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

                                   FORM 10-KSB

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

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

                     For the period ended December 31, 2000

                         Commission file number 0-27599


                                 FILMWORLD, INC.
                                 ---------------
                 (Name of Small Business Issuer in its Charter)



           Nevada                                                 88-0222729
           ------                                                 ----------
(State or other jurisdiction                                  (I.R.S. Employer
of incorporation or organization)                            Identification No.)


                      1650 Meadow Wood Lane, Reno, NV 89502
                      -------------------------------------
              (Address of principal executive offices) (Zip Code)

Issuer's Telephone number:   (775) 829-1310
                            ---------------


                                       1
<PAGE>


Securities registered pursuant to Section 12(b) of the Act:

         Title of each class          Name of each exchange on which registered
         -------------------          -----------------------------------------
            Common Stock                            Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, Par Value $0.001 Per Share
                    ----------------------------------------
                                (Title of Class)

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  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 III of this Form 10-KSB
or any amendment to the Form 10-KSB.
[X]

         State issuer's revenues for its most recent fiscal year: The Issuer has
not had any revenue for the year ended December 31, 2000.

         State the aggregate  market value of the voting and  non-voting  common
equity held by non-  affiliates  computed by reference to the price at which the
common  equity  was sold,  or the  average  bid and asked  price of such  common
equity,  as of a specified  date within the past 60 days: On March 6, 2001,  the
aggregate  market  value of the  voting and  non-voting  common  equity  held by
non-affiliates,  based on the closing  price of which the common equity was sold
on that date, equals $10,513,912.

                                       2
<PAGE>


                                     PART I

--------------------------------------------------------------------------------
ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------------------------------------------------------

(a)      Business Development

         FILMWORLD,  INC.  (the  "Company"  or the  "Registrant"  ) is a  Nevada
corporation which was originally incorporated on December 23, 1986 as Hair-Life,
Inc. On June 3, 1987, the Company  completed a public  offering  pursuant to the
provisions  of Rule  504 of  Regulation  D of the  Securities  Act of  1933,  as
amended.  During  1987,  the  Company  pursued  business  activities  which were
unsuccessful.

         On September 1, 1994, an Exchange  Agreement  was executed  between the
Company  and  the  stockholders  of The  Patterson  Group,  Inc.,  a  California
corporation,  whereby the California  corporation was acquired as a wholly-owned
subsidiary of the Company.  This  transaction  resulted in a name change for the
Company to The Patterson Group,  Inc., a reverse split of the Company's stock of
40 to 1, and the issuance to the  stockholders of the California  corporation of
4,500,000  shares.  Until 1996,  the Company's  business of providing  hazardous


                                       3
<PAGE>


waste transportation was conducted through its wholly-owned  subsidiary.  During
1996,  the  subsidiary  ceased its  operations.  In June of 1998, the subsidiary
sought  relief  under  Chapter 7 of the  Bankruptcy  laws of the  United  States
Bankruptcy  Court for the  Central  District of  California.  During  1997,  the
Company organized another subsidiary,  APF Holdings to conduct its business.  As
part of this  reorganization,  the Company changed its name to American  Pacific
Financial Services. APF Holdings ceased doing business in 1998.

         On July 19, 1999, the Company entered into an Exchange  Agreement under
the terms of which the  Company  acquired  certain  assets of Daly  Consultants,
Inc., a California corporation,  and Belfair International,  Inc., a corporation
organized  pursuant to the laws of the Isle of Jersey, in exchange for 7,013,392
shares of common stock of the Company.  The assets  acquired were motion picture
movie scripts and $50,000 in cash.

         As part of the Company's  reorganization in July of 1999, the Company's
name was changed to  FilmWorld,  Inc. and the Company's  issued and  outstanding
shares  underwent a ten (10) for one (1) reverse  split.  This reverse split was
effective prior to the issuance of the 7,013,392 shares pursuant to the Exchange
Agreement.

         On December 4, 2000,  the Company  entered  into an Exchange  Agreement
with GRD, Inc., a Nevada corporation. Under the terms of the Exchange Agreement,
GRD obtained  equity and management  control of the Company by exchanging all of
the issued and outstanding  shares of GRD for 20,000,000 shares of the Company's
common stock. The Exchange Agreement represented not only a change in control of
the Company, but a change in the Company's principal line of business as well.


                                       4
<PAGE>


         GRD  operates  under the name of  SulphCo,  Inc.  and is engaged in the
business of developing  and  marketing a process for removing  sulfur from crude
and fuel oils.  SulphCo's  principal  business  is  licensing  it's  proprietary
technology through a self-contained petroleum  desulfurization unit that removes
sulfur from crude oils, lighter distillates and fuel oils. SulphCo has developed
a proprietary  closed loop "sulfur polishing" unit, which can be scaled to treat
large or small  volumes  of  petroleum  product.  The unit  operates  at ambient
temperature and atmospheric pressure as a "plugs-in" to existing infrastructure.

