                 277.89 
                                          4862 Jul 09 96 IN                                                 420.42 
                                          4911 Jul 24 96 IN                                                  64.43 
                                          4922 Jul 31 96 IN                                                 487.13 
                                          5005 Sep 27 96 IN                                   162.38 
                                          5037 Oct 24 96 IN                     175.08 
                                         10351 Feb 08 96 IN                                               3,037.22 
                                         10424 Mar 23 96 IN                                              30,456.29 
                                         10429 Apr 01 96 IN                                                 727.26 
                                          Customer Totals:          0.00        175.08        162.38     35,470.64      35,808.10  

 C0249 CAPILANO INTERNATIONAL, INC.     PREPAY Jul 15 96 IN                                                 926.54-
                                          Customer Totals:          0.00          0.00          0.00        926.54-        926.54- 

 C0261 COMESA                             5011 Jan 16 97 IN       137.00 
                                          5053 Oct 29 96 IN                     155.59 
                                          5054 Oct 29 96 IN                   3,595.40 
                                          5055 Oct 29 96 IN                   7,278.58 
                                          Customer Totals:        137.00     11,029.57          0.00          0.00      11,166.57  

 C0272 COLUMBIA UNIVERSITY N.Y.          50180 Aug 07 96 IN                                               9,750.00 
                                         50238 Sep 06 96 IN                                 9,750.00 
                                         50290 Oct 06 96 IN                   9,750.00 
                                         50359 Nov 05 96 IN     9,750.00 
                                         50447 Dec 05 96 IN     9,750.00 
                                          Customer Totals:     19,500.00      9,750.00      9,750.00      9,750.00      48,750.00  

 D0291 DISCOVERY S.P.A.                   5095 Nov 21 96 IN       263.66 


   25

Date: Jan 21 97                 Mitcham Industries, Inc.                Page:  3

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
                                          Customer Totals:        263.66          0.00          0.00          0.00         263.66  

 D0297 DATATEK, INC                       4166 Feb 22 95 IN                                               6,262.50 
                                          4722 Mar 20 96 IN                                                  89.50 
                                          4759 May 08 96 IN                                               2,172.50 
                                          5136 Dec 12 96 IN     2,350.00 
                                          Customer Totals:      2,350.00          0.00          0.00      8,524.50      10,874.50  

 D0299 DAWSON GEOPHYSICAL COMPANY         5029 Oct 15 96 IN                  41,523.79 
                                          5192 Jan 07 97 IN       116.91 
                                          5200 Jan 14 97 IN        27.06 
                                          Customer Totals:        143.97     41,523.79          0.00          0.00      41,667.76  

 D0300 DIGICON, INC. & SUBSIDIARIES      50465 Dec 11 96 IN     2,237.17 
                                          Customer Totals:      2,237.17          0.00          0.00          0.00       2,237.17  

 D0304 DUNCAN EXPLORATION                 5074 Nov 13 96 IN     2,724.99 
                                          5074 Jan 17 97 CA     2,724.99-
                                          5157 Dec 19 96 IN     1,110.00 
                                          5203 Jan 16 97 IN       698.97 
                                          5207 Jan 16 97 IN       792.84 
                                          5208 Jan 16 97 IN       350.32 
                                         50292 Oct 17 96 IN                  19,093.60 
                                         50490 Dec 27 96 IN   125,035.00 
                                          Customer Totals:    127,987.13     19,093.60          0.00          0.00     147,080.73  

 D0307 DIGICON GEOPHYSICAL CORP.          4468 Sep 30 95 IN                                                 252.63 
                                          4893 Jul 21 96 IN                                               1,434.64 
                                         10102 Jul 14 95 IN                                               2,084.94 
                                         10104 Jul 21 95 IN                                              16,640.00 
                                         10256 Dec 11 95 IN                                              14,000.00 
                                         50061 May 23 96 IN                                               3,591.60 
                                         50372 Nov 13 96 IN     2,000.00 
                                         50388 Nov 11 96 IN       165.00 
                                         50469 Dec 13 96 IN     2,000.00 
                                          Customer Totals:      4,165.00          0.00          0.00     38,003.81      42,168.81  

 E0402 EOTVOS LORAND GEOPHYSICAL INST     5143 Dec 17 96 IN    61,400.00 
                                          5143 Jan 16 97 CA    61,400.00-
                                          Customer Totals:          0.00          0.00          0.00          0.00           0.00  

 E0411 EAGLE GEOPHYSICAL                  5081 Nov 13 96 IN       787.50 
                                          Customer Totals:        787.50          0.00          0.00          0.00         787.50  

 E0419 ENERTEC GEOPHYSICAL SER/TX         5160 Dec 19 96 IN       805.81 
                                         50148 Jun 19 96 IN                                               5,119.81 
                                         50318 Oct 17 96 IN                   1,750.00 
                                         50318 Jan 15 97 CA                   1,750.00-
                                         50395 Nov 16 96 IN     1,750.00 
                                         50395 Jan 15 97 CA     1,750.00-
                                          Customer Totals:        805.81          0.00          0.00      5,119.81       5,925.62  



   26

Date: Jan 21 97                Mitcham Industries, Inc.                Page:  4

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
 G0602 GEOPHYSICAL SALES & RENTALS        4347 Jul 27 95 IN                                               1,234.50 
                                          4540 Nov 17 95 IN                                                 850.00 
                                          Customer Totals:          0.00          0.00          0.00      2,084.50       2,084.50  

 G0603 GEOPHYSICAL ACQ & PRO (GAPS)       3580 Oct 16 96 IN                   4,095.25 
                                          4782 May 27 96 IN                                                 286.00 
                                          4794 May 28 96 IN                                                 155.00 
                                          4809 May 31 96 IN                                                 160.00 
                                          4913 Jul 24 96 IN                                               9,601.96 
                                          4970 Sep 03 96 IN                                80,125.00 
                                          4970 Jan 09 97 CA                                80,125.00-
                                          5018 Oct 15 96 IN                     948.75 
                                          5028 Oct 16 96 IN                  12,924.00 
                                          5075 Nov 13 96 IN    16,898.27 
                                          5078 Nov 13 96 IN        40.00 
                                          5105 Nov 27 96 IN     6,548.85 
                                          5129 Dec 05 96 IN     2,312.91 
                                          5132 Dec 06 96 IN       993.15 
                                          5132 Jan 09 97 CA       993.15-
                                         50422 Nov 30 96 IN    68,800.00 
                                         50432 Nov 27 96 IN     7,685.00 
                                         50432 Jan 09 97 CA     7,685.00-
                                         50520 Jan 02 97 IN     7,200.00 
                                          Customer Totals:    101,800.03     17,968.00          0.00     10,202.96     129,970.99  

 G0604 GLOBAL CHARTER CORPORATION        50510 Dec 31 96 IN   187,904.00 
                                          Customer Totals:    187,904.00          0.00          0.00          0.00     187,904.00  

 G0614 GECO-PRAKLA/BELLE CHASSE          50517 Jan 01 97 IN     1,240.00 
                                          Customer Totals:      1,240.00          0.00          0.00          0.00       1,240.00  

 G0615 GECO/PRAKLA/CANADA                 4624 Jan 22 96 IN                                              10,000.00 
                                          4652 Jan 23 96 IN                                                  51.50 
                                          4901 Jul 24 96 IN                                               9,062.85 
                                          4926 Aug 12 96 IN                                               9,062.85 
                                          5202 Jan 16 97 IN       500.00 
                                         50299 Oct 01 96 IN                                65,450.00 
                                         50383 Oct 31 96 IN                  46,433.75 
                                         50391 Nov 23 96 IN    67,870.00 
                                         50391 Jan 17 97 CR     2,420.00-
                                         50434 Dec 06 96 IN     9,000.00 
                                         50488 Dec 23 96 IN    58,190.00 
                                         50488 Jan 17 97 DR     7,260.00 
                                         50503 Jan 03 97 IN    11,650.00 
                                         50524 Jan 05 97 IN     9,000.00 
                                          Customer Totals:    161,050.00     46,433.75     65,450.00     28,177.20     301,110.95  

 G0616 GECO/PRAKLA/U.S.A.                 5016 Oct 15 96 IN                   1,175.00 
                                          5019 Oct 15 96 IN                     172.50 
                                          5036 Oct 24 96 IN                     110.25 


   27

Date: Jan 21 97               Mitcham Industries, Inc.                  Page:  5

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 


                                                                     

Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days          Days          Days              Total
- ------ -------------                  -------  ----      --       -------    -------       -------       -------             -----
                                                                                                  
                                          5041 Oct 24 96 IN                     542.25 
                                          5111 Nov 26 96 IN       465.11 
                                          5142 Dec 19 96 IN       378.88 
                                         50001 Feb 29 96 IN                                              11,366.25 
                                         50014 Mar 30 96 IN                                              14,824.84 
                                         50246 Sep 14 96 IN                                17,449.90 
                                         50392 Nov 22 96 IN     1,006.73 
                                         50392 Jan 14 97 DR         0.00 
                                         50393 Nov 22 96 IN     1,256.73 
                                         50460 Dec 10 96 IN    45,480.16 
                                          Customer Totals:     48,587.61      2,000.00     17,449.90     26,191.09      94,228.60  

 G0623 GEOITALIA S.p.A.                   4984 Sep 19 96 IN                                 9,562.50 
                                          5121 Dec 16 96 IN    12,532.50 
                                          5123 Dec 16 96 IN    25,100.00 
                                          5124 Dec 16 96 IN    25,100.00 
                                          5125 Dec 16 96 IN    12,550.00 
                                          5158 Dec 23 96 DR    86,077.50 
                                         50103 Dec 23 96 CR     1,875.00-
                                         50146 Dec 23 96 CR     1,875.00-
                                         50195 Dec 23 96 CR     2,375.00-
                                         50255 Dec 23 96 CR     2,375.00-
                                         50321 Oct 18 96 IN                  24,975.00 
                                         50321 Jan 17 97 CA                  24,975.00-
                                          Customer Totals:    152,860.00          0.00      9,562.50          0.00     162,422.50  

 G0633 GEOPHYSICAL SERVICES, INC.         5195 Jan 03 97 IN    16,000.00 
                                          Customer Totals:     16,000.00          0.00          0.00          0.00      16,000.00  

 G0638 GEOPHYSICAL APPLICATIONS           5139 Dec 16 96 IN     1,456.00 
                                          Customer Totals:      1,456.00          0.00          0.00          0.00       1,456.00  

 G0643 GEOCOM LTD                         4867 Jul 15 96 IN                                                 264.84 
                                          Customer Totals:          0.00          0.00          0.00        264.84         264.84  

 G0646 GULF NAUTECH                       4916 Jul 29 96 IN                                                  81.19 
                                          4916 Jan 17 97 CA                                                  81.19-
                                          4917 Jul 29 96 IN                                                 433.00 
                                          4917 Jan 17 97 CA                                                 433.00-
                                         50021 Dec 12 96 IN     2,219.13 
                                         50022 May 20 96 CR                                                 144.34-
                                          Customer Totals:      2,219.13          0.00          0.00        144.34-      2,074.79  

 G0651 GRANT GEOPHYSICAL, INC.             PP1 Dec 31 96 CR     5,000.00-
                                           PP2 Dec 31 96 CR     1,200.00-
                                           PP3 Dec 31 96 CR    12,500.00-
                                          4817 Dec 12 96 DR     8,617.00 
                                          4857 Dec 11 96 DR       162.38 
                                          4858 Dec 11 96 DR       226.38 
                                          4859 Dec 11 96 DR       665.99 
                                          4931 Aug 12 96 IN                                               1,718.80 




   28

Date: Jan 21 97            Mitcham Industries, Inc.                     Page:  6

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days          Days          Days              Total
- ------ -------------                  -------  ----      --       -------    -------       -------       -------             -----
                                                                                                  

                                          4960 Aug 27 96 IN                                                  40.59 
                                          4963 Aug 28 96 IN                                                 364.05 
                                          4990 Sep 23 96 IN                                   557.49 
                                          4991 Sep 23 96 IN                                   584.55 
                                          4999 Sep 24 96 IN                                 5,000.00 
                                          5000 Sep 24 96 IN                                 5,867.15 
                                          5002 Sep 27 96 IN                                   353.30 
                                          5015 Oct 15 96 IN                   3,305.00 
                                          5024 Oct 15 96 IN                   1,825.00 
                                          5046 Oct 28 96 IN                     186.00 
                                          5092 Nov 21 96 IN     3,600.00 
                                          5093 Nov 21 96 IN       187.48 
                                          5137 Dec 13 96 IN     4,725.00 
                                          5171 Dec 23 96 IN     8,803.43 
                                          5171 Jan 16 97 CR     3,929.77-
                                          5173 Dec 30 96 IN     3,807.91 
                                          5174 Jan 01 97 IN     3,807.91 
                                          5188 Jan 15 97 IN     1,200.00 
                                         10121 Jul 24 95 IN                                               4,296.88 
                                         10472 Dec 11 96 DR    22,750.00 
                                         10482 May 25 96 IN                                              13,999.85 
                                         10492 Jun 09 96 IN                                              22,750.00 
                                         10493 Jun 09 96 IN                                              33,200.00 
                                         10494 Jun 18 96 IN                                              11,325.00 
                                         10498 Jun 24 96 IN                                              26,880.00 
                                         10506 Jul 09 96 IN                                              22,750.00 
                                         10511 Jul 24 96 IN                                              26,880.00 
                                         10518 Aug 08 96 IN                                              22,750.00 
                                         10523 Aug 23 96 IN                                              26,880.00 
                                         10529 Sep 07 96 IN                                22,750.00 
                                         10532 Sep 07 96 IN                                 1,950.00 
                                         10533 Sep 16 96 IN                                 1,520.00 
                                         10537 Sep 22 96 IN                                26,880.00 
                                         10540 Oct 07 96 IN                  22,750.00 
                                         10543 Oct 07 96 IN                   1,950.00 
                                         50037 Dec 11 96 DR     2,922.76 
                                         50052 Dec 11 96 CR        21.65-
                                         50073 May 26 96 IN                                              43,792.54 
                                         50074 Dec 11 96 DR     3,599.31 
                                         50083 Jul 03 96 IN                                               3,957.91 
                                         50093 Jun 07 96 IN                                                 194.85 
                                         50111 Dec 11 96 DR       825.00 
                                         50116 Jun 25 96 IN                                              43,792.54 
                                         50128 Jul 07 96 IN                                                 194.85 
                                         50133 Jul 12 96 IN                                               2,056.76 
                                         50153 Jul 22 96 IN                                                 825.00 
                                         50159 Aug 02 96 IN                                               3,807.91 
                                         50167 Jul 27 96 IN                                                 274.31 
                                         50178 Aug 06 96 IN                                                 194.85 
                                         50183 Aug 11 96 IN                                               1,894.38 
                                         50186 Aug 19 96 IN                                                 568.31 



   29

Date: Jan 21 97               Mitcham Industries, Inc.                  Page:  7

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
                                         50203 Aug 21 96 IN                                                 825.00 
                                         50225 Sep 13 96 IN                                 5,000.00 
                                         50226 Sep 13 96 IN                                17,000.00 
                                         50227 Oct 13 96 IN                  17,000.00 
                                         50230 Sep 01 96 IN                                               3,807.91 
                                         50233 Sep 10 96 IN                                 1,894.38 
                                         50235 Sep 05 96 IN                                   194.85 
                                         50254 Sep 18 96 IN                                   541.25 
                                         50256 Sep 20 96 IN                                   825.00 
                                         50261 Sep 23 96 IN                                35,884.88 
                                         50265 Oct 01 96 IN                                 3,807.91 
                                         50289 Oct 05 96 IN                     194.85 
                                         50304 Oct 10 96 IN                   1,894.38 
                                         50319 Oct 17 96 IN                   8,250.00 
                                         50320 Oct 18 96 IN                     189.45 
                                         50322 Oct 20 96 IN                     825.00 
                                         50325 Oct 28 96 IN                     100.00 
                                         50328 Oct 23 96 IN                  35,884.88 
                                         50329 Oct 23 96 IN                   2,435.63 
                                         50330 Oct 25 96 IN                   3,599.31 
                                         50347 Nov 16 96 IN    24,945.57-
                                         50351 Nov 15 96 IN    12,500.00 
                                         50352 Nov 01 96 IN     6,250.00 
                                         50357 Nov 04 96 IN       194.85 
                                         50365 Nov 08 96 IN    75,775.00 
                                         50368 Nov 09 96 IN     1,894.38 
                                         50370 Nov 12 96 IN    17,000.00 
                                         50371 Nov 12 96 IN     5,000.00 
                                         50379 Oct 31 96 IN                   3,807.91 
                                         50396 Nov 16 96 IN     2,823.60 
                                         50398 Nov 18 96 IN    12,500.00 
                                         50400 Nov 19 96 IN       825.00 
                                         50405 Nov 22 96 IN     2,392.69 
                                         50406 Nov 23 96 IN    12,178.12-
                                         50407 Nov 24 96 IN    11,871.24-
                                         50415 Nov 27 96 IN     1,200.00 
                                         50421 Nov 30 96 IN     3,807.91 
                                         50427 Dec 01 96 IN     6,250.00 
                                         50427 Jan 07 97 CR     6,250.00-
                                         50435 Dec 01 96 IN    11,457.18 
                                         50436 Dec 01 96 IN    42,628.85 
                                         50437 Dec 01 96 IN     8,325.00 
                                         50437 Jan 10 97 CR        75.00-
                                         50446 Dec 04 96 IN       194.85 
                                         50453 Dec 08 96 IN    75,775.00 
                                         50458 Dec 09 96 IN     1,894.38 
                                         50458 Dec 30 96 CR       947.19-
                                         50467 Dec 12 96 IN    17,000.00 
                                         50468 Dec 12 96 IN     5,000.00 
                                         50468 Jan 07 97 CR     5,000.00-
                                         50474 Dec 15 96 IN    12,500.00 



   30

Date: Jan 21 97               Mitcham Industries, Inc.                 Page:  8

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
                                         50474 Jan 07 97 CR    12,500.00-
                                         50489 Dec 23 96 IN    19,250.00 
                                         50492 Dec 27 96 IN    22,880.00 
                                         50512 Dec 31 96 IN     6,250.00 
                                         50514 Dec 31 96 IN    37,216.35 
                                         50515 Dec 31 96 IN     8,250.00 
                                         50522 Jan 03 97 IN       194.85 
                                        10507A Aug 29 96 IN                                              24,362.53 
                                        10509A Aug 29 96 IN                                               6,298.00 
                                        10519A Aug 29 96 IN                                               1,950.00 
                                        10521A Aug 29 96 IN                                               1,520.00 
                                        50166A Aug 29 96 IN                                              37,540.37 
                                        50199A Aug 29 96 IN                                              35,884.88 
                                        C00594 Sep 07 96 CA                                 8,250.00-
***Over Credit Limit of 999999  Dollars   Customer Totals:    386,711.90    104,197.41    122,360.76    427,578.07   1,040,848.14  

