U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   Form 10-KSB

         [ ]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1933

                  For the fiscal year ended _________________________

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

                  For the transition period from January 1, 2005 to
                  September 30, 2005

                         Commission File Number 0-33215

                             CASPIAN SERVICES, INC.
                  ---------------------------------------------
                 (Name of Small Business Issuer in its charter)

             NEVADA                                          87-0617371
-------------------------------                          -------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                          Identification No.)


    2319 Foothill Blvd. Suite 250, Salt Lake City, Utah           84109
    ---------------------------------------------------          ---------
         (Address of principal executive Offices)               (Zip Code)

                    Issuer's telephone number: (801) 746-3700

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

Securities registered pursuant to section 12(g) of the Exchange Act: Common,
$.001 par value

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part  of this form 10-KSB or any
amendment to this Form 10-KSB. [ ]

The issuer's revenue for its most recent fiscal year was approximately:
$23,789.000.

The aggregate market value of the issuer's voting stock held as of December 1,
2005, by non-affiliates of the issuer based on the price at which shares were
sold on that date, was approximately: $84,443,877.

As of December 1, 2005, issuer had 38,858,446 shares of its $0.001 par value
common stock outstanding.

Transitional Small Business Disclosure Format.       Yes [ ] No [X]
Documents incorporated by reference: none

<PAGE>

                                TABLE OF CONTENTS


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.............................................  3

ITEM 2. DESCRIPTION OF PROPERTY............................................. 17

ITEM 3. LEGAL PROCEEDINGS................................................... 18

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................. 18

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS................................................. 19

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS................................ 22

ITEM 7. FINANCIAL STATEMENTS................................................ 32

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE................................. 32

ITEM 8A. CONTROLS AND PROCEDURES............................................ 32

ITEM 8B. OTHER INFORMATION.................................................. 32

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL
        PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT ......... 33

ITEM 10. EXECUTIVE COMPENSATION............................................. 35

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT..................................................... 37

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................... 39

                                     PART IV

ITEM 13. EXHIBITS........................................................... 39

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES............................. 40

SIGNATURES.................................................................. 41

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                                     PART I

Item 1.   Description of Business

Company History

         Caspian Services, Inc. (the "Company" or "CSI") was incorporated under
the laws of the state of Nevada on July 14, 1998. On February 28, 2002, the
Company entered into an Agreement and Plan of Reorganization whereby it acquired
all of the issued and outstanding shares of Caspian Services Group Limited,
("Caspian") in exchange for 27,089,700 restricted common shares of the Company.
Caspian became a wholly owned subsidiary of the Company and the Caspian
shareholders assumed the controlling interest in CSI. The shareholders of both
companies approved the Agreement. Since its acquisition of Caspian, CSI has
concentrated its business efforts to provide diversified oilfield services to
the oil and gas industry in western Kazakhstan.

         To enhance the range of oilfield services the Company could provide to
its clients, in May 2004, the Company acquired 100% of the outstanding interests
in TatArka LLP ("TatArka") and a 50% non-controlling interest in
Kazmorgeophysica CJSC ("KMG"). In September 2005, the Company increased it
ownership interest in KMG to 51%. Through TatArka and KMG, the Company is able
to offer onshore, transition zone and marine seismic data acquisition and
processing services to oil and gas exploration companies.

         At the Company's annual meeting of stockholders held on July 21, 2005,
the Company's shareholders voted to change the name of the Company from EMPS
Corporation to Caspian Services, Inc., to better reflect the nature of its
business in providing a range of oilfield services in the Caspian Sea region of
western Kazakhstan. On August 2, 2005, the OTCBB trading symbol for the
Company's common stock was changed to "CSSV".

         At the same meeting, the Company's stockholders approved a change in
the Company's fiscal year end from December 31 to September 30.

Recent Developments

         In August 2005, Caspian took delivery of its newly built multipurpose
utility craft ("MUC") vessel, the CS Carmen. The CS Carmen will work in
Turkmenistan for Dragon Oil until the Saipem charter for offshore operations
commences in May 2006. A second newly built MUC, and the CS Marina and the Sara
Maatje XII and Sara Maatje elf have also been added to the Company's fleet in
connection with the Saipem charter. These vessels are owned by Rederij Waterweg,
a Dutch shipping company, and operated by Caspian.

         During the first fiscal quarter of 2006, the Caspian Raushan, the
Company's high-speed crew boat, was launched and is undergoing sea trials. Full
delivery is expected during January 2006.

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         Subsequent to the end of the fiscal year, the Company, through its
wholly-owned subsidiary Caspian Real Estate Limited completed the acquisition of
a five hectare (approximately 12 acre) parcel of undeveloped real property
located in the port of Bautino near the Atashi Village in connection with its
plan to build a major marine supply and support base in the port of Bautino. The
feasibility study for the marine base prepared by the Company received approval
from the appropriate Kazakhstani regulatory agencies in December 2005.

Business of the Company

         The Company provides a broad range of oilfield services in western
Kazakhstan and the north Caspian Sea. The Company's business focuses in three
principal areas - Offshore Marine Services; Geophysical Services and
infrastructure development, including Water Desalinization. The Company provides
Offshore Marine Services through its wholly-owned subsidiary Caspian Services
Group Limited ("Caspian"). During the year, the Company formed two wholly-owned
subsidiaries, Caspian Geophysics Limited and Caspian Real Estate Limited, both
British Virgin Island companies. Caspian Geophysics is responsible for
overseeing the Company's Geophysical services operations and Caspian Real Estate
Limited is responsible for overseeing the Company's infrastructure development.
The following diagram sets forth the Company's subsidiaries and its percentage
ownership interest in each entity:

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         Kazakhstan

         Until 1991, Kazakhstan was one of 15 independent republics that
comprised the former Soviet Union. It has chosen to align with Russia and 12 of
the former republics in the Commonwealth of Independent States ("CIS"), a union
of economic and political cooperation. Upon independence, Kazakhstan embarked on
a course of political and monetary reforms that has resulted in the development
of a market economy. Kazakhstan's economic prospects are strong mainly due to
higher world oil prices, major oil finds in the Caspian Sea region and the
development of oil production and export capabilities.

         Kazakhstan is part of the third largest world hydrocarbon basin in
terms of both known and potential hydrocarbon reserves after the Persian Gulf
and Western Siberia. This basin is estimated to contain approximately 26 billion
proven barrels of oil in place and two trillion proven cubic meters of gas in
place. Kazakhstan produces an average of 1,200,000 barrels of oil per day
("bopd"), which is expected to increase to as much as 3,000,000 bopd by 2015.

         The Pre-Caspian and Pre-Salt Basins have hosted several large
world-class discoveries including the Tengiz, Karachaganak and Kashagan fields.
Many major western oil & gas exploration and production companies operate in
Kazakhstan.

         Petroleum Industry in Kazakhstan

         Kazakhstan is an area of significant investment activity for the
international oil and gas industry. Kazakhstan's proved reserves rank among the
top 15 countries in the world with over 180 producing oil fields and up to 26
billion barrels of proved reserves. In 2004, oil production was approximately
1,200,000 bopd, of which nearly 1,000,000 bopd was exported. In 2004,
Kazakhstan's oil exports were valued at more than $11 billion.

         The entire former Soviet Union region has seen significant foreign
investment and strategic alliances for exploration, acquisition and development
of oil and gas reserves. Since 1993, Kazakhstan has attracted over $18.4 billion
in foreign investment. The majority of this investment was focused in the oil,
gas and mineral industries. This includes investment in the development of the
Tengiz field, which has an estimated 6-9 billion barrels of reserves, the
Karachaganak field, with an estimated 2.4 billion barrels of reserves and the
Kashagan field with 7-9 billion barrels of recoverable reserves.

         The oil industry in Kazakhstan has been codified with the development
of the Law of Petroleum, which sets out the conduct of the oil and gas industry
and the roles of participants, both private and governmental. The industry is
regulated by the Ministry of Energy and Mineral Resources, which administers all
contracts, licenses and investment programs. The Ministry of Energy and Mineral
Resources has been through several stages of consolidation since the country's
independence in 1991. The government has been merging various regional
governmental agencies previously handling the extraction and transportation
sectors of the industry into one consolidated entity to eliminate the

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bureaucracy and provide for more efficient management of the country's natural
resources. This entity maintains a direct ownership on behalf of the Republic of
Kazakhstan in most large oil field development projects as well as sole
ownership and operation of many of the interconnecting oil and gas pipeline
systems. Governmental ownership or participation in exploration and development
projects, however, is not required.

Offshore Marine Services Industry

         The Company's customers employ its vessels to provide services
supporting the exploration, construction, positioning and ongoing operation of
offshore oil and natural gas drilling rigs and platforms ("Offshore Marine
Services"). This industry employs various types of vessels, referred to broadly
as offshore support vessels that are used to transport materials, supplies and
personnel. Offshore Marine Service providers are employed by companies that
engage in the offshore exploration and production of oil and natural gas and
related services.

         The Offshore Marine Services industry is directly impacted by the level
of activity in worldwide offshore oil and natural gas exploration, development
and production, which, in turn, is impacted by trends in oil and natural gas
prices. Oil and natural gas prices are affected by a host of geopolitical and
economic forces, including the fundamental principles of supply and demand. Each
of the major geophysical offshore oil and gas production regions has unique
characteristics that influence the economics of exploration and production and
consequently the market for vessels in support of these activities. While there
is some vessel interchangeability between geographic regions, barriers such as
mobilization costs, environmental sensitivity, seasonality and vessel
suitability restrict migration of vessels between regions. The effect of these
restrictions on vessel migration has segmented various regions into separate
markets.

Vessel Fleet

         Through its subsidiary, Caspian, the Company currently operates a fleet
of twelve specialized shallow draft vessels designed for use in the shallow
waters of the north Caspian Sea. Caspian owns one accommodation/work barge, the
"Baskunchak." This vessel is used to provide accommodation and food services to
personnel working on offshore production platforms, artificial islands, and
rigs. The Baskunchak can house up to 64 client personnel and 17 crewmembers. The
Baskunchak also has a heli-deck.

         Caspian owns a self-propelled accommodation vessel, the "Caspian
Dinara." This vessel is used to transport and provide accommodation and catering
services to personnel engaged in offshore exploration and production. The Dinara
can house up to 61 client personnel and 16 crewmembers.

         Caspian owns two shallow draft landing craft supply vessels, the
"Caspian Maria" and the "Caspian Yelena." Supply vessels serve drilling and
production facilities and support offshore construction and maintenance work.
They are differentiated from other vessels by their shallow draft, roll on-roll
off cargo handling capabilities, particularly their large capacity,
approximately 1,000 tons and versatility. These vessels are used to transport
supplies such as fuel, water, drilling fluids, equipment and provisions.

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         Caspian owns one shallow draft multi-purpose supply and tugboat, the
"Caspian Eva." The Caspian Eva is suitable for a variety of applications
including towing/pushing operations, supply and survey work.

         Caspian also owns a 45 meter shallow draft multi-purpose utility/survey
vessel, the "Caspian Galiya." This vessel has accommodation facilities for up to
20 client passengers, and a back deck area of 170 square meters for the
deployment of survey equipment. The Caspian Galiya is equipped with electric bow
thrusters, making it a highly maneuverable vessel.

         Caspian owns a new high-speed aluminum crew boat, the "Caspian
Raushan". Caspian commissioned the construction of this vessel. This vessel is a
33 meter boat capable of transporting up to 70 passengers and 35 tons of cargo
at speeds up to 25 knots. The vessel will be used to ferry oilfield workers
between offshore installations and land bases. The vessel is equipped as an
emergency response craft with a fire pump and monitor. The vessel delivery is
scheduled for December 2005 in the United Arab Emirates where it is intended she
will work the winter. Mobilization to the Caspian Sea is tentatively scheduled
for June 2006.

         Caspian also owns one MUC, the "CS Carmen". Caspian commissioned the
construction of this vessel in connection with the fulfillment of its contract
with Saipem. The CS Carmen has anchor handling capabilities. It is equipped with
a crane and deck to allow for light equipment handling and deployment. The CS
Carmen is also capable of towing and pushing small tonnage.

         Under an agreement with Rederij Waterweg, Caspian operates a second
MUC, the CS Marina, a multi-purpose survey vessel, the Coastal Bigfoot, and two
tugboats the Sara Maatje elf and Sara Maatje XII and MUC CS Marina that are
owned by Rederij Waterweg. Pursuant to its agreement with Rederij Waterweg,
Caspian charters these vessels, provides the crew, operates the vessel and pays
Rederij Waterweg a day rate for the vessel when it is under charter operations.

         The Sara Maatje elf is a supply vessel built for shallow and coastal
waterworks, and because of her unique hull design she is capable of beaching
with maximum cargo. She is fitted with the latest navigation and communication
systems and offers spacious accommodations including a hospital, offices and
large messroom.

         The Sara Maatje XII is a uniquely designed tug vessel. She is extremely
maneuverable and due to her special construction she can beach fully loaded.

         Caspian's fleet is time chartered to customers who charter the vessels
and hire Caspian to provide all necessary staffing and support for safe and
efficient operation. Vessel operating expenses are typically Caspian's
responsibility except that the customer generally provides water, fuel,
lubricants and anti-freeze. In return for providing time-chartered services,
Caspian is paid a daily rate of hire. Caspian also provides additional support
services for the Baskunchak and the Dinara. These services include:

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         o        Accommodation and food services for the customer's personnel
                  housed on the vessel;
         o        Laundry and related services to the customer's personnel; and
         o        Heli-deck operations on the Baskunchak.

         As future demand and funding justify, Caspian will continue to expand
its fleet.

         As part of its strategic plan, Caspian plans to develop a marine base
in the Port of Bautino. A feasibility study, including an environmental impact
assessment, seabed survey and engineering design works has been approved by the
applicable Kazakhstani regulatory authorities. Caspian plans to develop an
emergency response service that would react to offshore oil spills and other
emergencies on the Caspian Sea. There are no assurances, however, that there
will be sufficient demand in the market to justify expanding Caspian's fleet or
the services it can offer. Similarly, even if there is sufficient demand, there
is no guarantee that the Company would have sufficient funds or be able to
obtain sufficient funding to finance such expansion.

         Customers, Contract Terms and Competition

         Caspian's customers are oil and natural gas exploration and production
companies working in the Kazakh sector of the Caspian Sea. Currently, the CS
Carmen, CS Marina, Sara Maatje XII, Sara Maatje elf and Coastal Bigfoot are
chartered to Siapem, SpA for the upcoming work season. While Caspian does not
have firm charters in place for its remaining vessels, based on current
negotiations and strong demand in the region, Caspian expects close to 100%
vessel utilization for the 2006 work season.

         Caspian anticipated that during the 2006 work season most, if not all,
of the vessels in its fleet will be chartered either to Agip Kazakhstan North
Caspian Operating Company N.V., ("Agip KCO") or its subcontractors for use in
oil and gas exploration and development. Agip KCO is the operator of the
Kashagan and Kalamkas fields that lie in the northeastern sector of the Caspian
Sea. Agip KCO operates the fields on behalf of a consortium of international oil
companies.

         In addition to having its entire vessel fleet chartered directly to
Agip KCO or its subcontractors, Agip KCO is also the largest purchaser of water
from the Company's water desalinization plant, and during fiscal 2005, Agip KCO
leased 60% of the rooms at the Chagala Hotel owned by Caspian's 50% subsidiary
Bautino Development Company. The loss of Agip KCO as a client would severely and
adversely impact the Company's financial condition and results of operations.

         Caspian's competition varies from small regional companies to large
worldwide corporations. Competition is intense. Caspian currently has no known
local Kazakh competition, but does have to compete with many larger foreign
companies operating in the Kazakh sector of the Caspian Sea. Offsetting its
small size relative to some of its competition, Caspian believes it may have an
advantage over some larger companies because it has extensive experience

                                       8
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operating vessels in the Caspian Sea and conducting business within and
complying with the laws and regulations of the Republic of Kazakhstan. In
addition, Caspian has developed strong relationships with government authorities
and other local companies. Based on its local regulatory compliance and business
reputation Caspian has been able to differentiate itself from its competitors.

Geophysical Services

         The Company, through its wholly-owned subsidiary Caspian Geophysics
Ltd., ("CGL") provides onshore, transition zone and marine seismic data
acquisition services to oil and gas exploration and development companies
operating in Kazakhstan and the Caspian Sea. These services are provided through
TatArka LLP, a wholly-owned subsidiary of CGL and Kazmorgeophysica, CJSC,
("KMG") a 51% owned subsidiary.

         TatArka LLP

         TatArka provides 2D and 3D seismic data acquisition services to
companies engaged in onshore oil and gas exploration in the Republic of
Kazakhstan. TatArka provides its services under project specific partnerships
with other local service providers as required by the Republic of Kazakhstan.
TatArka has held a general state license to conduct geophysical works since
September 4, 2001.

         The onshore seismic market in Kazakhstan is comparably mature and is
dominated by local companies. The acquisition of onshore seismic data requires
considerably less effort, and is less complex, than the acquisition of offshore
seismic data. As a result onshore seismic data acquisition services are far less
expensive than offshore services.

         The current onshore seismic data acquisition services market in
Kazakhstan is dominated primarily by four local companies: Kazakhstancaspishelf,
Azimut, SIF Dank and TatArka.