         As part of the transaction  with GRD, Inc., two of the Company's former
directors, namely John Daly and Menahem Golan, resigned their positions with the
Company.  The  Company's  former  President,  Mark  Tolner,  also  resigned.  In
addition,  the Company  returned the assets  associated  with the Company's film
production  and  distribution  operations  to the  entities  contributing  those
assets. In this regard, the Company received 1,168,898 shares from the Company's
former President, Mark Tolner; 2,922,247 shares from Daly Consultants, Inc.; and
2,872,247  shares from  Belfair  International,  Ltd.  John Daly and Mark Tolner
retained a combined  total of 100,000  shares of the Company's  common stock and
$50,000 in cash each in  connection  with their  resignations  and Menahem Golan
also retained  100,000 shares of the Company's  common stock in connection  with
his resignation and withdrawal from the Company's operations.


                                       5
<PAGE>


         As of December 31, 2000,  there were issued and outstanding  21,200,000
shares of the  Company's  authorized  shares of common  stock and as of March 6,
2001, there were 22,712,800 shares issued and outstanding.

         Except as described above, to management's  knowledge,  the Company has
not been subject to bankruptcy, receivership or any similar proceeding.

         The Company  maintains  offices at 1650 Meadow Wood Lane, Reno,  Nevada
89502.  The Company  owns all of its assets as shown on the  attached  financial
statements as of December 31, 2000.


(b)      BUSINESS OF THE ISSUER

(1)      Principal Products and Services and Their Markets

         The  Company's   principal   business  is  licensing  it's  proprietary
technology through a self-contained petroleum  desulfurization unit that removes
sulfur from crude oils,  lighter  distillates and fuel oils.  These  proprietary
closed-loop  "sulfur  polishing"  units  will be scaled to treat  large or small
volumes of  petroleum  product.  They will  operate at ambient  temperature  and
atmospheric  pressure and will have a relatively small "footprint" compared with
existing desulfurization equipment.


                                       6
<PAGE>


         The market for the  Company's  product  will be the  producers of crude
oils,  and refined  products.  Efficient  sulfur  removal in crude oil  provides
profound   economic   advantages  in  the  oil  industry  by  equalizing   price
differentials between high sulfur crude oils and residual fuel oils and allowing
greater use of domestic  reserves  that are currently  underutilized  because of
their high sulfur  content.  Refiners and fuel  distributors  are faced with the
challenge of meeting tough new and proposed regulations in a cost effective way.
U.S.  refineries  have  decreased  in numbers  from more than 350 in 1945 to 155
currently, with less than 95 of these facilities producing diesel. The reduction
in refineries is due in part to the large capital expenditures  necessary to run
a modern facility.  Refiners need new technologies because existing technologies
are inadequate and enormously expensive in terms of capital cost, infrastructure
and  operational  expenses.  Current  methods of using light sweet crude as feed
stock,  or hydro  treating to remove  sulfur,  will not be  sufficient to obtain
regulated low sulfur levels.  Light sweet crude reserves are limited,  expensive
and will  continue  to rise in price as  demand  increases.  Hydrotreating  is a
dangerous  and  expensive  procedure,  requiring  high  heat and  pressure.  The
Company's  desulfurizing  technology  provide  a cost  effective  solution  that
enables  refiners,  oil producers and fuel  distributors to meet mandated sulfur
limits.

(2)      Distribution Methods

         The   Company   is   marketing   it's   technology   domestically   and
internationally to petroleum  refiners,  crude oil producers,  fuel distributors
and other strategic partners.  In this regard, the Company currently is pursuing


                                       7
<PAGE>


a working  relationship  with an  established  company in the oil industry.  The
Company has entered into negotiations with Bechtel Corp. for the development and
marketing of working  systems which utilize the  Company's  technology.  Through
this  relationship,  or other working  relationships  should  negotiations  with
Bechtel  fail,  the  Company  will  create a working  unit  which  embodies  the
Company's  technology  and  will  market  that  unit to the  Company's  intended
customers.

(3)      Status of Publicly Announced New Products or Services

         On December 4, 2000, the Company issued a press release  announcing the
terms of the Company's  restructuring  pursuant to the Exchange  Agreement  with
GRD, Inc. (SulphCo). The press release outlined the identity of the new officers
and directors of the Company, and the Company's new business endeavors.

         On January 4, 2001, the Company  issued a press release  announcing the
execution of a Memorandum of Understanding  with Bechtel Corp.,  under the terms
of which the parties would attempt to develop and working  relationship  whereby
Bechtel would provide  technical  management  and directly  related  services to
develop, manage, engineer, build and operate installations of mechanical systems
which embody the Company's technology for customers worldwide. The press release
indicated  that  Bechtel  would  undertake  a  due  diligence  investigation  of
SulphCo's proprietary technology and if reasonably satisfied with the commercial
potential,  good faith  negotiations to establish a business  relationship  will
ensue.