 G0653 GREAT LAKES GEOPHYSICAL            3853 Sep 08 94 IN                                               3,559.00 
                                          3854 Sep 08 94 IN                                                 116.00 
                                          4720 Mar 18 96 IN                                               2,325.00 
                                          4977 Sep 06 96 IN                                12,400.00 
                                          Customer Totals:          0.00          0.00     12,400.00      6,000.00      18,400.00  

 H0706 HARVEY-LYNCH, INC.                50179 Aug 07 96 IN                                                 185.62 
                                          Customer Totals:          0.00          0.00          0.00        185.62         185.62  

 H0707 HARDER, STEVE                      5072 Nov 13 96 IN        45.00 
                                          5072 Jan 06 97 CA        45.00-
                                          Customer Totals:          0.00          0.00          0.00          0.00           0.00  

 H0710 HEBEI MACHINERY IMPORT EXPORT      4366 Jul 31 95 IN                                               6,869.92 
                                          Customer Totals:          0.00          0.00          0.00      6,869.92       6,869.92  

 H0711 HUMMINGBIRD EXPLORATION            4959 Dec 31 96 IN        19.48 
                                          5057 Oct 29 96 IN                     632.99 
                                          Customer Totals:         19.48        632.99          0.00          0.00         652.47  

 H0730 HIGSCO                             4755 Apr 10 96 IN                                                 227.33 
                                          Customer Totals:          0.00          0.00          0.00        227.33         227.33  

 I0880 INPUT/OUTPUT, INC.                 4650 Jan 29 96 IN                                               4,357.06 
                                          4795 May 28 96 IN                                                 200.00 
                                          4897 Jul 24 96 IN                                                 107.00 
                                         50410 Nov 08 96 IN     2,615.00 
                                          Customer Totals:      2,615.00          0.00          0.00      4,664.06       7,279.06  

 I0881 INPUT/OUTPUT - SENSOR             50457 Dec 08 96 IN     2,066.67 
                                          Customer Totals:      2,066.67          0.00          0.00          0.00       2,066.67  

 J0895 J.R.S. EXPLORATION CO., LTD.      50433 Dec 06 96 IN    36,110.00 
                                         50433 Jan 06 97 CA    36,110.00-
                                         50526 Jan 06 97 IN    37,106.98 


   31

Date: Jan 21 97             Mitcham Industries, Inc.                   Page:  9

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
                                          Customer Totals:     37,106.98          0.00          0.00          0.00      37,106.98  

 K0907 KLOHN-CRIPPEN CONSULTANTS LTD      5127 Dec 16 96 IN     6,800.00 
                                          Customer Totals:      6,800.00          0.00          0.00          0.00       6,800.00  

 M1211 MARK PRODUCTS, LTD.                5145 Dec 19 96 IN       749.15 
                                          5146 Dec 19 96 IN       529.80 
                                          5147 Dec 19 96 IN       205.60 
                                          5148 Dec 19 96 IN       598.70 
                                          5149 Dec 19 96 IN       390.00 
                                          5150 Dec 19 96 IN       280.00 
                                          5151 Dec 19 96 IN       336.00 
                                          5152 Dec 19 96 IN       243.20 
                                          5153 Dec 19 96 IN       120.00 
                                          5154 Dec 19 96 IN       180.00 
                                          5155 Dec 19 96 IN       352.00 
                                          5156 Dec 19 96 IN       655.60 
                                          Customer Totals:      4,640.05          0.00          0.00          0.00       4,640.05  

 M1215 MACARTNEY, INC.                    3972 Oct 31 94 IN                                               1,294.00-
                                          Customer Totals:          0.00          0.00          0.00      1,294.00-      1,294.00- 

 M1216 MGGEC LTD. (MONGOLIAN)             4657 Jan 31 96 IN                                              42,139.66 
                                          Customer Totals:          0.00          0.00          0.00     42,139.66      42,139.66  

 M1218 M/S OIL & NATURAL GAS CORP         4981 Oct 25 96 IN                   3,338.00 
                                          4981 Jan 17 97 CA                   3,338.00-
                                          Customer Totals:          0.00          0.00          0.00          0.00           0.00  

 M1219 MITCHAM INDUSTRIES, INC.         PREPAY Oct 31 96 CA                   4,249.00-
                                          Customer Totals:          0.00      4,249.00-         0.00          0.00       4,249.00- 

 M1236 M.T.S.                             4833 Jun 30 96 IN                                                 757.75 
                                          5047 Oct 28 96 IN                      66.00 
                                          5823 Jun 14 96 IN                                               1,299.00 
                                          Customer Totals:          0.00         66.00          0.00      2,056.75       2,122.75  

 M1237 MASTER OF M/V ODIN EXPLORER        5089 Nov 20 96 IN       204.00 
                                          Customer Totals:        204.00          0.00          0.00          0.00         204.00  

 N1300 NORTHERN GEOPHYSICAL/AMERICA       4884 Jul 15 96 IN                                               2,598.96 
                                          4895 Jul 24 96 IN                                               3,775.00 
                                          4940 Aug 14 96 IN                                                 130.08 
                                          4950 Aug 23 96 IN                                                 333.55 
                                          4956 Aug 23 96 IN                                                 737.81 
                                          4957 Aug 27 96 IN                                              29,440.00 
                                          4958 Aug 27 96 IN                                              22,460.00 
                                          5001 Sep 25 96 IN                                 1,620.00 
                                          5022 Oct 15 96 IN                   1,675.00 
                                          5166 Dec 31 96 IN   139,746.86 
                                          5166 Jan 17 97 CR    35,946.86-



   32

Date: Jan 21 97                 Mitcham Industries, Inc.             Page: 10

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
                                         50123 Sep 10 96 IN                               103,424.00 
                                         50187 Aug 16 96 IN                                              57,144.40 
                                         50247 Sep 15 96 IN                                40,765.00 
                                         50247 Jan 16 97 CR                                19,940.00-
                                         50251 Sep 17 96 IN                                 7,650.00 
                                         50260 Sep 22 96 IN                                 7,300.00 
                                         50313 Oct 15 96 IN                  60,705.00 
                                         50341 Oct 29 96 IN                   1,516.65 
                                         50375 Nov 14 96 IN    60,705.00 
                                         50472 Dec 14 96 IN    51,705.00 
                                          Customer Totals:    216,210.00     63,896.65    140,819.00    116,619.80     537,545.45  

 N1302 NCS INTERNATIONAL                  4314 Jun 20 95 IN                                               4,000.00 
                                          5026 Oct 15 96 IN                   4,150.00 
                                          5026 Jan 06 97 CA                   4,150.00-
                                          Customer Totals:          0.00          0.00          0.00      4,000.00       4,000.00  

 N1308 NOREX GEOPHYSICAL                  5069 Nov 13 96 IN     4,950.00 
                                          Customer Totals:      4,950.00          0.00          0.00          0.00       4,950.00  

 N1312 NATIONAL HELICOPTER CORP         PREPAY Apr 22 96 CA                                               2,500.00-
                                          Customer Totals:          0.00          0.00          0.00      2,500.00-      2,500.00- 

 N1314 N.G.A.                             5012 Oct 14 96 IN                   3,600.00 
                                          Customer Totals:          0.00      3,600.00          0.00          0.00       3,600.00  

 O1485 OMNIQUEST INTERNATIONAL bv         3780 Jul 26 94 IN                                                 787.50 
                                          4436 Sep 27 95 IN                                                 110.00 
                                          4689 Feb 26 96 IN                                                  10.00 
                                          4968 Aug 28 96 IN                                               1,825.00 
                                          5097 Nov 21 96 IN       500.00 
                                          5141 Dec 17 96 IN     7,600.00 
                                          5209 Jan 16 97 IN       185.00 
                                          5210 Jan 16 97 IN       153.00 
                                         50301 Oct 08 96 IN                  26,205.00 
                                         50364 Nov 07 96 IN    11,355.50 
                                          Customer Totals:     19,793.50     26,205.00          0.00      2,732.50      48,731.00  

 O1487 OCEONICS, INC                      4915 Jul 29 96 IN                                               4,275.88 
                                          Customer Totals:          0.00          0.00          0.00      4,275.88       4,275.88  

 O1497 OSSERVATORIO GEOPHYSICAL           4751 May 06 96 IN                                               4,300.00 
                                          Customer Totals:          0.00          0.00          0.00      4,300.00       4,300.00  

 P1504 PGS EXPLORATION (U.S.), INC.       4819 Jun 12 96 IN                                                  17.50 
                                          Customer Totals:          0.00          0.00          0.00         17.50          17.50  

 P1511 P. T. ELNUSA                       WIRE Dec 11 96 DR    56,875.00 
                                        PREPAY Oct 01 96 CA                                56,875.00-
                                          Customer Totals:     56,875.00          0.00     56,875.00-         0.00           0.00  


   33

Date: Jan 21 97                  Mitcham Industries, Inc.              Page: 11

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
 P1514 P.T. EXLOG SARANA INDONESIA        4954 Aug 23 96 IN                                                 300.00 
                                          Customer Totals:          0.00          0.00          0.00        300.00         300.00  

 P1515 PERFORADATA, S.A. DE C.V.         50307 Oct 16 96 IN                   1,635.00 
                                         50461 Dec 11 96 IN    14,640.00 
                                         50477 Dec 16 96 IN     1,555.15 
                                         50482 Dec 20 96 IN     2,250.00 
                                          Customer Totals:     18,445.15      1,635.00          0.00          0.00      20,080.15  

 P1518 PETROLEUM DEVELOPMENT OMAN LLC    50345 Nov 08 96 IN    14,440.00 
                                         50438 Dec 03 96 IN    50,400.00 
                                          Customer Totals:     64,840.00          0.00          0.00          0.00      64,840.00  

 P1522 PROSOL TECHNOLOGY                  4438 Sep 30 95 IN                                                 810.00 
                                          4486 Oct 18 95 IN                                                 100.00 
                                          4966 Aug 28 96 IN                                                 100.00 
                                          4980 Sep 18 96 IN                                 1,500.00 
                                          Customer Totals:          0.00          0.00      1,500.00      1,010.00       2,510.00  

 P1525 PUBLIC PETROLEUM CORP/GREECE       4774 May 09 96 IN                                                 320.00 
                                          4898 Jul 24 96 IN                                                 160.00 
                                          Customer Totals:          0.00          0.00          0.00        480.00         480.00  

 R1789 RENTEC INTERNATIONAL               4986 Sep 23 96 IN                                    40.59 
                                          5007 Sep 24 96 IN                                    30.00 
                                         50107 Jun 01 96 IN                                                 175.31 
                                         50213 Aug 30 96 IN                                               2,165.00 
                                         50273 Sep 29 96 IN                                 2,165.00 
                                         50339 Oct 29 96 IN                   2,165.00 
                                         50418 Nov 28 96 IN     2,165.00 
                                         50500 Dec 28 96 IN     2,165.00 
                                          Customer Totals:      4,330.00      2,165.00      2,235.59      2,340.31      11,070.90  

 R1790 REES GEOPHYSICAL LTD.             50516 Jan 01 97 IN    17,456.09 
                                         50521 Jan 03 97 IN    10,416.00 
                                          Customer Totals:     27,872.09          0.00          0.00          0.00      27,872.09  

 S1806 SAGUARO GEOPHYSICAL, INC.          4411 Sep 14 95 IN                                               7,775.00 
                                          4506 Oct 31 95 IN                                                 175.00 
                                          Customer Totals:          0.00          0.00          0.00      7,950.00       7,950.00  

 S1807 SCHLUMBERGER SURENCO DE VENEZ     10498 Jun 22 96 IN                                               1,500.00 
                                         10510 Jul 22 96 IN                                               1,500.00 
                                         10522 Aug 21 96 IN                                               1,500.00 
                                         10536 Sep 20 96 IN                                 1,500.00 
                                          Customer Totals:          0.00          0.00      1,500.00      4,500.00       6,000.00  

 S1821 SEISMIC & OILFIELD SERVICES        5050 Oct 28 96 IN                   2,385.00 
                                          Customer Totals:          0.00      2,385.00          0.00          0.00       2,385.00  


   34

Date: Jan 21 97           Mitcham Industries, Inc.                      Page: 12

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 
                                                                               



Cust                                  Invoice                                30 - 60        60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days           Days          Days              Total
- ------ -----------------------------  -----    --------- --   -----------    ---------      --------     --------      ------------
                                                                                                     
 S1823 SEISTEX (86), INC.                 4972 Sep 17 96 IN                                 2,725.00 
                                          Customer Totals:          0.00          0.00      2,725.00          0.00       2,725.00  

 S1831 SEIS-TECH, INC.                    4003 Nov 16 94 IN                                                 926.59 
                                          4170 Feb 22 95 IN                                                 386.45 
                                          Customer Totals:          0.00          0.00          0.00      1,313.04       1,313.04  

 S1842 SOLID STATE EXPLORATION           50456 Dec 08 96 IN       258.33 
                                          Customer Totals:        258.33          0.00          0.00          0.00         258.33  

 S1843 SUELOPETROL                        4761 Apr 26 96 IN                                               5,218.00 
                                          4761 Jan 03 97 CA                                               5,218.00-
                                          4793 May 28 96 IN                                                 356.40 
                                          4793 Jan 03 97 CA                                                 356.40-
                                          5013 Oct 14 96 IN                   4,879.00 
                                          5013 Jan 03 97 CA                   4,879.00-
                                          Customer Totals:          0.00          0.00          0.00          0.00           0.00  

 S1844 SEISMIC SINGAPORE PTE LTD          5085 Nov 20 96 IN     1,060.00 
                                          5134 Dec 09 96 IN    98,947.50 
                                          5201 Jan 16 97 IN     1,009.55 
                                         50411 Nov 26 96 IN     2,220.00 
                                         50494 Dec 26 96 IN     2,108.00 
                                          Customer Totals:    105,345.05          0.00          0.00          0.00     105,345.05  

 S1845 SOLID STATE GEOPHYSICAL, INC.      4668 Jan 31 96 IN                                                 845.00 
                                          4802 May 28 96 IN                                                 150.00 
                                          4803 May 28 96 IN                                               1,824.02 
                                          4838 Jun 30 96 IN                                               2,249.40 
                                          4839 Jun 30 96 IN                                               1,057.64 
                                          4841 Jun 30 96 IN                                               1,375.00 
                                          4863 Jul 09 96 IN                                               1,855.00 
                                          4910 Jul 24 96 IN                                                  30.00 
                                          4941 Aug 14 96 IN                                                  75.00 
                                          4955 Aug 23 96 IN                                                 330.00 
                                          5159 Dec 19 96 IN    25,899.50 
                                         10467 Apr 18 96 IN                                               2,006.45 
                                         50019 Apr 03 96 IN                                               2,000.00 
                                         50149 Jul 18 96 IN                                              54,000.00 
                                         50208 Aug 17 96 IN                                              54,000.00 
                                         50215 Aug 28 96 IN                                               2,000.00 
                                         50241 Sep 16 96 IN                                 3,950.00-
                                         50241 Jan 10 97 DR                                 8,550.00 
                                         50316 Oct 16 96 IN                   9,000.00-
                                         50316 Jan 10 97 DR                   9,000.00 
                                         50385 Nov 15 96 IN    20,400.00-
                                         50385 Jan 10 97 DR    20,400.00 
                                         50389 Nov 08 96 IN       320.00 
                                         50401 Nov 20 96 IN     2,000.00 
                                         50491 Dec 27 96 IN   182,200.00 


   35

Date: Jan 21 97                Mitcham Industries, Inc.                 Page: 13

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days          Days          Days              Total
- ------ -------------                  -------  ----      --       -------    -------       -------       -------             -----
                                                                                                  

                                        PREPAY Oct 23 96 CA                     830.00-
                                          Customer Totals:    210,419.50        830.00-     4,600.00    123,797.51     337,987.01  

 S1849 SIGNATURE GEOPHYSICAL              4555 Nov 28 95 IN                                              24,000.00 
                                         10074 Jun 30 95 IN                                               3,346.19 
                                         10122 Jul 30 95 IN                                               7,500.00 
                                         10145 Aug 29 95 IN                                               7,500.00 
                                         10336 Jan 29 96 IN                                               6,000.00 
                                         10391 Mar 01 96 IN                                               3,000.00 
                                         10528 Sep 01 96 IN                                               6,000.00 
                                          Customer Totals:          0.00          0.00          0.00     57,346.19      57,346.19  

 S1862 STEWART CABLE                      4973 Sep 17 96 IN                                    47.44 
                                          5098 Nov 21 96 IN     3,625.00 
                                          Customer Totals:      3,625.00          0.00         47.44          0.00       3,672.44  

 S1863 SERCEL, INC.                       5130 Dec 17 96 IN        50.00-
                                          Customer Totals:         50.00-         0.00          0.00          0.00          50.00- 

 S1864 SUB SURFACE EXPLORATION            5073 Nov 13 96 IN     1,600.00 
                                          5170 Dec 31 96 IN     1,600.00 
                                          Customer Totals:      3,200.00          0.00          0.00          0.00       3,200.00  

 S1866 SOLID STATE INT'L INCENIERIA       5168 Dec 31 96 IN       150.00 
                                          Customer Totals:        150.00          0.00          0.00          0.00         150.00  

 T2001 TOWHEE EXPLORATION                 4450 Sep 30 95 IN                                                 154.39 
                                          4620 Jan 01 96 IN                                                 416.00 
                                          4864 Jul 09 96 IN                                               2,641.30 
                                          5116 Dec 07 96 IN       931.41 
                                          5116 Jan 04 97 CA       931.41-
                                          5190 Jan 15 97 IN     1,728.84 
                                          5204 Jan 16 97 IN     4,963.20 
                                          5205 Jan 16 97 IN     1,067.22 
                                          5206 Jan 16 97 IN       580.64 
                                         50307 Dec 30 96 CR     1,564.63-
                                         50378 Nov 01 96 IN     1,564.63 
                                         50378 Jan 04 97 CA     1,564.63-
                                         50420 Dec 01 96 IN     1,564.63 
                                         50506 Jan 01 97 IN     1,564.63 
                                        PREPAY Nov 06 96 CA     5,662.40-
                                          Customer Totals:      4,242.13          0.00          0.00      3,211.69       7,453.82  

