Plaintiff, by and through his attorneys, alleges the following based upon personal knowledge as to himself and his acts, and as to all other matters, upon the investigation undertaken by counsel, which investigation included, inter alia, the review and analysis of public filings of Mitcham Industries, Inc. ("Mitcham" or the "Company") with the United States Securities and Exchange Commission ("SEC"), press releases, published reports, and news articles.

1. This is a securities class action brought on behalf of all persons who purchased the common stock of Mitcham between June 4, 1997, and March 26, 1998, inclusive (the "Class Period"), as well as all persons who purchased shares of Mitcham stock pursuant to the Company's secondary public offering in December 1997. During the Class Period, Mitcham Industries, Inc. ("Mitcham") and Billy F. Mitcham, Jr. and Roberto Rios (the "Individual Defendants"), directly and indirectly through securities analysts to whom Defendants purposefully provided false and misleading information, knowingly and/or recklessly engaged in a course of conduct designed to mislead Plaintiff and the investing public in order to artificially inflate the price of Mitcham's common stock throughout the Class Period. This course of conduct included, without limitation, issuing materially false financial statements and materially false and misleading statements about Mitcham's operations and future prospects.

2. Defendants engaged in a pattern of misrepresentation throughout the Class Period in which they misrepresented to the investing public that Mitcham depended on revenues from seismic equipment leasing, as opposed to sales, to support Company growth, and that the Company had made adequate provisions for doubtful accounts. Both of these statements, made by Defendants on numerous occasions throughout the Class Period, were materially false and misleading, and drove the market price of Mitcham's stock to an all time Class Period high of $32.875 per share on November 5, 1997, having traded at the beginning of the Class Period at $7.00 per share.

3. As belatedly disclosed by Defendants on March 26, 1998, Mitcham was, in fact, dependent upon equipment sales to sustain Company growth, and it had inadequately provided for doubtful accounts. This disclosure shocked the investing public, and Mitcham stock declined drastically, by over 22%, thereby causing damages to the Plaintiff and the Class and Subclass members.

4. This Court has jurisdiction over the subject matter of this action pursuant to Section 27 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. §78aa, Section 22 of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. §77v, and 28 U.S.C. §1331 and §1337. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §78j(b) and §78t(a), and Rule 10b-5, 17 C.F.R. §240.10b-5, promulgated thereunder by the SEC, and Sections 11 and 12(a)(2) of the Securities Act, 15 U.S.C. 77k, 77l(a)(2).

5. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act, Section 22 of the Securities Act, and 28 U.S.C. §1391(b). Many of the acts and transactions giving rise to the violations of law complained of herein, including the preparation and dissemination to the investing public of false and misleading information, occurred in this Judicial District. In addition, Mitcham maintains its principal executive offices within this Judicial District.

6. In connection with the acts, conduct and other wrongs alleged in this Complaint, the Defendants, directly and indirectly, used the means and instrumentalities of interstate commerce, including the mails, telephone communications and the facilities of national securities exchanges.

7. Plaintiff Stanley Moskowitz purchased shares of Mitcham common stock during the Class Period, and was damaged thereby. In addition, Plaintiff purchased shares of Mitcham stock pursuant to a secondary public offering, in or about December 1997.

8. Defendant Mitcham is incorporated in the state of Texas, and maintains its principal place of business in Huntsville, Texas. During the Class Period, Mitcham shares were actively traded on the NASDAQ National Market System.

9. Defendant Billy F. Mitcham ("Billy Mitcham") was, at all times relevant to this case, Chairman, President, and Chief Executive Officer of the Company. Because of his position with Mitcham, Billy Mitcham knew the adverse, non-public information about its business, finances, products, markets, and present and future business prospects, and had access to internal corporate documents (including operating plans, budgets, forecasts, and reports of actual operations compared thereto), conversations and connections with other corporate officers and employees, and attendance at Board of Directors' and management meetings. Billy Mitcham knew or recklessly disregarded that the statements alleged in this Complaint were materially false and misleading when made and would affect trading in Mitcham securities and/or would create a false and misleading appearance with respect to the market for Mitcham securities before the truth about its financial condition was revealed to the public. As an integral part of the fraudulent scheme, during the Class Period, Billy Mitcham, who owned in excess of 10% of Mitcham stock, sold at least 135,000 shares of Mitcham stock at artificially inflated prices as high as $19.56 per share in September 1997, thereby realizing proceeds of at least $2,591,950. Additionally, he sold at least 20,000 shares of Mitcham stock at artificially inflated prices of at least $19.00 pursuant to a secondary public offering in December 1997, thereby realizing additional proceeds of at least $380,000.

10. Defendant Roberto Rios ("Rios") was, at all times relevant to this case, Vice President, Financial and Chief Financial Officer of Mitcham. Because of his position with Mitcham, Rios knew the adverse, non-public information about its business, finances, products, markets, and present and future business prospects, and had access to internal corporate documents (including operating plans, budgets, forecasts, and reports of actual operations compared thereto), conversations and connections with other corporate officers and employees, and attendance at Board of Directors' and management meetings. Rios knew or recklessly disregarded that the statements alleged in this Complaint were materially false and misleading when made and would affect trading in Mitcham securities and/or would create a false and misleading appearance with respect to the market for Mitcham securities before the truth about its financial condition was revealed to the public. As an integral part of the fraudulent scheme, during the Class Period, Defendant Rios sold at least 10,350 shares of Mitcham stock at the artificially inflated price of $19.38 per share in September 1997, realizing proceeds of at least $200,583. Additionally, pursuant to a secondary public offering in December 1997, Defendant Rios sold at least 10,000 shares of Mitcham stock at the artificially inflated price of $19.00 per share, thereby realizing additional proceeds of $190,000.

11. During the Class Period, the defendants, individually and in concert, directly and indirectly, engaged and participated in a continuous course of conduct to misrepresent the condtion of Mitcham's operations, and to conceal adverse material information regarding Mitcham as specified herein. The Defendants employed devices, schemes, and artifices to defraud, and engaged in acts, practices, and a course of conduct as herein alleged in an effort to increase and maintain an artificially high market price for Mitcham shares. This included the formulation, making, and/or participation in the making of untrue statements of material facts, and the omission to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, which operated as a fraud and deceit upon plaintiffs and the other members of the Class and Subclass.

12. Mitcham holds itself out as the leading independent company specializing in the leasing of 3-D seismic equipment to the oil and gas exploration industry. The Company leases and sells geophysical and other equipment used primarily by seismic service companies in performing seismic data acquisition surveys on land and in transition zones, such as marshes and shallow water. According to the Company, demand for leased seismic services has increased significantly over the past several years due to technological advances, which have had the effect of increasing drilling success rates, and thus, reducing the overall costs of locating oil and gas. As a consequence of increasing demand, during the period of January 31, 1994, through October 31, 1997, Mitcham's equipment lease pool grew from approximately $957,000 to $44.3 million.