         Kazmorgeophysica CJSC

         The Company owns a 51% controlling interest in KMG. KMG provides 2D and
3D transition zone and marine seismic data acquisition services to oil and gas
exploration companies operating in the Kazakhstan sector of the Caspian Sea. KMG
has held a general state license to conduct geophysical works since May 29,
2002.

         In contrast to the onshore seismic market, the marine seismic market in
Kazakhstan is still developing. The first modern marine seismic survey in the
Kazakhstan sector of the Caspian Sea was conducted between 1994 and 1996. Since
that time, only a small number of marine or transition zone surveys have been
conducted. We believe this is primarily due to the limited number of entities
currently holding exploration licenses in Kazakhstan. In early 2004, the
government of Kazakhstan announced the first round of licensing for new offshore
blocks in the Kazakhstan sector of the Caspian Sea. Current expectations are
that this will occur in late 2006. We expect that the release of new license

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blocks will attract significant interest from the international oil and gas
community. We also anticipate that a direct result of the release of new license
blocks will be a significant increase in demand for marine and transition zone
seismic data acquisition services.

         The complexity of modern marine seismic data collection methods in this
environmentally sensitive, shallow water area and the associated costs, has
meant that only large international exploration companies with advanced
technology and sufficient capital have been capable of providing marine seismic
services in Kazakhstan. KMG believes this trend will change as more local
companies gain access to the technology and methodologies used and as they
obtain sufficient capital to acquire the necessary equipment and vessels to
provide these services. Additionally, under the laws of Kazakhstan to provide
marine seismic services, the service provider must meet the country's local
content requirements, either through local ownership or by partnership. The
other 49% owner of KMG is 100% owned by a Kazakh entity, which satisfies the
local content requirement and gives KMG an advantage over its international
competitors.

         KMG currently competes with two local companies, Kazakhstancaspishelf
and Uzhmaorgeologia and four international firms, Westerngeco, CGG, PGS and
Veritas. As discussed above, the international firms are required to tender with
a local partner to satisfy the local content requirements of Kazakhstan.

         In the past two years, KMG has invested approximately $450,000 to
purchase geophysical equipment.

         On August 31, 2005, KMG acquired ownership of a Kazakh patent to a
unique low-frequency geophysical research technology known as "ANCHAR." The
ANCHAR technology can be used to identify the presence of hydrocarbons within
geological structures. KMG has been offering ANCHAR based research services to
its clients since 2003. A number of oil and gas exploration companies have
successfully used this technology to identify oil and gas deposits in Kazakhstan
since 2003, including EmbaYugNeft LLP, BMB Munai, Inc., CJSC Bolz and
KazNefteHim LLP.

         Management believes that acquisition of the right to use the ANCHAR
technology will enhance the competitive position of KMG and further distinguish
it as a leader in advanced technology deployment in geophysical direct survey
services in Kazakhstan.

         As oil and gas exploration companies often require both onshore and
offshore seismic data acquisition services, TatArka and KMG often contract with
each other to provide services for their respective customers.

Infrastructure Development

         Water Desalinization

                  CJSC Bauta

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         Through its wholly-owned subsidiary Caspian Real Estate Ltd. ("CRE"),
the Company owns a 56% interest in CJSC Bauta ("Bauta"), a joint venture that
operates a water desalinization plant in the Port of Bautino. At the
desalinization plant, Bauta purifies and markets drinking water in bulk and in
bottles. The Bauta facility produced approximately 71,801 0 metric tons of water
in 2005, a 5% increase in production compared to 2004. In 2005, the plant
produced water at approximately 20% of its production capacity. Approximately
92% of the water produced by Bauta was sold in bulk. Forty-five percent of all
bulk water sales were to Agip KCO. Bauta provides bulk water to the local
community at cost under its infrastructure agreement with the government and
provides water to oilfield camps in the region. Bauta also bottles and sells
water in five liter and one-and-a half liter bottles. As much of the demand for
drinking water comes from oilfield camps, water sales, like vessel operations
are seasonal, with most sales occurring during the work season. During the work
season, Bauta produced approximately 16,200 five-liter bottles and 4,200
one-and-a-half-liter bottles per week. The bottled water is primarily sold to
the surrounding oil field camps, the local municipality and other businesses in
the region. Bauta also provides the fresh water for the Chagala Hotel.

         Hotel Services

                  Bautino Development Company, LLP

         CRE is also a 50% joint venture partner with the Chagala Hotel Group,
in a development company, Bautino Development Company LLP, ("Bautino"). Bautino
has constructed and is operating a 96-room seaside hotel. Agip KCO is currently
leasing 58 rooms under a lease agreement that expires in March 2006. It is
anticipated that the lease will be extended for at least an additional year with
renewable options. The remaining rooms are typically rented to other tenants
through the Chagala reservation network.

         Atash Marine Base

         In connection with its plan to build a major marine supply and support
base in the port of Bautino, on November 16, 2005, the Company, through CRE
completed the acquisition of a five hectare (approximately 12 acre) parcel of
undeveloped real property located in the port of Bautino near the Atashi
Village. To acquire the real property, CRE acquired a 100% ownership interest in
Balykshi LLP, the entity in which the property was held by its previous owners.
During the fiscal year, the Company completed an offshore sea bed sampling
survey, environmental impact assessment study, preliminary jetty and shore site
facility engineering design works and a feasibility study. As per government
requirement, the Company has submitted and received approval of it feasibility
plan.

         Through the marine base, the Company will offer a full range of
services, not only to its own fleet, but also to other vessel fleet operators in
the region, as well as to the large multi-national oil companies engaged in
exploration in the region. Teniz a subsidiary of KazMunaiGas is building a
facility nearby.

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         Currently there are approximately 75 vessels and barges supporting the
Agip KCO development of the giant Kashagan field. This number is expected to
double in 2006 as pipeline laying, pile and flares, hookup and commissioning of
projects commence. The number of operating personnel requiring support offshore
is expected to peak at approximately 4,000 during the next three to four years.

         The Bautino Bay, where the Atash Marine Base will be located is
approximately 1.8km across from east to west and "open" to the Caspian Sea to
the north. A public road, public electricity and landline telephone utility
infrastructure run parallel to the property. No other utility infrastructure
(water, sewage, heating, etc.) exists in the vicinity of the property.

         Once completed, the Company plans to offer the following offshore
facilities and services:

         o        Service jetty and moorings
         o        Loading and off-loading facilities
         o        Slipway - vessel hauling facilities
         o        Breakwater protection
         o        Long-term berths
         o        Crew transfer berth
         o        Main wharf area

         The Company also plans to offer the following onshore facilities and
services at the marine base:

         o        Marine maintenance facilities
         o        Warehousing
         o        Base office
         o        Transit lounge
         o        Fully integrated marine base command and control facilities
         o        Fully integrated fuel distribution system and storage
                  facilities
         o        Fully integrated water distribution system and storage
                  facilities
         o        Sewage and wastewater treatment facilities
         o        Oily water collection and storage facilities
         o        Drilling waste treatment
         o        Weighbridge facilities
         o        Electrical power supply and distribution system
         o        Back-up electrical power generation facilities
         o        Security system
         o        Fire-fighting system
         o        Lay-down storage area

         Fuel bunkering, water export, material loading and off-loading and
vessel hauling/repairs at the slipway are expected to generate a significant
percentage of revenues during the operating season (mid March through mid

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November). Long-term berthing and vessel hauling/maintenance is expected to
generate the bulk of revenue during the off-season (mid November to mid March).

         The Company expects the initial phase of the marine base facilities,
including jetty berthings with water and fuel service stations, loading
facilities, transit berthings, storage facilities, command and control
functions, fire-fighting and safety systems and a lay down area to be completed
and functional by April 2007, with final completion of the base occurring by
December 2008. The Company estimates the cost to build the marine base will be
approximately $55 million.

         The Company does not currently have sufficient funds available to it to
fund the cost of constructing the marine base. The Company anticipates the need
to obtain capital, either through debt or equity financing or a combination of
both to fund construction of the marine base. The Company currently has no firm
commitments from any party to provide all or any of the funds needed to
construct the marine base.

Operating Risks and Insurance

         The Company's operations are subject to various operating hazards and
risks including:

         o        adverse sea and weather conditions
         o        mechanical failure
         o        navigation errors
         o        collision
         o        oil and hazardous substance spills, containment and clean up
         o        labor shortages and strikes
         o        damage to and loss of drilling rigs and production facilities
         o        war, sabotage and terrorism risks

         These risks present a threat to the safety of personnel and to the
Company's vessels, cargo, equipment in tow and other property, as well as the
environment. The Company could be required to suspend its operations or request
that others suspend their operations as a result of these hazards. Third parties
may have significant claim against the Company for damages due to personal
injury, death, property damage, pollution and loss of business.

         The Company's vessels are covered by Hull and Machinery Insurance,
which insures the vessels for their estimated market value against damage or
loss. The Company carries Protection and Indemnity Insurance, covering third
party liability, including pollution as customary in the industry.

         The continued threat of terrorist activities and other acts of war, or
hostility, has increased the risk of political, economic and social instability
in the geographic area in which the Company operates. It is possible that
further acts of terrorism could be directed against properties and personnel of
U.S.-owned companies such as Caspian. The resulting economic, political and
social uncertainties, including the potential for further terrorist acts and

                                       13
<PAGE>

war, could cause premiums charges for insurance coverage to increase. To date,
the Company has not experienced any property loss as a result of political,
economic or social instability, terrorism or war.

         Management believes that its insurance coverage is adequate. The
Company has not experienced a loss in excess of insurance policy limits;
however, there is no assurance that the Company's liability coverage will be
adequate to cover all potential claims that may arise nor can the Company
guarantee that it will be able to maintain adequate insurance in the future at
rates considered commercially feasible, especially with the current level of
uncertainty in the market.

Business Risks

         Oil and Gas Prices are Highly Volatile. Commodity prices for crude oil
and natural gas are highly volatile. Prices are extremely sensitive to the
supply/demand relationship for the respective natural resources. High demand for
crude oil and natural gas and/or low inventory levels for the resources as well
as any perceptions about future supply interruptions can cause commodity prices
for crude oil and natural gas to rise, while generally, low demand for natural
resources and/or increases in crude oil and natural gas supplies cause commodity
prices for the respective natural resources to decrease.

         Factors that affect the supply of crude oil and natural gas include but
are not limited to the following: the Organization of Petroleum Exporting
Countries' ("OPEC") ability to control crude oil production levels and pricing,
as well as, the level of production by non-OPEC countries; political and
economic uncertainties; advances in exploration and development technology;
worldwide demand for natural resources; and governmental restrictions placed on
exploration and production of natural resources.

         Changes in Level of Capital Spending by our Customers. The Company's
principal customers are oil and natural gas exploration, development and
production companies. The Company's results of operations are highly dependent
on the level of capital spending by the energy industry. The energy industry's
level of capital spending is substantially related to the prevailing commodity
price of natural gas and crude oil. Low commodity prices have the potential to
reduce the amount of crude oil and natural gas that the Company's customers can
produce economically. When this market dynamic occurs, it is expected that the
Company's customers will generally reduce their capital spending budgets for
offshore exploration, drilling and development until commodity prices for
natural resources increase to levels that can support increases in production
and development and sustain growth.

Foreign Operations

         In recent years, the Republic of Kazakhstan has undergone substantial
political and economic change. As an emerging market, Kazakhstan does not
possess the well-developed business infrastructure that generally exists in more
mature free market economies. As a result, operations carried out in Kazakhstan
can involve significant risks that are not typically associated with developed

                                       14
<PAGE>

markets. Instability in the market reform process could subject the Company to
unpredictable changes in the basic business infrastructure in which it currently
operates. The Company therefore faces risks inherent in conducting business
internationally, such as:

         o        Foreign currency exchange fluctuations or imposition of
                  currency exchange controls;
         o        Legal and governmental regulatory requirements;
         o        Potential vessel seizure or nationalization of assets;
         o        Import-export quotas or other trade barriers;
         o        Difficulties in collecting accounts receivable and longer
                  collection periods;
         o        Political and economic instability;
         o        Difficulties and costs of staffing and managing international
                  operations; and
         o        Language and cultural differences.

         Any of these factors could materially adversely affect the Company's
operations and consequently its business, operating results and financial
condition. At this time, management is unable to estimate what, if any, changes
may occur or the resulting effect of any such changes on the Company's financial
condition or future results of operations.

         The Company also faces a significant potential risk of unfavorable tax
treatment and currency law violations. Legislation and regulations regarding
taxation, foreign currency transactions and licensing of foreign currency loans
in the Republic of Kazakhstan continue to evolve as the central government
manages the transformation from a command to a market-oriented economy. The
legislation and regulations are not always clearly written and their
interpretation is subject to the opinions of local tax inspectors. Instances of
inconsistent opinions between local, regional and national tax authorities are
not unusual.

         The current regime of penalties and interest related to reported and
discovered violations of Kazakhstan's laws, decrees and related regulations can
be severe. Penalties include confiscation of the amounts at issue for currency
law violations, as well as fines of generally 100% of the taxes unpaid. Interest
is assessable at rates of generally 0.3% per day. As a result, penalties and
interest can result in amounts that are multiples of any unreported taxes.

         The Company's operations and financial condition may be adversely
affected by Kazakh political developments, including the application of existing
and future legislation and tax regulations.

Environmental Regulations

         Caspian must comply with extensive government regulation in the form of
international conventions, federal and state laws and regulations in
jurisdictions where its vessels operate and/or are registered. These
conventions, laws and regulations govern matters of environmental protection,
worker health and safety, and the manning, construction and operation of
vessels. Moreover, the International Maritime Organization recently made the
regulations of the International Safety Management ("ISM") Code mandatory. The
ISM Code provides an international standard for the safe management and

                                       15
<PAGE>

operation of ships, pollution prevention and certain crew and vessel
certifications. The risks of incurring substantial compliance costs, liabilities
and penalties for non-compliance are inherent in offshore maritime operations.
Compliance with environmental, health and safety laws and regulations increases
our cost of doing business. Additionally, environmental, health and safety laws
change frequently. Therefore, Caspian may be unable to predict the future costs
or other future impact of environmental, health and safety laws on its
operations. There is no assurance that Caspian can avoid significant costs,
liabilities and penalties imposed as a result of environmental regulation in the
future.

Employees

         The Company and its subsidiaries currently employ approximately 264
full time employees and 183 seasonal and/or part time employees. The Company and
its subsidiaries hire their employees under local labor contracts complying with
the governing law of the Republic of Kazakhstan. Typically, these employment
contracts are renewable for one-year terms.

         With new labor laws passed in early 2005, all labor contracts that do
not expire or are not terminated before one year are automatically (by law)
extended for an undefined period. This means that it will become more difficult
to terminate existing employees, and the Company's exposure to expenses
associated with termination of employees is expected to increase. The Company
has managed to maintain the turnover of its work force at very low level. On
average, the Company terminates five employees per year with another 10-15 per
year leaving voluntarily. With the ongoing labor market monitoring, the Company
believes that future new labor requirements can be satisfied and there is no
significant risk of labor shortage.

         The Company undertakes to provide voluntary and mandatory offshore
training and supports qualification growth of its employees. In addition there
are legislative requirements to provide a certain number of local employees per
year with formal outside training. The Company continues to satisfy these local
labor market protective measures.

         At the end of 2004 the Company undertook to change the payroll
structure in its offshore operations. The changes concern payment methods and
salary calculations and are aimed to satisfy local labor and statutory
accounting requirements as well as to reduce the Company's exposure to deferred
and unpaid wages and benefits. Subsequent to the year end, the changes have been
accepted by all personnel and no increase in payroll expenses has been
attributed to this change.

         The Company believes it has satisfactory relations with its employees.
To date, neither the operations of the Company, nor any of its subsidiaries,
have been interrupted by strikes or work stoppages.

Seasonality

                                       16
<PAGE>

         As discussed herein, due to weather conditions in the north Caspian
Sea, demand for the Company's vessel fleet, desalinized water and transition
zone and marine seismic data acquisition services is seasonal and is subject to
prevailing weather conditions in the region. Typically, significant demand for
these services begins in late March or early April and continues until late
November. Business volume for the Company, however, is more dependent on oil and
natural gas prices and the global supply and demand conditions for the Company's
services than any seasonal variations.

Reports to Security Holders

         The Company's internet website can be found at
www.caspianservicesinc.com. The Company makes available, free of charge, through
its website its code of ethics, annual reports on Form 10-KSB, quarterly reports
on Form 10-QSB and current reports of Form 8-K and any amendments to those
reports as soon as reasonably practicable after such information is filed with
the Securities and Exchange Commission ("SEC"). The reference to this website
address does not constitute incorporation by reference of the information
contained on the website and should not be construed as part of this report.

         Additionally, the public may read and copy any materials filed by the
Company with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company
is an electronic filer and the SEC maintains an Internet site that will contain
reports and other information regarding the Company that may be viewed at
http://www.sec.gov.

Item 2.  Description of Property

         Property & Facilities

         The Company's executive offices are located at 2319 Foothill Boulevard,
Suite 250, Salt Lake City, Utah 84109. The Company's lease on this space expires
December 31, 2005. The Company has not yet negotiated a new lease for office
space.

         The Company and its subsidiaries also lease three offices in Almaty and
one office in Aktau, Kazakhstan. The terms of these leases range from one year
to month-to-month. The Company pays approximately $26,600 per month for these
offices.