 T2002 TARA TECHNOLOGY, INC.              4424 Sep 20 95 IN                                               5,259.30 
                                          4428 Sep 20 95 IN                                                 322.99 
                                          4429 Sep 20 95 IN                                               2,107.25 
                                          4430 Sep 20 95 IN                                                 555.00 
                                          4431 Sep 20 95 IN                                                 566.26 
                                          4432 Sep 20 95 IN                                               1,360.00 
                                          4433 Sep 20 95 IN                                               1,177.15 
                                          4434 Sep 20 95 IN                                               2,119.20 



   36

Date: Jan 21 97                  Mitcham Industries, Inc.               Page: 14

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days          Days          Days              Total
- ------ -------------                  -------  ----      --       -------    -------       -------       -------             -----
                                                                                                  

                                          4607 Dec 29 95 IN                                               1,520.00 
                                          5086 Nov 20 96 IN    32,475.00 
                                          Customer Totals:     32,475.00          0.00          0.00     14,987.15      47,462.15  

 T2003 TRACE GEOPHYSICAL                  4869 Jul 15 96 IN                                                 187.50 
                                          4870 Jul 15 96 IN                                                 200.94 
                                          4871 Jul 15 96 IN                                               2,475.00 
                                          Customer Totals:          0.00          0.00          0.00      2,863.44       2,863.44  

 T2010 TIDELANDS GEOPHYSICAL CO.          4767 Apr 12 96 IN                                               3,300.00 
                                          4889 Jul 21 96 IN                                              10,650.00 
                                          4928 Aug 12 96 IN                                                 357.23 
                                          5061 Oct 31 96 IN                     250.00 
                                          5061 Jan 02 97 CA                     250.00-
                                          5135 Dec 10 96 IN   135,600.00 
                                          5172 Dec 27 96 IN       132.07 
                                          5172 Jan 16 97 CR       132.07-
                                         50140 Jun 27 96 IN                                               3,000.00 
                                         50197 Aug 26 96 IN                                               1,275.00 
                                         50326 Oct 29 96 IN                   4,416.61 
                                         50377 Nov 07 96 IN     7,577.50 
                                         50417 Nov 28 96 IN     4,059.38 
                                         50431 Nov 27 96 IN    15,999.35 
                                         50452 Dec 07 96 IN     7,577.50 
                                         50452 Jan 17 97 CR     3,026.00-
                                         50498 Dec 27 96 IN    11,433.19 
                                         50499 Dec 28 96 IN     4,059.38 
                                          Customer Totals:    183,280.30      4,416.61          0.00     18,582.23     206,279.14  

 T2011 TERRASCAN EXPLORATION LTD         50376 Nov 23 96 IN    87,450.00 
                                         50487 Dec 23 96 IN    90,364.99 
                                          Customer Totals:    177,814.99          0.00          0.00          0.00     177,814.99  

 T2027 U.S. ARMY CORP OF ENGINEERS        5131 Dec 06 96 IN       615.00 
                                          Customer Totals:        615.00          0.00          0.00          0.00         615.00  

 U2081 UNIVERSITY OF COPENHAGEN           4586 Dec 31 95 IN                                               7,490.00 
                                          Customer Totals:          0.00          0.00          0.00      7,490.00       7,490.00  

 U2082 UNION GEOFISICA ARGENTINA,S.A.     5103 Nov 27 96 IN       370.00 
                                         10517 Aug 08 96 IN                                               8,440.00-
                                         10517 Jan 17 97 DR                                               8,440.00 
                                         10530 Sep 07 96 IN                                13,440.00 
                                         10530 Jan 17 97 CR                                13,440.00-
                                         50192 Aug 15 96 IN                                               5,500.00-
                                         50192 Jan 17 97 DR                                               5,500.00 
                                         50221 Dec 23 96 DR     4,033.36 
                                         50221 Jan 17 97 CR     4,033.36-
                                          Customer Totals:        370.00          0.00          0.00          0.00         370.00  

 U2090 UNIVERSAL SEISMIC ACQUISITION      4113 Jan 17 95 IN                                               6,925.72 



   37

Date: Jan 21 97            Mitcham Industries, Inc.                     Page: 15

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days          Days          Days              Total
- ------ -------------                  -------  ----      --       -------    -------       -------       -------             -----
                                                                                                  

                                          4789 May 28 96 IN                                                 162.38 
                                          4790 May 28 96 IN                                                 124.49 
                                          4796 May 28 96 IN                                                 324.75 
                                          4797 May 28 96 IN                                                 108.25 
                                          4844 Jun 30 96 IN                                               1,542.40 
                                          4845 Jun 30 96 IN                                                 417.10 
                                          4846 Jun 30 96 IN                                                 100.00 
                                          4847 Jun 30 96 IN                                                 525.00 
                                          4848 Jun 30 96 IN                                                 296.80 
                                          4849 Jun 30 96 IN                                                 120.00 
                                          4850 Jun 30 96 IN                                                  61.56 
                                          4905 Jul 24 96 IN                                               5,000.73 
                                          4951 Aug 23 96 IN                                               1,190.75 
                                          4967 Aug 28 96 IN                                                 378.88 
                                          5009 Sep 27 96 IN                                   100.00 
                                          5020 Oct 15 96 IN                     596.25 
                                          5045 Oct 28 96 IN                      25.00 
                                          5128 Dec 05 96 IN       925.75 
                                          5161 Dec 19 96 IN       785.90 
                                          5191 Jan 16 97 IN     3,542.29 
                                          5199 Jan 09 97 IN     2,048.13 
                                         10020 Apr 20 95 IN                                               2,361.65 
                                         10105 Jul 19 95 IN                                               6,419.28 
                                         10110 Jul 18 95 IN                                                  80.00 
                                         10111 Jul 18 95 IN                                                  20.00 
                                         10290 Jan 03 96 IN                                               2,686.66 
                                         10433 Apr 03 96 IN                                               2,200.00 
                                         10475 May 05 96 IN                                               1,645.00 
                                         10485 Jul 05 96 IN                                               2,200.00 
                                         10487 Jun 03 96 IN                                               2,200.00 
                                         10488 Jun 04 96 IN                                               1,645.00 
                                         10501 Jul 05 96 IN                                               2,200.00 
                                         10502 Jul 04 96 IN                                               1,645.00 
                                         10503 Jul 05 96 IN                                               2,400.00 
                                         10520 Aug 03 96 IN                                               1,645.00 
                                         10527 Sep 05 96 IN                                 2,400.00 
                                         10539 Oct 05 96 IN                   2,400.00 
                                         50007 Mar 23 96 IN                                              19,863.88 
                                         50015 Apr 03 96 IN                                              18,600.00 
                                         50027 Apr 19 96 IN                                               4,113.50 
                                         50034 Apr 22 96 IN                                              18,943.75 
                                         50036 Apr 23 96 IN                                               1,120.39 
                                         50057 May 15 96 IN                                              12,124.00 
                                         50060 May 19 96 IN                                               4,113.50 
                                         50075 May 03 96 IN                                              39,577.95 
                                         50076 May 22 96 IN                                              18,943.75 
                                         50077 May 14 96 IN                                               7,312.50 
                                         50091 Jun 02 96 IN                                              34,630.00 
                                         50097 Jun 14 96 IN                                              12,124.00 
                                         50100 Jun 18 96 IN                                               4,113.50 
                                         50110 Jun 21 96 IN                                              17,301.95 



   38

Date: Jan 21 97             Mitcham Industries, Inc.                    Page: 16

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days          Days          Days              Total
- ------ -------------                  -------  ----      --       -------    -------       -------       -------             -----
                                                                                                  

                                         50127 Jul 02 96 IN                                               8,088.06 
                                         50150 Jul 18 96 IN                                               4,113.50 
                                         50152 Jul 21 96 IN                                              14,018.38 
                                         50174 Jul 22 96 IN                                              12,124.00 
                                         50185 Aug 15 96 IN                                              19,604.07 
                                         50193 Aug 17 96 IN                                               4,113.50 
                                         50205 Aug 21 96 IN                                              12,124.00 
                                         50210 Aug 02 96 IN                                               1,600.00 
                                         50217 Sep 03 96 IN                                35,121.71 
                                         50236 Sep 01 96 IN                                               1,600.00 
                                         50245 Sep 14 96 IN                                19,604.08 
                                         50248 Sep 16 96 IN                                 4,113.50 
                                         50257 Sep 20 96 IN                                12,124.00 
                                         50270 Sep 26 96 IN                                 1,569.63 
                                         50271 Sep 27 96 IN                                 1,000.00 
                                         50278 Oct 07 96 IN                   5,141.88 
                                         50286 Oct 01 96 IN                                 1,600.00 
                                         50288 Oct 03 96 IN                  33,666.76 
                                         50312 Oct 14 96 IN                  19,604.08 
                                         50317 Oct 16 96 IN                     980.59 
                                         50323 Oct 20 96 IN                  12,124.00 
                                         50331 Oct 26 96 IN                   1,569.63 
                                         50334 Oct 27 96 IN                   1,000.00 
                                         50336 Oct 28 96 IN                   4,030.18 
                                         50355 Nov 02 96 IN    16,037.00 
                                         50355 Jan 16 97 CR     2,013.45-
                                         50373 Nov 13 96 IN     5,800.50 
                                         50381 Oct 31 96 IN                   1,600.00 
                                         50386 Nov 15 96 IN       681.98 
                                         50408 Nov 25 96 IN       332.37 
                                         50413 Nov 26 96 IN     1,000.00 
                                         50423 Nov 30 96 IN     1,600.00 
                                         50470 Dec 13 96 DR        64.94 
                                         50476 Dec 15 96 DR       681.98 
                                         50493 Dec 25 96 IN       487.13 
                                         50496 Dec 26 96 IN     1,000.00 
                                         50509 Dec 31 96 IN     1,732.00 
                                         50520 Jan 01 97 IN       619.19 
                                         51011 Nov 25 96 IN     3,247.50 
                                        10458A Aug 30 96 IN                                               2,400.00 
                                        10474A Aug 30 96 IN                                               1,397.10 
                                        10489A Aug 30 96 IN                                               2,400.00 
                                        10515A Aug 30 96 IN                                               2,400.00 
                                        PREPAY Feb 26 96 CA                                               1,199.06 
                                          Customer Totals:     38,573.21     82,738.37     77,632.92    346,690.74     545,635.24  

 U2095 USGS                               5193 Jan 06 97 IN       349.00 
                                          Customer Totals:        349.00          0.00          0.00          0.00         349.00  

 U2098 UNIVERSITY OF SOUTH CAROLINA       4365 Jul 31 95 IN                                               1,200.00 
                                          4886 Jul 15 96 IN                                                 527.52 



   39

Date: Jan 21 97                Mitcham Industries, Inc.                 Page: 17

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
                                         50105 Jun 26 96 IN                                                 600.00 
                                          Customer Totals:          0.00          0.00          0.00      2,327.52       2,327.52  

 V2102 VERITAS GEOPHYSICAL                4903 Jul 24 96 IN                                                 193.42 
                                          4904 Jul 24 96 IN                                               1,231.23 
                                          4912 Jul 24 96 IN                                               1,488.44 
                                          4939 Aug 12 96 IN                                               7,520.00 
                                          5076 Nov 13 96 IN       443.80 
                                          5076 Jan 13 97 CA       443.80-
                                          5079 Nov 13 96 IN       956.25 
                                          5079 Jan 13 97 CA       956.25-
                                          5106 Nov 27 96 IN       188.64 
                                          5113 Dec 05 96 IN     6,250.00 
                                          5113 Jan 14 97 CR     6,250.00-
                                          5118 Dec 13 96 IN    14,353.25 
                                          5119 Dec 13 96 IN       857.50 
                                          5119 Dec 13 96 IN    12,862.50 
                                          5119 Jan 14 97 CR       857.50-
                                          5140 Dec 16 96 IN       385.00 
                                          5179 Jan 03 97 IN    43,280.00 
                                          5182 Jan 07 97 IN    13,892.08 
                                          5183 Jan 07 97 IN    12,897.45 
                                          5184 Jan 08 97 IN    19,722.50 
                                          5185 Jan 08 97 IN    18,315.00 
                                          5189 Jan 15 97 IN        81.19 
                                          5198 Jan 09 97 IN       132.61 
                                         10292 Jan 14 96 IN                                               8,064.00 
                                         50005 Mar 11 96 IN                                              27,942.00 
                                         50006 Mar 11 96 IN                                               2,925.76 
                                         50048 May 07 96 IN                                              27,111.22 
                                         50054 May 10 96 IN                                               2,500.00 
                                         50095 Jun 09 96 IN                                               2,500.00 
                                         50302 Oct 09 96 IN                   6,040.22 
                                         50303 Oct 09 96 IN                   5,683.13 
                                         50333 Nov 01 96 IN     2,776.32 
                                         50343 Nov 01 96 IN    13,233.56 
                                         50343 Jan 13 97 CA    13,233.56-
                                         50366 Dec 23 96 DR       676.52 
                                         50367 Nov 08 96 IN     5,683.13 
                                         50369 Nov 11 96 IN       389.70 
                                         50384 Nov 15 96 IN     2,435.63 
                                         50384 Jan 13 97 CA     2,435.63-
                                         50390 Nov 21 96 IN     2,435.63 
                                         50390 Jan 13 97 CA     2,435.63-
                                         50412 Nov 26 96 IN     3,163.76 
                                         50412 Jan 13 97 CA     3,163.76-
                                         50426 Dec 01 96 IN    14,045.44 
                                         50455 Dec 08 96 IN     5,683.13 
                                         50464 Dec 11 96 IN       389.70 
                                         50464 Jan 14 97 CR       194.85-
                                         50475 Dec 15 96 IN     2,435.63 



   40

Date: Jan 21 97               Mitcham Industries, Inc.                 Page: 18

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 




Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number    Customer Name               Number   Date      TP       Current      Days          Days          Days            Total
- -------   -------------               -------  ----      --       -------    --------      -------      ---------          -----
                                                                                                
                                         50486 Dec 21 96 IN     2,435.63 
                                         50495 Dec 26 96 IN     4,249.90 
                                         50511 Dec 31 96 IN        48.63 
                                          Customer Totals:    174,729.10     11,723.35          0.00     81,476.07     267,928.52  

 V2105 VENTURE SEISMIC, LTD.              5162 Dec 23 96 IN       190.00 
                                        PREPAY Dec 31 96 CA    73,704.07-
                                          Customer Totals:     73,514.07-         0.00          0.00          0.00      73,514.07- 

 W2380 WALKER GEOPHYSICAL                10356 Feb 26 96 IN                                               2,072.74 
                                          Customer Totals:          0.00          0.00          0.00      2,072.74       2,072.74  

 W2392 WOOTTEN R.D. & ASSOCIATES          4526 Nov 17 95 IN                                                 512.13 
                                          4526 Jan 14 97 CR                                                 512.13-
                                          4526 Jan 17 97 CA                                                 512.13-
                                          4529 Nov 17 95 IN                                               1,093.33 
                                          4529 Jan 14 97 CR                                               1,093.33-
                                          4529 Jan 17 97 CA                                               1,093.33-
                                          Customer Totals:          0.00          0.00          0.00      1,605.46-      1,605.46- 

 W2393 WESTERN GEOPHYSICAL CO/TX          4526 Dec 31 96 CR       512.13-
                                          4526 Jan 14 97 DR       512.13 
                                          4529 Dec 31 96 CR     1,093.33-
                                          4529 Jan 14 97 DR     1,093.33 
                                          4706 Feb 29 96 IN                                               1,000.00 
                                          4807 May 28 96 IN                                                 647.33 
                                          4865 Jul 15 96 IN                                               1,237.50 
                                          4971 Sep 17 96 IN                                   378.87 
                                          4994 Sep 23 96 IN                                   259.80 
                                          4994 Jan 11 97 CA                                   240.00-
                                          5070 Nov 13 96 IN     2,630.00 
                                          5070 Jan 11 97 CA     2,630.00-
                                          5090 Nov 20 96 IN        30.00 
                                          5091 Nov 20 96 IN       265.00 
                                          5091 Jan 04 97 CA       265.00-
                                          5108 Nov 26 96 IN     6,666.67 
                                          5109 Nov 26 96 IN     6,666.67 
                                          5110 Nov 26 96 IN     6,666.67 
                                          5194 Jan 03 97 IN     2,273.25 
                                         50479 Dec 13 96 IN     2,489.75 
                                          Customer Totals:     24,793.01          0.00        398.67      2,884.83      28,076.51  

 W2398 WILLIAMSON & ASSOCIATES, INC.      4678 Feb 09 96 IN                                               4,330.00 
                                          Customer Totals:          0.00          0.00          0.00      4,330.00       4,330.00  

 W2402 WESTERN ATLAS INTERNATIONAL        4830 Jun 30 96 IN                                                  94.88 
                                          4936 Aug 12 96 IN                                              39,470.00 
                                          Customer Totals:          0.00          0.00          0.00     39,564.88      39,564.88  

 W2403 WELL SERVICES (MARINE) LTD         5163 Dec 23 96 IN       358.65 
                                          Customer Totals:        358.65          0.00          0.00          0.00         358.65  


   41

Date: Jan 21 97              Mitcham Industries, Inc.                   Page: 19

Detailed Aged Trial Balance for Customers [      ] to [zzzzzz] as of Nov 30 96
Customers with all control accounts. 