13. In December 1996, one of Mitcham's largest customers, Grant Geophysical, Inc. ("Grant"), filed for bankruptcy protection under Chapter 11. For the eleven-month period ended December 31, 1996, revenues derived from Grant amounted $1.0 million or 17.8% of Mitcham's total revenues as of that date. As a consequence of Grant's filing, in December 1996, Mitcham increased its allowance for trade accounts receivable from $615,000 at October 31, 1996 to $1.5 million on December 31, 1996, which Defendants claimed would fully reserve all amounts due from Grant and to provide for any potential loss associated with the Company's remaining trade accounts receivable.

14. On or about January 17, 1997, Reuters Financial Service reported that Mitcham announced that it was increasing its doubtful account allowance by $500,000 to provide for Grant's filing for bankruptcy protection the preceding month. Thus, by mid-January 1997, Mitcham had represented to the public that it had completely provided for the doubtful account likely to arise from Grant's insolvency, as well as all other trade accounts receivable.

15. On March 5, 1997, Defendants filed a Registration Statement and Prospectus with the SEC, in anticipation of a secondary public offering, and represented in that registration statement that Mitcham's business strategy was as follows:

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: [e]nlarge and diversify its lease pool of seismic equipment..., [e]xpand its international presence..., [d]evelop and enhance alliances with major seismic equipment manufacturers....

The Registration Statement also represented that Mitcham was "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." These statements were intended to convince the investing public that leasing, as opposed to sales, offered the greater potential for business growth, and that the Company would not rely upon sales for financial stability.

16. In the March 5, 1997 Registration Statement, Defendants also enumerated various risk factors which, they suggested, should be considered by prospective investors. One risk factor was titled "Dependence Upon Additional Lease Contracts; Uncertain Future Results," and described the risk as follows:

The Company's operating risks occur primarily in its seismic equipment leasing business.... 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.

Accordingly, Defendants directly stated that the chief risk associated with investing in Mitcham would be derived from the Company's ability to glean revenues from leasing.

17. On or about March 12, 1997, Defendants issued a press release in which Billy Mitcham announced that for the fiscal year ended January 31, 1997, total revenues increased nearly 101.5% to $14.7 million from $7.3 million in fiscal year 1996. In touting the Company's nearly doubling of its revenues, Billy Mitcham stated:

We are enthusiastic about our Company's prospects for the new fiscal year. Importantly, with the infusion of $16.1 million in new capital from our secondary offering, we plan to diversify even further and grow our lease pool. In addition, we are expanding into international markets....Mitcham is also in an enviable competitive position, in that our exclusive lease referral agreements with Sercel [Societe E'tudes Recherches et Construction Electroniques, S.A.] and I/O [Input/Output, Inc.], which together manufacture 90% of the land seismic systems used throughout the world, fortify barriers to entry for competitors.

18. In its Form 10-KSB for the year ended January 31, 1997, filed with the SEC on or about April 30, 1997, Defendants represented that Mitcham was relying upon equipment leasing, as opposed to sales, for growth. Specifically, the report stated that:

[t]he 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 [emphasis added].

19. In the Form 10-KSB, Defendants also expounded the Company's business strategy as follows:

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: [e]nlarge and diversify its lease pool of seismic equipment..., [e]xpand its international presence..., [d]evelop and enhance alliances with major seismic equipment manufacturers...[emphasis added].

20. The Company also set forth in the Form 10-KSB specific information regarding its liquidity and capital resources. Of particular interest, Defendants stated that:

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

21. Mitcham's 1996 Form 10-KSB also represented to the investing public that the Company had made adequate provisions for doubtful accounts. Mitcham reported that it had increased its allowance for doubtful accounts expense from $627,000 in fiscal year 1996 to $1,346,000 in fiscal year 1997, and that of the increase, "approximately $500,000 was attributable to the bankruptcy filing of one of the Company's customers, Grant Geophysical, Inc." Significantly, the report then stated that:

As of January 31, 1997, the Company's allowance for doubtful accounts receivable amounted to $1,500,000, which was an amount management believed was sufficient to cover any potential losses in trade accounts receivable as of that date...[and] 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.

22. As of January 31, 1997, the Company's allowance for doubtful accounts totaled $1.5 million, or 29.4% of total accounts receivable, and the Company's doubtful accounts expense totaled $1,346,000, or 16% of total revenues. Additionally, at least $1.2 million of trade receivables, or over 24% of total trade receivables, were at least over 90 days old, and Grant, the Company's largest client, which owed $1.2 million, had declared bankruptcy.

23. Therefore, by the beginning of the Class Period, Defendants had conditioned the market into believing that: (a) equipment leasing was the area upon which Defendants stated Mitcham's growth potential existed, and (b) Mitcham's allowance for doubtful accounts was sufficient in light of the Company's rapid growth.

24. On or about June 4, 1997, Mitcham issued a press release announcing record revenue increases for the first quarter ended April 30, 1997. In commenting on the increase in revenues of approximately 144% from the first quarter of the prior year, Billy Mitcham stated:

We are gratified by the quarter's financial results; they are in line with our expectations and reflect a number of positive developments. Our investment in expanding our seismic lease pool is progressing smoothly, and with additions to our lease equipment running neck-in-neck with demand, we were able to surpass our historical lease utilization rate of 80% and achieved a utilization rate in excess of 90% on 3-D channel boxes during the first fiscal quarter of 1998.

This statement furthers Defendants' scheme to misrepresent that the Company's projected growth would come from equipment leasing, and sales revenues were not needed for growth.

25. On or about June 12, 1997, in its Form 10-QSB filing with the SEC for the first quarter fiscal quarter ended April 30, 1997, Defendants reported that the Company's net income was $1,723,000, earnings per share was $0.28, and that revenues were as follows:

Revenues of $5,536,000 for the three months ended April 30, 1997 represented an increase in 143.9% over revenues of $2,270,000 for the same prior year period. Leasing services generated revenues of $4,116,000 for the three months ended April 30, 1997, an increase of $2,312,000, or 128.2%, as compared to $1,804,000 for the same prior year period.

26. Defendants' first quarter Form 10-QSB also emphasized the Company's purported focus on expanding its leasing business:

While the Company seeks to increase its equipment sales revenue when opportunities to do so arise, management is continuing to pursue a growth strategy in its seismic equipment leasing business and does not necessarily anticipate that equipment sales revenues will continue to increase significantly either in dollar amount or as a percentage of total sales [emphasis added].

Thus, Defendants materially misrepresented that Mitcham did not consider equipment sales to be an area of revenue upon which the Company relied for growth or financial stability. However, as was subsequently disclosed on March 26, 1998, contrary to this representation, Defendants knew that without significant revenues from the sale of equipment, not only would the Company not grow, but revenues and earnings would materially shrink.

27. The first quarter Form 10-QSB also addressed the Company's provision for doubtful accounts expense, which had increased to $289,000 from $140,000 in first quarter of the previous year. According to the Form 10-QSB:

The increase was a result of additional provisions for the allowance account in connection with the bankruptcy filing of one of the Company's customers, Grant Geophysical, Inc.

The report, therefore, misrepresents that all potential losses in trade accounts receivable as of the end of the first quarter had been addressed.