                                       8
<PAGE>


         On January 9, 2001, the Company  issued a press release  announcing the
signing of a Memorandum  of  Understanding  with  Sinclair  Oil Corp.  The press
release described the terms of the Memorandum of Understanding with Sinclair. On
completion of satisfactory due diligence,  Sinclair and SulphCo will negotiate a
formal business  relationship  where Sinclair will purchase the first production
model and Beta test the  SulphCo  technology.  Sinclair  also would have a short
term option to take a 15% equity stake in SulphCo's  parent company,  FilmWorld,
Inc.

(4)      Competitive Business Conditions

         The Company is a new entrant in the market for  development and sale of
equipment  to  the  oil  industry.   The  Company  faces   well-established  and
well-funded competition.

         The Company intend to compete in this industry by entering into working
relationships  with  established  participates  in the  industry  and  using the
financial and experience of such  participates to help the Company  overcome the
obstacles it faces as a new entry into the market.


                                       9
<PAGE>


(5)      Dependence on Major Customers

         As   indicated   throughout   this  Item  1,  the   Company   is  in  a
reorganizational  stage and is in the process of industrializing its proprietary
technology. At this point in time, the Company has a pending order from Sinclair
Oil.  The  Company is  dependent  on  building  relationships  with  established
participates in the oil industry in order to develop and market its products and
services.

(6)      Patents, Trademarks, Licenses, Copyrights, etc.

         The Company's  subsidiary,  GRD, Inc.,  doing business as SulphCo,Inc.,
owns a pending patent application for a desulfurization  process for the removal
of organic sulfur from fossil or petroleum-derived fuels. This technology, which
operates at atmospheric pressure and low heat, produces environmentally friendly
fuels.

         The  Company  attempts  to  minimize  unauthorized  duplication  of its
process  by a  variety  of  methods,  however,  there can be no  assurance  that
unauthorized duplication will not occur. The Company attempts, and will continue
to attempt, to protect its desulfurization process by relying on patent laws and
non-disclosure  and  confidentiality  agreements  with its employees and certain
other persons who have access to its proprietary technology.

(7)      Governmental Approval, Effect of Governmental Regulations and Costs and
         Effects of Compliance with Environmental Laws

         The  Environmental   Protection  agency  (the  "EPA")  has  issued  new
regulations  that will require the nation's oil  refineries to remove 97% of the
sulfur  from  diesel  fuel by the year 2006.  The new rule will  require  modern
emission  controls on new trucks and buses,  as well as cleaner diesel fuel. The


                                       10
<PAGE>


EPA estimates that this  combination will cut pollution from such vehicles by 95
percent, annually preventing 8,300 premature deaths and 23,000 bronchitis cases,
and helping avoid more than 750,000 asthma attacks and related symptoms.

         Diesel  exhaust is associated  with several  air-quality  concerns.  It
contributes to ozone,  smog's chief ingredient.  It contains tiny soot particles
linked to several health problems.  And officials of federal,  international and
California  agencies  regard it as a potential or probable  carcinogen.  The new
regulations  state that fuel  cannot  contain  more than 15 parts per million of
sulfur. Current regulations set sulfur levels in fuels at a maximum of 500 parts
per million.  The Company  anticipates  that these new  regulations  will have a
significant  impact  on the fuel  oil  industry.  The  Company's  technology  is
designed  to reduce  sulfur in crude  oils by 80% and  reduce  sulfur in lighter
distillates  by 98%.  Such  technology  is designed to reduces  sulfur levels in
fuels to levels of 10 to 15 parts per million.

(8)      Research and Development in the Last Two Years

         The Company is engaged in a vigorous  research and development  program
for its technology.  In this regard, the Company maintains a strong relationship
with the  University of Southern  California.  Among the immediate  goals of the
Company's research and development  program are the refinement of its continuous
flow  system  and  expansion  of the  range of  petroleum  products  that can be
desulfurized with the Company's technology. During the past two years, SulphCo's


                                       11
<PAGE>


research and development costs have totaled  $275,000.  During that time, all of
SulphCo's business efforts were spent on research and development.  As the notes
to the Company's financial statements indicate,  the Company has a contract with
Professor T. F. Yen at the University of Southern California wherein he performs
research for the Company.  The original  agreement required payments of $100,000
each in 1999 and 2000. In 2000 an additional  $75,000 was paid. The contract was
extended through 2001 for an additional $100,000.