Cust                                  Invoice                                30 - 60       60 - 90      Over  90
Number Customer Name                  Number   Date      TP       Current      Days          Days          Days              Total
- ------ -------------                  -------  ----      --       -------    -------       -------       -------             -----
                                                                                                  

                                                            ------------- ------------- ------------- ------------- --------------
A/R - trade                                                 2,886,094.04    485,933.03    411,719.16  1,521,533.92   5,305,280.15 
A/R - employee                                                      0.00          0.00          0.00          0.00           0.00 
A/R - other                                                         0.00          0.00          0.00          0.00           0.00 
A/R - clearing                                                      0.00          0.00          0.00          0.00           0.00 
Allowance for doubtful                                              0.00          0.00          0.00          0.00           0.00 
                                                            ------------- ------------- ------------- ------------- --------------
                                                            2,886,094.04    485,933.03    411,719.16  1,521,533.92   5,305,280.15 
                                                            ============= ============= ============= ============= ==============
                                                               54.40 %        9.16 %        7.76 %       28.68 %



   42
Date: Jan 21 97    7:53am             MITCHAM INDUSTRIES INC.           Page: 1
Open Payables - Detail by date

Calculate balance as of: Nov 30 96
Control account [      ] to [zzzzzz]
Vendor number [      ] to [zzzzzz]
Report group [      ] to [zzzzzz]




Vendor Vendor Name/                                    Disc.              Post.                                  
Number     Doc. Number Doc. Date Due Date  Disc Date   Rate   Reference   Seq.    Original Amount   Current Amount  
- ------ --------------- --------- --------  ---------   -----  ---------   -----   ---------------   --------------
                                                                         
 A0053 ANIMAL HOSPITAL               
       IN       102196 Oct 21 96 Nov 20 96                                 123         146.64          146.64   
                                                                                                     --------
                                                                                                       146.64   

 A0423 AIR TIGER EXPRESS (USA) INC.  
       IN      6112046 Nov 07 96 Dec 07 96                                 115         125.00          125.00   
                                                                                                     --------
                                                                                                       125.00   

 A0424 ADVERTISING, AGENCY THE       
       IN         2581 Nov 15 96 Dec 15 96                                 115       8,436.88        8,436.88   
                                                                                                     --------
                                                                                                     8,436.88   

 A0549 AVA COFFEE SERVICE            
       IN       407388 Nov 06 96 Nov 06 96                                 113         152.98          152.98   
       IN       829150 Nov 15 96 Nov 15 96                                 113           9.74            9.74   
       IN       408100 Nov 20 96 Nov 20 96                                 113          97.15           97.15   
                                                                                                     --------
                                                                                                       259.87   

 B1202 BOGEL SALES, INC.             
       IN       115104 Nov 22 96 Dec 22 96                                 110          66.90           66.90   
                                                                                                     --------
                                                                                                        66.90   

 B1208 BLACKWELL SCIENCE LTD         
       IN     30277572 Nov 19 96 Dec 19 96                                 115         231.20          231.20   
                                                                                                     --------
                                                                                                       231.20   

 B1211 BAY TACT CORPORATION          
       IN        27964 Nov 25 96 Dec 25 96                                 110          53.50           53.50   
                                                                                                     --------
                                                                                                        53.50   

 C1344 C & M SEISMOGRAPH EQUIPMENT   
       IN        25530 Nov 21 96 Dec 21 96                                 110         701.35          701.35   
                                                                                                     --------
                                                                                                       701.35   

 C1350 C & H DISTRIBUTORS, INC.      
       IN    267070501 Nov 19 96 Dec 19 96                                 110         463.99          463.99   
       IN    267495700 Nov 22 96 Dec 22 96                                 110         464.05-         464.05-  
                                                                                                     --------
                                                                                                         0.06-  

 C1375 COPY TIME, ETC.               
       IN       110696 Nov 06 96 Nov 16 96                                 113         500.12          500.12   
       IN      11-6-96 Nov 06 96 Nov 16 96                                 113          17.05           17.05   
                                                                                                     --------
                                                                                                       517.17   

 C1406 CASE WINE CELLARS             
       IN          262 Nov 25 96 Dec 25 96                                 113       1,127.18        1,127.18   



   43

Date: Jan 21 97    7:53am             MITCHAM INDUSTRIES INC.           Page: 2
Open Payables - Detail by date




Vendor Vendor Name/                                    Disc.              Post.                                  
Number     Doc. Number Doc. Date Due Date  Disc Date   Rate   Reference   Seq.    Original Amount   Current Amount  
- ------ --------------- --------- --------  ---------   -----  ---------   -----   ---------------   --------------
                                                                         

       (Vendor  C1406 continued)                                                                   ----------
                                                                                                     1,127.18   

 D2001 DIAL-A-CHECK PAYROLL SERVICE  
       IN         5275 Nov 30 96 Nov 30 96                                 113          78.82           78.82   
                                                                                                   ----------
                                                                                                        78.82   

 D2168 DERINGER, INC.                
       IN 140-49004501 Nov 01 96 Dec 01 96                                 112         598.70          598.70   
       IN 140-49030701 Nov 06 96 Dec 06 96                                 112         390.00          390.00   
       IN     491836.1 Nov 07 96 Dec 07 96                                 112         205.60          205.60   
       IN     492586.1 Nov 23 96 Dec 23 96                                 112         529.80          529.80   
       IN     492725.1 Nov 25 96 Dec 25 96                                 112         749.15          749.15   
       IN     492948.1 Nov 27 96 Dec 27 96                                 113         655.60          655.60   
                                                                                                   ----------
                                                                                                     3,128.85   

 E2436 EDGETECH                      
       IN       117235 Nov 21 96 Dec 21 96                                 110         333.00          333.00   
                                                                                                   ----------
                                                                                                       333.00   

 E2497 EXPEDITORS INTERNATIONAL INC. 
       IN     97008093 Nov 27 96 Dec 07 96                                 113         140.00          140.00   
                                                                                                   ----------
                                                                                                       140.00   

 F2730 FEDERAL EXPRESS CORPORATION   
       IN  1-905-82355 Sep 12 96 Sep 22 96                                 115         321.15          321.15   
       IN  1-923-83065 Nov 28 96 Dec 08 96                                 120       1,009.55        1,009.55   
       IN  1-923-88046 Nov 28 96 Dec 08 96                                 115       2,787.51        2,787.51   
                                                                                                   ----------
                                                                                                     4,118.21   

 G3223 GEO SPACE CORPORATION         
       IN       116304 Nov 13 96 Dec 13 96                                 102      79,160.11       79,160.11   
       IN       116353 Nov 19 96 Dec 19 96                                 110      29,711.74       29,711.74   
       IN       116354 Nov 19 96 Dec 19 96                                 104         270.00          270.00   
       IN       116391 Nov 26 96 Dec 26 96                                 111       5,915.00        5,915.00   
       IN       116419 Nov 27 96 Dec 27 96                                 111      15,245.00       15,245.00   
                                                                                                   ----------
                                                                                                   130,301.85   

 G3231 GLOBAL EQUIPMENT COMPANY      
       IN     46159594 Nov 22 96 Nov 22 96                                 113         354.95          354.95   
                                                                                                   ----------
                                                                                                       354.95   

 H3825 HAMMERHEAD ROCK TOOLS, INC.   
       IN         1393 Nov 25 96 Dec 25 96                                 125      35,567.62       35,567.62   
       IN         1373 Nov 27 96 Dec 27 96                                 111         836.10          836.10   
                                                                                                   ----------
                                                                                                    36,403.72   

 H3843 HOUSTON GEOPHYSICAL PRODUCTS  
       IN          267 Nov 27 96 Dec 27 96                                 111         678.78          678.78   
                                                                                                   ----------
                                                                                                       678.78   

 H3850 HUMMINGBIRD EXPLORATION, INC  



   44
Date: Jan 21 97    7:53am             MITCHAM INDUSTRIES INC.           Page: 3
Open Payables - Detail by date




Vendor Vendor Name/                                    Disc.              Post.                                  
Number     Doc. Number Doc. Date Due Date  Disc Date   Rate   Reference   Seq.    Original Amount   Current Amount  
- ------ --------------- --------- --------  ---------   -----  ---------   -----   ---------------   --------------
                                                                         

       (Vendor  H3850 continued)
       IN      96-3012 Nov 30 96 Dec 30 96                                 123       5,317.00        5,317.00   
                                                                                                   ----------
                                                                                                     5,317.00   

 I4210 INPUT/OUTPUT, INC.            
       IN        54416 Nov 04 96 Dec 04 96                                 102       4,343.56        4,343.56   
       IN        54417 Nov 04 96 Dec 04 96                                 102         571.50          571.50   
       IN        54418 Nov 04 96 Dec 04 96                                 102       1,633.21        1,633.21   
       IN        54419 Nov 04 96 Dec 04 96                                 102         382.50          382.50   
       IN        54420 Nov 04 96 Dec 04 96                                 102          15.00           15.00   
       IN        54423 Nov 04 96 Dec 04 96                                 102          15.00           15.00   
       IN        54425 Nov 04 96 Dec 04 96                                 102         198.75          198.75   
       IN        54426 Nov 04 96 Dec 04 96                                 102          15.00           15.00   
       IN        54427 Nov 04 96 Dec 04 96                                 102         721.87          721.87   
       IN        54428 Nov 04 96 Dec 04 96                                 102         150.00          150.00   
       IN        54432 Nov 04 96 Dec 04 96                                 102         408.86          408.86   
       IN        54497 Nov 11 96 Dec 11 96                                 102         229.50          229.50   
       IN        54553 Nov 14 96 Dec 14 96                                 102         187.48          187.48   
       IN        54722 Nov 25 96 Dec 25 96                                 110         276.34          276.34   
       IN        54761 Nov 27 96 Dec 27 96                                 113      84,474.22       84,474.22   
       IN        54772 Nov 27 96 Dec 27 96                                 113         178.64          178.64   
       IN        54773 Nov 27 96 Dec 27 96                                 113       4,783.35        4,783.35   
       IN        54774 Nov 27 96 Dec 27 96                                 116       4,120.82        4,120.82   
       IN        54775 Nov 27 96 Dec 27 96                                 113         445.11          445.11   
                                                                                                   ----------
                                                                                                   103,150.71   

 J2494 JENSEN TOOLS, INC.            
       IN      2005052 Jul 22 96 Aug 21 96                                 115         167.74          167.74   
                                                                                                   ----------
                                                                                                       167.74   

 L4848 LTI WIRE SERVICES             
       IN         3479 Nov 22 96 Nov 22 96                                 123         586.20          586.20   
                                                                                                   ----------
                                                                                                       586.20   

 L4863 LTI,INC.                      
       IN        69136 May 10 96 May 10 96                                 121         188.50          188.50   
                                                                                                   ----------
                                                                                                       188.50   

 M4958 MERRILL CORPORATION           
       IN      1903758 Oct 17 96 Oct 17 96                                 115         865.62          865.62   
       IN      1903770 Oct 17 96 Oct 17 96                                 115         521.85          521.85   
       IN      1904030 Nov 30 96 Nov 30 96                                 113       6,028.77        6,028.77   
       IN      1904033 Nov 30 96 Nov 30 96                                 113         313.93          313.93   
       IN      1904034 Nov 30 96 Nov 30 96                                 113         281.07          281.07   
                                                                                                   ----------
                                                                                                     8,011.24   

 M5069 MARK PRODUCTS/CANADA          
       IN        12676 Nov 01 96 Dec 01 96                                 120     205,380.00      205,380.00   
                                                                                                   ----------
                                                                                                   205,380.00   

 M5071 MARK PRODUCTS/HOUSTON         
       IN        42523 Nov 26 96 Dec 26 96                                 111      53,767.25       53,767.25   


   45

Date: Jan 21 97    7:53am             MITCHAM INDUSTRIES INC.           Page: 4
Open Payables - Detail by date




Vendor Vendor Name/                                    Disc.              Post.                                  
Number     Doc. Number Doc. Date Due Date  Disc Date   Rate   Reference   Seq.    Original Amount   Current Amount  
- ------ --------------- --------- --------  ---------   -----  ---------   -----   ---------------   --------------
                                                                         

       (Vendor  M5071 continued)
                                                                                                   ----------
                                                                                                    53,767.25   

 M5310 MITCHAM, BILLY F., SR.        
       IN         1195 Nov 08 95 Jan 08 97                                 113         531.53          531.53   
                                                                                                   ----------
                                                                                                       531.53   

 N6030 NORTON, JACOBS, KUHN & McTOPY 
       IN         2637 Oct 31 96 Nov 30 96                                 102         421.10          421.10   
       IN         2638 Oct 31 96 Nov 30 96                                 102           9.33            9.33   
       IN         2639 Oct 31 96 Nov 30 96                                 102         877.50          877.50   
       IN         2722 Oct 31 96 Nov 30 96                                 102       3,327.41        3,327.41   
       IN         2723 Oct 31 96 Nov 30 96                                 102       1,664.60        1,664.60   
       IN         2727 Oct 31 96 Nov 30 96                                 102       5,777.95        5,777.95   
       IN         2808 Nov 30 96 Dec 30 96                                 115          39.00           39.00   
       IN         2824 Nov 30 96 Dec 30 96                                 115         562.50          562.50   
       IN         2827 Nov 30 96 Dec 30 96                                 115         370.50          370.50   
       IN         2828 Nov 30 96 Dec 30 96                                 115       1,764.90        1,764.90   
       IN         2829 Nov 30 96 Dec 30 96                                 115       1,912.65        1,912.65   
                                                                                                   ----------
                                                                                                    16,727.44   

 O6221 O.R.E. INTERNATIONAL, INC.    
       IN        25000 Aug 31 96 Sep 30 96                                 114      22,850.00       22,850.00   
       IN        25001 Aug 31 96 Sep 30 96                                 114      31,205.00       31,205.00   
       IN        25009 Aug 31 96 Sep 30 96                                 114       1,380.00        1,380.00   
       IN        25063 Sep 30 96 Oct 30 96                                 114       1,800.00        1,800.00   
                                                                                                   ----------
                                                                                                    57,235.00   

 P6288 PELAGOS CORP.                 
       IN   1232(2714) Nov 30 96 Dec 30 96                                 115       1,479.55        1,479.55   
                                                                                                   ----------
                                                                                                     1,479.55   

 Q6374 QUIK-PAK, INC.                
       IN    291196GNR Nov 29 96 Dec 14 96                                 113          45.90           45.90   
                                                                                                   ----------
                                                                                                        45.90   

 R6442 REID OFFICE SYSTEMS, INC.     
       IN        87734 Oct 09 96 Nov 08 96                                 120          13.79           13.79   
                                                                                                   ----------
                                                                                                        13.79   

 R6700 RELIABLE PARTS CO.            
       IN         4822 Nov 21 96 Dec 21 96                                 110          90.86           90.86   
       IN         5107 Nov 22 96 Dec 22 96                                 110          19.19-          19.19-  
       IN         5790 Nov 26 96 Dec 26 96                                 110          29.20           29.20   
                                                                                                   ----------
                                                                                                       100.87   

 S7101 SETON NAME PLATE COMPANY      
       IN   B702650-01 Nov 27 96 Dec 27 96                                 110         739.95          739.95   
                                                                                                   ----------
                                                                                                       739.95   

 S7126 SERCEL, INC.                  
       IN   96/11/0450 Nov 18 96 Dec 18 96                                 104     740,350.00      740,350.00   


   46

Date: Jan 21 97    7:53am             MITCHAM INDUSTRIES INC.           Page: 5
Open Payables - Detail by date




Vendor Vendor Name/                                    Disc.              Post.                                  
Number     Doc. Number Doc. Date Due Date  Disc Date   Rate   Reference   Seq.    Original Amount   Current Amount  
- ------ --------------- --------- --------  ---------   -----  ---------   -----   ---------------   --------------
                                                                      

       (Vendor  S7126 continued)
       IN   96/11/0451 Nov 18 96 Dec 18 96                                 105   1,021,751.00    1,021,751.00   
       IN   96/11/0452 Nov 18 96 Dec 18 96                                 105     204,561.00      204,561.00   
       IN   96/11/0458 Nov 21 96 Dec 21 96                                 111       2,574.99        2,574.99   
       IN   96/11/0466 Nov 30 96 Dec 30 96                                 111     627,376.00      627,376.00   
       IN   96/11/0467 Nov 30 96 Dec 30 96                                 113          75.50           75.50   
       IN   96/11/0468 Nov 30 96 Dec 30 96                                 113       2,188.36        2,188.36   
       IN   96/11/0482 Nov 30 96 Dec 30 96                                 113     857,618.00      857,618.00 H 
                                                                                                 ------------
                                                                                                 3,456,494.85   

 T8236 THOMAS INSTRUMENTS INC.       
       IN         4554 Nov 22 96 Dec 22 96                                 110          92.50           92.50   
                                                                                                 ------------
                                                                                                        92.50   

 T8243 TERRASCAN EXPLORATION, LTD.   
       IN     10-19-95 Oct 19 95 Nov 18 95                                  58     150,000.00       22,500.00   
       AD         57-1 Jan 31 96                                             9      22,500.00-      22,500.00-F 
                                                                                                 ------------
                                                                                                         0.00   

 T8246 TESCORP SEISMIC PRODUCTS      
       IN         8133 Nov 25 96 Dec 25 96                                 110       9,021.24        9,021.24   
       IN         3153 Nov 26 96 Dec 26 96                                 110       7,121.40        7,121.40   
       IN         8258 Nov 30 96 Dec 30 96                                 111      20,344.50       20,344.50   
                                                                                                 ------------
                                                                                                    36,487.14   

 T8739 TRACE VENTURES EXPLORATIONS,IN
       IN      82-9611 Nov 30 96 Nov 30 96                                 115       3,420.00        3,420.00   
                                                                                                 ------------
                                                                                                     3,420.00   

 T8740 TRACE EXPLORATIONS LTD.       
       IN     736-9611 Nov 30 96 Dec 30 96                                 116      15,200.00       15,200.00   
       IN     737-9611 Nov 30 96 Dec 30 96                                 116       3,000.00        3,000.00   
                                                                                                 ------------
                                                                                                    18,200.00   

 T8742 TERMINIX                      
       IN       112096 Nov 20 96 Dec 20 96                                 110          27.06           27.06   
                                                                                                 ------------
                                                                                                        27.06   

 W9339 WAGGONERS TRUCKING            
       IN      133405A Nov 07 96 Nov 17 96                                 112         280.00          280.00   
       IN      133450A Nov 16 96 Nov 26 96                                 112         180.00          180.00   
       IN      133495A Nov 16 96 Nov 26 96                                 112         120.00          120.00   
       IN      134763A Nov 25 96 Dec 05 96                                 112         243.20          243.20   
       IN      134785A Nov 25 96 Dec 05 96                                 112         352.00          352.00   
       IN      134823A Nov 27 96 Dec 07 96                                 112         336.00          336.00   
                                                                                                 ------------
                                                                                                     1,511.20   

 W9341 WALKER COUNTY APPRAISAL DIST  
       IN        16054 Oct 08 96 Jan 01 97                                  87       4,655.24        4,655.24   
       IN        16055 Oct 08 96 Jan 01 97                                  87       4,129.21        4,129.21   
                                                                                                 ------------
                                                                                                     8,784.45   


   47
Date: Jan 21 97    7:53am             MITCHAM INDUSTRIES INC.           Page: 6
Open Payables - Detail by date




Vendor Vendor Name/                                    Disc.              Post.                                  
Number     Doc. Number Doc. Date Due Date  Disc Date   Rate   Reference   Seq.    Original Amount   Current Amount  
- ------ --------------- --------- --------  ---------   -----  ---------   -----   ---------------   --------------
                                                                         

 W9344 WARD ELECTRIC SUPPLY CO.      
       IN    224596-00 Nov 27 96 Dec 27 96                                 113          19.71           19.71   
                                                                                                 ------------
                                                                                                        19.71   

 W9345 WALKER COUNTY TAX ASSESSOR/   
       IN      1908196 Oct 25 96 Jan 01 97                                  91       2,190.77        2,190.77   
       IN      1908296 Oct 25 96 Jan 01 97                                  91       2,469.86        2,469.86   
                                                                                                 ------------
                                                                                                     4,660.63   

 W9349 WARREN,GORHAM & LAMONT        
       IN     55445076 Nov 14 96 Dec 14 96                                 115          85.00           85.00   
                                                                                                 ------------
                                                                                                        85.00   


                                                                                                 ------------
                       Control account total (     1)                                            4,170,429.02   
                                                                                                 ------------

                       Total                                                                     4,170,429.02   
                                                                                                 ============



F: indicates transaction forced for payment.
H: indicates transaction placed on hold.
   48 vendor(s) printed.