28. The first quarter report further describes the Company's provision for doubtful account allowance:

As of April 30, 1997, of the Company's customers with trade receivables more than 90 days past due, four customers had an aggregate of $2,096,000 more than 90 days past due. As of April 30, 1997, amounts due from Grant at that date totaled $1,513,000. The Company's allowance for trade accounts receivable balance at April 30, 1997 is $1,700,000, which management believes is adequate to cover any potential loss associated with Grant and the Company's remaining trade accounts receivable.

29. Defendants' statements regarding the adequacy of Mitcham's doubtful accounts allowance and expense were materially false and misleading because they did not adequately reflect Mitcham's true financial position. Defendants knew that the Company's allowance for doubtful accounts as of April 30, 1997, totaling $1.7 million, or 21.9% of total accounts receivable (compared to the year end January 31, 1997 allowance of 29.4%), and doubtful accounts expense totaling $289,000, or 5.2% of total revenues (compared to the year end January 31, 1997 expense of 16%), were not sufficient based upon then known facts, because: (1) total revenues and trade accounts receivables were substantially increasing, yet the allowance for doubtful accounts and doubtful accounts expense were shrinking as a percentage of trade receivables and total revenue, respectively; (2) over $2 million of trade receivables, or over 35% of total trade receivables, were already over 90 days old (when the Company's historic average collection period is 60-90 days); and (3) Grant, the Company's largest client, owing over $1.5 million, declared bankruptcy. Therefore, Defendants knew that its doubtful accounts allowance of $1.7 million and first quarter expense of $289,000 were not sufficient, and, therefore, the Company's financial statements for the first quarter ended April 30, 1997 were materially false and misleading because they overstated assets and earnings.

30. Throughout the Class Period, Defendants continued to report record revenues, and on September 3, 1997, Defendants announced that revenues for the second quarter of fiscal year 1998 increased approximately 428% to $10.9 million from $2.1 million in the second quarter of the previous year. In discussing the revenue growth, Billy Mitcham specifically stated that:

The dramatic increases in the Company's revenues and profits reflect accelerated growth in both our leasing and sales businesses. During the quarter many of our leasing customers exercised their option to purchase equipment under lease at the end of their lease contracts, which accounted for $6.6 million in equipment sales....We remain optimistic regarding the remainder of fiscal 1998 as we continue to pursue our growth strategy in our seismic equipment leasing business by expanding the size and scope of the lease fleet....We are well-positioned to expand our lease fleet to $38 million by the end of the current fiscal year with the net proceeds from our recent secondary offering, internally generated funds and our revolving line of credit.

Thus, Defendants continued to publicly emphasize fiscal year 1998 growth would come from lease revenue.

31. The September 3, 1997 announcement also underscored the fact that the secondary offering of common stock from March 1997 had generated proceeds which were to be applied toward expanding the Company's lease fleet. The Company, therefore, continued to misrepresent the importance of sales to the Company's financial growth, when in fact, it depended substantially upon equipment sales for the growth and security of the business.

32. In Mitcham's Form 10-QSB for the second quarter ended July 31, 1997, filed with the SEC on September 10, 1997, Defendants formally reported what was publicly announced one week prior; namely, that the Company experienced a substantial increase in sales during the second quarter of fiscal year 1998. In discussing growth, Defendants again emphasized that:

management is continuing to pursue a growth strategy primarily in its seismic equipment leasing business and does not necessarily anticipate that equipment sales revenues will continue to increase significantly in either dollar amount or as a percentage of total revenues.

Defendants, therefore, continued to misrepresent to the investing public that the financial growth of the Company was not dependent upon sales of seismic equipment when Defendants knew that without substantial sales revenue, Mitcham could not achieve financial growth. Accordingly, Defendants continued to deliberately misrepresent to the public that sales revenues were not materially important, when, as subsequently disclosed on March 26, 1998, sales were of material importance to Company growth.

33. The second quarter Form 10-QSB also reported that the Company's net income was $1,190,000, earnings per share were $0.16, and revenue was as follows:

Revenues of $10.9 million for the three months ended July 31, 1997 increased 428% over revenues of $2.1 million for the same prior year period. Leasing services generated revenues of $2.7 million for the three months ended July 31, 1997, a 141% increase as compared to leasing revenues for the same prior year period.

34. The Form 10-QSB for the second quarter further indicated that a significant amount of Mitcham's trade receivables were materially past due:

At July 31, 1997, of the Company's customers with trade receivables more than 90 days past due, four customers had an aggregate of $2.3 million more than 90 days past due. As of July 31, 1997, amounts due from Grant totaled $2.4 million, an increase of approximately $907,000 from the amount Grant owed at April 30, 1997, due to the Company's $1.2 million sale to Grant in May 1997 of the seismic equipment it was previously leasing.

35. Mitcham's Form 10-QSB for the second quarter of fiscal 1998 also addressed issues relating to allowances for doubtful accounts, particularly those associated with Grant.

The Company's provision for doubtful accounts expense increased to $271,000 in the second quarter of fiscal 1997 from $13,000 in the same prior year period. The increase was a result of additional provisions for the allowance account in connection with the bankruptcy filing of one of the Company's customers, Grant Geophysical, Inc. ("Grant"). As of July 31, 1997, the Company's allowance for doubtful accounts receivable amounted to $1.7 million, which is an amount management believes is sufficient to cover any potential losses in trade accounts receivable as of that date.

36. Also in the Form 10-QSB for the second quarter of fiscal 1998, Mitcham addressed its doubtful accounts expense:

The Company's provision for doubtful accounts expense increased to $560,000 for the six months ended July 31, 1997, as compared to the same prior year period. The increase was a result of additional provisions for the allowance account in connection with the bankruptcy filing of Grant.

The Company, however, disclosed that it made sales to Grant of $1.2 million in May 1997, which increased the amount due from Grant by $907,000 -- to a total of $2.4 million as of July 31, 1997. As of that date, the Company's allowance for doubtful accounts reportedly still totaled $1.7 million, while accounts receivable had grown to $8,102,000, from $3,598,000 on January 31, 1997. Thus, despite having to make additional allowances for doubtful accounts in connection with the Grant bankruptcy, Mitcham continued to sell equipment to Grant and incur significant increases in accounts receivable as a consequence of those transactions, yet Defendants failed to properly record sufficient allowance for doubtful accounts provisions or expenses.

37. Defendants' statements regarding the adequacy of Mitcham's doubtful accounts allowance and expense were materially false and misleading because they did not adequately reflect Mitcham's true financial position. Defendants knew that the Company's allowance for doubtful accounts as of July 31, 1997, totaling $1.7 million, or 17.3% of total accounts receivable, and doubtful accounts expense totaling $560,000, or 5.1% of total revenues, were not sufficient based upon then known facts, because: (1) total revenues and trade accounts receivables were substantially increasing, yet the allowance for doubtful accounts and doubtful accounts expense were shrinking as a percentage of trade receivables and total revenue, respectively; (2) at least $2.3 million of trade receivables, or over 28.4% of total trade receivables, were already over 90 days old (when the Company's historic average collection period is 60-90 days); and (3) Grant, the Company's largest client, declared bankruptcy. Therefore, Defendants knew that its doubtful accounts allowance of $1.7 million and expense for the second quarter of $289,000 were not sufficient, and, therefore, the Company's financial statements for year end July 31, 1997 were materially false and misleading because they overstated assets and earnings.