(9)      Employees

         As of March 1, 2001, the Company had three (3) full-time  employees and
three (3)  part-time  employees.  The five (5)  officers  and  directors  of the
Company  also  perform  services  on  behalf  of  the  Company  but  do  so on a
non-exclusive basis. None of the Company's employees or independent  contractors
are subject to a collective  bargaining  agreement and the Company  believes its
relations with its employees and independent contractors are good.

(c)      Reports to Security Holders

         The Company is a  "reporting  company"  and it files  reports  with the
Securities and Exchange Commission.  In this regard, the Company files quarterly
reports on Form  10-QSB,  annual  reports on Form 10-KSB and as  required  files
reports on Form 8-K.  To the extent  that the  Company  is  required  to deliver


                                       12
<PAGE>


annual reports to security  holders  through its status as a reporting  company,
the Company shall  deliver  annual  reports.  Also, to the extent the Company is
required to deliver  annual  reports by the rules or regulations of any exchange
upon which the Company's  shares are traded,  the Company  shall deliver  annual
reports.  If the Company is not required to deliver annual reports,  the Company
will not go the expense of producing and delivering such reports. If the Company
is required to deliver  annual  reports,  they will  contain  audited  financial
statements as required.

         The public may read and copy any  materials  the Company files with the
Securities and Exchange  Commission at the Commission'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 call the Commission
at  1-800-SEC-0330.  The  Commission  maintains an Internet  site that  contains
reports,  proxy and  information  statements,  and other  information  regarding
issuers that file  electronically  with the Commission.  The Internet address of
the Commission's site is (http://www.sec.gov).


                                       13
<PAGE>


--------------------------------------------------------------------------------
ITEM 2.  DESCRIPTION OF PROPERTY
--------------------------------------------------------------------------------

(1)      Principal  Plants  and  Property  and  Description  of Real  Estate and
         Operating Data.

         The Company's  executive  offices are located at 1650 Meadow Wood Lane,
Reno, Nevada 89502.

(2)      Investment Policies

         The Company's  plan of operations is focused on the  development of its
proprietary  technology  and marketing  endeavors  described in Item (1) of this
part.  Accordingly,  the Company has no particular  policy regarding each of the
following types of investments:

         (1)      Investments in real estate or interests in real estate;
         (2)      Investments in real estate mortgages; or
         (3)      Securities  of or  interests in persons  primarily  engaged in
                  real estate activities.


--------------------------------------------------------------------------------
ITEM 3.  LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

         The  Company is not party to,  and none of the  Company's  property  is
subject to, any pending or threatened  legal,  governmental,  administrative  or
judicial  proceedings  that  will  have a  materially  adverse  effect  upon the
Company's financial condition or operation, except as follows:

         On or about November 4, 1999, the Kidani Trust, Clarence E. Jackson and
Robert H. Nakata  filed a complaint in the Circuit  Court of the First  Circuit,
State of Hawaii naming themselves as plaintiffs and Daniel  Patterson,  Kathleen
Patterson and American Pacific Financial  Services,  Inc.("APFS") as defendants.
The  action  is  listed  as  civil  number  99-4110-11  in that  court.  In that
complaint,  plaintiff  allege that the Patterson  solicited money from plaintiff
for investment in a company named Blue Parrot. Plaintiff allege that Blue Parrot
is "an  unincorporated  related company to APFS." Plaintiff claim that they gave
the Patterson  $160,000 and that the Mr.  Patterson  later executed a promissory
note in favor of plaintiffs in the amount of $140,000. Plaintiffs claim that Mr.
Patterson  executed that  promissory  note as "CEO of APFS."  Plaintiffs seek to
collect on that note against all  defendants.  Plaintiff  complaint lists counts
for breach of contract,  securities fraud,  civil conspiracy and unfair business
practices. Plaintiffs pray for an award of "special, consequential,  general and
punitive  damages,  plus  treble  damages  pursuant to Chapter 480 of the Hawaii
Revised  Statutes,  plus their costs and attorneys  fees. Mr.  Patterson did not
make management of the Company aware of the existence of this complaint.


                                       14
<PAGE>


         Plaintiffs  obtained a default judgment against  defendants on or about
May 12, 2000. After the Company became aware of the action, it filed a motion in
this action to have the default  judgment set aside.  That motion was granted on
or about September 11, 2000.

         The  parties  to  this   litigation   have  entered   into   settlement
negotiations and discovery has been put on hold pending those negotiations.

         The Company is confident  that it faces no serious  exposure  from this
litigation now that the default judgment has been set aside. Plaintiffs have not
produced  the  original  of any signed  promissory  note.  Further,  the Company
contends that plaintiffs gave the Company no  consideration  for any note signed
by Mr.  Patterson.  It appears  that  plaintiffs  invested in a venture with the
Pattersons  that did not involve  the  Company.  Plaintiff  now seek to have the
Company pay for plaintiffs' bad investment with the Pattersons.