   1

                              ASSIGNMENT OF LEASES


                 In consideration of Ten and No/100 Dollars ($10.00) and other
good and valuable considerations in hand paid, the receipt and sufficiency of
which are hereby acknowledged and confessed, Mitcham Industries, Inc., a Texas
corporation ("Borrower"), having an address of P.O. Box 1175, Huntsville, Texas
77342, and Bank One, Texas, N.A. ("Lender"), having an address of 910 Travis,
Houston, Texas 77002, in connection with and as security for the Indebtedness
described in that certain Letter Loan Agreement of even date herewith by and
among Borrower and Lender ("Agreement") enter into this Assignment of Leases
("Assignment").  Unless otherwise defined herein, capitalized terms defined in
the Agreement shall have the same meaning when used herein.  Borrower and
Lender hereby agree as follows:

         1.      Notwithstanding the restrictions against leasing or renting
Collateral in the Agreement, Borrower may lease any item of equipment
("Lease/Purchase Equipment") which is (i) to be leased to a third party under a
lease/purchase agreement upon the terms and conditions set forth in the
Agreement, (ii) purchased by Borrower with funds advanced by Lender under a
Traunch, and (iii) covered by an Advance Note under the Revolving Line of
Credit, but only upon the following conditions:

         (a)     as used in this Assignment, the term "Lease" shall include any
         present or future lease, rental contract and any other contract for
         the use or operation of any of the Lease/Purchase Equipment;

         (b)     Borrower shall have absolute and unconditional primary
         liability for payment and performance of all its obligations,
         agreements and indemnities under the Agreement, including, without
         limitation, payment of all principal and interest payments and other
         amounts due or to become due under the Agreement directly to Lender;

         (c)     each Lease shall be entered into in the ordinary course of
         Borrower's business and the terms of each Lease shall be arm's length
         terms;

         (d)     each Lease shall not involve the transfer of legal or
         beneficial title to the Lease/Purchase Equipment to the lessee except
         upon the purchase of such Lease/Purchase Equipment by the lessee and
         in accordance with, and as provided in, the Agreement; and

         (e)     Borrower shall remain liable under each Lease to perform all
         of its agreements, obligations and indemnities thereunder and Lender
         shall have absolutely no obligation or liability under any Lease.





                                      -1-
   2
         2.      As collateral security for all of its agreements, obligations
and indemnities under the Agreement, Borrower hereby assigns to Lender, and
hereby grants to Lender a continuing first priority security interest in, all
of Borrower's right, title and interest in, to and under (a) the Leases and all
rental payments and other monies from time to time payable to or receivable by
Borrower under the Leases, including all proceeds thereof, and (b) all of
Borrower's rights, powers and remedies under the Leases.  Borrower represents,
warrants and covenants to Lender:  (i) that the collateral described in the
immediately preceding sentence is now and will remain at all times free and
clear of any liens, security interests and other claims other than the rights
of the lessees under the Leases and the rights of Lender under the Agreement
and this Assignment; and (ii) that if an event of default occurs under the
Agreement, then Lender shall have all the rights and remedies of a secured
party under the applicable Uniform Commercial Code as well as the rights and
remedies provided under the Agreement and/or the Leases, by law or in equity.

         3.      Notwithstanding anything to the contrary contained herein, the
liens created by this Assignment are junior, second and inferior to the liens
against the Collateral described in that certain Assignment of Leases from
Borrower in favor of Lender and Banc One Leasing Corporation (collectively, the
lender thereunder), executed by Borrower as of January 31, 1996 (the "Bank One
First Lien").  Neither Borrower nor Lender intend that there be, and there
shall not in any event be, a merger of any of the liens created by this
Assignment with the title, any other lien or other interest of Lender in the
Collateral by virtue of the Bank One First Lien or any of the Loan Documents
(as defined in that certain Letter Loan Agreement dated as of January 31, 1996
entered into by and among Borrower, Lender, and Banc One Leasing Corporation),
and the parties hereto expressly provide that each such interest in any lien
created hereby on one hand and any other title, lien or other interest on the
other are and remain at all times SEPARATE and DISTINCT.

         4.      Except as expressly amended by this Assignment, the Agreement
remains unchanged and in full force and effect.

   
         IN WITNESS WHEREOF, the parties hereto have executed this Assignment
as of January 16, 1997.
    
                                        BORROWER:

                                        MITCHAM INDUSTRIES, INC.,
                                        a Texas Corporation



   
                                        By: /s/ BILLY F. MITCHAM, JR.
                                           -------------------------------------
                                        Billy F. Mitcham, Jr., President
    
                                        




                                      -2-
   3


                                        LENDER:

                                        BANK ONE, TEXAS, N.A.



   
                                        By: /s/ WALTER F. RODEE, III
                                           -------------------------------------
                                        Name:  Walter F. Rodee, III
                                             -----------------------------------
                                        Title:  Vice President
                                              ----------------------------------
    





                                      -3-

   1
                               SECURITY AGREEMENT


   
         THIS SECURITY AGREEMENT ("Agreement") is made as of the 16th day of
January, 1997, by MITCHAM INDUSTRIES, INC., a Texas corporation (hereinafter
called "Debtor"), in favor of BANK ONE, TEXAS, N.A. (hereinafter called
"Secured Party").  Debtor hereby agrees with Secured Party as follows:
    

         1.      DEFINITIONS.  As used in this Agreement, the following terms
                 shall have the meanings indicated below:

                 (a)      The term "Code" shall mean the Uniform Commercial
         Code as in effect in the State of Texas on the date of this Agreement
         or as it may hereafter be amended from time to time.

                 (b)      The term "Collateral" shall mean all of the property
         set forth below:

                          (i)        All present and future accounts, chattel
                 paper, contract rights, documents, instruments, deposit
                 accounts and general intangibles (including any right to
                 payment for goods sold or leased or services rendered arising
                 out of the sale or delivery of personal property or work done
                 or labor performed by Debtor), now or hereafter owned, held,
                 or acquired by Debtor, together with any and all books of
                 account, customer lists and other records relating in any way
                 to the foregoing (including, without limitation, computer
                 software, whether on tape, disk, card, strip, cartridge or any
                 other form), and in any case where an account arises from the
                 sale or lease of goods or equipment, the interest of Debtor in
                 such goods or equipment.

                          (ii)       All finished goods, equipment, fixtures
                 and machinery of whatsoever kind and character now or
                 hereafter possessed, held, acquired or owned by Debtor and
                 held for resale, lease or ordinary disposition in the course
                 of Debtor's business, together with all replacements,
                 accessories, additions, substitutions and accessions to all of
                 the foregoing, all records relating in any way to the
                 foregoing (including, without limitation, any computer
                 software, whether on tape, disk, card, strip, cartridge or any
                 other form).

                          (iii)      All of Debtor's right, title and interest
                 in, to and under (a) present or future leases, rental
                 contracts and any other contracts for the use or operation of
                 any equipment owned by Debtor (each a "Lease" collectively,
                 "Leases") for and all rental payments and other monies from
                 time to time payable to or
   2
                 receivable by Debtor under the Leases, including all proceeds
                 thereof, and (b) all of Debtor's rights, powers and remedies
                 under the Leases.

                 The term Collateral, as used herein, shall also include all
         PRODUCTS and PROCEEDS of all of the foregoing (including without
         limitation, insurance payable by reason of loss or damage to the
         foregoing property) and any property, securities, guaranties or monies
         of Debtor which may at any time come into the possession of Secured
         Party (as hereinafter defined).  The designation of proceeds does not
         authorize Debtor to sell, transfer or otherwise convey any of the
         foregoing property except finished goods intended for sale in the
         ordinary course of Debtor's business or as otherwise provided herein.

                 (c)      The term "Indebtedness" shall mean:

                          (i)        all indebtedness, obligations and
                 liabilities of Debtor to Secured Party of any kind or
                 character, now existing or hereafter arising, whether direct,
                 indirect, related, unrelated, fixed, contingent, liquidated,
                 unliquidated, joint, several or joint and several, and
                 regardless of whether such indebtedness, obligations and
                 liabilities may, prior to their acquisition by Secured Party,
                 be or have been payable to or in favor of a third party and
                 subsequently acquired by Secured Party (it being contemplated
                 that Secured Party may make such acquisitions from third
                 parties), including without limitation all indebtedness,
                 obligations and liabilities of Debtor to Secured Party now
                 existing or hereafter arising by note, draft, acceptance,
                 guaranty, endorsement, letter of credit, assignment, purchase,
                 overdraft, discount, indemnity agreement or otherwise, (ii)
                 all accrued but unpaid interest on any of the indebtedness
                 described in (i) above, (iii) all obligations of Debtor to
                 Secured Party under any documents evidencing, securing,
                 governing and/or pertaining to all or any part of the
                 indebtedness described in (i) and (ii) above, (iv) all costs
                 and expenses incurred by Secured Party in connection with the
                 collection and administration of all or any part of the
                 indebtedness and obligations described in (i), (ii) and (iii)
                 above or the protection or preservation of, or realization
                 upon, the collateral securing all or any part of such
                 indebtedness and obligations, including without limitation all
                 reasonable attorneys' fees, and (v) all renewals, extensions,
                 modifications and rearrangements of the indebtedness and
                 obligations described in (i), (ii), (iii) and (iv) above,
                 including, without limitation, the Notes of even date herewith
                 in the principal amounts of $4,000,000.00 (the "Revolving Line
                 of Credit") and





                                      -2-
   3
                 $1,000,000.00 (the "Term Loan") (collectively, the "Notes"),
                 and all accrued but unpaid interest on the Notes.

                 (f)      The term "Loan Documents" shall mean all instruments
         and documents evidencing, securing, governing, guaranteeing and/or
         pertaining to the Indebtedness.

                 (g)      The term "Obligated Party" shall mean any party other
         than Debtor who secures, guarantees and/or is otherwise obligated to
         pay all or any portion of the Indebtedness.

                 (h)      The term "Secured Party" shall mean Bank One, Texas,
         N.A., and its successors and assigns, including without limitation,
         any party to whom Secured Party, or its successors or assigns, may
         assign its rights and interests under this Agreement.

All words and phrases used herein which are expressly defined in Section 1.201
or Chapter 9 of the Code shall have the meaning provided for therein.  Other
words and phrases defined elsewhere in the Code shall have the meaning
specified therein except to the extent such meaning is inconsistent with a
definition in Section 1.201 or Chapter 9 of the Code.

         2.      SECURITY INTEREST.  As security for the Indebtedness, Debtor,
for value received, hereby grants to Secured Party a continuing security
interest in the Collateral.

         3.      REPRESENTATIONS AND WARRANTIES.  Debtor hereby represents and
warrants the following to Secured Party:

                 (a)      Due Authorization.  The execution, delivery and
         performance of this Agreement and all of the other Loan Documents by
         Debtor have been duly authorized by all necessary corporate action of
         Debtor, to the extent Debtor is a corporation.

                 (b)      Enforceability.  This Agreement and the other Loan
         Documents constitute legal, valid and binding obligations of Debtor,
         enforceable in accordance with their respective terms, except as
         limited by bankruptcy, insolvency or similar laws of general
         application relating to the enforcement of creditors' rights and
         except to the extent specific remedies may generally be limited by
         equitable principles.

                 (c)      Ownership and Liens.  Debtor has good and marketable
         title to the Collateral free and clear of all liens, security
         interests, encumbrances or adverse claims, except for the security
         interest created by this Agreement.  No dispute, right of setoff,
         counterclaim or defense exists with respect to all or any part of the
         Collateral.  Debtor has not executed





                                      -3-
   4
         any other security agreement currently affecting the Collateral and no
         effective financing statement or other instrument similar in effect
         covering all or any part of the Collateral is on file in any recording
         office except as may have been executed or filed in favor of Secured
         Party.

                 (d)      No Conflicts or Consents.  Neither the ownership, the
         intended use of the Collateral by Debtor, the grant of the security
         interest by Debtor to Secured Party herein nor the exercise by Secured
         Party of its rights or remedies hereunder, will (i) conflict with any
         provision of (A) any domestic or foreign law, statute, rule or
         regulation, (B) the articles or certificate of incorporation, charter,
         bylaws or partnership agreement, as the case may be, of Debtor, or (C)
         any agreement, judgment, license, order or permit applicable to or
         binding upon Debtor, or (ii) result in or require the creation of any
         lien, charge or encumbrance upon any assets or properties of Debtor or
         of any person except as may be expressly contemplated in the Loan
         Documents.  Except as expressly contemplated in the Loan Documents, no
         consent, approval, authorization or order of, and no notice to or
         filing with, any court, governmental authority or third party is
         required in connection with the grant by Debtor of the security
         interest herein or the exercise by Secured Party of its rights and
         remedies hereunder.

                 (e)      Security Interest.  Debtor has and will have at all
         times full right, power and authority to grant a security interest in
         the Collateral to Secured Party in the manner provided herein, free
         and clear of any lien (other than liens held by Secured Party),
         security interest or other charge or encumbrance.  This Agreement
         creates a legal, valid and binding security interest in favor of
         Secured Party in the Collateral securing the Indebtedness.  Possession
         by Secured Party of all certificates, instruments and cash
         constituting Collateral from time to time and/or the filing of the
         financing statements delivered prior hereto and/or concurrently
         herewith by Debtor to Secured Party will perfect and establish the
         first priority of Secured Party's security interest hereunder in the
         Collateral.

                 (f)      Location.  Debtor's residence or chief executive
         office, as the case may be, and the office where the records
         concerning the Collateral are kept is located at its address set forth
         on the signature page hereof.

                 (g)      Solvency of Debtor.  As of the date hereof, and after
         giving effect to this Agreement and the completion of all other
         transactions contemplated by Debtor at the time of the execution of
         this Agreement, (i) Debtor is and will be solvent, (ii) the fair
         saleable value of Debtor's assets exceeds and will continue to exceed
         Debtor's liabilities (both





                                      -4-
   5
         fixed and contingent), (iii) Debtor is paying and will continue to be
         able to pay its debts as they mature, and (iv) if Debtor is not an
         individual, Debtor has and will have sufficient capital to carry on
         Debtor's businesses and all businesses in which Debtor is about to
         engage.

                 (h)      Compliance with Environmental Laws.  Except as
         disclosed in writing to Secured Party: (i) Debtor is conducting
         Debtor's businesses in material compliance with all applicable
         federal, state and local laws, statutes, ordinances, rules,
         regulations, orders, determinations and court decisions, including
         without limitation, those pertaining to health or environmental
         matters such as the Comprehensive Environmental Response,
         Compensation, and Liability Act of 1980, as amended by the Superfund
         Amendments and Reauthorization Act of 1986 (collectively, together
         with any subsequent amendments, hereinafter called "CERCLA"), the
         Resource Conservation and Recovery Act of 1976, as amended by the Used
         Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of
         1980, and the Hazardous Substance Waste Amendments of 1984
         (collectively, together with any subsequent amendments, hereinafter
         called "RCRA"), the Texas Water Code and the Texas Solid Waste
         Disposal Act; (ii) none of the operations of Debtor is the subject of
         a federal, state or local investigation evaluating whether any
         material remedial action is needed to respond to a release or disposal
         of any toxic or hazardous substance or solid waste into the
         environment; (iii) Debtor has not filed any notice under any federal,
         state or local law indicating that Debtor is responsible for the
         release into the environment, the disposal on any premises in which
         Debtor is conducting its businesses or the improper storage, of any
         material amount of any toxic or hazardous substance or solid waste or
         that any such toxic or hazardous substance or solid waste has been
         released, disposed of or is improperly stored, upon any premise on
         which Debtor is conducting its businesses; and (iv) Debtor otherwise
         does not have any known material contingent liability in connection
         with the release into the environment, disposal or the improper
         storage, of any such toxic or hazardous substance or solid waste.  The
         terms "hazardous substance" and "release", as used herein, shall have
         the meanings specified in CERCLA, and the terms "solid waste" and
         "disposal", as used herein, shall have the meanings specified in RCRA;
         provided, however, that to the extent that the laws of the State of
         Texas establish meanings for such terms which are broader than that
         specified in either CERCLA or RCRA, such broader meanings shall apply.

                 (i)      Accounts.  Each account represents the valid and
         legally binding indebtedness of a bona fide account debtor arising
         from the sale or lease by Debtor of goods or the rendition by Debtor
         of services and is not subject to contra





                                      -5-
   6
         accounts, setoffs, defenses or counterclaims by or available to
         account debtors obligated on the accounts except as disclosed by
         Debtor to Secured Party from time to time in writing.  The amount
         shown as to each account on Debtor's books is the true and undisputed
         amount owing and unpaid thereon, subject only to discounts,
         allowances, rebates, credits and adjustments to which the account
         debtor has a right and which have been disclosed to Secured Party in
         writing.

                 (j)      Chattel Paper, Documents and Instruments.  The
         chattel paper, documents and instruments of Debtor pledged hereunder
         have only one original counterpart and no party other than Debtor or
         Secured Party is in actual or constructive possession of any such
         chattel paper, documents or instruments.