38. Between September 12, 1997, and September 18, 1997, Defendant Billy Mitcham sold 135,000 shares -- which constituted 32% of his total holdings as of those dates -- at artificially inflated prices: 15,000 shares at $19.56 per share; 15,000 shares at $19.48 per share; 20,000 shares at $19.38 per share; 15,000 shares at $19.25 per share; and 70,000 shares at $19.00 per share. As a consequence of this insider selling, Billy Mitcham realized a gain of $2,591,950 and capitalized significantly upon the numerous materially false and misleading positive statements about the Company that he had issued during the Class Period, which statements had the direct effect of artificially inflating the price of Mitcham stock.

39. On September 16, 1997, Roberto Rios, Mitcham's Vice President of Finance and CFO, sold 10,350 shares of his Company stock -- which constituted over 30% of his total holdings as of that date -- at the artificially inflated price of $19.38 per share. This insider selling allowed Rios to realize a gain of at least $200,583 and to capitalih he contributed, during the Class Period, which statements had the direct effect of artificially inflating the price of Mitcham stock.

40. On September 16, 1997, William J. Sheppard, Mitcham's Vice President of International Operations, sold 10,350 shares of his Company stock -- which constituted over 30% of his total holdings as of that date -- at the artificially inflated price of $19.38 per share. This insider selling of more than 30% of his total Mitcham stock as of that date allowed Sheppard to realize a gain of at least $200,583 and to capitalize on the materially false and misleading statements issued by Defendants during the Class Period, which statements had the direct effect of artificially inflating the price of Mitcham stock.

41. On Oct. 23, 1997, the Business Wire reported that Forbes would list Mitcham as one of America's 200 Best Small Companies in its November 3, 1997 issue. In response to the Company's ranking of 67, Billy Mitcham attributed the Company's success to:

exclusive contracts with manufacturers who make 90% of 3-D seismic equipment....This recognition is a reflection of the dedication of our entire staff, who are simply the best in the business. Our success results from our commitment to provide superior round-the-clock service, 365 days a year, to all our customers.

The fact that Forbes bestowed this honor upon the Company evidences the extent to which Defendants' scheme had succeeded. Defendants' pattern of misrepresentations had so completely misled the investing public, and so drastically inflated the price of Mitcham stock, that the scheme had earned the Company a prestigious award.

42. The Company continued to publicly portray its dependence upon and dedication to the leasing dimension of its business, while failing to disclose the importance of sales to Company growth. On November 19, 1997, Defendants issued a press release announcing that the Company had filed a registration statement with the SEC for a secondary offering of 1,850,000 shares of common stock, of which 50,000 were to be sold by selling shareholders. Significantly, Defendants clearly stated that: [p]roceeds from of the offering will be used to purchase additional seismic equipment for the Company's lease pool and for general corporate purposes, including working capital." Thus, Defendants misrepresented to the investing public that it was committing a substantial portion of capital -- specifically, that raised by the secondary offering -- toward its leasing business, which further underscored the Company's public position that it was relying upon equipment leasing, not sales, for revenue growth.

43. On November 25, 1997, Defendants filed with the SEC a Form 10-QSB/A, to amend its filing for the second fiscal quarter. In this filing, Defendants reported net income of $1,190,000, earnings per share of $0.16, as reported in the original second quarter filing, but a $261,000 decrease in revenues during the second quarter as follows:

Revenues of $10.7 million for the three months ended July 31, 1998 increased 415% over revenues of $2.1 million for the same prior year period. Leasing revenues increased by $1.3 million during the three months ended July 31, 1997, a 118% increase as compared to leasing revenues for the same prior year period [emphasis added].

44. Correspondingly, Defendants also reported a $261,000 decrease in doubtful accounts provision as a percentage of revenue during the second fiscal quarter. Specifically, Defendants stated:

Provision for doubtful accounts was 2% of total revenues in the six months ended July 31, 1997, as compared to 4% of total revenues in the same prior year period. As of July 31, 1997, the Company's allowance for doubtful accounts was $1.7 million [emphasis added].

45. Defendants' amended second quarter filing also revised the amount of trade receivables which were materially past due. Whereas the original Form 10-QSB for the second quarter reported that $2.3 million of trade receivables were more than 90 days past due, according to the amended filing:

[a]t July 31, 1997, the Company had trade receivables of $3.1 million that were more than 90 days past due, with four customers owing an aggregate of $2.3 million of such amount. As of such date, the Company's allowance for doubtful accounts was $1.7 million. In addition, at such date, the Company had receivables due from one customer of approximately $559,000, $249,000 of which was more than 12 months past due [emphasis added].

46. Mitcham's Form 10-QSB/A was materially false and misleading at the time it was filed in that, subsequent to the original second quarter filing, Defendants had discovered that they had overstated revenues by $261,000 in the Form 10-QSB for the second quarter, and they knew that such a disclosure would cause earnings per share to decrease by 22% from $0.16 per share to $0.125 per share. Thus, instead of reporting the overstatement of revenues -- which would materially affect the stock price of the secondary public offering planned for December and already underway -- Defendants decreased the Company's allowance for doubtful account expense by a corresponding $261,000, to a mere $10,000. These materially false and misleading statements allowed Defendants to maintain a $0.16 earnings per share, and avoid any negative impact on the anticipated secondary public offering.

47. In its Form 10-QSB for the third quarter ended October 31, 1997, filed with the SEC on November 26, 1997, Defendants reported that net income had increased to $1,973,000, and earnings per share had increased to $0.25. Additionally, Defendants once again reported an increase in revenues in the three month period ending October 31, 1997, as compared with the same three month period:

Revenues of $10.1 million for the three months ended October 31, 1997 increased 233% over revenues of $3.0 million for the same prior year period. Leasing services generated revenues of $4.3 million for the three months ended October 31, 1997, a $1.9 million, or 78% increase, compared to leasing revenues for the same prior year period.

48. The third quarter filing addressed Mitcham's provision for doubtful accounts expense:

The Company's provision for doubtful accounts expense increased to $709,000 for the nine months ended October 31, 1997 from $418,000 in the same prior year period. The increase was a result of additional provisions for the allowance account in connection with the bankruptcy filing of Grant. The provision for doubtful accounts expense was 3% of total revenue in the nine months ended October 31, 1997, as compared to 6% of total revenue in the same prior year period. As of October 31, 1997, the Company's allowance for doubtful accounts was $891,000 [emphasis added].

Thus, at a time when revenues were increasing by 233%, trade accounts receivable increased by 288%, and trade accounts receivable more than 90 days past due rose to over $3.1 million, Defendants explicitly reported that provision for doubtful accounts expense had diminished, as a percentage of total revenue, compared to the nine month period in the prior year. Thus, Defendants knew that their provision for trade accounts receivable were not sufficient and the Company's earnings were materially inflated.

49. Mitcham's third quarter Form 10-QSB also reported past due trade account receivables as of October 31, 1997:

At October 31, 1997, the Company had trade account receivables of $2.9 million that were more than 90 days past due, with four customers owing an aggregate of $1.5 million of such amount. As of such date, the Company's allowance for doubtful accounts was $891,000. In addition, at such date, the Company had receivables due from one customer of approximately $539,000, $449,000 of which was more than 12 months past due.