         The Company also leases three apartments in Aktau for use by Company
employees. The terms of these leases range from one year to month-to-month. The
Company pays approximately $1,800 per month for these three apartments.

         The Company, through Bauta, owns the water desalinization plant. The
Bauta facility, located in Bautino, Kazakhstan consists of production and
administrative buildings, two 500 meter capacity desalinization units,
filtration systems, bulk storage tanks, production lines1, packaging equipment
and warehouse space.

                                       17
<PAGE>

         Through its 50% equity investee, Bautino Development Company, the
Company owns a 96 room seaside hotel in the Port of Bautino, Kazakhstan.

         As disclosed above in Item 1. Description of Business in November 2005,
the Company, through CRE acquired a five hectare parcel of undeveloped real
property. The Company owns this property free of any mortgages or liens.

         The Company acquires interests in real property to support its
operations. The Company is not engaged in the business of acquiring real estate
for investment purposes.

Item 3.  Legal Proceedings.

         To the knowledge of management, there is no material litigation or
governmental agency proceeding pending or threatened against the Company or its
management. Further, the Company is not aware of any material pending or
threatened litigation or governmental agency proceeding to which the Company or
any of its directors, officers or affiliates is or would be a party.

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

         On July 21, 2005 we held our annual meeting of stockholders. The total
number of shares entitled to be voted at the meeting was 38,858,446. The total
number of shares present at the meeting in person or by proxy was 22,814,510. At
the meeting the stockholders were asked to vote on the following matters:

         1)       To elect four individuals to the board of directors of the
                  Company for one year terms and to retain a fifth directorship
                  vacant until such time as an individual who is both
                  independent and may qualify as a "financial expert" to serve
                  on the Company's audit committee can be appointed by the Board
                  of Directors. Each of the individuals nominated and elected as
                  a director at the meeting was a director of the Company prior
                  to the meeting. The following individuals were elected to the
                  Board of Directors of the Company:

                                                              For       Abstain
                                                              ---       -------

                  Mirgali Kunayev                         22,814,510      -0-
                  James Passin                            22,814,510      -0-
                  Paul Roberts                            22,814,510      -0-
                  Valery Tolkachev                        22,814,510      -0-
                  To retain a fifth directorship vacant   22,814,510      -0-

         2)       To amend the Articles of Incorporation of the corporation to
                  change the name of the corporation from EMPS Corporation to

                                       18
<PAGE>

                  Caspian Services, Inc., 22,814,510 shares voted in favor of
                  this proposal, no shares voted against or abstained from
                  voting on this proposal.

         3)       To ratify the appointment of Hansen, Barnett &Maxwelll as the
                  Company's independent registered public accounting firm for
                  the 2005 fiscal year. 22,814,510 shares voted in favor of this
                  proposal, no shares voted against or abstained from voting on
                  this proposal.

         4)       To ratify the actions of our board of directors to change the
                  fiscal year end of the Company to September 30. 22,814,510
                  shares voted in favor of this proposal, no shares voted
                  against or abstained from voting on this proposal.

         Following the vote on these matters, the annual meeting was adjourned.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholders Matters.

         The Company's shares are currently traded on the Over-the-Counter
Bulletin Board ("OTCBB") under the symbol "CSSV". As of December l, 2005, the
Company had approximately 101 shareholders holding 38,858,446 common shares. Of
the issued and outstanding common stock, approximately 10,758,831 are free
trading, the balance are "restricted securities" as that term is defined in Rule
144 promulgated by the Securities and Exchange Commission.

         The published bid and ask quotations from October 1, 2003 through
September 30, 2005, are included in the chart below. These quotations represent
prices between dealers and do not include retail markup, markdown or
commissions. In addition, these quotations do not represent actual transactions.

                                       Bid                          Ask
                                 High       Low             High        Low
                                 ----       ---             ----        ---
July thru Sept. 2005            $4.75      $2.00            $4.95      $2.75
April thru June 2005             3.35       2.15             4.50       2.50
Jan. thru March 2005             3.80       2.50             4.50       3.41
Oct. thru Dec. 2004              3.75       2.25             4.45       3.50

July thru Sept. 2004            $3.20      $2.00            $4.45      $3.00
April thru June 2004             4.00       2.50             5.00       3.75
Jan. thru March 2004             5.50       2.50             7.00       3.50
Oct. thru Dec. 2003              3.75       2.25             4.45       3.50

         The above information was obtained from Pink Sheets LLC, 304 Hudson
Street, 2nd Floor, New York, New York 10013.

                                       19
<PAGE>

Dividends

         The Company has not paid, nor declared, any dividends since its
inception and does not intend to declare any such dividends in the foreseeable
future. The Company's ability to pay dividends is subject to limitations imposed
by Nevada law. Under Nevada law, dividends may be paid to the extent that the
corporation's assets exceed it liabilities and it is able to pay its debts as
they become due in the usual course of business.

Securities Authorized for Issuance Under Equity Compensation Plans
<TABLE>
<CAPTION>
------------------------- --------------------------- --------------------------- ------------------------------------
Plan category             Number of securities        Weighted-average            Number of securities
                          to be issued  upon          exercise price of           remaining available for future
                          exercise of                 outstanding                 issuance under equity
                          outstanding options,        options, warrants           compensation plans
                          warrants and rights         and rights                  (excluding securities reflected
                                                                                    in columns (a))
                                       (a)                       (b)                              (c)
------------------------- --------------------------- --------------------------- ------------------------------------
<S>                                 <C>                       <C>                                <C>
Equity compensation
plans approved by
security holders                    1,000,000                  $3.00                              -0-
------------------------- --------------------------- --------------------------- ------------------------------------
Equity compensation
plans not approved by
security holders                          -0-                    $-0-                             -0-
------------------------- --------------------------- --------------------------- ------------------------------------
Total                               1,000,000                  $3.00                              -0-
------------------------- --------------------------- --------------------------- ------------------------------------
</TABLE>

         The Board of Directors adopted and the Company's shareholders approved
the EMPS Corporation 2002 Stock Option Plan (the "Plan") allowing it to offer
key employees, officers, directors, consultants and advisors, an opportunity to
acquire a proprietary interest in the Company. The various types of incentive
awards which may be provided under the Stock Option Plan will enable the Company
to respond to changes in compensation practices, tax laws, accounting
regulations and the size and diversity of its business.

         On December 31, 2004, the Company granted options to purchase 100,000
shares each to two employees of the Company. The options have an exercise price
of $3.00 per share. Fifty percent of the option granted to one employee vested
on January 1, 2005. An additional 25% will vest on October 1, 2006, and the
remaining 25% will vest on October 1, 2007. This option expires on September 30,
2009. Twenty five percent of the option granted to the second employee vested on
January 1, 2005, with the remaining 75% vesting at a rate of 25% per year on
October 1, 2005, October 1, 2006 and October 1, 2007. This option expires on
September 30, 2010.

                                       20
<PAGE>

         On August 1, 2005, the Company granted options to purchase up to an
aggregate of 800,000 shares to officers, directors, employees or consultants to
the Company as follows:

               Name                            # of Shares underlying Options
               -----------------------------  --------------------------------
               Marat Cherdabayev                                      100,000
               Laird Garrard                                          220,000
               Alexey Kotov                                           100,000
               Mirgali Kunayev                                        110,000
               Yevgeniy Kurguzkin                                     110,000
               James Passin                                            25,000
               Paul Roberts                                           110,000
               Valery Tolkachev                                        25,000

The options vest one year from the date of grant and expire ten years from the
date of grant. The options have an exercise price of $3.00 per share.

Recent Sales of Unregistered Securities

         No instruments defining the rights of the holders of any class of
registered securities were materially modified, limited or qualified during the
quarter ended September 30, 2005.

         On August 1, 2005, the Company granted options to purchase up to
800,000 common shares to eight individuals, all of who are officers, directors,
employees or consultants to the Company, as set forth in the table above. Six of
the eight individuals to whom these options were granted are non-U.S. persons,
and the options were granted to them without registration pursuant to the
exemption from registration provided under Regulation S of the Securities Act of
1933. Options were granted to the remaining two individuals pursuant to the
exemption from provided in Section 4(2) of the Securities Act of 1933.

         On November 16, 2005, the Company issued 444,444 shares of common stock
to two non-U.S. persons as partial consideration for the acquisition of the five
hectare parcel of real property acquired by the Company. The aggregate value of
the shares was $2,000,000, based on the market price of the Company's common
stock at the time the shares were issued. The shares were issued without
registration pursuant to the exemption from registration provided by Regulation
S of the Securities Act of 1933.

Transfer Agent

         The Company's transfer agent and registrar is Interwest Transfer
Company, Inc., 1981 East 4800 South, Suite 100, Salt Lake City, Utah 84117,
Telephone (801) 272-9294.

                                       21
<PAGE>

Item 6.  Management's Discussion and Analysis

         All dollar amounts stated in this Item 6 are presented in thousands,
unless stated otherwise.

2005 Summary

         In fiscal 2005, the Company experienced 94% increase in total revenue,
a 475% increase in income from operations, net income of $2,177 compared to a
loss of $1,951 and net income per share of $0.06 during fiscal 2005 compared to
a net loss per share of $0.06 during fiscal 2004. These increase in revenue,
income from operations, net income and net income per share are the result of
several factors. The largest contributing factor is that the Company realized
revenue from geophysical services for the entire 2005 fiscal year, compared to
approximately four months of revenue from geophysical services during fiscal
2004. Another significant contributing factor was an overall increase in oil and
gas exploration and development activities during the twelve months ended
September 30, 2005 compared to the same period of 2004. During fiscal 2004, due
to a dispute between one of the Company's largest customers and the government,
the customer significantly reduced its exploration and production budget in the
region for 2004. As a result, demand for vessels in the region was significantly
reduced. During 2004 the customer and the government resolved the dispute
resulting in an increase in the customer's budget for exploration and
development in 2005.

         The Company has increased its vessel fleet 100% since the end of the
2004 fiscal year. Based on contracts in place and ongoing charter negotiations,
the Company anticipates near full utilization of its vessel fleet during fiscal
2006. Based on work and demand in the region, the Company also expects ongoing
strong demand for its geophysical services in fiscal 2006. During fiscal 2005,
the Company also acquired real property and has received government approval of
its feasibility plan to construct a state of the art marine base in the Bautino
Bay, assuming necessary funding can be obtained, the Company expects the marine
base to be operational sometime in fiscal 2007.

         In fiscal 2005, the Company operated four business segments: Vessel
Operations, Geophysical Services, Infrastructure and Corporate Administration.
The following discussion and analysis of results of operations should be read in
conjunction with the Consolidated Financial Statements.

(Stated in thousands)
-------------------------------------------------------------------------------
                                          2005            2004        % Change

VESSEL OPERATIONS
Operating Revenue                      $  8,573        $ 7,383           16%
Pretax Operating Income/(Loss)(1)      $ (1,563)       $(1,126)          39%

GEOPHYSICAL SERVICES
Operating Revenue                      $ 14,118        $ 3,821          269%
Pretax Operating Income/(Loss)(1)      $  5,449        $ 1,482          255%

                                       22
<PAGE>

INFRASTRUCTURE
Operating Revenue                      $  1,098        $ 1,029            7%
Pretax Operating Income/(Loss)(1)      $   (290)       $  (112)         159%

CORPORATE ADMINISTRATION
Operating Revenue                      $      -        $     -          n/a
Pretax Operating Income/(Loss)(1)      $   (260)       $  (110)         136%

--------
(1) Pretax segment income represents income before taxes and minority interest.

Revenue

         Total revenue for the year ended September 30, 2005 was $23,789
compared to $12,233 for the year ended September 30, 2004. This increase in
total revenue was largely the result of the Company's realizing revenue from its
geophysical services segment for the full 2005 fiscal year, whereas it realized
revenue for geophysical services for less than five months of fiscal 2004.
Another contributing factor was an overall increase in demand for oilfield
services in the region in fiscal 2005 compared to fiscal 2004.

         Total operating expenses increased to $19,677 from $11,518, a 71%
increase compared to fiscal 2004. This increase in operating expenses is
partially attributable to the increase in operating expenses associated with the
acquisition of TatArka midway through the 2004 fiscal year. The increase is also
attributable to increasing fuel costs. The Company also realized a 99% increase
in general and administrative expenses, much of which is attributable to
TatArka's operations. Income from operations for the 2005 fiscal year was
$4,112, compared to $715 for the 2004 fiscal year. The Company realized net
income of $2,177 during fiscal 2005 compared to a net loss of $1,951 during
fiscal 2004. This change from a net loss to net income is partially attributable
to the Company realizing revenue from geophysical services for a complete year,
rather than for less than five months of the year, as happened in fiscal 2004.
The change from net loss to net income can also be attributed to an increase in
the demand for oilfield services in fiscal 2005 as compared to fiscal 2004.

         Vessel revenue of $8,573 in fiscal 2005 was 16% higher compared to
fiscal 2004 as a result of increased demand for vessels during fiscal 2005.
Vessel revenue less vessel operating costs in fiscal 2005 was $2,682 compared to
$2,481 during fiscal 2004.

         In fiscal 2005, geophysical service revenue was $14,118 or 269% higher
than in fiscal 2004. Revenues less geophysical costs of revenue totaled $9,206
in fiscal 2005 a 387% increase compared to fiscal 2004. These significant
increases are primarily the result of the Company providing geophysical services
for the full 2005 fiscal year. The Company provided geophysical services for
less than five months of the 2004 fiscal year. The increases are also partially
attributable to increased demand in the region for geophysical services during
fiscal 2005.

         Infrastructure revenue in fiscal 2005 of $1,098 increased 7%
year-on-year. Revenue from product sales less cost of product sold in fiscal

                                       23
<PAGE>

2005 was $720 compared to $599 during fiscal 2004, as the Company continued its
trend of improving efficiency, profitability and revenue at its water
desalinization plant.

         The corporate administration segment of the Company's business refers
primarily to the administration of our affairs in the United States and includes
marketing services provided by that segment to the other segments of the
Company's operations. Corporate Administration generated a pretax operating loss
of $260 during the year ended September 30, 2005 compared to a pretax operating
loss of $110 during the year ended September 30, 2004.

         Vessel Operations

         As discussed herein, the Company experienced a decrease in revenue from
vessel operations during the 2004 fiscal year that was largely attributable to a
reduction in demand for vessels resulting from a dispute between the Company's
largest customer and the government, and unexpected repairs to a chartered
vessel during several months of the 2004 work season. While vessel revenues in
fiscal 2005 increased 16%, the factors that negatively impacted the 2004 fiscal
year continued into fiscal 2005, as vessel utilization was lower than
anticipated. The Company also realized increased vessel operating costs due
primarily to the Company having more vessels in its fleet during fiscal 2005
compared to fiscal 2004. Vessel revenues are affected by utilization and day
rates. Day rates remained fairly constant during fiscal 2005 and fiscal 2004,
while vessel utilization increased somewhat in fiscal 2005.

         The exploration and production season in the north Caspian Sea, where
the Company's vessels typically operate, usually ends in November and does not
commence again until March or April. Therefore, revenue and operating income
from vessel operations will decrease during the first fiscal quarter of each
year and will typically be at their lowest levels during the second fiscal
quarter of the fiscal year.

         Based on charters in place, current negotiations and anticipated
increased exploration and production activities in the Caspian Sea in the
upcoming year, we expect revenues and income from vessel operations to increase
in fiscal 2006 as compared to fiscal 2005. As evidenced by the decrease in our
vessel revenues in fiscal 2004 and relatively small increase in vessel revenues
during fiscal 2005, if we are unable to charter all or most of our vessels for
all or most of the upcoming 2006 work season, our vessel revenues may continue
to be adversely affected.

         Vessel operating costs of $5,891 during the year ended September 30,
2005 were $989 or 52% higher compared to the year ended September 30, 2004. This
increase is primarily the result of the Company having more vessels in its fleet
during fiscal 2005 as compared to fiscal 2004, combined with increases in costs
resulting from inflation. We anticipate vessel operating costs will continue to
increase in fiscal 2006 with the additions of the Caspian Raushan, CS Carmen, CS
Marina, Sara Maatje XII and Sara Maatje elf to our fleet.

         Geophysical Services

         As discussed above, the Company began providing geophysical services at
the end of May 2004, when it acquired TatArka and KMG. As a result of the
Company's recent acquisition of the controlling interest in KMG, it fully

                                       24
<PAGE>

consolidates the operations of TatArka and KMG from the dates of acquisition of
the controlling interests into its financial results. The Company provided
geophysical services for less than five months of the fiscal year ended
September 30, 2004, compared to providing such services for the full 2005 fiscal
year. Therefore, comparisons of revenues and expenses from between the 2005 and
2004 fiscal years are of limited value. TatArka and KMG currently have contracts
in place to supply seismic acquisition services beginning at various times from
March 2006 to August 2006, with scheduled completion dates ranging from November
2006 to December 2006, unless extended. With the anticipated increase in
exploration activities in the Caspian Sea region in 2006, we expect revenue and
costs of providing geophysical services to increase as compared to revenues and
costs experienced during in the 2005 fiscal year. Unlike our vessel operations,
TatArka can provide onshore geophysical research services throughout the year.
Because KMG provides marine and transition zone geophysical services, its
operations are more seasonal.