         In any event,  the  Company in a party to  indemnity  agreements  which
would cover any exposure the Company  faces from this  litigation.  Accordingly,
this litigation will not impact upon the Company's operations.


--------------------------------------------------------------------------------
ITEM 4.  SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------------------------

         No matter was  submitted  during the fourth  quarter of the fiscal year
covered  by  this  report  to a vote  of the  securities  holders,  through  the
solicitation of proxies. Any shareholder action taken during that time was taken
via consent of a majority of shareholders pursuant to applicable state law.


                                       15
<PAGE>


                                    PART II

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

a.       Market Information:

         Quotations for the Company's common stock are made on the system of the
National Association of Securities Dealers,  Inc. ("NASDAQ"),  known on the Over
the Counter Bulletin Board under the symbol "FWLD".

         The following table sets forth the range of high and low bid prices for
the Company's  Common Stock for each quarterly  period  indicated as reported by
the  Research  Department  of the NASDAQ Stock  Market,  Inc.  These  quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent  actual  transactions.  The Research  Department of the NASDAQ
Stock Market,  Inc. has indicated  that high/low bid  information is unavailable
for certain periods :

         Common Stock
         Quarter Ended                       High Bid          Low Bid
         -------------                       --------          -------
         December 31, 2000                       $ 4.50            $0.25
         September 30, 2000                 Unavailable      Unavailable
         June 30, 2000                      Unavailable      Unavailable
         March 31, 2000                     Unavailable      Unavailable
         December 31, 1999                  Unavailable      Unavailable
         September 30, 1999                     $  5.00          $ 1.125
         June 30, 1999                          $  0.18          $ 0.0313
         March 31, 1999                         $  0.125         $ 0.0313


                                       16
<PAGE>


b.       Holders:

         There were  approximately 196 holders of record of the Company's common
stock as of March 1, 2001.

c.       Dividends

         There  have  been  no  cash  dividends  declared  on any  class  of the
Company's  stock in the last two  fiscal  years.  The  Company's  ability to pay
dividends has been limited by the Company's  lack of cash  available to pay such
dividends. Management does not anticipate that dividends will be in the future.

d. Issuances of Shares in the Last Three Years:

         On July 19, 1999, the Company issued a total of 7,013,392 shares of its
common stock to the following in the following amounts:

         Daly Consultants, Inc.                   2,922,247
         Belfair International, Inc.              2,922,247
         Mark Tolner                              1,168,898

         The shares issued to Daly Consultants,  Inc. and Belfair International,
Inc.  were  issued in  consideration  for  $50,000 in cash and the  intellectual
property  purchased by the Company pursuant to the Exchange Agreement dated July
19, 1999. Such property had a value of at least  $525,000.  It is carried on the
Company's  financial  statement  at  predecessor  cost  due to the  relationship
between directors and these  shareholders.  The shares issued to Mr. Tolner were
issued in  consideration  for his services to the Company.  All such shares were
issued in reliance on the exemption from registration  contained in Section 4(2)
of the Securities  Act of 1933, as amended,  and the  certificates  representing
such shares bear a  restrictive  legend  reflecting  the  limitations  on future
transfer of those shares.  As part of the transaction with GRD, Inc.,  described
in Item 1 above,  two of the Company's  former  directors,  namely John Daly and
Menahem Golan,  resigned their positions with the Company.  The Company's former
President,  Mark Tolner,  also resigned.  In addition,  the Company returned the
assets associated with the Company's film production and distribution operations
to the entities  contributing those assets. In this regard, the Company received
1,168,898 shares from the Company's former President,


<PAGE>



Mark Tolner; 2,922,247 shares from Daly Consultants,  Inc.; and 2,872,247 shares
from Belfair  International,  Ltd. John Daly and Mark Tolner retained a combined
total of 100,000  shares of the Company's  common stock and received  $50,000 in
cash in  connection  with their  resignations  and Menahem  Golan also  retained
100,000 shares of the Company's  common stock in connection with his resignation
and withdrawal from the Company's operations.

         On September  15, 1999,  5,000 shares were issued to  Morgounova  Corp.
Such shares were issued in reliance on the exemption from registration contained
in Section 4(2) of the Securities Act of 1933, as amended,  and the certificates
representing such shares bear a restrictive legend reflecting the limitations on
future transfer of those shares.

         On October 29, 1999, the following shares were issued:

         Registered Owner                   No.  Shares

         Marlene Vallen                             160
         George Newberry                            600
         Christina Miller                           100

         All  such  shares  were  issued  in  reliance  on  the  exemption  from
registration  contained  in  Section  4(2) of the  Securities  Act of  1933,  as
amended, and the certificates representing such shares bear a restrictive legend
reflecting the limitations on future transfer of those shares.