Thus, as compared to the second quarter, despite the fact that the amount of total trade account receivables 90 days past due was $2.9 million, the allowances for doubtful accounts had decreased from $1.7 million to $891,000 between the second and third quarters.

50. Moreover, according to the third quarter Form 10-QSB, as of October 31, 1997, Mitcham reported having received $1.2 million in payments from Grant, which represented final settlement on the amounts owed from post-bankruptcy petition claims of $1.6 million. According to the third quarter Form 10-QSB, the Company expected to collect one-half of pre-bankruptcy petition claims totaling approximately $755,000, prior to the end of the fiscal year, the balance of which would be written off by the Company. Defendants stated, however, that, contrary to what it reported for the previous quarter, Mitcham was "currently leasing seismic equipment to Grant." In light of the substantial losses absorbed by the Company as a consequence of Grant's bankruptcy, Defendants knew that Mitcham's allowance for doubtful accounts and doubtful accounts expenses were woefully inadequate, especially when Mitcham was continuing to do business with Grant. Therefore, Defendants clearly issued financial statements that were materially false and misleading.

51. Defendants' statements regarding the adequacy of Mitcham's doubtful accounts allowance and expense were materially false and misleading because they did not adequately reflect Mitcham's true financial position. Defendants knew that the Company's allowance for doubtful accounts as of October 31, 1997, totaling $891,000, or 8.6% of accounts receivable, and doubtful accounts expense totaling $410,000, or only 4.1% of total revenues, were not sufficient based upon then known facts, because: (1) total revenues and trade accounts receivables were substantially increasing, yet the allowance for doubtful accounts and doubtful accounts expense were shrinking as a percentage of trade receivables and total revenue, respectively; (2) at least $2.9 million of trade receivables, or over 27% of total trade receivables, were already over 90 days old (when the Company's historic average collection period is 60-90 days); and (3) Grant, the Company's largest client, owing $1.6 million, declared bankruptcy. Therefore, Defendants knew that its doubtful accounts allowance of $891,000 and second quarter doubtful account expense of $410,000 were not sufficient, and, therefore, the Company's financial statements for year end October 31, 1997 were materially false and misleading because they overstated assets and earnings.

52. In a Company press release on December 1, 1997, Roberto Rios, Vice President, Finance and CFO, announced Mitcham's operating results for the third quarter ended October 31, 1997. Of particular significance were reported increases in sales of seismic equipment:

Revenues for the quarter increased 233% to $10.1 million from $3.0 million in the same prior year period. Leasing services revenues for the quarter increased 78% to $4.3 million as compared to $2.4 million last year. Sales of seismic equipment increased to $5.8 million as compared to $610,000 in last year's comparable period. This increase is attributable in large part to the exercise of lease purchase option contracts...

Thus, as of December 1, 1997, despite the Company's purported reliance upon revenues from the leasing dimension of its business, Mitcham was reporting increases in equipment sales, and attributing such increases to purchase options. Such statements were materially false and misleading at the time they were made, as Defendants subsequently disclosed on March 26, 1998, that a decrease in the exercise of purchase options had significantly impaired Company growth.

53. The Company filed a registration statement and prospectus with the SEC on or about December 17, 1997 (the "Offering Materials"), in anticipation of a secondary offering of common stock. In enumerating its business strategies in the Offering Materials, Defendants touted an overriding principal guiding its business practices, as well as its primary objectives:

The Company's business strategy is to meet the expanding needs of users of seismic equipment through its leasing and support services. To accomplish this, the Company has identified the following major objectives: [e]nlarge and diversify the seismic equipment lease pool..., [e]xpand international operations..., develop and enhance alliances with major seismic equipment manufacturers..., pursue additional business development opportunities.

Accordingly, Defendants clearly misrepresented, as it had throughout the Class Period that the leasing of seismic equipment would support financial growth, as opposed to sales. Through such misrepresentations, the Company continuously failed to disclose the importance of equipment sales to the Mitcham's growth and stability.

54. The Offering Materials also reported that in October 1997, Mitcham had entered into a non-binding letter of intent to acquire all of the issued and outstanding stock of North American Western Data Services, Inc. ("Western Data"), a company which leases and sells geophysical surveying equipment to companies in the seismic services industry. Pursuant to the acquisition, Mitcham was to pay approximately $3 million, 92% of which was to consist of shares of common stock and 8% of which was to be cash. Thus, Defendants were using the artificially inflated price of Mitcham's common stock to acquire assets and capitalize the Company.

55. Defendants include in the Offering Materials a list of "Risk Factors" associated with the stock being offered. Prospective investors were advised of the following risks:

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

Another risk factor similarly enumerates the risks associated with equipment leasing:

CUSTOMER CONCENTRATION AND CREDIT LOSSES....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.

Accordingly, Defendants completely fail to advise prospective investors of the substantial risk that insufficient sales pose to the Company's financial growth. As subsequently disclosed on March 26, 1998, sales were, in fact, a vital element in Mitcham's stability and financial success.

56. In the Offering Materials, the Company made specific statements regarding how Defendants intend to allocate the proceeds of the offering:

[N]et proceeds will be used to purchase additional seismic equipment for the Company's lease pool which the Company has ordered from manufacturers and for which the Company has obtained future lease commitments. The remaining net proceeds will be used for working capital and other general corporate purposes, including additional equipment purchases....

These statements were materially misleading in that they fraudulently misrepresented that Mitcham's equipment lease pool was the primary basis of its financial support and growth, and that the proceeds of the Offering would be best allocated to further the corporate goal of expanding this most important dimension of the Company's business. At the time these statements were made, Defendants knew that Mitcham was suffering from a lack of financial growth and stability as a consequence of deficiencies in sales, rather than leases. Indeed, as Defendants disclosed on March 26, 1998, the numerous "future lease commitments" obtained by the Company were inadequate to alleviate the effects of poor equipment sales.

57. In the Offering Materials, Defendants also omitted certain material information about equipment sales which, had such information been disclosed to the investing public, Defendants would not have been able to artificially inflate the price of Mitcham stock to the drastic extent that it did. Specifically, the Offering Materials represented that, for the nine months ended October 31, 1997, net income was $4,886,000, earnings per share were $0.67, and further, that:

Seismic equipment sales for the nine months ended October 31, 1997 were $15.4 million, an increase of $13.4 million, or 667% percent, from $2.0 million for the same prior year period. The increase in sales was due primarily to the exercise of lease purchase option contracts in the period totaling $12.0 million.

This statement materially misrepresents the revenue successes experienced by the Company as a consequence of sales. As subsequently disclosed by Defendants on March 26, 1998, and materially omitted in this Prospectus, sales were not only a significant source of Company growth and financial stability, but even the figures presented above were inadequate to allow the Company to meet its financial projections. Thus, Defendants clearly misrepresent the impact of equipment sales on Mitcham's financial success.