         4.      AFFIRMATIVE COVENANTS.  Debtor will comply with the covenants
contained in this Section 4 at all times during the period of time this
Agreement is effective unless Secured Party shall otherwise consent in writing.

                 (a)      Ownership and Liens.  Debtor will maintain good and
         marketable title to all Collateral free and clear of all liens,
         security interests, encumbrances or adverse claims, except for the
         security interest created by this Agreement and the security interests
         and other encumbrances expressly permitted by the other Loan
         Documents.  Debtor will not permit any dispute, right of setoff,
         counterclaim or defense to exist with respect to all or any part of
         the Collateral.  Debtor will cause any financing statement or other
         security instrument with respect to the Collateral to be terminated,
         except as may exist or as may have been filed in favor of Secured
         Party.  Debtor will defend at its expense Secured Party's right, title
         and security interest in and to the Collateral against the claims of
         any third party.

                 (b)      Further Assurances.  Debtor will from time to time at
         its expense promptly execute and deliver all further instruments and
         documents and take all further action necessary or appropriate or that
         Secured Party may request in order (i) to perfect and protect the
         security interest created or purported to be created hereby and the
         first priority of such security interest, (ii) to enable Secured Party
         to exercise and enforce its rights and remedies hereunder in respect
         of the Collateral, and (iii) to otherwise effect the purposes of this
         Agreement, including without limitation:  (A) executing and filing
         such financing or continuation statements, or amendments thereto; and
         (B) furnishing to Secured Party from time to time statements and
         schedules further identifying and describing the Collateral and such





                                      -6-
   7
         other reports in connection with the Collateral, all in reasonable
         detail satisfactory to Secured Party.

                 (c)      Inspection of Collateral.  Debtor will keep adequate
         records concerning the Collateral and will permit Secured Party and
         all representatives and agents appointed by Secured Party to inspect
         any of the Collateral and the books and records of or relating to the
         Collateral at any time during normal business hours, to make and take
         away photocopies, photographs and printouts thereof and to write down
         and record any such information.

                 (d)      Payment of Taxes.  Debtor (i) will timely pay all
         property and other taxes, assessments and governmental charges or
         levies imposed upon the Collateral or any part thereof, (ii) will
         timely pay all lawful claims which, if unpaid, might become a lien or
         charge upon the Collateral or any part thereof, and (iii) will
         maintain appropriate accruals and reserves for all such liabilities in
         a timely fashion in accordance with generally accepted accounting
         principles.  Debtor may, however, delay paying or discharging any such
         taxes, assessments, charges, claims or liabilities so long as the
         validity thereof is contested in good faith by proper proceedings and
         provided Debtor has set aside on Debtor's books adequate reserves
         therefor; provided, however, Debtor understands and agrees that in the
         event of any such delay in payment or discharge and upon Secured
         Party's written request, Debtor will establish with Secured Party an
         escrow acceptable to Secured Party adequate to cover the payment of
         such taxes, assessments and governmental charges with interest, costs
         and penalties and a reasonable additional sum to cover possible costs,
         interest and penalties (which escrow shall be returned to Debtor upon
         payment of such taxes, assessments, governmental charges, interests,
         costs and penalties or disbursed in accordance with the resolution of
         the contest to the claimant) or furnish Secured Party with an
         indemnity bond secured by a deposit in cash or other security
         acceptable to Secured Party.  Notwithstanding any other provision
         contained in this Subsection, Secured Party may at its discretion
         exercise its rights under Subsection 6(c) at any time to pay such
         taxes, assessments, governmental charges, interest, costs and
         penalties.

                 (e)      Mortgagee's and Landlord's Waivers.  Debtor shall
         cause each mortgagee of real property owned by Debtor and each
         landlord of real property leased by Debtor to execute and deliver
         agreements satisfactory in form and substance to Secured Party by
         which such mortgagee or landlord waives or subordinates any rights it
         may have in the Collateral.

                 (f)      Condition of Goods.  Debtor will maintain, preserve,
         protect and keep all Collateral which constitutes goods or





                                      -7-
   8
         Equipment in good condition, repair and working order and will cause
         such Collateral to be used and operated in good and workmanlike
         manner, in accordance with applicable laws and in a manner which will
         not make void or cancelable any insurance with respect to such
         Collateral.  Debtor will promptly make or cause to be made all
         repairs, replacements and other improvements to or in connection with
         the Collateral which Secured Party may request from time to time.

                 (g)      Insurance.  Debtor will, at its own expense, maintain
         insurance with respect to all Collateral which constitutes goods or
         Equipment in such amounts, against such risks, in such form and with
         such insurers, as shall be satisfactory to Secured Party from time to
         time.  If requested by Secured Party, each policy for property damage
         insurance shall provide for all losses to be paid directly to Secured
         Party.  If requested by Secured Party, each policy of insurance
         maintained by Debtor shall (i) name Debtor and Secured Party as
         insured parties thereunder (without any representation or warranty by
         or obligation upon Secured Party) as their interests may appear, (ii)
         contain the agreement by the insurer that any loss thereunder shall be
         payable to Secured Party notwithstanding any action, inaction or
         breach of representation or warranty by Debtor, (iii) provide that
         there shall be no recourse against Secured Party for payment of
         premiums or other amounts with respect thereto, and (iv) provide that
         at least thirty (30) days prior written notice of cancellation or of
         lapse shall be given to Secured Party by the insurer.  Debtor will, if
         requested by Secured Party, deliver to Secured Party original or
         duplicate policies of such insurance and, as often as Secured Party
         may reasonably request, a report of a reputable insurance broker with
         respect to such insurance.  Debtor will also, at the request of
         Secured Party, duly execute and deliver instruments of assignment of
         such insurance policies and cause the respective insurers to
         acknowledge notice of such assignment. All insurance payments in
         respect of loss of or damage to any Collateral shall be paid to
         Secured Party and applied as Secured Party in its sole discretion
         deems appropriate.

                 (h)      Accounts and General Intangibles.  Debtor will,
         except as otherwise provided in Subsection 6(e), collect, at Debtor's
         own expense, all amounts due or to become due under each of the
         accounts and general intangibles.  In connection with such
         collections, Debtor may and, at Secured Party's direction, will take
         such action not otherwise forbidden by Subsection 5(e) as Debtor or
         Secured Party may deem necessary or advisable to enforce collection or
         performance of each of the accounts and general intangibles.  Debtor
         will also duly perform and cause to be performed all of its
         obligations with respect to the goods or services, the sale or lease
         or rendition of which gave rise or will give rise to each account





                                      -8-
   9
         and all of its obligations to be performed under or with respect to
         the general intangibles.  Debtor also covenants and agrees to take any
         action and/or execute any documents that Secured Party may request in
         order to comply with the Federal Assignment of Claims Act, as amended.

                 (i)      Chattel Paper, Documents and Instruments.  Debtor
         will take such action as may be requested by Secured Party in order to
         cause any chattel paper, documents or instruments to be valid and
         enforceable and will cause all chattel paper to have only one original
         counterpart.  Upon request by Secured Party, Debtor will deliver to
         Secured Party all originals of chattel paper, documents or instruments
         and will mark all chattel paper with a legend indicating that such
         chattel paper is subject to the security interest granted hereunder.

                 (j)      Equipment.  Debtor will furnish Secured Party with
         written notice within two (2) business days of Debtor's knowledge, or
         reasonable belief, of the occurrence from time to time of any change
         in the location of any part of the Collateral that is not within the
         United States of America and Canada.

         5.      NEGATIVE COVENANTS.  Debtor will comply with the covenants
contained in this Section 5 at all times during the period of time this
Agreement is effective, unless Secured Party shall otherwise consent in
writing.

                 (a)      Transfer or Encumbrance.  Debtor will not (i) sell,
         assign (by operation of law or otherwise), transfer, exchange, lease
         or otherwise dispose of any of the Collateral, (ii) grant a lien or
         security interest in or execute, file or record any financing
         statement or other security instrument with respect to the Collateral
         to any party other than Secured Party, or (iii) deliver actual or
         constructive possession of any of the Collateral to any party other
         than Secured Party, except for (A) sales and leases of leased
         equipment and the sale of inventory in the ordinary course of
         business, and (B) the sale or other disposal of any item of equipment
         which is worn out or obsolete and which has been replaced by an item
         of equal suitability and value, owned by Debtor and made subject to
         the security interest under this Agreement, but which is otherwise
         free and clear of any lien, security interest, encumbrance or adverse
         claim; provided, however, the exceptions permitted in clauses (A) and
         (B) above shall automatically terminate upon the occurrence of an
         Event of Default.

                 (b)      Impairment of Security Interest.  Debtor will not
         take or fail to take any action which would in any manner impair the
         value or enforceability of Secured Party's security interest in any
         Collateral.





                                      -9-
   10
                 (c)      Possession of Collateral.  Debtor will not cause or
         permit the removal of any Collateral from its possession, control and
         risk of loss other than (i) as permitted by Subsection 4(j) and/or
         5(a), or (ii) in connection with the possession of any Collateral by
         Secured Party or by its bailee.  Notwithstanding the foregoing, Debtor
         will not cause or permit the removal of 50% of the Collateral from the
         United States of America and Canada.

                 (d)      Goods.  Debtor will not permit any Collateral which
         constitutes goods to at any time (i) be covered by any document except
         documents in the possession of the Secured Party, (ii) become so
         related to, attached to or used in connection with any particular real
         property so as to become a fixture upon such real property, or (iii)
         be installed in or affixed to other goods so as to become an accession
         to such other goods unless such other goods are subject to a perfected
         first priority security interest under this Agreement.

                 (e)      Compromise of Collateral.  Debtor will not adjust,
         settle, compromise, amend or modify any Collateral, except an
         adjustment, settlement, compromise, amendment or modification in good
         faith and in the ordinary course of business; provided, however, this
         exception shall automatically terminate upon the occurrence of an
         Event of Default or upon Secured Party's written request.  Debtor
         shall provide to Secured Party such information concerning (i) any
         adjustment, settlement, compromise, amendment or modification of any
         Collateral, and (ii) any claim asserted by any account debtor for
         credit, allowance, adjustment, dispute, setoff or counterclaim, as
         Secured Party may request from time to time.

                 (f)      Financing Statement Filings.  Debtor recognizes that
         financing statements pertaining to the Collateral have been or may be
         filed where Debtor maintains any Collateral, has its records
         concerning any Collateral or has its residence or chief executive
         office, as the case may be.  Without limitation of any other covenant
         herein, Debtor will not cause or permit any change in the location of
         (i) any Collateral (except as permitted in that certain Letter Loan
         Agreement, of even date herewith, entered into by and between Debtor
         and Secured Party), (ii) any records concerning any Collateral, or
         (iii) Debtor's residence or  chief executive office, as the case may
         be, to a jurisdiction other than as represented in Subsection 3(f)
         unless Debtor shall have notified Secured Party in writing of such
         change at least thirty (30) days prior to the effective date of such
         change, and shall have first taken all action required by Secured
         Party for the purpose of further perfecting or protecting the security
         interest in favor of Secured Party in the Collateral or unless
         otherwise permitted by Section 4.(j) hereof.  In any written notice
         furnished pursuant to this Subsection, Debtor will





                                      -10-
   11
         expressly state that the notice is required by this Agreement and
         contains facts that may require additional filings of financing
         statements or other notices for the purpose of continuing perfection
         of Secured Party's security interest in the Collateral.

         6.      RIGHTS OF SECURED PARTY.  Secured Party shall have the rights
contained in this Section 6 at all times during the period of time this
Agreement is effective.

                 (a)      Additional Financing Statements Filings.  Debtor
         hereby authorizes Secured Party to file, without the signature of
         Debtor, one or more financing or continuation statements, and
         amendments thereto, relating to the Collateral.  Debtor further agrees
         that a carbon, photographic or other reproduction of this Security
         Agreement or any financing statement describing any Collateral is
         sufficient as a financing statement and may be filed in any
         jurisdiction Secured Party may deem appropriate.

                 (b)      Power of Attorney.  Debtor hereby irrevocably
         appoints Secured Party as Debtor's attorney-in-fact, such power of
         attorney being coupled with an interest, with full authority in the
         place and stead of Debtor and in the name of Debtor or otherwise, from
         time to time in Secured Party's discretion, to take any action and to
         execute any instrument which Secured Party may deem necessary or
         appropriate to accomplish the purposes of this Agreement, including
         without limitation:  (i) to obtain and adjust insurance required by
         Secured Party hereunder; (ii) to demand, collect, sue for, recover,
         compound, receive and give acquittance and receipts for moneys due and
         to become due under or in respect of the Collateral; (iii) to receive,
         endorse and collect any drafts or other instruments, documents and
         chattel paper in connection with clause (i) or (ii) above; and (iv) to
         file any claims or take any action or institute any proceedings which
         Secured Party may deem necessary or appropriate for the collection
         and/or preservation of the Collateral or otherwise to enforce the
         rights of Secured Party with respect to the Collateral.

                 (c)      Performance by Secured Party.  If Debtor fails to
         perform any agreement or obligation provided herein, Secured Party may
         itself perform, or cause performance of, such agreement or obligation,
         and the expenses of Secured Party incurred in connection therewith
         shall be a part of the Indebtedness, secured by the Collateral and
         payable by Debtor on demand.

                 (d)      Debtor's Receipt of Proceeds.  All amounts and
         proceeds (including instruments and writings) received by Debtor in
         respect of such accounts or general intangibles





                                      -11-
   12
         shall be received in trust for the benefit of Secured Party hereunder
         and, upon request of Secured Party, shall be segregated from other
         property of Debtor and shall be forthwith delivered to Secured Party
         in the same form as so received (with any necessary endorsement) and
         applied to the Indebtedness in such manner as Secured Party deems
         appropriate in its sole discretion.

                 (e)      Notification of Account Debtors.  If Secured Party
         has a reasonable basis to believe an Event of Default has occurred, or
         with the passage of time, could occur, Secured Party may at its
         discretion notify any or all obligors under any accounts or general
         intangibles (i) of Secured Party's security interest in such accounts
         or general intangibles and direct such obligors to make payment of all
         amounts due or to become due to Debtor thereunder directly to Secured
         Party, and (ii) to verify the accounts or general intangibles with
         such obligors.  Secured Party shall have the right, at the expense of
         Debtor, to enforce collection of any such accounts or general
         intangibles and to adjust, settle or compromise the amount or payment
         thereof, in the same manner and to the same extent as Debtor.


         7.      EVENTS OF DEFAULT.  Each of the following constitutes an
"Event of Default" under this Agreement:

                 (a)      Failure to Pay Indebtedness.  The failure, refusal or
         neglect of Debtor to make any payment of principal or interest on the
         Indebtedness or any other amounts owing by Debtor to Secured Party, or
         any portion thereof, as the same shall become due and payable; or

                 (b)      Non-Performance of Covenants.  The failure of Debtor
         or any Obligated Party to timely and properly observe, keep or perform
         any covenant, agreement, warranty or condition required herein or in
         any of the other Loan Documents; or

                 (c)      Default Under other Loan Documents.  The occurrence
         of an event of default under any of the other Loan Documents or any
         other agreement between Debtor and Secured Party; or

                 (d)      False Representation.  Any representation contained
         herein or in any of the other Loan Documents made by Debtor or any
         Obligated Party is false or misleading in any material respect; or

                 (e)      Default to Third Party.  The occurrence of any event
         which permits the acceleration of the maturity of any indebtedness
         owing by Debtor or any Obligated Party to any third party under any
         agreement or undertaking; or





                                      -12-
   13
                 (f)      Bankruptcy or Insolvency.  If Debtor or any Obligated
         Party:

                               (i)     becomes insolvent, or makes a transfer
                 in fraud of creditors, or makes an assignment for the benefit
                 of creditors, or admits in writing its inability to pay its
                 debts as they become due; or

                              (ii)     generally is not paying its debts as
                 such debts become due; or

                             (iii)     has a receiver or custodian appointed
                 for, or take possession of, all or substantially all of the
                 assets of such party or any of the Collateral, either in a
                 proceeding brought by such party or in a proceeding brought
                 against such party and such appointment is not discharged or
                 such possession is not terminated within thirty (30) days
                 after the effective date thereof or such party consents to or
                 acquiesces in such appointment or possession; or

                              (iv)     files a petition for relief under the
                 United States Bankruptcy Code or any other present or future
                 federal or state insolvency, bankruptcy or similar laws (all
                 of the foregoing hereinafter collectively called "Applicable
                 Bankruptcy Law") or an involuntary petition for relief is
                 filed against such party under any Applicable Bankruptcy Law
                 and such involuntary petition is not dismissed within thirty
                 (30) days after the filing thereof, or an order for relief
                 naming such party is entered under any Applicable Bankruptcy
                 Law, or any composition, rearrangement, extension,
                 reorganization or other relief of debtors now or hereafter
                 existing is requested or consented to by such party; or

                               (v)     fails to have discharged within a period
                 of thirty (30) days any attachment, sequestration or similar
                 writ levied upon any property of such party; or

                              (vi)     fails to pay within thirty (30) days any
                 final money judgment against such party; or

                 (g)      Execution on Collateral.  The Collateral or any
         portion thereof is taken on execution or other process of law in any
         action against Debtor; or

                 (h)      Abandonment.  Debtor abandons the Collateral or any
         portion thereof; or

                 (i)      Action by Other Lienholder.  The holder of any lien
         or security interest on any of the assets of Debtor, including





                                      -13-
   14
         without limitation, the Collateral (without hereby implying the
         consent of Secured Party to the existence or creation of any such lien
         or security interest on the Collateral), declares a default thereunder
         or institutes foreclosure or other proceedings for the enforcement of
         its remedies thereunder; or

                 (j)      Liquidation, Death and Related Events.  If Debtor or
         any Obligated Party is an entity, the liquidation, dissolution, merger
         or consolidation of any such entity or, if Debtor or any Obligated
         Party is an individual, the death or legal incapacity of any such
         individual.

         8.      REMEDIES AND RELATED RIGHTS.  If an Event of Default shall
have occurred, and without limiting any other rights and remedies provided
herein, under any of the other Loan Documents or otherwise available to Secured
Party, Secured Party may exercise one or more of the rights and remedies
provided in this Section.