         Infrastructure

         During fiscal 2005, revenue from water desalinization increased 7%
compared to fiscal 2004, and revenue from water sales, less the cost of water
sales increased to $720 in fiscal 2005 compared to $599 in fiscal 2004. These
increases are the result of increased demand for water arising from increased
activity in the port of Bautino, and a conscious effort on the Company's part to
reduce costs and to conduct its water desalinization operations more
efficiently. While the Company hopes to continue to reduce its costs for
producing water, it does not anticipate such significant reductions in future
years. Similarly, as much of the Company's water sales are made to exploration
and production camps operating in the Caspian Sea region, much like its vessel
operations, demand for water is directly affected by oil and gas exploration and
production in the region. With the anticipated increases in exploration and
production activities in the region, the Company anticipates increased revenue
and income from water desalinization in 2006.

         Corporate Administration

         During the fiscal year ended September 30, 2005, net loss from
corporate administration was $260 compared to $110 during the fiscal year ended
September 30, 2004. This increase in net loss is the result of increased
compensation and consulting expenses. Corporate administration realizes revenue
by providing marketing services to the Company's other segments. During fiscal
2005, revenue decreased 30% due to an increase in the use of third party
consultants and service providers rather than providing certain services
in-house. These intersegment revenues are eliminated in consolidation.

Consolidated Results

         General and Administrative Expenses

         General and administrative expenses increased $3,406, or 99%, during
fiscal 2005. The primary contributing factor to this increase in general and
administrative expense is the consolidation of TatArka's general and

                                       25
<PAGE>

administrative expenses for the full fiscal year, as well as, a significant
increase in payroll expense as a result of a reclassification of certain payroll
expenses, increased technical and marketing fees, materials, rent expense and
transportation expense.

         While we anticipate general and administrative expenses for the
upcoming year will continue to rise as we continue to expand our operations, we
do not expect general and administrative expenses to increase at such a dramatic
rate in the upcoming fiscal year.

         Interest Expense

         Interest expense decreased 16% to $984 during fiscal 2005, compared to
fiscal 2004. The decrease in interest expense was primarily due to the Company
reducing a portion of its debt load with the proceeds raised by the Company in a
private placement of its equity securities during the 2005 fiscal year.

Cash Flow

         The Company typically realizes decreasing cash flows during its first
fiscal quarter and limited cash flow during its second fiscal quarter as weather
conditions in the north Caspian Sea region dictate when oil and gas exploration
and development work can be undertaken. Usually, the work season commences in
late March or early April and continues until the Caspian Sea ices over in
November. As a result, other than TatArka, which can continue to provide some
onshore geophysical services between November and March and the receipt of
winter standby rates on vessels, the Company generates limited revenue from
November to March each year.

         The following table provides an overview of the Company's cash flow
during fiscal 2005 and 2004.

                                                      Fiscal 2005   Fiscal 2004
                                                      -----------   -----------
Net cash provided by (used in) operating activities     $   513       $  (628)
Net cash used in investing activities                    (8,458)       (4,480)
Net cash provided by (used in) financing activities       9,901         5,024
                                                        -------       -------
Net Change in Cash                                      $ 2,366       $   (49)
                                                        =======       =======

         In fiscal 2005 net cash provided by operating activities was $513,
compared to net cash used in operating activities of $628 in fiscal 2004. This
change in cash flow from operating activities is the result of increased net
income from operations in fiscal 2005, coupled with a $1,668 increase in
depreciation and amortization and a $2,580 increase in deferred revenue. These
increases in net cash provided from operating activities were only partially

                                       26
<PAGE>

offset by a $1,461 increase in trade and other receivables, a $1,500 increase in
prepaid expenses and other current assets and a $2,481 increase in accounts
payable and accrued expenses.

         In fiscal 2005 the Company invested $5,972 in the acquisition of
vessels and equipment. The increase in cash used in investing activities was
coupled with a $2,351 decrease in advances on related party notes receivable and
a $244 decrease in other receivables to related parties. These reductions in
cash from investing activities were only partially offset by cash acquired in
the purchase of subsidiaries of $280.

         During fiscal 2005, the Company raised net proceeds of $22,931 through
a private placement of its equity securities. The Company also borrowed $4,153
from related and unrelated parties. Of the funds raised by the Company in
financing activities, $7,718 was used to repay short-term debts to related
parties and $8,410 was used to repay notes payable. The Company also incurred
$1,135 in issuance costs in connection with the funds raised through financing
activities.

Summary of Material Contractual Commitments

(Stated in thousands)
--------------------------------------------------------------------------------
                                                    Payment Period
                                    --------------------------------------------
Contractual Commitments              Less than                            After
                            Total      1 year    2-3 years   4-5 years   5 years

Long-Term Debt            $     59   $     59    $     -      $    -      $    -
Operating Leases               324        324          -           -           -
                          --------   --------    -------      ------      ------
         Total                 383        383          -           -           -

Financing

         During September 2004, Caspian re-financed $4,900 of notes payable with
a bank. The new note bore interest at 14% with interest payments due monthly.
This note was repaid in full during the second fiscal quarter 2005.

         During July 2004, Caspian entered into a $2,100 credit line with a bank
and drew $1,000 on the line. The credit line bears interest at 14% with interest
payments due monthly. During the second fiscal quarter 2005 the credit line was
paid in full.

         During 2004, TatArka entered into a $2,150 credit line with a bank and
immediately drew the full amount available under the line. The credit line bears
interest at 14% with interest payments due monthly. This credit line was repaid
in full during fiscal 2005.

         During 2004, Caspian entered into short-term loan agreements with a
group of shareholders and companies related through common management for an
aggregate $4,686 in notes payable. These notes bore interest at nine and ten
percent interest and were due through March 2005. These notes were repaid during
the second fiscal quarter 2005.

                                       27
<PAGE>

         During 2004, TatArka entered into a $300 loan agreement with a company
related through common management. This note was repaid in full during the
second fiscal quarter 2005.

         In December 2004, TatArka borrowed $600 by entering into a two year
note payable with a bank at an interest rate of 14%. The Company immediately
loaned this $600 to an unrelated third party. The loan has no stated interest
rate and is due by December 2007. Interest will be imputed on payments received
at a rate of 14%. As of September 30, 2005 no payments had been received on this
note.

         In March 2005, the Company completed a private placement of 7,658,446
shares of common stock for $3 per share. The Company received $21,796 after
deducting placement agent fees. In connection with the offering, the Company
issued a warrant to purchase 765,845 shares of common stock. The warrant is
exercisable at $3 per share, is exercisable immediately and expires in September
2006. As discussed herein, the Company has used part of the proceeds from the
offering to reduce outstanding debt. The Company plans to use the remaining
funds to reduce additional debt and fund the acquisition of vessels.

Off-Balance Sheet Financing Arrangements

         As of September 30, 2005 the Company had no off-balance sheet financing
arrangements.

New Accounting Standards

         In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 123R, (SFAS 123R),
Share-Based Payment, an amendment of FASB Statements Nos. 123 and 95, which
addresses the accounting for share-based payment transactions in which a company
receives employee services in exchange for either equity instruments of that
company or liabilities that are based on the fair value of that company's equity
instruments, or that may be settled by issuance of such equity instruments. SFAS
123R eliminates the Company's ability to account for share-based compensation
transactions using the intrinsic value method as prescribed by Accounting
Principles Board Opinion No. 25, Accounting for stock Issued to Employees, and
requires that such transactions be accounted for using a fair value-based method
and recognized as expense in the consolidated statement of operations. SFAS 123R
is effective beginning January 1, 2006. The Company is currently evaluating the
method of adoption and evaluating the impact that the adoption of SFAS 123R will
have on the consolidated financial statements. The impact of adoption will be
dependent on several factors, including but not limited to, the future
stock-based compensation strategy and stock price volatility of the Company.

         In November 2004, the FASB issued SFAS 151, "Inventory Costs." SFAS 151
requires that the allocation of fixed production overhead costs be based on the
normal capacity of the production facilities and unallocated overhead costs
recognized as an expense in the period incurred. In addition, other items such

                                       28
<PAGE>

as abnormal freight, handling costs and wasted materials require treatment as
current period charges rather than a portion of the inventory cost. SFAS 151 is
effective for inventory costs incurred during periods beginning after June 15,
2005. The Company does not expect the adoption of SFAS 151 to have a material
impact on results of operations or financial condition.

         In December 2004, the FASB issued SFAS 153, "Exchanges of Nonmonetary
Assets," (SFAS 153) an amendment of APB Opinion No. 29. SFAS 153 addresses the
measurement of exchanges of nonmonetary assets and redefines the scope of
transactions that should be measured based on the fair value of the assets
exchanged. SFAS 153 is effective for nonmonetary asset exchanges beginning in
the first quarter of fiscal 2006. The Company does not expect the adoption of
SFAS 153 to have a material impact on results of operations or financial
condition.

         In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error
Corrections" (SFAS 154) which replaces Accounting Principles Board Opinions No.
20 "Accounting Changes" and SFAS 3, "Reporting Accounting Changes in Interim
Financial Statements - An Amendment of APB Opinion No. 28." SFAS 154 provides
guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the earliest
practicable date, as the required method for reporting a change in accounting
principle and restatement with respect to the reporting of a correction of an
error. SFAS 154 is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005.

Critical Accounting Policies and Estimates

         The preparation of financial statements in accordance with accounting
standards generally accepted in the United States requires management to make
estimates and assumptions that affect both the recorded values of assets and
liabilities at the date of the financial statements and the revenues recognized
and expenses incurred during the reporting period. The company's estimates and
assumptions affect its recognition of deferred expenses, bad debts, income
taxes, the carrying value of its long-lived assets and its provision for certain
contingencies. The company evaluates the reasonableness of these estimates and
assumptions continually based on a combination of historical information and
other information that comes to its attention that may vary its outlook for the
future. Actual results may differ from these estimates under different
assumptions.

         Management suggests that the company's Summary of Significant
Accounting Policies, as described in Note 1 of Notes to Consolidated Financial
Statements, be read in conjunction with this Management's Discussion and
Analysis of Financial Condition and Results of Operations. The company believes
the critical accounting policies that most impact the company's consolidated
financial statements are described below.

         Revenue Recognition - Vessel revenues are derived from time charter
contracts of its vessels on a rate-per-day of service basis; therefore, vessel
revenues are recognized on a daily basis throughout the contract period. These

                                       29
<PAGE>

time charter contracts are generally on a term basis, ranging from three months
to three years. The base rate of hire for a contract is generally a fixed rate,
provided, however, that term contracts often include clauses to recover specific
additional costs, and mobilization and demobilization costs.

         Geophysical service revenue is recognized when services are rendered
and collectibility is reasonably assured. Certain revenues are recognized on a
time and materials basis, or on a percentage of completion basis, depending on
the contract, as services are provided. Revenue from time and material service
contracts is recognized as the services are provided. Revenue from fixed price
contracts lasting longer than one year is recognized over the contract term
based on the percentage of the cost of services provided during the period
compared to the total estimated cost of services to be provided over the entire
contract. Losses on contracts are recognized during the period in which the loss
first becomes probable and reasonably estimated.

         Product sales revenue is recorded upon delivery or shipment of bulk or
bottled water to the customer.

         Receivables - In the normal course of business, the company extends
credit to its customers on a short-term basis. The company's principal customers
are major oil and natural gas exploration, development and production companies.
Although credit risks associated with our customers are considered minimal, the
Company routinely reviews its accounts receivable balances and makes adequate
provisions for doubtful accounts.

         Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of
- Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount that the carrying amount
of the assets exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.
At September 30, 2005, the Company reviewed its long-lived assets as disclosed
above and determined no impairment was necessary.

         Income Taxes - Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences in the balances of
existing assets and liabilities on the Company's financial statements and their
respective tax bases and attributable to operating loss carry forwards. Deferred
taxes are computed at the enacted tax rates for the periods when such amounts
are expected to be realized or settled. Because of differences which result in
calculation of income under accounting principles generally accepted in the
United States of America, and income calculated under Kazakh income tax
regulations it is possible for operations to result in local taxable income
while reflecting operating losses in the accompanying consolidated financial
statements.

         Dry-docking Costs - Caspian's vessels must be periodically dry-docked
and pass certain inspections to maintain their operating classification, as
mandated by certain maritime regulations. Costs incurred to dry-dock the vessels

                                       30
<PAGE>

for certification are deferred and amortized over the period to the next
certification dry-docking, generally 54 to 60 months. Dry-docking costs are
comprised of painting the vessel hull and sides, recoating cargo and fuel tanks,
and performing other engine and equipment maintenance activities to bring the
vessels into compliance with classification standards.

Effects of Inflation

         Day-to-day operating costs are generally affected by inflation.
However, because the energy services industry requires specialized goods and
services, general economic inflationary trends may not affect the Company's
operating costs. The major impact on operating costs is the level of offshore
exploration, development and production spending by energy exploration and
production companies. As spending increases, prices of goods and services used
by the energy industry and the energy services industry will increase. Future
increases in vessel day rates may shield the Company from the inflationary
effects on operating costs.

Forward Looking Statements

         In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company notes that certain statements in this
report, which provide other than historical information and which are forward
looking, involve risks and uncertainties that may impact the Company's actual
results of operations. The Company faces many risks and uncertainties, many of
which are beyond the control of the Company, including: fluctuations in oil and
gas prices; level of fleet additions by competitors; changes in capital spending
by customers in the energy industry for exploration, development and production;
unsettled political conditions, civil unrest and governmental actions,
especially in higher risk countries of operations; foreign currency
fluctuations; and environmental and labor laws. Other risk factors are discussed
elsewhere in this Form 10-KSB.

         Forward-looking statements, which can generally be identified by the
use of such terminology as "may," "expect," "anticipate," "estimate,"
"forecast," "believe," "think," "could," "will," "continue," "intend," "seek,"
"plan," "should," "would" and similar expressions contained in this report, are
predictions and not guarantees of future performance or events. The
forward-looking statements are based on current industry, financial and economic
information, which the Company has assessed but which by its nature is dynamic
and subject to rapid and possibly abrupt changes. The Company's actual results
could differ materially from those stated or implied by such forward-looking
statements due to risks and uncertainties associated with our business. The
forward-looking statements should be considered in the context of the risk
factors listed above and discussed elsewhere in this Form 10-KSB. Investors and
prospective investors are cautioned not to place undue reliance on such
forward-looking statements. Management disclaims any obligation to update or
revise the forward-looking statements contained herein to reflect new
information, future events or developments.

                                       31
<PAGE>

Item 7.  Financial Statements

         See Consolidated Financial Statements listed in the accompanying index
to the Consolidated Financial Statements on Page F-1 herein.

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

         None.

Item 8A. Controls and Procedures

         The Company's principal executive officers and our principal financial
officer (the "Certifying Officers") are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e). Such officers have concluded (based upon their
evaluations of these controls and procedures as of the end of the period covered
by this report) that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by it in this
report is accumulated and communicated to management, including the Certifying
Officers as appropriate, to allow timely decisions regarding required
disclosure.

         The Certifying Officers have also indicated that there were no
significant changes in the Company's internal controls over financial reporting
or other factors that could significantly affect such controls subsequent to the
date of their evaluation, and there were no significant deficiencies and
material weaknesses.

         Management, including the Certifying Officers, does not expect that the
Company's disclosure controls or its internal controls will prevent all error
and all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. In addition, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have
been detected. These inherent limitations include the realities that judgments
in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by
management override of the control. The design of any systems of controls is
also based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions. Because of these
inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and may not be detected.

Item 8B. Other Information.

         None.

                                       32
<PAGE>

                                    PART III

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

         The following table sets forth the Company's directors, executive
officers, promoters and control persons, their ages, and all offices and
positions held with the Company. Directors are elected for a period of one year
and thereafter serve until their successor is duly elected by the stockholders
and qualified. Officers and other employees serve at the will of the Board of
Directors.


Name of Director   Age   Positions with the Company      Term Served as Director
----------------   ---   --------------------------      -----------------------

Laird Garrard      41    Chief Executive Officer and
                         President

Mirgali Kunayev    49    Chairman of the Board            Since July 2002
                         of Directors

James Passin       35    Director                         Since January 2005

Paul Roberts       49    Director and Chief Operating     Since July 2002
                         Officer

Maksuda Sunnatova  32    Chief Financial Officer

Valery Tolkachev   38    Director                         Since January 2005


         The above individuals will serve as the Company's officers and/or
directors. A brief description of their positions, proposed duties and their
background and business experience follows:

         Laird Garrard, Chief Executive Officer and President. In addition to
his duties with the Company, Mr. Garrard serves as a Vice President and Director
of Caspian Services Group Limited. Mr. Garrard joined Caspian in August 2002.
From July 1999 to July 2002, Mr. Garrard was the Eastern Hemisphere Financial
Manager, for PGS Onshore, Inc., a company specializing in oilfield services. At
PGS Onshore, Mr. Garrard was primarily responsible as the regional financial
manager for Africa, the Middle East and Central Asia. Prior to joining PGS
Onshore, Mr. Garrard was employed with Western Geophysical from 1990 to July
1999. During his time at Western Geophysical, Mr. Garrard held a number of
overseas accounting management positions including from 1994 to 1999 the
position of Financial Controller Kazakhstan. As Financial Controller he was
responsible for all aspects of finance and administration. From 1983 to 1987,
Mr. Garrard worked in Somalia for Resource Management and Research, a company
specializing in land use surveys. Initially employed as a field research

                                       33
<PAGE>

assistant, Mr. Garrard was promoted to Project Manager in 1986. Mr. Garrard
earned a Bachelor of Arts degree in Business Administration from Westminster
University, London, England in 1990. Mr. Garrard is not a director or nominee in
any other reporting company.