         On  December  9,  1999,  the  Company  issued  50,000  shares  to  John
Smallcombe.   Such  shares  were  issued  in  reliance  on  the  exemption  from
registration  contained  in  Section  4(2) of the  Securities  Act of  1933,  as
amended, and the certificates representing such shares bear a restrictive legend
reflecting the limitations on future transfer of those shares.

         On January 27, 2000, the Company issued the following shares:

         Registered Owner                        No. Shares

         Harry Holman                                14,875
         Alexander H. Walker III                    200,000

         All  such  shares  were  issued  in  reliance  on  the  exemption  from
registration  contained  in  Section  4(2) of the  Securities  Act of  1933,  as
amended, and the certificates representing such shares bear a restrictive legend
reflecting the limitations on future transfer of those shares.

         On December 4, 2000, the Company issued 20,000,000 shares of its common
stock in accordance with the terms of the Exchange Agreement between the Company
and GRD, Inc. (SulphCo) as follows:

         Registered Owner                        No. Shares

         Rudolph Gunnerman                       12,000,000
         Kristina Gunnerman                       2,000,000
         Peter Gunnerman                          2,000,000
         Alex Paior                               2,000,000
         Mark T. Cullen                           2,000,000

         The  shares  issued  were  issued  in  consideration  for  cash and the
proprietary  technology  acquired  by  the  Company  pursuant  to  the  Exchange
Agreement  dated December 4, 2000.  Such cash and patent had a value of at least
$4,000,000.  All such  shares were  issued in  reliance  on the  exemption  from
registration  contained  in  Section  4(2) of the  Securities  Act of  1933,  as
amended, and the certificates representing such shares bear a restrictive legend
reflecting the limitations on future transfer of those shares.

         On February 14, 2001, the company issued the following shares:

         Registered Owner                        No. Shares

         R. W. Gunnerman                            700,000
         M. T. Cullen                               120,000
         Erika Herrmann                             292,800

         All  such  shares  were  issued  in  reliance  on  the  exemption  from
registration  contained  in  Section  4(2) of the  Securities  Act of  1933,  as
amended, and the certificates representing such shares bear a restrictive legend
reflecting the limitations on future transfer of those shares.

         On February  21,  2001,  the company  issued  400,000  shares to Sutton
Ventures  Group.  Such shares were  issued in  reliance  on the  exemption  from
registration  contained  in  Section  4(2) of the  Securities  Act of  1933,  as
amended, and the certificates representing such shares bear a restrictive legend
reflecting the limitations on future transfer of those shares.

                                       19
<PAGE>


--------------------------------------------------------------------------------
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
--------------------------------------------------------------------------------

         Statements   contained   herein  that  are  not  historical  facts  are
forward-looking  statements,  as that term is defined by the Private  Securities
Litigation  Reform Act of 1995.  Although the Company  believes that expectation
reflected in such forward-looking statements are reasonable, the forward-looking
statements  are subject to risks and  uncertainties  that could cause results to
differ  from  those  projected.   The  Company   cautions   investors  that  any
forward-looking  statements  made by the  Company are not  guarantees  of future
performance  and that  actual  results may differ  materially  from those in the
forward-looking   statements.   Such  risks  and  uncertainties   include,  with
limitation:   well  established   competitors  who  have  substantially  greater
financial  resources and longer operating  histories,  changes in the regulatory
environment in which the Company competes, and access to sources of capital.

Plan of Operation

1.       Completion of Reorganization

         During the first quarter of 2001,  the Company  intends to complete its
change  in  business  focus  from the  entertainment  industry  to its  intended
participation in the oil refining industry.  In this regard,  management intends
to take  appropriate  action to change the Company's name and possibly merge the
Company's wholly-owned  subsidiary,  GRD, Inc., doing business as SulphCo., into
the Company.  It is  management's  intention to  eventually  operate the Company
under the name SulphCo, Inc. Management also likely will change the symbol under
which the  Company's  shares are traded on the Over the Counter  Bulletin  Board
from FWLD to a symbol which relates to the Company's new name or business.


                                       20
<PAGE>


         Management also is exploring the possibility of obtaining a listing for
the Company  shares on the NASDAQ  Small Cap  market.  In order to obtain such a
listing,  the Company must meet certain eligibility  requirements set by NASDAQ.
No  commitment  has been made by management to apply for a listing on the NASDAQ
Small Cap Market.

2.       Business Plans

         During 2001, the Company intends,  with it's marketing  partner Bechtel
to formalize it business  relationships with third parties for the completion of
an  industrial  design for the  Company's  proprietary  technology.  The Company
expects due diligence being performed by two such third parties will be complete
by mid March,  2001. At that point the Company  intends to move forward with the
design of industrial  units and plans to be in a position to produce a test unit
for Beta  testing by Sinclair  Oil  Company  before the end of  September  2001.
Thereafter the Company intends to make appropriate  changes to the design of the
industrial  units as may be prudent given the results of the Beta  testing.  The
Company plans call for the marketing and sale of the industrial units before the
end of 2001.