58. In the Prospectus, Defendants also made serious misrepresentations as to the Company's allowance for doubtful accounts:

The Company's provision for doubtful accounts expense increased to $709,000 for the nine months ended October 31, 1997 from $418,000 in the same prior year period. The increase was a result of additional provisions for the allowance account in connection with the bankruptcy filing of one of the Company's customers, Grant Geophysical, Inc. ("Grant"). The provision for doubtful accounts expense was 3% of total revenues in the nine months ended October 31, 1997, as compared to 6% of total revenues in the same prior year period. As of October 31, 997, the Company's allowance for doubtful accounts was $891,000.

This statement is materially misleading in that it constitutes another occasion for Defendants to use Grant's bankruptcy to justify its doubtful account allowance, when Defendants had represented in its Form 10-QSB filings during 1997 that it had adequately provided for losses to be sustained as a consequence of Grant's bankruptcy.

59. The Prospectus also contained information about Mitcham's trade accounts receivable:

At October 31, 1997, the Company had trade accounts receivable of $2.9 million that were more than 90 days past due, with four customers owing an aggregate of $1.5 million of such amount. As of such date, the Company's allowance for doubtful accounts was $891,000. In addition, at such date, the Company had receivables due from one customer of approximately $539,000, $449,000 of which was more than 12 months past due.

Thus, despite the fact that the amount of total trade account receivables 90 days past due had increased to $2.9 million, the allowances for doubtful accounts had decreased from $1.7 million to $891,000 between the second and third quarters.

60. Defendants' statements regarding the adequacy of Mitcham's doubtful accounts allowance and expense were materially false and misleading because they did not adequately reflect Mitcham's true financial position. Defendants knew that the Company's allowance for doubtful accounts as of October 31, 1997, totaling $891,000, or 8.6% of total accounts receivable, and doubtful accounts expense totaling $410,000, or 4.1% of total revenues, were not sufficient based upon then known facts, because: (1) total revenues and trade accounts receivables were substantially increasing, yet the allowance for doubtful accounts and doubtful accounts expense were shrinking as a percentage of trade receivables and total revenue, respectively; (2) at least $2.9 million of trade receivables, or over 27% of total trade receivables, were already over 90 days old (when the Company's historic average collection period is 60-90 days); and (3) Grant, the Company's largest client, owing $1.6 million, declared bankruptcy. Therefore, Defendants knew that its doubtful accounts allowance of $891,000 and expense of $410,000 were not sufficient, and, therefore, the Company's financial statements contained in its Offering Materials, as well as in Forms 10-QSB and the first, second, and third fiscal quarters were materially false and misleading because they overstated assets and earnings.

61. On December 18, 1997, the day after the December Offering Materials were filed, Mitcham announced through its own press release that an underwriting group had priced a public offering of 1,820,000 shares of the Company's common stock at $19.00 per share. Of the total shares sold, 1,800,000 were to be sold by the Company, and 20,000 were to be sold by selling shareholders. According to the press release, the offering was expected to generate net proceeds of approximately $32 million.

62. On February 18, 1998, the Bergen County Record reported that the National Association of Securities Dealers ("NASD") had fined and sanctioned Barron Chase Securities, Inc. for violations of securities rules in conjunction with the pricing of Mitcham warrants for stock. Specifically, according to the report, NASD announced that:

Barron Chase, without admitting any wrongdoing, accepted sanctions for violations of securities rules, including the selling of securities to the public 'at prices that were not reasonably related to the prevailing market price....' [Specifically], on 17 occasions over a three-month period in 1994 and 1995, Barron Chase had overpriced warrants for stock in Mitcham Industries, Inc., a Texas company that makes seismic equipment for the oil industry. The warrants were issued around the time the company was managing Mitcham's $5.2 million initial public offering [emphasis added].

63. On March 26, 1998, Mitcham issued a stunning press release that its public accounting firm had not completed its year-end audit, and that the Company was not prepared to release its financial results for the fourth quarter and year ended January 31, 1998. More importantly, Mitcham shocked the investment community by reporting that its projected growth would not meet expectations:

the Company does not expect to meet analysts' estimates for the fourth quarter and the year. Factors contributing to the Company's expected shortfall include customers not exercising purchase options on leased equipment as anticipated, and a possible increase in allowance for doubtful accounts receivable related to certain international customers.

Thus, after failing to disclose any negative financial information throughout the Class Period, the Company surprisingly admitted the true condition of the Company, and publicly acknowledged the vital importance of equipment sales to the Company's financial stability and that it had not adequately provided for doubtful accounts receivable. As a consequence of Defendants' disclosure of the Company's financial condition, Mitcham's common stock dropped $3.75 per share -- over 22% -- from $16.75 per share on March 25, 1998, to $13.00 per share on March 26, 1998, the date of Defendants' disclosure.

64. Each of the positive statements made by the Company and Company management about its business during the Class Period was materially false and misleading when issued, and was made for the purpose of artificially inflating the price of Mitcham stock so that members of Mitcham management could sell their shares of stock and realize artificially high gains.

65. Plaintiff intends to rely, in part, on the fraud-on-the-market doctrine which involves the existence of an efficient market for Mitcham common stock. In that connection, brokers nationwide have immediate access to press releases and trading information about Mitcham through computer and news wire systems. These systems display, within minutes of the release or transaction taking place, pertinent information and the most recent trades and prices. These systems also make it possible to trade Mitcham common stock with others in a timely manner.

66. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that:

A. Defendants made public misrepresentations or failed to disclose facts during the Class Period;

B. the omissions and misrepresentations of fact were material;

C. Mitcham met the requirements for listing, and was listed on the NASDAQ National Market System, which is a highly efficient and automated market;

D. as a regulated issuer, Mitcham filed periodic public reports with the SEC and NASDAQ;

E. Mitcham trading volume was substantial, averaging over 100,000 shares per day during the Class Period, thereby reflecting numerous trades each day;

F. the misrepresentations alleged herein, as made by Mitcham management, would induce a reasonable investor to misjudge the value of the common stock of Mitcham;

G. Plaintiff and members of the Class purchased or otherwise acquired their Mitcham stock between the time Defendants failed to disclose or misrepresented material facts, and the time the true facts were disclosed, without knowledge of the omitted or misrepresented facts; and

H. Mitcham was followed by numerous analysts employed by major brokerage firms who wrote reports that were distributed to its sales force and certain customers of their respective brokerage firms and that were available to the public through various automated data retrieval services. Thus, each of these reports was publicly available and entered the public marketplace.

42[sic]. Based upon the foregoing, Plaintiff and members of the Class are entitled to a presumption of reliance upon the integrity of the market.

43. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. The class which Plaintiff seeks to represent (the "Class") consists of all persons and entities who purchased the common stock of Mitcham during the period from June 4, 1997 through March 26, 1998, inclusive (the "Class Period") and who were damaged thereby. Plaintiff also seeks to represent a subclass of individuals who purchased Mitcham common stock pursuant to the Company's secondary public offering in December 1998 (the "Subclass"). Excluded from the Class and Subclass (collectively, "Classes") are Defendants herein, members of the immediate family of the Individual Defendants, directors, officers, subsidiaries and affiliates of Mitcham, any entity in which any excluded person or entity has a controlling interest, and the legal representatives, heirs, successors or assigns of any such excluded person or entity.