                 (a)      Remedies.  Secured Party may from time to time at its
         discretion, without limitation and without notice except as expressly
         provided in any of the Loan Documents:

                               (i)     exercise in respect of the Collateral
                 all the rights and remedies of a secured party under the Code
                 (whether or not the Code applies to the affected Collateral);

                              (ii)     require Debtor to, and Debtor hereby
                 agrees that it will at its expense and upon request of Secured
                 Party, assemble the Collateral as directed by Secured Party
                 and make it available to Secured Party at a place to be
                 designated by Secured Party which is reasonably convenient to
                 both parties;

                             (iii)     reduce its claim to judgment or
                 foreclose or otherwise enforce, in whole or in part, the
                 security interest granted hereunder by any available judicial
                 procedure;

                              (iv)     sell or otherwise dispose of, at its
                 office, on the premises of Debtor or elsewhere, the
                 Collateral, as a unit or in parcels, by public or private
                 proceedings, and by way of one or more contracts (it being
                 agreed that the sale or other disposition of any part of the
                 Collateral shall not exhaust Secured Party's power of sale,
                 but sales or other dispositions may be made from time to time
                 until all of the Collateral has been sold or disposed of or
                 until the Indebtedness has been paid and performed in full),
                 and at any such sale or other disposition it shall not be
                 necessary to exhibit any of the Collateral;





                                      -14-
   15
                               (v)     buy the Collateral, or any portion
                 thereof, at any public sale;

                              (vi)     buy the Collateral, or any portion
                 thereof, at any private sale if the Collateral is of a type
                 customarily sold in a recognized market or is of a type which
                 is the subject of widely distributed standard price
                 quotations;

                             (vii)     apply for the appointment of a receiver
                 for the Collateral, and Debtor hereby consents to any such
                 appointment; and

                            (viii)     at its option, retain the Collateral in
                 satisfaction of the Indebtedness whenever the circumstances
                 are such that Secured Party is entitled to do so under the
                 Code or otherwise.

         Debtor agrees that in the event Debtor is entitled to receive any
         notice under the Uniform Commercial Code, as it exists in the state
         governing any such notice, of the sale or other disposition of any
         Collateral, reasonable notice shall be deemed given when such notice
         is deposited in a depository receptacle under the care and custody of
         the United States Postal Service, postage prepaid, at Debtor's address
         set forth on the signature page hereof, five (5) days prior to the
         date of any public sale, or after which a private sale, of any of such
         Collateral is to be held.  Secured Party shall not be obligated to
         make any sale of Collateral regardless of notice of sale having been
         given.  Secured Party may adjourn any public or private sale from time
         to time by announcement at the time and place fixed therefor, and such
         sale may, without further notice, be made at the time and place to
         which it was so adjourned.

         (b)     Application of Proceeds.  If any Event of Default shall have
occurred, Secured Party may at its discretion apply or use any cash held by
Secured Party as Collateral, and any cash proceeds received by Secured Party in
respect of any sale or other disposition of, collection from, or other
realization upon, all or any part of the Collateral as follows in such order
and manner as Secured Party may elect:

                               (i)     to the repayment or reimbursement of the
                 reasonable costs and expenses (including, without limitation,
                 reasonable attorneys' fees and expenses) incurred by Secured
                 Party in connection with (A) the administration of the Loan
                 Documents, (B) the custody, preservation, use or operation of,
                 or the sale of, collection from, or other realization upon,
                 the Collateral, and (C) the exercise or enforcement of any of
                 the rights and remedies of Secured Party hereunder;





                                      -15-
   16
                              (ii)     to the payment or other satisfaction of
                 any liens and other encumbrances upon the Collateral;

                             (iii)     to the satisfaction of the Indebtedness;

                              (iv)     by holding such cash and proceeds as
                 Collateral;

                               (v)     to the payment of any other amounts
                 required by applicable law (including without limitation,
                 Section 9.504(a)(3) of the Code or any other applicable
                 statutory provision); and

                              (vi)     by delivery to Debtor or any other party
                 lawfully entitled to receive such cash or proceeds whether by
                 direction of a court of competent jurisdiction or otherwise.

                 (c)      Deficiency.  In the event that the proceeds of any
         sale of, collection from, or other realization upon, all or any part
         of the Collateral by Secured Party are insufficient to pay all amounts
         to which Secured Party is legally entitled, Debtor and any party who
         guaranteed or is otherwise obligated to pay all or any portion of the
         Indebtedness shall be liable for the deficiency, together with
         interest thereon as provided in the Loan Documents.

                 (d)      Non-Judicial Remedies.  In granting to Secured Party
         the power to enforce its rights hereunder without prior judicial
         process or judicial hearing, Debtor expressly waives, renounces and
         knowingly relinquishes any legal right which might otherwise require
         Secured Party to enforce its rights by judicial process.  Debtor
         recognizes and concedes that non-judicial remedies are consistent with
         the usage of trade, are responsive to commercial necessity and are the
         result of a bargain at arm's length.  Nothing herein is intended to
         prevent Secured Party or Debtor from resorting to judicial process at
         either party's option.

                 (e)      Other Recourse.  Debtor waives any right to require
         Secured Party to proceed against any third party, exhaust any
         Collateral or other security for the Indebtedness, or to have any
         third party joined with Debtor in any suit arising out of the
         Indebtedness or any of the Loan Documents, or pursue any other remedy
         available to Secured Party.  Debtor further waives any and all notice
         of acceptance of this Agreement and of the creation, modification,
         rearrangement, renewal or extension of the Indebtedness.  Debtor
         further waives any defense arising by reason of any disability or
         other defense of any third party or by reason of the cessation from
         any cause whatsoever of the liability of any third party.  Until all
         of the Indebtedness shall have been paid in full, Debtor





                                      -16-
   17
         shall have no right of subrogation and Debtor waives the right to
         enforce any remedy which Secured Party has or may hereafter have
         against any third party, and waives any benefit of and any right to
         participate in any other security whatsoever now or hereafter held by
         Secured Party.  Debtor authorizes Secured Party, and without notice or
         demand and without any reservation of rights against Debtor and
         without affecting Debtor's liability hereunder or on the Indebtedness
         to (i) take or hold any other property of any type from any third
         party as security for the Indebtedness, and exchange, enforce, waive
         and release any or all of such other property, (ii) apply such other
         property and direct the order or manner of sale thereof as Secured
         Party may in its discretion determine, (iii) renew, extend,
         accelerate, modify, compromise, settle or release any of the
         Indebtedness or other security for the Indebtedness, (iv) waive,
         enforce or modify any of the provisions of any of the Loan Documents
         executed by any third party, and (v) release or substitute any third
         party.

         9.      INDEMNITY.  Debtor hereby indemnifies and agrees to hold
harmless Secured Party, and its officers, directors, employees, agents and
representatives (each an "Indemnified Person") from and against any and all
liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature,
including, but not limited to attorney's fees and any settlement costs,
(collectively, the "Claims") which may be imposed on, incurred by, or  asserted
against, any Indemnified Person (whether or not caused by any Indemnified
Person's sole, concurrent or contributory negligence) arising in connection
with the Loan Documents, the Indebtedness or the Collateral (including without
limitation, the enforcement of the Loan Documents and the defense of any
Indemnified Person's actions and/or inactions in connection with the Loan
Documents), except to the limited extent the Claims against an Indemnified
Person are proximately caused by such Indemnified Person's gross negligence or
willful misconduct.  If Debtor or any third party ever alleges such gross
negligence or willful misconduct by any Indemnified Person, the indemnification
provided for in this Section shall nonetheless be paid upon demand, subject to
later adjustment or reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect of the alleged
gross negligence or willful misconduct.  The indemnification provided for in
this Section shall survive the termination of this Agreement and shall extend
and continue to benefit each individual or entity who is or has at any time
been an Indemnified Person hereunder.

         10.     MISCELLANEOUS.

                 (a)      Entire Agreement.  This Agreement contains the entire
         agreement of Secured Party and Debtor with respect to





                                      -17-
   18
         the Collateral.  If the parties hereto are parties to any prior
         agreement, either written or oral, relating to the Collateral, the
         terms of this Agreement shall amend and supersede the terms of such
         prior  agreements as to transactions on or after the effective date of
         this Agreement, but all security agreements, financing statements,
         guaranties, other contracts and notices for the benefit of Secured
         Party shall continue in full force and effect to secure the
         Indebtedness unless Secured Party specifically releases its rights
         thereunder by separate release.

                 (b)      Amendment.  No modification, consent or amendment of
         any provision of this Agreement or any of the other Loan Documents
         shall be valid or effective unless the same is in writing and signed
         by the party against whom it is sought to be enforced.

                 (c)      Actions by Secured Party.  The lien, security
         interest and other security rights of Secured Party hereunder shall
         not be impaired by (i) any renewal, extension, increase or
         modification with respect to the Indebtedness, (ii) any surrender,
         compromise, release, renewal, extension, exchange or substitution
         which Secured Party may grant with respect to the Collateral, or (iii)
         any release or indulgence granted to any endorser, guarantor or surety
         of the Indebtedness.  The taking of additional security by Secured
         Party shall not release or impair the lien, security interest or other
         security rights of Secured Party hereunder or affect the obligations
         of Debtor hereunder.

                 (d)       Waiver by Secured Party.  Secured Party may waive
         any Event of Default without waiving any other prior or subsequent
         Event of Default.  Secured Party may remedy any default without
         waiving the Event of Default remedied.  Neither the failure by Secured
         Party to exercise, nor the delay by Secured Party in exercising, any
         right or remedy upon any Event of Default shall be construed as a
         waiver of such Event of Default or as a waiver of the right to
         exercise any such right or remedy at a later date.  No single or
         partial exercise by Secured Party of any right or remedy hereunder
         shall exhaust the same or shall preclude any other or further exercise
         thereof, and every such right or remedy hereunder may be exercised at
         any time.  No waiver of any provision hereof or consent to any
         departure by Debtor therefrom shall be effective unless the same shall
         be in writing and signed by Secured Party and then such waiver or
         consent shall be effective only in the specific instances, for the
         purpose for which given and to the extent therein specified.  No
         notice to or demand on Debtor in any case shall of itself entitle
         Debtor to any other or further notice or demand in similar or other
         circumstances.





                                      -18-
   19
                 (e)      Costs and Expenses.  Debtor will upon demand pay to
         Secured Party the amount of any and all costs and expenses (including
         without limitation, reasonable attorneys' fees and expenses), which
         Secured Party may incur in connection with (i) the transactions which
         give rise to the Loan Documents, (ii) the preparation of this
         Agreement and the perfection and preservation of the security
         interests granted under the Loan Documents, (iii) the administration
         of the Loan Documents, (iv) the custody, preservation, use or
         operation of, or the sale of, collection from, or other realization
         upon, the Collateral, (v) the exercise or enforcement of any of the
         rights of Secured Party under the Loan Documents, or (vi) the failure
         by Debtor to perform or observe any of the provisions hereof.

                 (F)      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY
         AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
         APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE
         EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST
         GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
         GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.

                 (g)      Venue.  This Agreement has been entered into in the
         county in Texas where Secured Party's address for notice purposes is
         located, and it shall be performable for all purposes in such county.
         Courts within the State of Texas shall have jurisdiction over any and
         all disputes arising under or pertaining to this Agreement and venue
         for any such disputes shall be in the county or judicial district
         where this Agreement has been executed and delivered.

                 (h)      Severability.  If any provision of this Agreement is
         held by a court of competent jurisdiction to be illegal, invalid or
         unenforceable under present or future laws, such provision shall be
         fully severable, shall not impair or invalidate the remainder of this
         Agreement and the effect thereof shall be confined to the provision
         held to be illegal, invalid or unenforceable.

                 (i)      No Obligation.  Nothing contained herein shall be
         construed as an obligation on the part of Secured Party to extend or
         continue to extend credit to Debtor.

                 (j)      Notices.  All notices, requests, demands or other
         communications required or permitted to be given pursuant to this
         Agreement shall be in writing and given by (i) personal delivery, (ii)
         expedited delivery service with proof of delivery, or (iii) United
         States mail, postage prepaid, registered or certified mail, return
         receipt requested, sent to the intended addressee at the address set
         forth on the signature page hereof or to such different address as the





                                      -19-
   20
         addressee shall have designated by written notice sent pursuant to the
         terms hereof and shall be deemed to have been received either, in the
         case of personal delivery, at the time of personal delivery, in the
         case of expedited delivery service, as of the date of first attempted
         delivery at the address and in the manner provided herein, or in the
         case of mail, upon deposit in a depository receptacle under the care
         and custody of the United States Postal Service.  Either party shall
         have the right to change its address for notice hereunder to any other
         location within the continental United States by notice to the other
         party of such new address at least thirty (30) days prior to the
         effective date of such new address.

                 (k)      Binding Effect and Assignment.  This Agreement (i)
         creates a continuing security interest in the Collateral, (ii) shall
         be binding on Debtor and the heirs, executors, administrators,
         personal representatives, successors and assigns of Debtor, and (iii)
         shall inure to the benefit of Secured Party and its successors and
         assigns.  Without limiting the generality of the foregoing, Secured
         Party may pledge, assign or otherwise transfer the Indebtedness and
         its rights under this Agreement and any of the other Loan Documents to
         any other party.  Debtor's rights and obligations hereunder may not be
         assigned or otherwise transferred without the prior written consent of
         Secured Party.

                 (l)      Termination.  It is contemplated by the parties
         hereto that from time to time there may be no outstanding
         Indebtedness, but notwithstanding such occurrences, this Agreement
         shall remain valid and shall be in full force and effect as to
         subsequent outstanding Indebtedness.  Upon (i) the satisfaction in
         full of the Indebtedness, (ii) the termination or expiration of any
         commitment of Secured Party to extend credit to Debtor, (iii) written
         request for the termination hereof delivered by Debtor to Secured
         Party, and (iv) written release or termination delivered by Secured
         Party to Debtor, this Agreement and the security interests created
         hereby shall terminate.  Upon termination of this Agreement and
         Debtor's written request, Secured Party will, at Debtor's sole cost
         and expense, return to Debtor such of the Collateral as shall not have
         been sold or otherwise disposed of or applied pursuant to the terms
         hereof and execute and deliver to Debtor such documents as Debtor
         shall reasonably request to evidence such termination.

                 (m)      Cumulative Rights.  All rights and remedies of
         Secured Party hereunder are cumulative of each other and of every
         other right or remedy which Secured Party may otherwise have at law or
         in equity or under any of the other Loan Documents, and the exercise
         of one or more of such rights or





                                      -20-
   21
         remedies shall not prejudice or impair the concurrent or subsequent
         exercise of any other rights or remedies.

                 (n)      Gender and Number.  Within this Agreement, words of
         any gender shall be held and construed to include the other gender,
         and words in the singular number shall be held and construed to
         include the plural and words in the plural number shall be held and
         construed to include the singular, unless in each instance the context
         requires otherwise.

                 (o)      Descriptive Headings.  The headings in this Agreement
         are for convenience only and shall in no way enlarge, limit or define
         the scope or meaning of the various and several provisions hereof.

                 (p)      First Lien; No Merger.  Notwithstanding anything to
         the contrary contained herein, the liens created by this Security
         Agreement are junior, second and inferior to the liens against the
         Collateral described in that certain Security Agreement from Debtor in
         favor of Secured Party and Banc One Leasing Corporation (collectively,
         the secured party thereunder), executed by Debtor as of January 31,
         1996 (the "Bank One First Lien").  Neither Debtor nor Secured Party
         intend that there be, and there shall not in any event be, a merger of
         any of the liens created by this Agreement with the title, any other
         lien or other interest of Secured Party in the Collateral by virtue of
         the Bank One First Lien or any of the Loan Documents (as defined in
         that certain Letter Loan Agreement dated as of January 31, 1996
         entered into by and among Debtor, Secured Party, and Banc One Leasing
         Corporation), and the parties hereto expressly provide that each such
         interest in any lien created hereby on one hand and any other title,
         lien or other interest on the other are and remain at all times
         SEPARATE and DISTINCT.

         EXECUTED as of the date first written above.

                                            DEBTOR:
                                            ------ 
Debtor's Address:                           
- ----------------                            
                                            MITCHAM INDUSTRIES, INC.,
                                            a Texas corporation
   
P. O. Box 1175                              
Huntsville, Texas                           
  77342-1175                                By: /s/ BILLY F. MITCHAM, JR.
                                                -------------------------------
                                            Billy F. Mitcham, Jr., President
    


Secured Party's Address:
- ----------------------- 
Bank One, Texas, N.A.
910 Travis
Houston, Harris County, Texas 77002
Attn:  Walter F. Rodee, III, Vice President





                                      -21-

   1

                                PROMISSORY NOTE

   
$1,000,000.00                    Houston, Texas                 January 16, 1997
    

         FOR VALUE RECEIVED, on or before January 31, 1999 ("Maturity Date"),
the undersigned and if more than one, each of them, jointly and severally
(hereinafter referred to as "Borrower"), promises to pay to the order of BANK
ONE, TEXAS, N.A. ("Bank") at its offices in Harris County, Texas, at 910
Travis, Houston, Texas 77002, the principal amount of ONE MILLION AND NO/100
DOLLARS ($1,000,000.00) ("Total Principal Amount"), or such amount less than
the Total Principal Amount which has been advanced to Borrower if the total
amount advanced under this Promissory Note ("Note") is less than the Total
Principal Amount, together with interest on such portion of the Total Principal
Amount which has been advanced to Borrower from the date advanced until paid at
a fluctuating rate per annum which shall from day to day be equal to the lesser
of (a) the Maximum Rate (as hereinafter defined), or (b) a rate ("Contract
Rate"), calculated on the basis of actual days elapsed but computed as if each
year consisted of 365 days, equal to the sum of (i) the Bank One Base Rate of
interest ("Base Rate") as established from time to time by Bank (which may not
be the lowest, best or most favorable rate of interest which Bank may charge on
loans to its customers) plus (ii) one-half of one percent (0.5%), each change
in the rate to be charged on this Note to become effective without notice to
Borrower on the effective date of each change in the Maximum Rate or the Base
Rate, as the case may be; provided, however that if at any time the Contract
Rate shall exceed the Maximum Rate, thereby causing the interest on this Note
to be limited to the Maximum Rate, then any subsequent reduction in the Base
Rate shall not reduce the rate of interest on this Note below the Maximum Rate
until the total amount of interest accrued on this Note equals the amount of
interest which would have accrued on this Note if the Contract Rate had at all
times been in effect.

         The term "Maximum Rate," as used herein, shall mean at the particular
time in question the maximum rate of interest which, under applicable law, may
then be charged on this Note.  If such maximum rate of interest changes after
the date hereof and this Note provides for a fluctuating rate of interest, the
Maximum Rate shall be automatically increased or decreased, as the case may be,
without notice to Borrower from time to time as of the effective date of each
change in such maximum rate.  If applicable law ceases to provide for such a
maximum rate of interest, the Maximum Rate shall be equal to eighteen percent
(18%) per annum.