         The Company will market a completed design for industrial units through
its business  relationship  with third parties who  participate in the design of
the units.  In this  regard,  the  Company's  plans on  formalizing  a long-term
relationship with Bechtel,  Inc., a  well-established  company in the world-wide
markets for the location, extraction, transportation and refinement of petroleum
products.

         The Company  estimates that its operating  expenses for 2001 will be as
follows:

                  Wages                     $   831,000
                  R & D                     $   300,000
                  Outside Serv.             $    93,000
                  G & A                     $   494,000
                  Depreciation              $    24,000
                  Total                     $ 1,742,000


                                       21
<PAGE>


         The Company  intends to fund  operations  with cash  generated from the
private  sales of the  Company's  common stock near the end of 2000 and in early
2001.  Such  sales have  generated  $2,300,000  in cash and such cash  should be
sufficient to meet the Company's operating needs for the next 12 months.

         The time  frames set forth above may be  adversely  affected by factors
such as unforeseen  delays in the design of the Beta testing unit and unforeseen
problems which are discovered when the Beta unit is tested.

         The Company's  plans also could be adversely  impacted by the patenting
process for the devises and methods  which  comprise the  Company's  proprietary
technology. In this regard, the need to keep aspects of the Company's technology
secret during the patenting process could delay the Company's plans to bring its
proprietary technology to market.

         If the  Company is  required  to  initiate  litigation  to protect  its
interest  in its  proprietary  technology  or is  required  to  defend an action
challenging the Company's  interest,  the costs and delays  associated with such
litigation  could  negatively  impact  on the  Company's  ability  to bring  the
proprietary technology to market.

         Also,  any  delays  or  unforeseen  impasses  in  developing  a working
relationship with Bechtel,  Inc. or other third-party in connection with design,
development,  testing  and  eventual  marketing  of  industrial  units  for  the
proprietary technology would have not only impact on the timing of the Company's
business plan and could entirely disrupt such plans and prevent the Company from
bringing the proprietary technology to market.

3.       Research and Development

         The Company will continue its research and  development  program during
2001 in order to facilitate the development of the design and  manufacturing  of
industrial units which embody the Company's proprietary  technology.  Management
anticipates  that its  research  and  development  costs  will be  approximately
$300,000 in 2001. A. Stated above, the Company will pay for said costs with cash
it has received from the private sale of its common stock.

4.       Facilities and Personnel

         In late  February and early March of 2001,  the Company  moved into its
new facility at 1650 Meadow Wood Lane, Reno,  Nevada. The Company new facilities
include a research  laboratory as well as the Company's  business  offices.  The
Company  expect to employee  approximately  12 people at any one time as part of
its business  plans for 2001,  though the Company may  experience an increase or
decrease  in that  number as its  needs  require  and as is  normal  in  general
business operations.


                                       22
<PAGE>


--------------------------------------------------------------------------------
ITEM 7.  FINANCIAL STATEMENTS
--------------------------------------------------------------------------------





                                 FILMWORLD, INC.
                        CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDING DECEMBER 31, 2000 AND 1999





<PAGE>

                                 FILMWORLD, INC.
                            AND SUBSIDIARY GRD, INC.
                                TABLE OF CONTENTS
                           ------------------------

                                                                      Page
                                                                       No.
                                                                      ----
 ACCOUNTANT'S AUDIT REPORT                                             F-1

 FINANCIAL STATEMENTS

             Balance Sheets                                         F-2 - F-3

             Statements of Operation                                   F-4

             Statements of Changes in Stockholder's Equity             F-5

             Statements of Cash Flows                                  F-6

 NOTES TO FINANCIAL STATEMENTS                                      F7  - F-11


<PAGE>

                          INDEPENDENT AUDITOR'S REPORT



To the Board of  Directors
FilmWorld, Inc.

I have audited the accompanying  consolidated balance sheets of FilmWorld,  Inc.
and subsidiary (a  development  stage company) as of December 31, 2000 and 1999,
the related  consolidated  statements of  operations,  changes in  stockholders'
equity and cash flows for the three  years then  ended,  and from  inception  of
development stage through December 31, 2000. These financial  statements are the
responsibility of the Company's  management.  My responsibility is to express an
opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally  accepted auditing  standards.
Those standards  require that I plan and perform the audit 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.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion,  the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  Company's  financial  position  as of
December  31,  2000 and 1999,  and the results of their  operations,  changes in
stockholders'  equity,  and their cash flows for the three years then ended,  in
conformity with generally accepted accounting principals.
/s/ Dale McGhie
---------------
    Dale McGhie
    Reno, Nevada
    February 12, 2001