         Mirgali Kunayev, Chairman of the Board of Directors. Mr. Kunayev served
as Chief Executive Officer and President of the Company from July of 2002
through May of 2005. Mr. Kunayev has been a Vice President for Caspian Services
Group Limited since 2000. Mr. Kunayev's primary responsibilities include marine
oil operations support, construction of infrastructure within the Caspian region
and negotiation of service contracts. From 1998 to 2000, Mr. Kunayev was the
President of OJSC Kazakhstancaspishelf. During that time he worked
collaboratively on the international project JNOC-KazakhOil with geophysical
companies including, JGI, Schlumberger, Western Geophysical and PGS. From 1995
to 1998, Mr. Kunayev served as President of International Geophysics, Ltd. He
was primarily responsible to oversee geological-geophysical operations and
exploratory drilling. In January 2002, Mr. Kunayev earned a Ph.D. under the
discipline of Geological and Mineralogical Science from the Moscow Geological
University in Moscow, Russia.

         James Passin, Director. In July 1999, Mr. Passin joined Firebird
Management, LLC., as a portfolio manager. In April 2000, he co-founded FGS
Advisors, LLC, which is an investment advisor to Firebird Global Master Fund,
Ltd. Mr. Passin is not a director in any other reporting company.

         Makhsuda Sunnatova, Chief Financial Officer. Ms. Sunnatova served as
the Finance Manager of Caspian Services Group Limited from May 2004 through May
2005. While with Caspian Services, Ms. Sunnatova was primarily responsible for
the preparation of the Company's reports in accordance with US GAAP accounting
standards. Prior to joining Caspian Services, Ms. Sunnatova worked as an auditor
in the audit department of PricewaterhouseCoopers in Almaty, Kazakhstan from
January 2002 to March 2004. While with PricewaterhouseCoopers, Ms. Sunnatova
supervised and coached audit teams, audited oil and gas sector companies and
audited financial statements in accordance with Kazakhstani, US GAAP, Canadian
GAAP and International accounting standards. Prior to joining
PricewaterhouseCoopers, Ms. Sunnatova was employed as an auditor's assistant
with Deloitte & Touche in Almaty, Kazakhstan. Among other things, while she was
at Deloitte & Touche, Ms. Sunnatova audited financial statements and tested and
documented operational procedures. Ms. Sunnatova received a Bachelor of Arts
degree in Economics from Shymkent State University, in Shymkent, Kazakhstan in
1996, and a Masters in Business Administration from the University of Colorado.
Ms. Sunnatova is a US Certified Public Accountant. Ms. Sunnatova is not a
director or nominee in any reporting company.

         Paul A. Roberts, Chief Operating Officer and Director. Mr. Roberts has
worked for Caspian Services Group Limited since 2001. He was appointed President
and Chairman of the Board of Caspian Services Group in February 2002 where he
oversees Caspian's marine operations. Prior to that time, Mr. Roberts served as
a Vice President. As such, he was responsible for business development,
financial planning, contracts, marketing and operations in Kazakhstan and

                                       34
<PAGE>

Central Asia. In this position, he worked closely with government authorities
and state and local businesses. From 1999 to 2001, Mr. Roberts was an Area
Manager for PGS Onshore, Inc., in Almaty Kazakhstan. As Area Manager, he was
responsible for seismic exploration. He also performed many of the same duties
he performed in his capacity as Vice President of Caspian. From 1997 to 1999,
Mr. Roberts was the Resident Manager for PetroAlliance (WGC) in Almaty,
Kazakhstan. He was responsible for land and marine seismic exploration. He also
oversaw business and financial planning, contract negotiations and operations in
Kazakhstan and Central Asia. Mr. Roberts is not a director or nominee in any
other reporting company.

         Valery Tolkachev, Director. Since 1999, Mr. Tolkachev has served as a
Deputy Director of the Corporate Clients Department for Aton Investment Company
in Moscow, Russia. From 1991 to 1999, Mr. Tolkachev served in various positions
including, broker, analyst, manager and V.P. of Equities Department at MDM Bank,
IncomBank, IncomCapital, Tveruniversalbank and TIRAbrok Company. Mr. Tolkachev
graduated with Honors from the High Military School in Kiev, USSR in 1989. He is
currently attending the Academy of National Economy, Moscow Law faculty. Mr.
Tolkachev is also a director of BMB Munai, Inc., a reporting company.

         There are no family relationships among the board of directors.

Compliance with Section 16(a) of the Exchange Act

         Directors, executive officers and beneficial owners of greater than 10%
of the Company's outstanding common stock are required to comply with Section
16(a) of the Securities Exchange Act of 1934, which requires generally that such
persons file reports regarding ownership of and transactions in securities of
the Company on Forms 3, 4, and 5. Form 3 is an initial statement of ownership of
securities, Form 4 is to report changes in beneficial ownership and Form 5 is an
annual statement of changes in beneficial ownership.

         Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during its most recent fiscal year, it appears that
none of the Company's directors, executive officers of greater than 10%
shareholders failed to timely file Forms 3, 4 or 5.

Code of Ethics

         On January 9, 2006, the Company's Board of Directors revised it code of
ethics to provide additional guidance to the Company's executive officers,
directors and employees, including our principal executive officer, principal
financial officer, principal accounting officer and controller. The revised code
of ethics is posted on the Company's website at www.caspianservicesinc.com.

Item 10. Executive Compensation.

         The following chart sets forth the compensation paid by the Company to
each of its Executive Officers and Directors during the last three fiscal years:

                                       35
<PAGE>
<TABLE>
<CAPTION>
                                             SUMMARY COMPENSATION TABLE


                        Annual Compensation                                    Long Term           Compensation
                                                                                Awards                Payouts
                                                                        Restricted                LTIP
Name & Principal                                        Other Annual      Stock       Options    Payout    All Other
Position                Year       Salary     Bonus     Compensation      Awards      /SARs #      ($)     Compensation
--------------------    ----      --------  --------- ----------------- ----------- ---------- --------- ----------------
<S>                     <C>       <C>       <C>            <C>            <C>        <C>         <C>          <C>
Mirgali Kunayev(1)      2005      $138,900    $-0-          $-0-            --       110,000     $-0-         $-0-
Director and            2004       $51,600     -0-           -0-            --         --         -0-          -0-
Former CEO              2003        60,300     -0-           -0-            --         --         -0-          -0-

Laird Garrard(1)        2005       162,000     -0-           -0-            --       220,000      -0-          -0-
CEO and President       2004       162,000     -0-           -0-            --         --         -0-          -0-
                        2003       138,000     -0-           -0-            --         --         -0-          -0-

Paul Roberts(1)         2005       162,000     -0-           -0-            --       110,000      -0-          -0-
COO and Director        2004       162,000     -0-           -0-            --         --         -0-          -0-
                        2003       137,000     -0-           -0-            --         --         -0-          -0-

Arjan Goris(1)          2005       166,511   7,405           -0-            --         --         -0-          -0-
Regional Manager        2004       153,329   9,503           -0-            --       100,000      -0-          -0-
Caspian Services        2003        79,600     -0-           -0-            --          --        -0-          -0-

Robert Jobling(1)       2005       134,222   7,405           -0-            --         --         -0-          -0-
Manager of
Engineering and         2004       123,667   9,503           -0-            --       100,000      -0-          -0-
Equipment  Caspian
Services                2003        78,700     -0-           -0-            --         --         -0-          -0-

Louis Naegle(2)         2005           -0-     -0-           -0-            --         --         -0-          -0-
Former CEO and          2004        30,000     -0-           -0-            --         --         -0-          -0-
Former President        2003           -0-     -0-           -0-            --         --         -0-          -0-
</TABLE>
----------------
(1) Compensation paid to these individuals was paid to them by Caspian Services
Group Limited, our wholly owned subsidiary, in connection with services provided
to Caspian.

(2) Mr. Naegle served as the Chief Executive Officer of the Company from August
1998 until December 2002, and as President from August 1998 until June 2004.

         No other compensation has been paid directly or accrued to any other
officer or director of the Company to date. The Company has no policy for
compensating its directors for attendance at Board of Directors meetings or for
other services as directors.

         Compensation of officers and directors is determined by the Company's
Board of Directors and is not subject to shareholder approval. While none of the
officers and directors of the Company have employment agreements with the
Company, several of them do have agreements with Caspian regarding employment
with Caspian and compensation for services.

         In the past three years no executive officer has received any amounts
in connection with his resignation, retirement, or other termination. No

                                       36
<PAGE>

executive officer received any amounts in the last three years in connection
with a change in control of the Company of a change in the executive officer's
responsibilities after a change in control.

         The Company has no retirement, pension, or benefit plan at the present
time, however, the Board of Directors may adopt plans as it deems to be
reasonable under the circumstances.

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The term "beneficial owner" refers to both the power of investment and
the right to buy and sell shares of the Company. It also refers to rights of
ownership or the right to receive distributions from the Company and proceeds
from the sale of Company shares. Since these rights may be held or shared by
more than one person, each person who has a beneficial ownership interest in
shares is deemed to be the beneficial owners of the same shares because there is
shared power of investment or shared rights of ownership.

         The following table sets forth as of December 1, 2005, the name and the
number of shares of the Registrant's Common Stock, par value of $0.001 per
share, held of record or beneficially by each person who held of record, or was
known by the Registrant to own beneficially, more than 5% of the 38,858,446
issued and outstanding shares of the Company's Common Stock, and the name and
shareholdings of each director and of all officers and directors as group.

Type of                                      Amount & Nature of         % of
Security Name and Address                   Beneficial Ownership        Class
-------------------------                   --------------------        -----

Common   Dora International Limited               2,841,624             7.3%
         P.O. Box 357
         Pirouet House, Union Street
         St. Helier, Jersey, Channel Islands
         JE4 9WQ, United Kingdom

Common   Firebird Management LLC(2)               3,675,000             9.5%
         152 West 57th Street, 24th Floor
         New York, New York 10019

Common   Laird Garrard(1)                         2,441,624             6.3%
         Akademik Satpaev Avenue 29/6
         Ninth Floor
         Almaty 480100
         Republic of Kazakhstan

Common   Mirgali Kunayev(1)(3)                   11,794,858            30.4%
         Akademik Satpaev Avenue 29/6
         Ninth Floor
         Almaty 480100
         Republic of Kazakhstan

                                       37
<PAGE>

Common   James Passin(1)(4)                       1,330,000             3.4%
         152 West 57th Street, 14th Floor
         New York, New York 10019

Common   Petroleum Group Services Limited(3)     11,794,858            30.3%
         P.O. Box 544
         14 Britannia Place Bath Street
         St. Helier, Jersey, Channel Islands
         JE2 4SU, United Kingdom

Common   Paul Roberts(1)                          2,441,624             6.3%
         Akademik Satpaev Avenue 29/6
         Ninth Floor
         Almaty 480100
         Republic of Kazakhstan

Common   Maksuda Sunnatova                              -0-              *
         Akademik Satpaev Avenue 29/6
         Ninth Floor
         Almaty 480100
         Republic of Kazakhstan

Common   Techgrand Company Limited                2,441,624             6.3%
         Room 304, Arion Commercial Centre
         2-12 Queens Road West
         Hong Kong, People's Republic of China

Common   Valery Tolkachev(1)                            -0-              *
         27 Pokrovka Street, Building 6
         Moscow, Russia 105062
--------------------------------------------------------------------------------
All officers and directors                       17,878,106            46.0%
as a group (6 persons)
--------------------------------------------------------------------------------

*  Less than 1%.

(1) Mr. Garrard and Ms. Sunnatova are officers of the Company. Mr. Kunayev, Mr.
    Passin, Mr. Roberts and Mr. Tolkachev are directors of the Company.
(2) Firebird Avrora Advisors, LLC, FGS Advisors, LLC and Firebird Management,
    LLC are investment advisers under common control, each of which manages
    certain private investment funds. Firebird Avrora Advisors, LLC acts as

                                       38
<PAGE>

    investment advisor to Firebird Avrora Fund, Ltd. ("Avrora"), a private
    investment fund which owns 947,500 shares of Common Stock. FGS Advisors, LLC
    acts as investment adviser to Firebird Global Master Fund, Ltd. ("Global"),
    a private investment fund which owns 1,330,000 shares of Common Stock.
    Firebird Management, LLC acts as investment adviser to Firebird Republics
    Fund, Ltd., a private investment fund which owns 1,325,000 shares of Common
    Stock ("Republics,") and Firebird New Russia Fund, Ltd., a private
    investment fund which owns 72,500 ("New Russia" and collectively with
    Avrora, Global and Republics, the "Funds" and each individually a "Fund").
    As investment advisers to the Funds, each of Firebird Avrora Advisors, LLC,
    FGS Advisors, LLC and Firebird Management, LLC have voting and investment
    control with respect to the shares of Common Stock held by their respective
    advised Fund.
(3) Mr. Kunayev owns no shares in his own name. The shares attributed to Mr.
    Kunayev are the shares held of record by Petroleum Group Services Limited.
    On October 1, 2004, Mr. Kunayev became the managing director of Petroleum
    Group Services Limited. As the managing director, he may be deemed to have
    voting and investment power over the shares held by Petroleum Group Services
    Limited. (4) In his capacity as a manager of FGS Advisors, LLC, Mr. Passin
    may be deemed to have shared control with respect to shares of Common Stock
    owned by Global.

Change in Control

         To the knowledge of the management, there are no present arrangements
or pledges of the Company's securities that may result in a change in control of
the Company.

Item 12. Certain Relationships and Related Transactions.

         For the fiscal years ended September 30, 2005 and 2004 the Company paid
$684 and $78, respectively to a company owned by a shareholder, note holder and
officer of Caspian, Yevgeniy Kurguzkin, for services related to corporate
travel, visas and entry and exit services.

         During the fiscal years ended September 30, 2005 and 2004 the Company
paid a company under common management $39 and $18, respectively for marketing
and technical services.


                                     PART IV

Item 13. Exhibits

         Exhibits. The following exhibits are included as part of this report:

         Exhibit 14.1      Code of Ethics and Business Conduct

         Exhibit 14.2      Supplemental Code of Ethics for the Company's Chief
                           Executive Officer, Chief Financial Officer, Principal
                           Accounting Officer, Controller and Senior Accounting
                           Officer

                                       39
<PAGE>

         Exhibit 21.1      List of Subsidiaries

         Exhibit 31.1      Certification of Principal Executive Officer Pursuant
                           to Section 302 of the Sarbanes-Oxley Act of 2002

         Exhibit 31.2      Certification of Principal Financial Officer Pursuant
                           to Section 302 of the Sarbanes-Oxley Act of 2002

         Exhibit 32.1      Certification of Principal Executive Officer Pursuant
                           to Section 906 of the Sarbanes-Oxley Act of 2002

         Exhibit 32.2      Certification of Principal Executive Officer Pursuant
                           to Section 906 of the Sarbanes-Oxley Act of 2002


Item 14. Principal Accountant Fees and Services

         Hansen, Barnett and Maxwell served as the Company's independent
accountants for the years ended September 30, 2005 and 2004, and is expected to
serve in that capacity for the current year. Principal accounting fees for
professional services rendered for us by Hansen, Barnett & Maxwell for the years
ended September 30, 2005 and 2004, are summarized as follows:

                                                     2005              2004
--------------------------------------------------------------------------------
  Audit                                            $197,262           $182,136
  Audit related                                         -                  -
  Tax                                                 1,767              1,247
  All other                                             -                  -
--------------------------------------------------------------------------------
  Total                                            $199,029           $183,383
================================================================================

         Audit Fees. Audit fees were for professional services rendered in
connection with the Company's annual financial statement audits and quarterly
reviews of financial statements for filing with the Securities and Exchange
Commission.

         Tax Fees. Tax fees related to services for tax compliance and
consulting.

         Board of Directors Pre-Approval Policies and Procedures. At its
regularly scheduled and special meetings, the Board of Directors, in lieu of an
established audit committee, considers and pre-approves any audit and non-audit
services to be performed by the Company's independent accountants. The Board of
Directors has the authority to grant pre-approvals of non-audit services.

                                       40
<PAGE>

                                   SIGNATURES

         In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf,
thereunto duly authorized.

                                      CASPIAN SERVICES, INC.