         The principal of and all accrued but unpaid interest on this Note
shall be due and payable as follows: The principal of this Note shall be due
and payable in twenty-four (24) equal monthly installments, together with all
accrued but unpaid interest thereon, commencing on the 1st day of February,
1997, and continuing on the 1st day of each successive month thereafter until
January ____, 1999, when the outstanding principal balance of this





                                     - 1 -
   2
Note, together with all accrued but unpaid interest, shall be due and payable
without demand.

         The indebtedness evidenced by this Note may be prepaid, in whole or in
part, any time during the term hereof.

         To the extent that any interest is not paid on or before the fifth day
after it becomes due and payable, Bank may, at its option, add such accrued
interest to the principal of this Note.  Notwithstanding anything herein to the
contrary, upon an Event of Default (as hereinafter defined) or at maturity,
whether by acceleration or otherwise, all principal of this Note shall, at the
option of Bank, bear interest at the Maximum Rate until paid.

         All regularly scheduled payments of the indebtedness evidenced by this
Note and by any of the other Loan Documents shall be applied first to any
accrued but unpaid interest then due and payable hereunder or thereunder and
then to the principal amount then due and payable.  All non-regularly scheduled
payments shall be applied to such indebtedness in such order and manner as the
holder of this Note may from time to time determine in its sole discretion.
All payments and prepayments of principal of or interest on this Note shall be
made in lawful money of the United States of America in immediately available
funds, at the address of Bank indicated above, or such other place as the
holder of this Note shall designate in writing to Borrower.  If any payment of
principal of or interest on this Note shall become due on a day which is not a
Business Day (as hereinafter defined), such payment shall be made on the next
succeeding Business Day and any such extension of time shall be included in
computing interest in connection with such payment.  As used herein, the term
"Business Day" shall mean any day other than a Saturday, Sunday or any other
day on which national banking associations are authorized to be closed.  The
books and records of Bank shall be prima facie evidence of all outstanding
principal of and accrued and unpaid interest on this Note.

         This Note has been executed and delivered pursuant to that certain
Letter Loan Agreement, of even date herewith, by and between Borrower and Bank
("Loan Agreement"), and is secured by (i) inter alia, a Security Agreement of
even date herewith, by and among Borrower, its Subsidiaries and Affiliates (as
defined in the Loan Agreement) and Bank, covering certain collateral as more
particularly described therein, (ii) an Assignment of Leases, of even date
herewith, and (iii) all liens and security interests granted by Borrower
pursuant to, and in connection with, that certain Letter Loan Agreement dated
January 31, 1996 entered into by and among Borrower, Bank and Banc One Leasing
Corporation, as amended by that certain First Amendment to Letter Loan
Agreement dated of even date herewith (such loan agreement, together with the
first amendment, and any future amendments, the "Leasing Loan Agreement");





                                     - 2 -
   3
         This Note, the Loan Agreement, and all other documents evidencing,
securing, governing, guaranteeing and/or pertaining to this Note, including but
not limited to those documents described above, are hereinafter collectively
referred to as the "Loan Documents."  The holder of this Note is entitled to
the benefits and security provided in the Loan Documents.

         Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall
be used solely for business, commercial, investment, or other similar purposes.

         Borrower agrees that upon the occurrence of any one or more of the
following events of default ("Event of Default"):

                 (a)      failure of Borrower to pay any installment of
         principal of or interest on this Note or on any other indebtedness of
         Borrower to Corporation when due; or

                 (b)      the occurrence of any event of default specified in
         any of the other Loan Documents; or

                 (c)      the bankruptcy or insolvency of, the assignment for
         the benefit of creditors by, or the appointment of a receiver for any
         of the property of, or the liquidation, termination, dissolution or
         death or legal incapacity of, any party liable for the payment of this
         Note, whether as maker, endorser, guarantor, surety or otherwise; or

                 (d)      an Event of Default as that term is defined in the
         Leasing Loan Agreement;

the holder of this Note may, at its option, without further notice or demand,
(i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) refuse to advance any
additional amounts under this Note, (iii) foreclose all liens securing payment
hereof, (iv) pursue any and all other rights, remedies and recourses available
to the holder hereof, including but not limited to any such rights, remedies or
recourses under the Loan Documents, at law or in equity, or (v) pursue any
combination of the foregoing.

         The failure to exercise the option to accelerate the maturity of this
Note or any other right, remedy or recourse available to the holder hereof upon
the occurrence of an Event of Default hereunder shall not constitute a waiver
of the right of the holder of this Note to exercise the same at that time or at
any subsequent time with respect to such Event of Default or any other Event of
Default.  The rights, remedies and recourses of the holder hereof, as provided
in this Note and in any of the other Loan Documents, shall be cumulative and
concurrent and may be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the holder hereof.
The acceptance





                                     - 3 -
   4
by the holder hereof of any payment under this Note which is less than the
payment in full of all amounts due and payable at the time of such payment
shall not (i) constitute a waiver of or impair, reduce, release or extinguish
any right, remedy or recourse of the holder hereof, or nullify any prior
exercise of any such right, remedy or recourse, or (ii) impair, reduce, release
or extinguish the obligations of any party liable under any of the Loan
Documents as originally provided herein or therein.

         This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable usury laws.  If any provision hereof or of any of the other Loan
Documents or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance nor the
remainder of the instrument in which such provision is contained shall be
affected thereby and shall be enforced to the greatest extent permitted by law.
It is expressly stipulated and agreed to be the intent of the holder hereof to
at all times comply with the usury and other applicable laws now or hereafter
governing the interest payable on the indebtedness evidenced by this Note.  If
the applicable law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Note or under any of the other
Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the indebtedness evidenced by this Note, or if Bank's exercise of
the option to accelerate the maturity of this Note, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by law, then it is the express intent of Borrower and Bank that all
excess amounts theretofore collected by Bank be credited on the principal
balance of this Note (or, if this Note and all other indebtedness arising under
or pursuant to the other Loan Documents have been paid in full, refunded to
Borrower), and the provisions of this Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectable hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the then applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
All sums paid, or agreed to be paid, by Borrower for the use, forbearance,
detention, taking, charging, receiving or reserving of the indebtedness of
Borrower to Bank under this Note or arising under or pursuant to the other Loan
Documents shall, to the maximum extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the usury ceiling from time to
time in effect and applicable to such indebtedness for so long as such
indebtedness is outstanding.  To the extent federal law permits Bank to
contract for, charge or receive a greater amount of interest, Bank will rely on
federal law instead of Tex. Rev. Civ. Stat. Ann. art. 5069-1.04, as amended,
for the purpose of determining the Maximum Rate.  Additionally, to





                                     - 4 -
   5
the maximum extent permitted by applicable law now or hereafter in effect, Bank
may, at its option and from time to time, implement any other method of
computing the Maximum Rate under such Article 5069-1.04, as amended, or under
other applicable law by giving notice, if required, to Borrower as provided by
applicable law now or hereafter in effect.  Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, it is not the
intention of Bank to accelerate the maturity of any interest that has not
accrued at the time of such acceleration or to collect unearned interest at the
time of such acceleration.

         In no event shall Tex. Rev. Civ. Stat. Ann. art. 5069 Ch. 15 (which
regulates certain revolving loan accounts and revolving tri-party accounts)
apply to this Note.  To the extent that Tex. Rev. Civ. Stat. Ann. art.
5069-1.04, as amended, is applicable to this Note, the "indicated rate ceiling"
specified in such article is the applicable ceiling; provided that, if any
applicable law permits greater interest, the law permitting the greatest
interest shall  apply.

         If this Note is placed in the hands of an attorney for collection, or
is collected in whole or in part by suit or through probate, bankruptcy or
other legal proceedings of any kind, Borrower agrees to pay, in addition to all
other sums payable hereunder, all costs and expenses of collection, including
but not limited to reasonable attorneys' fees.

         Borrower and any and all endorsers and guarantors of this Note
severally waive presentment for payment, notice of nonpayment, protest, demand,
notice of protest, notice of intent to accelerate, notice of acceleration and
dishonor, diligence in enforcement and indulgences of every kind and without
further notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral, indulgences or partial payments,
either before or after maturity.

         THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE
PREEMPTED BY APPLICABLE FEDERAL LAWS.

                                        BORROWER:

                                        MITCHAM INDUSTRIES, INC.



   
                                        By: /s/ BILLY F. MITCHAM, JR.
                                           -------------------------------------
                                        Billy F. Mitcham, Jr., President
    





                                     - 5 -

   1





                                FIRST AMENDMENT
                            TO LETTER LOAN AGREEMENT


   
         This First Amendment to Letter Loan Agreement dated as of January
16, 1997 ("First Amendment") is entered into by and between MITCHAM
INDUSTRIES, INC., a Texas corporation (the "Borrower"), BANK ONE, TEXAS, N.A.,
a national banking association and BANC ONE LEASING CORPORATION (collectively,
the "Lender").
    
                              W I T N E S S E T H:

                 Borrower and Lender entered into a Letter Loan Agreement dated
January 31, 1996 (as such may be amended, modified, supplemented or restated,
the "Loan Agreement").

                 Borrower has requested that the Lender modify certain
financial covenants of the credit facility evidenced by the Loan Agreement, and
Lender has agreed to such request, subject to the terms and conditions of the
Loan Agreement as amended by this First Amendment.

                 NOW, THEREFORE, in consideration of the premises herein
contained, and each intending to be legally bound hereby, the parties agree as
follows:

1.       Amendments to Loan Agreement.

         A.      Section 1.(a) of the Loan Agreement is hereby amended by
                 replacing the first two (2) full paragraphs of such section
                 with the following:

                          "1.(a)  Revolving Line of Credit.  Subject to the
                 terms and conditions set forth herein, Bank agrees to lend to
                 Borrower, on a revolving basis from time to time during the
                 period commencing on the date hereof and continuing through
                 and including 11:00 a.m. on January 1, 1998 (the "Termination
                 Date"), such amounts as Borrower may request hereunder (the
                 "Revolving Line of Credit"); provided, however, the total
                 principal amount outstanding at any time shall not exceed the
                 lesser of an amount (the "Borrowing Base") equal to (i) 80% of
                 the then Eligible Accounts plus 50% of Eligible Inventory,
                 such Eligible Inventory not to exceed $200,000, or (ii)
                 $1,000,000 (the "Committed Sum").  If at any time the
                 aggregate principal amount outstanding under the Revolving
                 Line of Credit Loan shall exceed an amount equal to the
                 Borrowing Base, Borrower agrees to immediately repay to Bank
                 such excess amount, plus all accrued but unpaid interest
                 thereon.  Subject to the terms and conditions hereof, Borrower
                 may borrow, repay and reborrow hereunder.  All sums advanced





                                    - 1 -
   2
                 hereunder, together with all accrued but unpaid interest
                 thereon, shall be due and payable in full on the Termination
                 Date.  The sums advanced under the Revolving Line of Credit
                 shall be used for working capital and general corporate
                 purposes.  Borrower shall give Bank not less than two (2)
                 business days' prior written notice of each requested advance
                 hereunder, specifying (i) the aggregate amount of such
                 requested advance, and (ii) the requested date of such
                 advance, with such advances to be requested in a form
                 satisfactory to Bank.

                          "As used in this Loan Agreement, the term "Eligible
                 Accounts" means, at any time, an amount equal to the aggregate
                 net invoice or ledger amount owing on all trade accounts
                 receivable of Borrower for goods sold or leased or services
                 rendered in the ordinary course of business, in which the Bank
                 has a perfected, first priority lien, and after deducting
                 (without duplication): (i) each such account that is unpaid
                 ninety (90) days or more after the original invoice date
                 thereof, (ii) the amount of all discounts, allowances,
                 rebates, credits and adjustments to such accounts (iii) the
                 amount of all contra accounts, setoffs, defenses or
                 counterclaims asserted by or available to the account debtors,
                 (iv) all accounts with respect to which goods are placed on
                 consignment or subject to a guaranteed sale or other terms by
                 reason of which payment by the account debtor may be
                 conditional, (v) the amount billed for or representing
                 retainage, if any, until all prerequisites to the immediate
                 payment of retainage have been satisfied, (vi) all accounts
                 owing by account debtors for which there has been instituted a
                 proceeding in bankruptcy or reorganization under the United
                 States Bankruptcy Code or other law, whether state or federal,
                 now or hereafter existing for relief of debtors, (vii) all
                 accounts in which the account debtor is the United States or
                 any department, agency or instrumentality of the United
                 States, except to the extent an acknowledgment of assignment
                 to Bank of such account in compliance with the Federal
                 Assignment of Claims Act and other applicable laws has been
                 received by Bank, (viii) all accounts subject to any provision
                 prohibiting assignment or requiring notice of or consent to
                 such assignment, (ix) that portion of all account balances
                 owing by any single account debtor which exceeds twenty-five
                 percent (25%) of the aggregate of all accounts otherwise
                 deemed eligible hereunder which are owing to Borrower by all
                 account debtors, (x) any accounts for any unbilled work in
                 process, progress payments, unapplied client retainer payments
                 and net of client advances, (xi) all accounts existing outside
                 of the United States of America (unless such accounts are
                 insured by The Export Import Bank, or a bank acceptable





                                     - 2 -
   3
                 to Lender has issued a letter of credit guaranteeing the
                 payment of such account), and (xii) any other accounts deemed
                 unacceptable by Bank in its sole and absolute discretion;
                 provided, however, if more than twenty percent (20%) of the
                 then balance owing by any single account debtor does not
                 qualify as an Eligible Account under the foregoing provisions,
                 then the aggregate amount of all accounts owing by such
                 account debtor shall be excluded from Eligible Accounts.
                 Borrower shall give Bank not less than two (2) business days'
                 prior notice of each requested advance hereunder, specifying
                 (1) the aggregate amount of such requested advance, and (2)
                 the requested date of such advance, with such advances to be
                 requested in a form satisfactory to Bank."

2.       B.      Section 5 of the Loan Agreement is hereby amended by replacing
                 the last sentence contained in said Section 5 with the
                 following:

                          "Borrower agrees to pay a fee to Bank of 0.25% of the
                 unused portion of the indebtedness on a quarter annual basis
                 beginning on  April 1, 1997."

3.       Reaffirmation of Representations and Warranties.  To induce the Lender
to enter into this First Amendment, the Borrower hereby reaffirms, as of the
date hereof, its representations and warranties contained in Section 4 of the
Loan Agreement and in all other documents executed pursuant thereto, and
additionally represents and warrants as follows:

                 A.       The execution and delivery of this First Amendment
         and the performance by the Borrower of its obligations under this
         First Amendment are within the Borrower's power, and does not and will
         not contravene or conflict with any provision of law or of any
         agreement binding upon the Borrower.

                 B.       The Loan Agreement as amended by this First Amendment
         represents the legal, valid and binding obligations of the Borrower,
         enforceable against the Borrower in accordance with their respective
         terms subject as to enforcement only to bankruptcy, insolvency,
         reorganization, moratorium or other similar laws affecting the
         enforcement of creditors' rights generally.

                 C.       No Event of Default has occurred and is continuing 
         as of the date hereof.

4.       Defined Terms.  Except as amended hereby, terms used herein that are
defined in the Loan Agreement shall have the same meanings herein.





                                     - 3 -
   4
5.       Reaffirmation of Loan Agreement.  This First Amendment shall be deemed
to be an amendment to the Loan Agreement, and the Loan Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Loan Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.

6.       Entire Agreement.  The Loan Agreement, as hereby amended, embodies the
entire agreement between the Borrower and the Lender and supersedes all prior
proposals, agreements and understandings relating to the subject matter hereof.
The Borrower certifies that it is relying on no representation, warranty,
covenant or agreement except for those set forth in the Loan Agreement as
hereby amended and the other documents previously executed or executed of even
date herewith.

7.       Governing Law.  THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.  This First Amendment has been entered
into in Harris County, Texas, and it shall be performable for all purposes in
Harris County, Texas.  Courts within the State of Texas shall have jurisdiction
over any and all disputes between the Borrower and the Lender, whether in law
or equity, including, but not limited to, any and all disputes arising out of
or relating to this First Amendment or any other Loan Document; and venue in
any such dispute whether in federal or state court shall be laid in Harris
County, Texas.

8.       Severability.  Whenever possible each provision of this First
Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this First Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this First Amendment.

9.       Execution in Counterparts.  This First Amendment may be executed in
any number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same agreement.

10.      Section Captions.  Section captions used in this First Amendment are
for convenience of reference only, and shall not affect the construction of
this First Amendment.

11.      Successors and Assigns.  This First Amendment shall be binding upon
the Borrower and the Lender and their respective successors and assigns, and
shall inure to the benefit of the Borrower and the Lender, and the respective
successors and assigns of the Lender.





                                     - 4 -
   5
12.      Non-Application of Chapter 15 of Texas Credit Codes.  The provisions
of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil Statutes, Article
5069-15) are specifically declared by the parties hereto not to be applicable
to the Loan Agreement as hereby amended or any of the other Loan Documents or
to the transactions contemplated hereby.

13.      NOTICE.  THIS FIRST AMENDMENT TOGETHER WITH THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

         IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the day and year first above written.

                                        BORROWER:

                                        MITCHAM INDUSTRIES, INC.,
                                        a Texas corporation



   
                                        By: /s/ BILLY F. MITCHAM
                                           -------------------------------------
                                        Billy F. Mitcham, President
    



                                        Lender:

                                        BANK ONE, TEXAS, N.A.



   
                                        By: /s/ WALTER F. RODEE, III
                                           -------------------------------------
                                        Name:  Walter F. Rodee, III
                                             -----------------------------------
                                        Title:  Vice President
                                              ----------------------------------
    

                                        BANC ONE LEASING CORPORATION



                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------




                                     - 5 -

   1
 
                                                                    EXHIBIT 23.1
 
              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
     We consent to the use of our reports on the financial statements and
related financial statement schedule as of January 31, 1995 and 1996 and for
each of the years in the three year period ended January 31, 1996, dated
February 23, 1996, included herein, in this Registration Statement on Form S-1
and to the reference to our Firm under the heading "Experts."
 
/s/  HEIN + ASSOCIATES LLP
 
HEIN + ASSOCIATES LLP
Certified Public Accountants
Houston, Texas
   
January 31, 1997