44. The members of the Classes are so numerous that joinder of all members is impracticable. While the exact number of Class and Subclass members is unknown to Plaintiff at the present time and can only be ascertained from books and records maintained by Mitcham and/or its agents, Plaintiff believes that there are thousands of members of the Class and Subclass located throughout the United States. Mitcham has over 9.3 million shares of common stock outstanding owned by thousands of shareholders of record and beneficial owners. Furthermore, throughout the Class Period, Mitcham common stock was actively traded on the NASDAQ National Market System.

45. Plaintiff's claims are typical of the claims of the members of the Classes, as all members of the Classes are similarly affected by Defendants' wrongful conduct in violation of federal law complained of herein.

46. Plaintiff will fairly and adequately protect the interests of the members of the Classes, and has retained counsel competent and experienced in class and securities litigation. Plaintiff and members of the Classes do not have interests antagonistic to or in conflict with the other members of the Classes.

47. Common questions of law and fact exist as to all members of the Classes and predominate over any questions affecting solely individual Class members. Among the questions of law and fact common to the Classes are:

A. whether Defendants' acts as alleged herein have violated the federal securities laws;

B. whether documents, reports, releases and statements disseminated by Defendants to the investing public and security holders during the Class Period omitted and/or misrepresented material facts with respect to the business, financial condition and future prospects of the Company;

C. whether Defendants acted knowingly or recklessly in failing to disclose the truth with respect to the materially false and misleading statements and omissions of material fact described herein;

D. whether the market price of the Company's stock was artificially inflated due to the non-disclosures and misrepresentations described herein; and

E. the extent of damages sustained by members of the Classes and the appropriate measure of damages.

48. A class action is superior to other available methods for the fair and efficient adjudication of this controversy since joinder of all Class and Subclass members is impracticable. Furthermore, as the damages suffered by individual Class and Subclass members may be relatively small, the expenses and burden of individual litigation make it impossible for members of the Classes to individually redress the wrongs done to them. There will be no difficulty in the management of this action as a class action.

49. The Individual Defendants had the opportunity to commit and participate in the fraud. The Individual Defendants were the top officers and/or directors of Mitcham and they controlled its press releases, corporate reports, SEC filings, and its communications with analysts. Thus, they controlled the public dissemination of, and could falsify, the information about Mitcham's business, products, financial results and future prospects that reached the public and impacted the price of its stock. They were also in a position to collectively authorize secondary public offerings, through which they could personally sell off thousands of their own shares, thereby generating tremendous proceeds.

50. The Individual Defendants also had the motive to commit and participate in the fraud. As owners of significant amounts of Mitcham stock, they were in a position to realize significant gains through the liquidation of their investment. As demonstrated by their sale of tens of thousands of Mitcham shares, both privately and through secondary public offerings, the Individual Defendants readily and accessibly capitalized upon the artificially inflated stock price, and generate for themselves millions of dollars in proceeds. The Individual with its revenues in an attempt to maintain Mitcham's competitive position in its markets.

51. As alleged herein, Defendants acted with scienter in that they knew that the public documents and statements issued or disseminated in the name of the Company were materially false and misleading; they knew that such statements or documents would be issued or disseminated to the investing public; and they knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements or documents as primary violations of the federal securities laws.

52. As set forth elsewhere herein in detail, Defendants, by virtue of their control over, and/or receipt and/or modification of Mitcham's allegedly materially misleading misstatements and/or their associations with the Company which made them privy to confidential proprietary information concerning Mitcham, participated in the fraudulent scheme alleged herein. With respect to non-forward-looking statements and/or omissions, Defendants knew and/or recklessly disregarded the falsity and misleading nature of the information which they caused to be disseminated to the investing public.

53. Defendants engaged in such a scheme to inflate the price of Mitcham common stock in order to sell their individually owned shares at artificially high prices. Specifically, in September 1997, Defendant Billy Mitcham sold at least 135,000 shares of Mitcham stock -- which constituted 32% of his total holdings at the time -- at artificially inflated prices as high as $19.56 per share; Defendant Rios sold at least 10,350 shares of Mitcham stock -- which constituted over 30% of his total holdings at the time -- at the artificially inflated price of $19.38 per share; and Vice Presdident of International Operations William J. Sheppard sold at least 10,350 shares of Mitcham stock -- which constituted over 30% of his total holdings at the time -- at the artificially inflated price of $19.38 per share. Moreover, in December 1997, pursuant to Mitcham's secondary public offering, while the stock price was artificially inflated to over $19.00 per share, Defendant Billy Mitcham sold at least 20,000 shares of Mitcham stock, and Defendants Rios and William J. Sheppard each sold at least 10,000 shares of Mitcham stock. Accordingly, Defendants' scheme to defraud and mislead the investing public generated immediately accessible financial return for the Defendants through the sale of significant amounts of their Mitcham stock. Thus, as set forth above, while Defendants were issuing false favorable statements about the Company's business, and concealing or obscuring negative information, Defendants, who had access to confidential information and were aware of the truth about the Company and its operations, were benefitting from the impact on the market of their misrepresentations and omissions.

54. Plaintiff repeats and realleges each allegation above as if fully set forth herein.

55. During the Class Period, Defendants engaged in a plan, scheme, conspiracy and course of conduct, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices, and courses of business which operated as a fraud and deceit upon Plaintiff and the other members of the Classes; made various untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and employed devices, schemes, and artifices to defraud in connection with the purchase and sale of securities. This scheme was intended to, and, throughout the Class Period, did: (a) conceal the adverse facts concerning the Company's operations, particularly with respect to its financial condition; (b) artificially inflate and maintain the market price of Mitcham common stock; and (c) cause Plaintiff and the other members of the Classes to purchase Mitcham common stock at inflated prices.

56. Pursuant to the aforesaid plan, scheme, conspiracy and course of conduct, each of the Defendants participated directly and/or indirectly in the preparation and/or issuance of the quarterly and annual reports, SEC filings, press releases and other statements and documents described herein, including statements made to securities analysts and the media that were designed to influence the market for Mitcham common stock. Such reports, filings, releases, and statements were materially false and misleading in that they failed to disclose material adverse information and misrepresented the truth about Mitcham's future business prospects as alleged herein.

57. Defendants had actual knowledge of the materially false and misleading statements and material omissions alleged herein, and intended thereby to deceive Plaintiff and the other members of the Classes, or, in the alternative, Defendants acted with reckless disregard for the truth in that they failed or refused to ascertain and disclose such facts as would reveal the materially false and misleading nature of the statements made, although such facts were readily available to Defendants. Such acts and omissions on the part of Defendants were committed willfully or with reckless disregard for the truth. In addition, each Defendant knew or recklessly disregarded that material facts were being misrepresented or omitted, as described above.

58. Information showing that Defendants acted knowingly or with reckless disregard for the truth is peculiarly within Defendants' knowledge and control. As the (a) Chairman, President, and Chief Executive Officer, and (b) Vice President, Financial and Chief Financial Officer, Defendants Billy Mitcham and Rios, respectively, had knowledge of the details of the Company's internal affairs.