Date: January 9, 2006                   /s/ Laird Garrard
                                     -------------------------------------------
                                      Laird Garrard, Chief Executive Officer


Date: January 9, 2006                  /s/ Maksuda Sunnatova
                                     -------------------------------------------
                                      Maksuda Sunnatova, Chief Financial Officer


Date: January 9, 2006                  /s/ Mirgali Kunayev
                                     -------------------------------------------
                                      Mirgali Kunayev, Director



Date: January 9, 2006                  /s/ James Passin
                                     -------------------------------------------
                                      James Passin, Director



Date: January 9, 2006                  /s/ Paul Roberts
                                     -------------------------------------------
                                      Paul Roberts, Director



Date: January 9, 2006                  /s/ Valery Tolkachev
                                     -------------------------------------------
                                      Valery Tolkachev, Director

                                       41
<PAGE>

                     CASPIAN SERVICES, INC. AND SUBSIDIARIES
                           (FORMERLY EMPS CORPORATION)

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                       AND
                              FINANCIAL STATEMENTS

                           September 30, 2005 and 2004











                            HANSEN, BARNETT &MAXWELLL
                           A Professional Corporation
                          CERTIFIED PUBLIC ACCOUNTANTS

<PAGE>

CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)

TABLE OF CONTENTS


                                                                          Page

Report of Independent Registered Public Accounting Firm                    F-2

Consolidated Financial Statements:

         Consolidated Balance Sheets - September 30, 2005 and 2004         F-3

         Consolidated Statements of Operations for the years ended
                  September 30, 2005 and 2004                              F-4

         Consolidated Statements of Shareholders' Equity
                  for the years ended September 30, 2004 and 2005          F-5

         Consolidated Statements of Cash Flows for the years ended
                  September 30, 2005 and 2004                              F-6

Notes to Consolidated Financial Statements                                 F-8

                                      F-1
<PAGE>

 HANSEN, BARNETT & MAXWELL
 A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
  5 Triad Center, Suite 750
Salt Lake City, UT 84180-1128
    Phone: (801) 532-2200
     Fax: (801) 532-7944
       www.hbmcpas.com




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and the Shareholders
Caspian Services, Inc. and Subsidiaries


We have audited the accompanying consolidated balance sheets of Caspian
Services, Inc. and Subsidiaries as of September 30, 2005 and 2004, and the
related statements of operations, shareholders' equity, and cash flows for the
years then ended. 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 the standards of the Public Company
Accounting Oversight Board (United States). 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Caspian Services,
Inc. and Subsidiaries as of September 30, 2005 and 2004, and the results of its
operations and its cash flows for the years then ended in conformity with U.S.
generally accepted accounting principles.


                                                   /s/ HANSEN, BARNETT & MAXWELL

Salt Lake City, Utah
November 19, 2005

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except share and per share data)

September 30,                                                                           2005            2004
-------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>             <C>
ASSETS
Current Assets
Cash                                                                                $  2,600        $    234
Trade accounts receivable, net of allowance of $394 and $16 respectively               4,788           3,434
Other receivables                                                                        965             380
Advances to related parties, net                                                         189             142
Inventories                                                                              500             184
Prepaid expenses and other current assets                                              3,494             888
-------------------------------------------------------------------------------------------------------------
Total Current Assets                                                                  12,536           5,262
-------------------------------------------------------------------------------------------------------------

Vessels, equipment and property, net                                                  20,711          13,237
Drydocking costs, net                                                                    399             437
Goodwill                                                                               2,911             663
Intangible assets, net                                                                    89               -
Investments                                                                              303           2,925
Notes receivable from related parties                                                  1,109             917
-------------------------------------------------------------------------------------------------------------
Total Assets                                                                        $ 38,058        $ 23,441
=============================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses                                               $  4,453        $  4,965
Income tax payable                                                                       599             650
Deferred revenue                                                                       2,883             155
Advances from related parties                                                            156             330
Notes payable - related parties                                                            -           3,995
Current portion of long-term debt                                                         55           3,339
-------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                              8,146          13,434
-------------------------------------------------------------------------------------------------------------
Long-Term Debt - Net of Current Portion                                                    -           4,401
-------------------------------------------------------------------------------------------------------------
Minority Interest                                                                      2,442           2,116
-------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common stock, $0.001 par value, 150,000,000 shares authorized,
  38,858,446 and 31,200,000 shares issued and outstanding, respectively                   39              31
Additional paid-in capital                                                            26,595           4,731
Accumulated other comprehensive income (loss)                                            (37)             32
Retained earnings (deficit)                                                              873          (1,304)
-------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity                                                            27,470           3,490
-------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity                                          $ 38,058        $ 23,441
=============================================================================================================


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

                                                      F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)



For the Years Ended September 30,                                                     2005           2004
----------------------------------------------------------------------------------------------------------
<S>                                                                            <C>            <C>
Revenues
Vessel revenues                                                                $     8,573    $     7,383
Geophysical service revenues                                                        14,118          3,821
Product sales                                                                        1,098          1,029
----------------------------------------------------------------------------------------------------------
Total Revenues                                                                      23,789         12,233
----------------------------------------------------------------------------------------------------------

Operating Expenses
Vessel operating costs                                                               5,891          4,902
Geophysical costs of revenues                                                        4,912          1,931
Cost of product sold                                                                   378            430
Depreciation                                                                         1,668            833
General and administrative                                                           6,828          3,422
----------------------------------------------------------------------------------------------------------
Total Operating Expenses                                                            19,677         11,518
----------------------------------------------------------------------------------------------------------
Income from Operations                                                               4,112            715
----------------------------------------------------------------------------------------------------------

Other Income (Expense)
Interest expense                                                                      (984)        (1,176)
Gain on sale of securities                                                               -            571
Exchange gain (loss)                                                                   (26)            23
Interest income                                                                         85             17
Income from equity method investees                                                    150            121
Other                                                                                   (1)          (137)
----------------------------------------------------------------------------------------------------------
Net Other Income (Expense)                                                            (776)          (581)
----------------------------------------------------------------------------------------------------------

Net Income Before Income Tax and Minority Interest                                   3,336            134
Provision for income tax                                                            (1,217)        (2,120)
Minority interest                                                                       58             35
----------------------------------------------------------------------------------------------------------
Net Income (Loss)                                                              $     2,177    $    (1,951)
==========================================================================================================
Basic Income (Loss) Per Common Share                                           $      0.06    $     (0.06)
==========================================================================================================
Diluted Income (Loss) Per Common Share                                         $      0.06    $     (0.06)
==========================================================================================================
Basic Weighted Average Common Share Outstanding                                 35,459,355     30,416,393
==========================================================================================================
Diluted Weighted Average Common Share Outstanding                               35,819,049     30,416,393
==========================================================================================================


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

                                                       F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share and per share data)


                                                                                  Accumulated
                                                 Common Stock        Additional      Other       Retained        Total
                                           ------------------------   Paid-in     Comprehensive  Earnings    Shareholders'
                                              Shares      Amount      Capital     Income (Loss)  (Deficit)       Equity
-------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>               <C>      <C>             <C>        <C>           <C>
Balance, September 30, 2003                 30,000,000        $ 30     $  1,456        $ (12)     $   647       $  2,121
                                                                                                           --------------
Net loss for the year ended
  September 30, 2004                                 -           -            -            -       (1,951)        (1,951)
Currency translation adjustment                      -           -            -           44            -             44
                                                                                                           --------------
Comprehensive loss                                   -           -            -            -            -       $ (1,907)
                                                                                                           --------------
Acquisition of 50% interest of
  Kazmorgeophysica                           1,000,000           1        2,729            -            -          2,730
Acquisition of TatArka                         200,000           -          546            -            -            546
-------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2004                 31,200,000          31        4,731           32       (1,304)      $  3,490
=========================================================================================================================

Net income for the year ended
  September 30, 2005                                 -           -            -            -        2,177          2,177
Currency translation adjustment                      -           -            -          (69)           -            (69)
                                                                                                           --------------
Comprehensive income                                 -           -            -            -            -       $  2,108
                                                                                                           --------------
Issuance of common stock for cash,
  net of offering costs of $1,135 and
  a warrant with a fair value of $2,679      7,658,446           8       21,788            -            -         21,796
Compensation related to issuance of
options to employees                                 -           -           76            -            -             76
-------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2005                 38,858,446        $ 39     $ 26,595        $ (37)     $   873       $ 27,470
=========================================================================================================================

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

                                                           F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands except share and per share data)

For the Year Ended September 30,                                                         2005       2004
---------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>        <C>
Cash flows from operating activities:
Net income (loss)                                                                     $ 2,177    $(1,951)
Adjustments to reconcile net loss to net cash from operating activities:
Loss (gain) on disposal of equipment                                                       28       (184)
Depreciation and amortization                                                           1,668        833
Minority interest                                                                         (58)       (35)
Net income in equity method investees                                                    (150)      (121)
Gain on sale of securities                                                                  -       (571)
Provision for loss on related party receivables                                             -         40
Foreign currency exchange (gain) loss                                                      26        (23)
Compensation from issuance of options                                                      76          -
Changes in current assets and liabilities:
Trade accounts receivable                                                                (871)      (390)
Other receivables                                                                        (590)      (363)
Inventories                                                                              (325)       (34)
Prepaid expenses and other current assets                                              (1,500)      (364)
Accounts payable and accrued expenses                                                  (2,481)     2,187
Income tax payable                                                                        (67)       475
Deferred revenue                                                                        2,580       (127)
---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                                       513       (628)
---------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Cash acquired in purchase of subsidiaries                                                 280        221
Advances on related party notes receivable                                             (2,351)      (928)
Advances on notes receivable                                                             (175)         -
Repayments on related party notes receivable                                                -        500
Other receivables - related                                                              (244)         -
Payment of drydocking costs                                                                 -       (423)
Proceeds from sale of property and equipment                                                4          -
Proceeds from sale of securities                                                            -        571
Purchase of vessels and equipment                                                      (5,972)    (4,421)
---------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                  (8,458)    (4,480)
---------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of short-term debt to related parties                            3,463      3,133
Proceeds from issuance of debt                                                            690      2,997
Change in advances to/from related parties                                                 80        172
Principal payments on short-term debt to related parties                               (7,718)      (310)
Principal payments on notes payable                                                    (8,410)      (968)
Proceeds from issuance of common stock                                                 22,931          -
Issuance costs                                                                         (1,135)         -
---------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                               9,901      5,024
---------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                                                   410         35
---------------------------------------------------------------------------------------------------------
Net change in cash                                                                      2,366        (49)
Cash at beginning of period                                                               234        283
---------------------------------------------------------------------------------------------------------
Cash at end of period                                                                 $ 2,600    $   234
---------------------------------------------------------------------------------------------------------

                                                                                              (CONTINUED)

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

                                                        F-6
<PAGE>
<CAPTION>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in thousands except share and per share data)


For the Year Ended September 30,                                                         2005       2004
---------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>        <C>
Supplemental disclosure of cash flow information:
Cash paid for interest                                                                $ 1,037    $   697
Cash paid for income tax                                                              $ 1,449    $ 1,160
Supplemental disclosure of non-cash investing and financing information:
Refinance notes payable                                                               $     -    $ 4,900
Issuance of stock for investment in TatArka                                           $     -    $   546
Issuance of stock for investment in Kazmorgeophysica                                  $     -    $ 2,730
---------------------------------------------------------------------------------------------------------


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

                                                         F-7
</TABLE>
<PAGE>

CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation - The accompanying consolidated financial statements
include operations and balances of Caspian Services, Inc. and its wholly owned
subsidiaries Caspian Services Group Limited ("Caspian"), and TatArka LLP
("TatArka"), Caspian Real Estate, Ltd. ("CRE"), Caspian Geophyzica, Ltd.
("CGEO"), and majority owned subsidiaries, CJSC Bauta ("Bauta"), and
Kazmorgeophysica CJSC ("KMG"), collectively ("Caspian" or the "Company").
Caspian has non-controlling 50% interests in Bautino Development Company, LLC
(Bautino), and Ishimgeophysica for which it accounts by the equity method.
Intercompany balances and transactions have been eliminated in consolidation.

Administrative changes - During the July 2005 shareholder's meeting, the
Company's shareholders voted on and approved several corporate changes. The
Shareholders changed the Company's name from EMPS Corporation to Caspian
Services, Inc. effective immediately. The shareholders also approved a change to
the company's fiscal year end from December 31 to September 30.

Nature of Operations - The Company's operations consist of a fleet of shallow
draft vessels operating in the Kazakh Sector of the North Caspian Sea; providing
seismic data acquisition and interpretation services to oil and gas companies
operating both onshore in Kazakhstan and offshore in the Kazakhstan sector of
the North Caspian Sea and the adjacent transition zone; operation of a water
desalinization and bottling plant in the Port of Bautino on the Caspian Sea;
development and operation of a hotel located at the Port of Bautino and the
development of a marine base located at the Port of Bautino.

Business Condition - The Company has retained earnings of $873 and a deficit of
$1,304 as of September 30, 2005 and 2004, respectively, and has working capital
of $4 and negative working capital of $8 as of September 30, 2005 and 2004,
respectively.

The Company has income of $2,177 and a net loss of $1,951 for the years ended
September 30, 2005 and 2004, respectively. The Company's operations provided
cash of $513 during September 30, 2005 and used cash of $628 during September
30, 2004.

During January 2005, the Company announced they had entered into a contract to
provide five shallow draft vessels in support of offshore pipeline construction
activities ongoing in the Kashagan oilfield in the North Caspian Sea. To fulfill
the contract, one of the vessels will be supplied from the Company's existing
fleet. The remaining four will be new additions to the Company's fleet, through
acquisition and leasing. All vessels have been mobilized to the Caspian Sea in
November 2005 for an initial contract period of two years.

Between January and March 2005, the Company completed a private placement of its
common stock by issuing 7,658,446 common shares for proceeds, net of offering
costs, of $21,796. The Company used the proceeds to reduce outstanding debt, to
fund the acquisition of the above mentioned vessels and to acquire seismic
recording equipment.

Management believes these new contracts and the additional capital received from
the issuance of common stock will further enable the Company to continue its
operations as a going concern.

                                      F-8
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Fair Value of Financial Statements - The carrying amounts reported in the
accompanying consolidated financial statements for cash, accounts receivable,
notes payable and accounts payable approximate fair values because of the
immediate nature of short-term maturities of these financial instruments.

Minority Interest - Minority interest presented on the balance sheet refers to
the minority shareholder's investment in the voting stock of Bauta and KMG. In
the statement of operations, consolidated net income is adjusted by the minority
shareholder's proportionate share of the income or losses.

Receivables - In the normal course of business, the company extends credit to
its customers on a short-term basis. The principal customers are major oil and
natural gas exploration, development and production companies. Although credit
risks associated with these customers are considered minimal, the company
routinely reviews its accounts receivable balances and makes provisions for
doubtful accounts.

Inventories - Inventory consists of bulk and bottled water related to the Bauta
desalinization plant, fuel, spare parts and supplies related to the geophysical
operations of TatArka and KMG. Inventories are stated at the lower of cost or
market, cost being determined by an average cost method, which approximates the
first-in, first-out (FIFO) method.

Vessels, Equipment and Property - Vessels, property and equipment are stated at
cost less accumulated depreciation. At the time property is disposed of, the
assets and related accumulated depreciation are removed from the accounts, and
any resulting gain or loss is charged to other income. Major renewals and
betterments that extend the life of the property and equipment are capitalized.
Maintenance and repairs are expensed as incurred except for drydocking
expenditures, which are capitalized and amortized.

Depreciation of property and equipment is calculated by using the straight-line
method based on the following estimated useful lives:
                                                              Years
                  Vessels                                    10 - 12
                  Machinery and equipment                     2 - 20
                  Office equipment and furniture              2 - 3

Depreciation expense was $1,668 and $833 for the years ended September 30, 2005
and 2004, respectively.

Drydocking Costs - Caspian's vessels must be periodically drydocked and pass
certain inspections to maintain their operating classification, as mandated by
certain maritime regulations. Costs incurred to drydock the vessels for

                                      F-9
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


certification are deferred and amortized over the period to the next
certification drydocking, generally 54 to 60 months. Drydocking costs are
comprised of painting the vessel hull and sides, recoating cargo and fuel tanks,
and performing other engine and equipment maintenance activities to bring the
vessels into compliance with classification standards.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of -
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount that the carrying amount
of the assets exceed the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.
At September 30, 2005, the Company reviewed its long-lived assets as disclosed
above and determined no impairment was necessary.

Revenue Recognition - Vessel revenues are derived from time charter contracts
of its vessels on a rate-per-day of service basis; therefore, vessel revenues
are recognized on a daily basis throughout the contract period. These time
charter contracts are generally on a term basis, ranging from three months to
three years. The base rate of hire for a contract is generally a fixed rate,
provided, however, that term contracts often include clauses to recover specific
additional costs, and mobilization and demobilization costs.

Geophysical service revenue is recognized when services are rendered and
collectibility is reasonably assured. Certain revenues are recognized on a time
and materials basis, or on a percentage of completion basis, depending on the
contract, as services are provided. Revenue from time and material service
contracts is recognized as the services are provided. Revenue from fixed price
contracts lasting longer than one year is recognized over the contract term
based on the percentage of the cost of services provided during the period
compared to the total estimated cost of services to be provided over the entire
contract. Losses on contracts are recognized during the period in which the loss
first becomes probable and reasonably estimated.

Product sales revenue is recorded upon delivery or shipment of bulk or bottled
water to the customer.

Operating Costs - Vessel operating costs are incurred on a daily basis and
consist primarily of costs such as crew wages, repair and maintenance,
insurance, fuel, lube oil and supplies, and other vessel expenses such as crew
personnel training costs. Vessel operating costs are recognized as incurred on a
daily basis.

Foreign Currency Transactions - Caspian makes its principal investing and
financing transactions in United States Dollars and the United States Dollar is
therefore its functional currency. Transactions and balances denominated in
other currencies have been translated into United States Dollars using
historical exchange rates. Exchange gains and losses from holding foreign
currencies and having liabilities payable in foreign currencies are included in
the results of operations. The Kazakh Tenge is TatArka's, KMG's and Bauta's,
functional currency. The effect of changes in exchange rates with respect to
these subsidiaries are recognized as a separate component of accumulated other
comprehensive income. The translation of Kazakh Tenge denominated assets and
liabilities into United States Dollars for the purpose of these consolidated

                                      F-10
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


financial statements does not necessarily mean that the Company could realize or
settle, in United States Dollars, the reported values of these assets and
liabilities. Likewise it does not mean that the Company could return or
distribute the reported United States Dollar value of its Kazakh subsidiaries
capital to its shareholders.

Income Taxes - Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences in the balances of existing
assets and liabilities on the Company's financial statements and their
respective tax bases and attributable to operating loss carry forwards. Deferred
taxes are computed at the enacted tax rates for the periods when such amounts
are expected to be realized or settled. Because of differences which result in
calculation of income under accounting principles generally accepted in the
United States of America, and income calculated under Kazakh income tax
regulations it is possible for operations to result in local taxable income
while reflecting operating losses in the accompanying consolidated financial
statements.

Comprehensive Income - The Company uses SFAS No. 130, "Reporting Comprehensive
Income," which requires the reporting and display of total comprehensive income
and its components in the financial statements. Total comprehensive income
represents the net change in shareholders' equity during a period from sources
other than transactions with shareholders. For the Company, accumulated other
comprehensive income is comprised of accumulated foreign currency translation
adjustments.

Effects of Inflation - Day-to-day operating costs are generally affected by
inflation. However, because the energy services industry requires specialized
goods and services, general economic inflationary trends may not affect our
operating costs. The major impact on operating costs is the level of offshore
exploration, development and production spending by energy exploration and
production companies. As spending increases, prices of goods and services used
by the energy industry and the energy services industry will increase. Future
increases in vessel day rates may shield the Company from the inflationary
effects on operating costs.

Basic and Diluted Income (Loss) Per Share - Basic income (loss) per share is
calculated by dividing net income (loss) by the weighted-average number of
shares outstanding. Diluted income per share is calculated by dividing net
income by the weighted-average number of shares and all dilutive potentially
issuable shares, except during loss periods when those potentially issuable
shares are anti-dilutive.

The following data shows the amounts used in computing basic and diluted
weighted-average number of shares outstanding at September 30, 2005 and 2004:

For year ended September 30,                               2005            2004
--------------------------------------------------------------------------------
Basic weighted average common shares outstanding     35,459,355      30,416,393
Dilutive effect of outstanding options/warrants         359,694               -
                                                     ----------      ----------
Diluted weighted average common shares outstanding   35,819,049      30,416,393
                                                     ==========      ==========

There were no potentially issuable common shares outstanding at September 30,
2004.

Stock-based Compensation Plans - The Company accounts for stock options issued
to directors, officers and employees under Accounting Principles Board Opinion
No. 25 and related interpretations ("APB 25"). The Company accounts for options

                                      F-11
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


and warrants issued to non-employees at their fair value in accordance with SFAS
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123").

During the year ended September 30, 2005, the Company recognized $76 of
compensation expense related to options issued to employees. Had the Company
determined compensation cost based on the fair value at the grant date for stock
options under SFAS No. 123, the Company's net income would have been reduced to
the pro forma amounts indicated below for the year ended September 30, 2005 and
2004:
<TABLE>
<CAPTION>
September 30,                                                           2005         2004
------------------------------------------------------------------------------------------
<S>                                                                  <C>         <C>
Net income (loss) applicable to common shareholders, as reported     $ 2,177     $ (1,951)
Add: Total stock-based employee compensation expense
  recorded                                                                76            -
Deduct: Total stock-based employee compensation expense
  determined under fair value based method for all awards               (851)           -
------------------------------------------------------------------------------------------
Pro Forma Net Income (Loss)                                          $ 1,402     $ (1,951)
==========================================================================================
Basic income (loss) per share:
  As reported                                                        $  0.06     $  (0.06)
  Pro forma                                                          $  0.04     $  (0.06)
------------------------------------------------------------------------------------------
Diluted income (loss) per share:
  As reported                                                        $  0.06     $  (0.06)
  Pro forma                                                          $  0.04     $  (0.06)
==========================================================================================
</TABLE>

Concentrations of Credit Risk - The Caspian Sea offshore operations are
contracted primarily with Agip KCO and service providers to Agip KCO. Loss of
these customers could have a material negative effect on the Company. Vessel
charter services provided to these customers were under contract with varying
terms and dates during 2005. However, it is possible that a loss of business
could occur in the short or long term. While Management expects to renew the
contracts periodically, there is no assurance that these customers will renew,
or will renew on terms favorable to the Company.

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of trade and other receivables. The Company
manages its exposure to risk through ongoing credit evaluations of its customers
and generally does not require collateral. The Company maintains an allowance
for doubtful accounts for potential losses and does not believe it is generally
exposed to concentrations of credit risk that are likely to have a material
adverse impact on the Company's financial position or results of operations.

New Accounting Standards - In December 2004, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards No. 123R, (SFAS
123R), Share-Based Payment, an amendment of FASB Statements Nos. 123 and 95,
which addresses the accounting for share-based payment transactions in which a
company receives employee services in exchange for either equity instruments of
that company or liabilities that are based on the fair value of that company's
equity instruments, or that may be settled by issuance of such equity
instruments. SFAS 123R eliminates the Company's ability to account for
share-based compensation transactions using the intrinsic value method as

                                      F-12
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


prescribed by Accounting Principles Board Opinion No. 25, Accounting for stock
Issued to Employees, and requires that such transactions be accounted for using
a fair value-based method and recognized as expense in the consolidated
statement of operations. SFAS 123R is effective beginning January 1, 2006. The
Company is currently evaluating the method of adoption and evaluating the impact
that the adoption of SFAS 123R will have on the consolidated financial
statements. The impact of adoption will be dependent on several factors,
including but not limited to, the future stock-based compensation strategy and
stock price volatility of the Company.

In November 2004, the FASB issued SFAS 151, "Inventory Costs." SFAS 151 requires
that the allocation of fixed production overhead costs be based on the normal
capacity of the production facilities and unallocated overhead costs recognized
as an expense in the period incurred. In addition, other items such as abnormal
freight, handling costs and wasted materials require treatment as current period
charges rather than a portion of the inventory cost. SFAS 151 is effective for
inventory costs incurred during periods beginning after June 15, 2005. The
Company does not expect the adoption of SFAS 151 to have a material impact on
results of operations or financial condition.

In December 2004, the FASB issued SFAS 153, "Exchanges of Nonmonetary Assets,"
(SFAS 153) an amendment of APB Opinion No. 29. SFAS 153 addresses the
measurement of exchanges of nonmonetary assets and redefines the scope of
transactions that should be measured based on the fair value of the assets
exchanged. SFAS 153 is effective for nonmonetary asset exchanges beginning in
the first quarter of fiscal 2006. The Company does not expect the adoption of
SFAS 153 to have a material impact on results of operations or financial
condition.

In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error
Corrections" (SFAS 154) which replaces Accounting Principles Board Opinions No.
20 "Accounting Changes" and SFAS 3, "Reporting Accounting Changes in Interim
Financial Statements - An Amendment of APB Opinion No. 28." SFAS 154 provides
guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the earliest
practicable date, as the required method for reporting a change in accounting
principle and restatement with respect to the reporting of a correction of an
error. SFAS 154 is effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005.

Reclassifications - Certain reclassifications have been made in the 2004
financial statements to conform to the 2005 presentation. The reclassifications
had no effect on net income.

NOTE 2 - ACQUISITION OF TATARKA AND KAZMORGEOPHYSICA

On May 26, 2004, the Company finalized its acquisition of all of the membership
interests of TatArka LLP ("TatArka") and 50% of the outstanding common stock of
Kazmorgeophysica CJSC ("KMG") in exchange for total consideration of $3,276
which consisted of the Company issuing 200,000 shares of common stock in
exchange for all of the membership interests in TatArka and 1,000,000 shares of
common stock in exchange for 50% of the outstanding common stock of KMG. The
consideration given and the purchase price were recorded at the estimated fair
value of the stock issued, or $3,276. The remaining 50% of the outstanding
common stock of KMG not purchased by the Company was held by the Chairman and
CEO of the Company before and after the acquisition. Of the TatArka interests

                                      F-13
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


purchased, 50% was purchased from a company controlled by the Company's CEO, who
is a non-controlling shareholder of the Company. On September 21, 2005, the
Company increased its ownership percentage of KMG from 50% to 51% for and
additional payment of $56.

TatArka was formed as a limited liability partnership under the laws of
Kazakhstan on July 17, 2001 to provide seismic data acquisition services to
onshore oil and gas exploration companies operating in the Republic of
Kazakhstan. Most of TatArka's customers are foreign oil and gas corporations
operating in Kazakhstan.

KMG was organized under the laws of Kazakhstan on February 12, 2002 to provide
seismic data acquisition services to offshore oil and gas exploration companies
operating in the Kazakhstan sector of the North Caspian Sea and the adjacent
transition zone. Most of KMG's customers are Kazakh oil and gas corporations
operating in Kazakhstan.

As oil and gas exploration companies often require both onshore and offshore
seismic data acquisition and interpretation services, TatArka and KMG often
contract with each other to provide services for their respective customers.

The Company acquired TatArka and the investment in KMG in an effort to enhance
the services offered to the oil and gas exploration and development industry
operating in the Kazakh Sector of the North Caspian Sea.

The purchase price for the acquisitions of TatArka and stock interest in KMG was
$546 and $2,730, respectively, or $2.73 per share. the Company estimated the
value of the 1,200,000 shares of common stock issued based on the quoted market
price of the Company's common stock on May 26, 2004, adjusted for the effects of
quantities traded, and price fluctuations between the acquisition date and the
prices through July 2004, through which an active market in the Company's stock
was established.

The Company allocated the $546 purchase price related to the 200,000 shares
issued for TatArka to the assets acquired and liabilities assumed on May 26,
2004, based on their estimated fair values. The $250 excess of the purchase
price over the fair value of the assets acquired and liabilities assumed was
recognized as goodwill.

                                      F-14
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


The TatArka assets acquired and liabilities assumed were as follows:

         Assets Acquired

         Current assets                                      $  617
         Receivables from related parties                       459
         Property and equipment                                 214
         Goodwill                                               250
         -----------------------------------------------------------
         Total Assets Acquired                                1,540
         -----------------------------------------------------------

         Liabilities Assumed

         Current liabilities                                    762
         Deferred revenue                                       232
         -----------------------------------------------------------
         Total Liabilities Assumed                              994
         -----------------------------------------------------------
         Net Assets Acquired                                 $  546
         ===========================================================

The purchase price of $2,730 for 50% of the KMG common stock was accounted for
in accordance with APB 18, The Equity Method of Accounting for Investments in
Common Stock, and the difference between the cost of the investment and the
amount of underlying equity in net assets of KMG was accounted for as if KMG
were a consolidated subsidiary, and therefore the Company recognized equity
method goodwill of $2,654. On September 21, 2005, the Company increased its
ownership percentage of KMG from 50% to 51% for $56. The Company allocated the
$3,131 carrying value of the investment in KMG to the assets acquired and
liabilities assumed on September 21, 2005, based on their estimated fair values.
KMG has a 50% non-controlling interest in Ishimgeophysica which is accounted for
under the equity method of accounting.

The KMG assets acquired and liabilities assumed were as follows:

         Assets Acquired

         Current assets                                     $ 2,174
         Investment in Ishimgeophysica                          303
         Property and equipment                                 428
         Goodwill                                             2,654
         -----------------------------------------------------------
         Total Assets Acquired                                5,559
         -----------------------------------------------------------

         Liabilities Assumed

         Current liabilities                                  1,875
         Deferred revenue                                       180
         Total Liabilities Assumed                            2,055
         -----------------------------------------------------------
         Minority interest                                      373
         -----------------------------------------------------------
         Net Assets Acquired                                $ 3,131
         ===========================================================

The following pro forma operating information for the years ended September 30,
2005 and 2004 have been prepared to present the effects of the acquisitions as
though the acquisitions had occurred on October 1, 2004 and 2003, respectively.
The pro forma financial information is illustrative of the effects of the

                                      F-15
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


acquisitions and does not necessarily reflect results of operations that would
have resulted had the acquisitions actually occurred at those dates. In
addition, the pro forma financial information is not necessarily indicative of
the results that may be expected for the year ending September 30, 2005, or any
other period.

For year ended September 30,                            2005               2004
--------------------------------------------------------------------------------
Revenue                                              $ 4,541            $ 5,268
Net Income                                           $   452            $ 1,344
Net Income Per Common Share                          $  0.01            $  0.04
--------------------------------------------------------------------------------

NOTE 3 - TRADE ACCOUNTS RECEIVABLE

The Company believes accounts receivable for vessel charters are fully
collectable within one year, and no allowance for doubtful accounts was deemed
necessary at September 30, 2005 and 2004. Receivables from vessel charter
revenues are approximately $2,081 and $2,293 at September 30, 2005 and 2004,
respectively.

Accounts receivable from geophysical services arise principally from contracts
to gather seismic data for future geophysical processing and analysis. The
receivables are current and collectable in 45 days from date of invoice. At
September 30, 2005 and 2004, receivables related to geophysical services totaled
$2,971 and $1,033 at September 30, 2005 and 2004, respectively. The Company
provided an allowance for doubtful accounts for these receivables of $390 and
zero, respectively.

At September 30, 2005 and 2004, receivables related to desalinization operations
totaled $130 and $129 respectively. The Company provided an allowance for
doubtful accounts for these receivables of $4 and $16 for the years ended
September 30, 2005 and 2004, respectively.

NOTE 4 -VESSELS, EQUIPMENT AND PROPERTY

Vessels, equipment and property consisted of the following:

September 30,                                            2005            2004
------------------------------------------------------------------------------
Marine vessels                                       $  8,275        $  8,247
Machinery and equipment                                10,812           5,570
Office equipment and furniture                            612             308
Land                                                    2,331             631
Construction in progress                                2,978           1,100
------------------------------------------------------------------------------
                                                       25,008          15,856
Accumulated depreciation                               (4,297)         (2,619)
------------------------------------------------------------------------------
Vessels, Equipment and Property, net                 $ 20,711        $ 13,237
==============================================================================

Vessels - During January 2005, the Company entered into contracts to provide
five shallow draft vessels in support of offshore pipeline construction
activities ongoing in the Kashagan oilfield in the North Caspian Sea. One of the
vessels will be supplied from the Company's existing fleet. During July 2005 the

                                      F-16
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


board of directors authorized a joint construction agreement with a third party
to build two Damen Multicat vessels for the purpose of fulfilling this contract.
The combined build cost of the two Damen Multicat vessels is approximately
$2,900 of which $1,450 will be paid by the Company.

In August 2005, the Company took delivery of its newly built Damen Multicat
vessel, the CS Carmen. The CS Carmen will work in Turkmenistan until the Saipem
charter for offshore operations commences in May 2006. The second newly built
vessel, the CS Marina and the Sara Maatje XII and Sara Maatje elf have also been
added to the Company's fleet in connection with the Saipem charter. These
vessels are owned by Rederij Waterweg, a Dutch shipping company, and operated by
Caspian.

In February 2004, Caspian entered into an agreement for the construction and
purchase of a high speed aluminum crew boat ("Caspian Raushan"). The boat is 33
meters long and capable of transporting up to 70 passengers and 35 tons of cargo
at speeds up to 25 knots. The vessel will be used to ferry oilfield workers
between offshore installations and land bases. The vessel will also be equipped
as an emergency response craft with a fire pump and monitor. The Company has
paid $1,100 towards the contract price of $1,800 with the remainder due at
various progress points. During September 2005, the Caspian Raushan was launched
and is undergoing sea trials. Full delivery is expected during January 2006.

During June, 2004, the Company entered into an agreement for the purchase of a
used 45 meter shallow draft multi-purpose utility vessel for $575. The Company
paid an additional $313 for shipping and repairs. The vessel has accommodation
facilities for up to 20 client passengers and a back deck area of 170 square
meters for the deployment of survey equipment and is equipped with electric bow
thrusters, making it a highly maneuverable vessel. The Company took possession
of the vessel on July 7, 2004 and re-named it the Caspian Galiya.

Geophysical Equipment - The Company's geophysical equipment primarily includes
technical equipment and heavy equipment used for collecting seismic data in
remote potential oil and gas field locations.

Desalinization Plant - The desalinization operations are located in the Port of
Bautino and consist of production and administrative buildings, two 500 meter
capacity desalinization units, filtration systems, bulk storage tank, production
lines, packaging equipment, warehouse space and various other production and
administrative equipment, furniture and fixtures.

NOTE 5 - DEVELOPMENT OF MARINE BASE

In March 2005, the Company formed Caspian Real Estate Limited, a British Virgin
Island Company to develop and operate a marine service base in the Port of
Bautino, Kazakhstan to support the Company's growing fleet and to serve as a
major supply-chain marine base providing a full range of services to vessel
fleet operators and to oil companies operating in the Kazakhstan Sector of the
North Caspian Sea. The Company commenced phase one of the project in March 2005,
which includes conducting an offshore sea bed sampling survey, environmental
impact assessment study, final jetty and shore site facility engineering design
works, submission of plans for approvals and preliminary site works in
preparation for start of construction.