59. Defendants Billy Mitcham and Rios are liable both directly and indirectly for the wrongs complained of herein. Because of their positions of control and authority, Defendants were able to and did, directly or indirectly, control the content of the statements of the Company. As officers and directors of a publicly-held company, Defendants had a duty to disseminate timely, accurate, and truthful information with respect to the Company's businesses, operations, future financial condition, and future prospects. As a result of the dissemination of the aforementioned false and misleading reports, releases, and public statements, the market price of Mitcham common stock was artificially inflated throughout the Class Period. In ignorance of the adverse facts concerning Mitcham's business and financial condition, which were concealed by Defendants, Plaintiff and the other members of the Classes purchased Mitcham common stock at artificially inflated prices and relied upon the price of the stock, the integrity of the market for the stock, and/or upon statements disseminated by Defendants, and were damaged thereby.

60. During the Class Period, Mitcham common stock was traded on an active and efficient market. Relying on the materially false and misleading statements described herein, which the Defendants made, issued, or caused to be disseminated, or relying upon the integrity of the market, Plaintiff and the members of the Classes purchased shares of Mitcham common stock at prices artificially inflated by Defendants' wrongful conduct. Had Plaintiff and the other members of the Classes known Mitcham's true business and financial condition, they would not have purchased the shares, or would not have purchased them at the inflated prices that they paid. At the time of the purchases by Plaintiff and the members of the Classes, the true value of Mitcham stock was substantially lower than the prices paid by Plaintiff and the other members of the Classes. Moreover, the market price of Mitcham common stock declined sharply upon public disclosure of the facts alleged in this Complaint.

61. By reason of the conduct alleged herein, Defendants knowingly or recklessly, directly or indirectly, violated Section 10(b) of the Exchange Act and Rule 10-5 promulgated thereunder.

62. As a direct and proximate result of the defendants' wrongful conduct, Plaintiff and the other members of the Classes suffered damages in connection with their purchases of the Company's common stock during the Class Period.

63. Plaintiff repeats and realleges each and every allegation above as if fully set forth herein.

64. During the Class Period, by virtue of their positions as officers and/or directors of Mitcham, and by virtue of their specific acts, Defendants Billy Mitcham and Rios were controlling persons of the Company within the meaning of Section 20(a) of the Exchange Act.

65. The Individual Defendants' positions made them privy to, and provided them with actual knowledge of, the material facts which Mitcham concealed from Plantiffs and the other members of the Classes, and indeed the entire investing public, during the Class Period.

66. By reason of their senior management positions, and by reason of their sizeable common stock ownership, they had the power and influence, and exercised the same, to cause the Company to engage in the unlawful acts and conduct complained of herein -- including the dissemination of materially false and misleading information about the condition of the Company.

67. The Individual Defendants exercised control over the general operations of the Company, and possessed the power to control the specific activities which comprise the primary violations about which Plaintiff and the members of the Classes complain.

68. By reason of such wrongful conduct, Defendants Billy Mitcham and Rios are liable pursuant to Section 20 of the Exchange Act.

69. As a direct and proximate result of the Individual Defendants' wrongful conduct, Plaintiff and the members of the Classes suffered damages in connection with their purchase of their shares of Mitcham common stock.

70. Plaintiff repeats and realleges each and every allegation above as if fully set forth herein.

71. In December 1997, Mitcham filed a Registration Statement with the SEC for a secondary public offering of common stock. The Registration Statement contained materially false and misleading information about the operations and financial condition of the Company.

72. On December 18, 1997, Mitcham announced through its own press release that an underwriting group had priced the Offering of 1,820,000 shares of the Company's common stock at $19.00 per share. Of the total shares sold, 1,800,000 were to be sold by the Company, and 20,000 were to be sold by selling shareholders, including the Individual Defendants.

73. When declared effective by the SEC, the Registration Statement for the Offering, which contained a Prospectus, was inaccurate and misleading, contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading, and concealed and failed adequately to disclose material facts as described above.

74. The Company is the registrant for the Offering, and the Individual Defendants were responsible for the contents of the Registration Statement and Prospectus, as well as for its dissemination.

75. As issuer of the shares of common stock, the Company is strictly liable to Plaintiff and the members of the Subclass for the misstatements and omissions contained in the offering documents.

76. The Individual Defendants signed the Registration Statement and were directors of the Company at the time the Registration Statement was declared effective.

77. Defendants issued, caused to be issued, and participated in the issuance of materially false and misleading written statements to the investing public which were contained in the Registration Statement and Prospectus, which misrepresented or failed to disclose material information about the operations and financial condition of the Company, and which caused the shares to be offered at an artificially inflated price. By virtue of such conduct, Defendants violated Section 11 of the Securities Act.

78. Plaintiff and members of the Subclass purchased shares of Mitcham stock pursuant to, or traceable to, and in reliance upon, the Registration Statement and Prospectus.

79. At the times Plaintiff and members of the Subclass purchased their shares of Mitcham stock pursuant to the Offering, they were without knowledge of the facts concerning the wrongful conduct alleged herein, and could not have reasonably discovered those facts prior to the Company's disclosure on March 26, 1998.

80. As a consequence of their purchase of Mitcham shares pursuant to the Offering at an artificially inflated price, Plaintiff and members of the Subclass sustained damages, as the value of their shares has declined substantially due to Defendants' conduct as alleged herein.

81. Plaintiff repeats and realleges each and every allegation as if fully set forth herein.

82. Defendants were sellers, offerors, and/or solicitors of sales of the shares offered pursuant to the Prospectus for the secondary public offering of December 1997.

83. The Prospectus, which was prepared by the Defendants, contained untrue statements of material facts, omitted to state other facts necessary to make the statements made not misleading, and concealed and failed to disclose material facts.

84. Defendants owed to Plaintiff and members of the Subclass the duty to make a reasonable and diligent investigation of the statements contained in the Offering materials, including the Prospectus, to insure that such statements were true and that there was no omission to state a material fact required to be stated to make the statements contained therein not misleading.

85. By virtue of the conduct alleged herein, Defendants violated Section 12(a)(2) of the Securities Act.

86. Plaintiff and members of the Subclass purchased or otherwise acquired shares of Mitcham stock pursuant to and traceable to the materially false and misleading Prospectus. Plaintiff and members of the Subclass did not know, and in the exercise of reasonable diligence could not have known, of the untruths and omissions contained in the Prospectus.

87. As a direct and proximate result of their purchasing Mitcham shares pursuant to the false and misleading Prospectus, Plaintiff and members of the Subclass acquired stock at artificially inflated prices, and have therefore sustained compensable damages.

WHEREFORE, Plaintiff demands judgment against defendants as follows:

A. Determining that the instant action is a proper class action maintainable under Rule 23, Federal Rules of Civil Procedure and certifying the named class plaintiff;

B. Requiring defendants to pay damages sustained by plaintiff and the Class by reason of the acts and transactions alleged herein;

C. Awarding plaintiff and the other members of the Class, prejudgment and post-judgment interest, as well as their reasonable attorneys' fees, expert fees and other costs; and

D. Such other and further relief as this Court may deem just and proper.

Plaintiff hereby demands a trial by jury.