                                      F-17
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


During August 2005, the Company entered into a contract to acquire 3 separate
adjoining parcels of land, totaling 4.97 hectares of waterfront property for
$3,950 on which the marine base will be located. Of the $3,950 purchase price,
$1,950 is payable in cash and the remaining $2,000 is payable with common stock.
At September 30, 2005, the Company had paid $1,700 down on the land and the
remaining $250 plus 444,444 shares of common stock valued at $2,000 was paid
upon closing in November 2005. In connection with this land purchase, the
Company acquired 100% of the ownership interests in Balykshi LLP, the holding
company of the real estate.

During the year ended September 30, 2005, the Company incurred construction
costs totaling $994.

NOTE 6 - NOTES RECEIVABLE

In December 2004, TatArka borrowed $600 by entering into a two year 14% interest
bearing note payable with a bank. The Company immediately loaned this $600 to an
unrelated third party. The loan has no stated interest rate and is due by
December 2007. Interest will be imputed on payments received at a rate of 14%.
By September 2005, this note was repaid in full.

NOTE 7 - NOTES RECEIVABLE FROM RELATED PARTIES

In December 2003, the Company entered into an agreement with Bautino to provide
$1,100 funding to build, furnish and equip the phase two addition to the hotel.
Through December 31, 2003, the Company advanced $400 in accordance with the
agreement and through December 31, 2004, the full $1,100 had been advanced.
Interest began accruing on January 1, 2005 at the rate of 6% and will be
received quarterly until the principal has been received in full. The terms
provide for Bautino to repay the principal loaned in semi-annual installments of
$138 plus interest beginning September 18, 2005 and through March 20, 2009.
Construction of phase two was completed and opened in February 2005. At
September 30, 2005, no amounts have been collected under this note.

On September 10, 2003 the Company advanced $500 to BMB Holding, Inc., a Delaware
corporation related through a Company officer and director. By December 31,
2003, this note had been collected in full. The note carried an interest rate of
16.5% and was collateralized by an option to purchase BMB Holding, Inc. common
stock at 95% of its market value in exchange of the amount due to the Company on
the maturity date. As additional compensation for providing the loan, the
Company received 10 shares of BMB Holding, Inc. common stock, totaling a one
percent equity interest in BMB, and recorded the investment at $0. During August
2004, the Company sold the equity investment for proceeds of $571 and recognized
a gain on the sale of $571.

At September 30, 2005 and 2004, $9 and $17 in loans to employees were included
in notes receivable from related parties.

NOTE 8 - LONG-TERM DEBT

During September 2004, Caspian refinanced $4,900 of notes payable with a bank.
The new note bore interest at 14% with interest payments due monthly. The note
required monthly principle payments. The note was collateralized by the

                                      F-18
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


Baskunchak, the Caspian Maria, the Caspian Yelena, the Caspian Eva and 5,400
shares of Bauta CJSC. In March 2005, the note was paid in full.

During 2004, TatArka entered into a line availability agreement with a local
bank for up to $600, and immediately borrowed $600. The line is collateralized
by equipment and bears interest at 14%. The funds drawn are due by December
2006. During 2005, the note was paid in full.

Long-term debt consists of the following:

September 30,                                                2005         2004
-------------------------------------------------------------------------------
Notes payable to a bank bearing interest at 14%;
 due August 2007; paid in full - March 2005                   $ -      $ 4,568
Note payable to a bank bearing interest at 14%;
 collateralized by land and vessel under construction
 paid in full - March 2005                                      -        1,000
Bank credit line bearing interest at 21%
 due June 2005; secured by inventory                           55           22
Bank credit line bearing interest at 14%; due July 2005;
 secured by equipment and future cash flows                     -            -
Bank credit line bearing interest at 14%
 due by December 2006; secured by equipment                     -        2,150
-------------------------------------------------------------------------------
Total Long-term Debt                                           55        7,740
Less: Current Portion                                          55        3,339
-------------------------------------------------------------------------------
Long-term Debt - Net of Current Portion                       $ -      $ 4,401
===============================================================================

NOTE 9 - NOTES PAYABLE - RELATED PARTIES

During 2004, Caspian entered into short-term loan agreements with a group of
shareholders and companies related through common management for an aggregate
$4,686 in notes payable. These notes bear interest at nine and ten percent and
were repaid by March 2005.

NOTE 10 - STOCKHOLDERS' EQUITY

Common Stock - During March 2005, the Company completed a private placement of
7,658,446 shares of common stock for $3 per share. The Company received $21,796
after offering costs of $1,135. In connection with the offering, the Company
issued a warrant to purchase 765,845 shares of common stock. The warrant is
exercisable at $3 per share, is exercisable immediately and expires in September
2006. The warrant had a fair value of $2,679 on the date of issuance and was
recorded as part of the offering costs.

Options - On December 31, 2004, the Company granted 200,000 options to key
employees to purchase shares of common stock with an exercise price of $3.00 per
share. The market value of the common stock on the date of grant was $3.50. On
January 1, 2005, 75,000 of these options were fully vested with an additional
50,000 options vesting on October 1, 2005 and 2006, respectively. The final
25,000 options vest on October 1, 2007.

On August 1, 2005, the Company granted 800,000 options to key employees to
purchase shares of common stock with an exercise price of $3.00 per share. The
market value of the common stock on the date of grant was $2.80. These options
will be fully vested one year from the date of grant.

                                      F-19
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


A summary of the stock options issued under the Company's Plan is as follows:

                                                               Weighted-Average
Fixed options                                  Shares          Exercise Price
-------------------------------------------------------------------------------
Outstanding at September 30, 2004                       -          $         -
Granted                                         1,000,000                 3.00
-------------------------------------------------------------------------------
Outstanding at September 30, 2005               1,000,000                 3.00
-------------------------------------------------------------------------------


The following table summarizes information about fixed stock options under the
Plan outstanding at September 30, 2005:

                                 Weighted-
                    Options       Average                            Number
                Outstanding at   Remaining        Weighted-      Exercisable at
                 September 30,  Contractual    Average Exercise  September 30,
Exercise Price       2005           Life            Price             2005
--------------------------------------------------------------------------------
 $   3.00         1,000,000        8.80           $ 3.00             75,000
--------------------------------------------------------------------------------

NOTE 11 - INCOME TAXES

Kazakh tax legislation and practice is in a state of continuous development and
therefore is subject to varying interpretations and frequent changes, which may
be retroactive. Further, the interpretation of tax legislation by tax
authorities as applied to the transactions and activities of the Company may not
coincide with that of management. As a result, tax authorities may challenge
transactions and the Company may be assessed additional taxes, penalties and
interest. Tax periods remain open to review by the tax authorities for five
years.

Management believes it has paid or accrued for all taxes that are applicable.
Where practice concerning the provision of taxes is unclear, management has
accrued tax liabilities based on its best estimate.

Earnings and losses before income taxes derived from United States and
international operations are as follows:

For the year ended September 30,                          2005            2004
-------------------------------------------------------------------------------
United States                                           $ (271)         $ (140)
Kazakhstan                                               3,607             274
-------------------------------------------------------------------------------
                                                       $ 3,336           $ 134
===============================================================================

                                      F-20
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


Deferred tax assets and liabilities are as follows:

September 30,                                             2005            2004
-------------------------------------------------------------------------------
Tax loss carry forwards                                $ 1,186         $   565
Property and equipment                                     402             434
Valuation allowance                                     (1,588)           (999)
-------------------------------------------------------------------------------
Net deferred tax asset                                 $     -         $     -
===============================================================================

The following is a reconciliation of the amount of tax that would result from
applying the federal rate to pretax income with the provision for income taxes:

For the year ended September 30,                          2005            2004
-------------------------------------------------------------------------------
Tax at US Federal statutory rate (34%)                 $ 1,134         $    46
Non-deductible expenses                                   (153)          2,086
Deferred tax asset valuation change                        418              (4)
Effect of lower foreign tax rates                         (182)             (8)
-------------------------------------------------------------------------------
Income tax provision                                   $ 1,217         $ 2,120
===============================================================================

As of September 30, 2005, the Company has loss carry forwards of approximately
$713 and $3,145 in the United States and Kazakhstan, respectively. Tax loss
carry forwards available in the United States begin to expire in 2022, and tax
loss carry forwards available in Kazakhstan begin to expire in 2006.

NOTE 12 - EQUITY METHOD INVESTMENTS

The Company accounts for its 50% non-controlling equity investments in Bautino,
KMG and Ishimgeophysica under the equity method of accounting. The investment in
KMG was carried under the equity method of accounting through September 22, 2005
at which time the Company obtained an additional 1% and began consolidating the
results of operations. The Company's investment in Bautino was reduced from its
original investment of $96 to zero from recognition of its share of the Bautino
operating losses.

KMG and Veritas DGC ("Veritas"), a UK company, entered into an agreement and
formed a local Kazakh LLP (Veritas-Caspian LLP) for the collection and marketing
of seismic data to prospective bidders on tendered Kazakhstan oil blocks. KMG
accounts for its 50% investment under the equity method of accounting. At
September 30, 2005, KMG's investment in Veritas-Caspian LLP was recorded at
zero.

Summarized financial information for the years ended September 30, 2005 and 2004
are as follows:
<TABLE>
<CAPTION>
                                         Bautino                KMG          Ishimgeophysica
                                  -------------------  ------------------  ------------------
For the year ended September 30,    2005      2004       2005       2004     2005     2004
---------------------------------------------------------------------------------------------
<S>                                <C>       <C>        <C>        <C>        <C>        <C>
Total Assets                       7,314     6,519      5,559      2,519      667        -
Total Liabilities                  6,801     5,872      2,097      1,971      101        -
Net Income (Loss)                   (118)      (84)       452        326       58        -
---------------------------------------------------------------------------------------------
</TABLE>
                                      F-21
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


NOTE 13 - OPERATING LEASES

The Company maintains its corporate offices in Salt Lake City, Utah, and
administrative offices in Almaty and Aktau, Kazakhstan. The Company also leases
apartments in Almaty and Aktau for use by employees. The corporate office lease
expires in December 2005, while the offices and apartments in Kazakhstan expire
by April 2005 and are expected to be renewed. Rent expense for the years ended
September 30, 2005 and 2004 was $314 and $176, respectively.

The future minimum rental payments required under these operating leases for
2006 are $375.

NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION

On May 26, 2004, the Company issued 1,200,000 shares of common stock valued at
$3,275 for a 100% interest in TatArka and a 50% interest in Kazmorgeophyzika.

NOTE 15 - COMMITMENTS AND CONTINGENCIES

Charter Contracts - The Company is committed to make the Vessels available in
accordance with the Vessel Charter Contracts.

Economic Environment - In recent years, Kazakhstan has undergone substantial
political and economic change. As an emerging market, Kazakhstan does not
possess a well-developed business infrastructure, which generally exists in a
more mature free market economy. As a result, operations carried out in
Kazakhstan can involve significant risks which are not typically associated with
those in developed markets. Instability in the market reform process could
subject the Company to unpredictable changes in the basic business
infrastructure in which it currently operates. Uncertainties regarding the
political, legal, tax or regulatory environment, including the potential for
adverse changes in any of these factors could significantly affect the Company's
ability to operate commercially. Management is unable to estimate what changes
may occur or the resulting effect on such changes on the Company's financial
condition or future results of operations.

Legislation and regulations regarding taxation, foreign currency translation,
and licensing of foreign currency loans in the Republic of Kazakhstan continue
to evolve as the central Government manages the transformation from a command to
a market-oriented economy. The various legislation and regulations are not
always clearly written and their interpretation is subject to the opinions of
the local tax inspectors. Instances of inconsistent opinions between local,
regional and national tax authorities are not unusual.

Environmental Uncertainties - Current local laws do not impose any particular
requirements on the Company with regard to its fleet operation beyond the
standard maritime regulations followed by the Company. Liabilities are recorded
when environmental assessments and/or remedial efforts are probable, and the
cost can be reasonably estimated based on studies, discussions with the
environmental authorities and assumptions as to the areas that may have to be
re-mediated along with the nature and extent of the remediation that may be
required. Ultimate cost to the Company is primarily dependent upon factors
beyond its control such as the scope and methodology of the remedial action

                                      F-22
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004


requirements to be established by environmental and public health authorities,
new law or government regulations, and the outcome of any potential related
litigation.

Deferred Revenue - During June 2003, Bauta entered into an agreement with AGIP
KCO ("AGIP"), its major customer, for the construction of a 2,000 cubic meter
water storage tank. AGIP agreed to advance $140 to Bauta for the construction of
the tank, for which Bauta would repay the $140 through the sale of water to AGIP
at a discounted rate. By December 31, 2003, Bauta placed $62 of proceeds
received from AGIP with a contractor. Construction of the tank began in January
2004 and was completed in June 2004 at a cost of approximately $173. AGIP's
payment of $140 was recorded as deferred revenue to be amortized over the period
of discounted water sales. During the year ended September 30, 2005, $84 of
deferred revenue was recognized with $38 still deferred at September 30, 2005.
During the year ended September 30, 2004, $18 of deferred revenue was recognized
with $122 still deferred at September 30, 2004.

Due to the nature of some of the geophysical services provided, certain
customers have prepaid their contract services. These prepayments have been
deferred and are being recognized as revenue as the services are provided. At
September 30, 2005 and 2004, the Company had $2,845 and $33 of deferred revenue
related to these prepaid services.

NOTE 16 - RELATED PARTY TRANSACTIONS

During the years ended September 30, 2005 and 2004, the Company paid a company
related through common ownership by a Caspian shareholder and noteholder, $684
and $78, respectively, for corporate travel, Kazakh visa, entry and exit
services. A company under common management was paid $39 and $18 during the
years ended September 30, 2005 and 2004, respectively, for marketing and
technical services. For related party notes receivable and payable, see Notes 7
and 9.

NOTE 17 - SEGMENT INFORMATION

Accounting principles generally accepted in the United States of America
establish disclosures related to components of a company for which separate
financial information is available and evaluated regularly by a company's chief
operating decision makers in deciding how to allocate resources and in assessing
performance. They also require segment disclosures about products and services
as well as geographic area.

During the year ended September 30, 2005, the Company re-organized their
segments into the following: Vessel Operations - daily operations of the fleet
of vessels; Geophysical Services - providing onshore and offshore geophysical
data extraction and interpretation; Infrastructure - Operation of a hotel, water
desalinization plant and the development of a marine base; and Corporate
Administration. The vessel operations, infrastructure and geophysical services
are located in the Republic of Kazakhstan. The administration operations are
located in the United States of America. Information regarding the operations
and assets of these reportable business segments follows:

                                      F-23
<PAGE>
CASPIAN SERVICES, INC. AND SUBSIDIARIES
(FORMERLY EMPS CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004
<TABLE>
<CAPTION>
For the year                          Vessel           Geophysical                              Corporate
ended September 30, 2005           Operations           Services          Infrastructure     Administration          Total
------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                 <C>                   <C>                <C>               <C>
Sales to external customers          $ 8,573            $ 14,118              $ 1,098            $   120           $ 23,909
Intersegment sales                         -                   -                    -                120                120
Depreciation and amortization            906                 605                  154                  3              1,668
Interest expense                         476                 502                    6                  -                984
Income (loss) from equity
 method investee                         (32)                182                    -                  -                150
Provision for income tax                   -               1,217                    -                  -              1,217
Minority Interest                          -                   -                  (58)                 -                (58)
Segment income (loss)                 (1,563)              4,232                 (232)              (260)             2,177
Segment assets                        14,613              15,797                5,562             21,316             57,288
Investments in equity
 method investees                          -                 303                    -                  -                303
<CAPTION>
For the year                         Vessel            Geophysical                              Corporate
ended September 30, 2004           Operations            Services         Infrastructure     Administration          Total
------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                 <C>                   <C>                <C>               <C>
Sales to external customers          $ 7,383            $  3,821              $ 1,029            $   172           $ 12,405
Intersegment sales                         -                   -                    -                172                172
Depreciation and amortization            794                  36                    -                  3                833
Interest expense                       1,106                  52                   10                  8              1,176
Income (loss) from equity
 method investees                        (42)                163                    -                  -                121
Provision for taxes                    1,656                 464                    -                  -              2,120
Minority interest                          -                   -                  (35)                 -                (35)
Segment income (loss)                 (2,782)              1,018                  (77)              (110)            (1,951)
Segment assets                        12,963               8,293                2,705                 45             24,006
Investments in equity
 method investees                         32               2,893                    -                  -              2,925
</TABLE>

Consolidated Total Assets
September 30,                                          2005             2004
--------------------------------------------------------------------------------
Total assets for reportable segments                $ 57,288         $ 24,006
Elimination of intersegment assets                   (19,230)            (565)
--------------------------------------------------------------------------------
Consolidated Total Assets                           $ 38,058         $ 23,441
================================================================================

Consolidated Net Sales
For the year ended September 30,                        2005             2004
--------------------------------------------------------------------------------
Total sales for reportable segments                 $ 23,909         $ 12,405
Elimination of intersegment sales                       (120)            (172)
--------------------------------------------------------------------------------
Consolidated net sales                              $ 23,789         $ 12,233
================================================================================

                                      F-24