                                       F-1

<PAGE>

                    FILMWORLD, INC. AND SUBSIDIARY GRD, INC.
                                 BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

                                     ASSETS
                                     ------

                                                   2000       1999
                                                 --------   --------
CURRENT ASSETS
    Cash                                         $ 98,010   $     73
    Stock Subscription Receivable (Note 6)        208,500       --
    Other Receivables                              18,435       --
                                                 --------   --------

    Total Current Assets                          324,945         73
                                                 --------   --------

PROPERTY, PLANT & EQUIPMENT
    Machines and Equipment (Notes 2 and 3)        393,613      3,096
    Furniture and Fixtures                         19,057       --
                                                 --------   --------

                                                  412,670      3,096
    Less Accumulated Depreciation                  21,171        310
                                                 --------   --------

    Total Property, Plant & Equipment             391,499      2,786
                                                 --------   --------



OTHER ASSETS
    Patent Costs (Note 2)                          15,843       --
    Film inventory, story rights and scenarios       --      536,400
    Deposits                                         --          400
                                                 --------   --------

    Total Other Assets                             15,843    536,800
                                                 --------   --------

    TOTAL ASSETS                                 $732,287   $539,659
                                                 ========   ========


     The accompany notes are an integral part of these financial statements


                                       F-2

<PAGE>

<TABLE>
<CAPTION>

                    FILMWORLD, INC. AND SUBSIDIARY GRD, INC.
                                 BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

                                                                              2000             1999
                                                                           ---------        ---------
CURRENT LIABILITIES

<S>                                                                        <C>              <C>
    Account Payable                                                        $  18,754        $   3,600
    Accrued Expenses                                                          33,427              300
    Contract Payable - shareholder (Note 5)                                  200,000          150,000
    Note Payable - Stockholder (Note 5)                                      100,000             --
    Note Payable (Note 4)                                                       --              9,335
                                                                           ---------        ---------

    Total Current Liabilities                                                352,181          163,235
                                                                           ---------        ---------


    Deferred Income Taxes - Note 2                                              --               --
                                                                           ---------        ---------

STOCKHOLDERS' EQUITY

    Preferred stock: 10,000,000 shares
      authorized ($.001 par value), none issued
    Common Stock: 100,000,000 shares

      authorized, ($.001 par value) issued and                                  --               --
      and outstanding 21,200,000 shares on December
      31, 2000 and 7,848,517 shares on December 31 1999                       21,200            7,849
    Additional Paid in Capital                                               622,136          563,386
    Stock Subscribed (Note 6)                                                    820
    Deficit accumulated during development
       stage (July 16, 1999 in connection with quasi reorganization)        (264,050)        (194,811)
                                                                           ---------        ---------

    Total Stockholder's Equity                                               380,106          376,424
                                                                           ---------        ---------


                                                                           $ 732,287        $ 539,659
                                                                           =========        =========
</TABLE>

     The accompany notes are an integral part of these financial statements

                                       F-3

<PAGE>

<TABLE>
<CAPTION>

                    FILMWORLD, INC. AND SUBSIDIARY GRD, INC.
                             STATEMENTS OF OPERATION
         FOR THE YEARS ENDING DECEMBER 31, 2000, 1999 AND 1998 AND FROM
    INCEPTION OF DEVELOPMENT STAGE (JULY 16, 1999) THROUGH DECEMBER 21, 2000

                                                                                                               from inception
                                                                                                               of development
                                                            2000              1999              1998               stage
                                                         ---------          ---------          ---------         ---------

REVENUE                                                  $    --            $    --            $ 289,230         $    --
                                                         ---------          ---------          ---------         ---------

OPERATING EXPENSES

<S>                                                         <C>             <C>                   <C>               <C>
    Labor Costs                                             35,519               --               92,862            35,518
    Outside Services                                         9,417             22,435               --              31,852
    Travel                                                   1,959             16,644               --              18,603
    General and Administrative Expenses                     22,345              7,632             53,583            27,777
                                                         ---------          ---------          ---------         ---------

        Total Operating Expenses                            69,240             46,711            146,445           113,750
                                                         ---------          ---------          ---------         ---------

Operating Income (Loss)                                    (69,240)           (46,711)           142,785          (113,750)

OTHER INCOME / (EXPENSE)

    Organizational Costs (Note 2)                             --             (150,000)              --            (150,000)
    Interest Expense                                          --                 (300)              --                (300)
    Forgiveness of Debt                                       --                 --               43,033              --
                                                         ---------          ---------          ---------         ---------

NET INCOME (LOSS) BEFORE INCOME

TAXES                                                      (69,240)          (197,011)           185,818          (264,050)
     Provision for Income Taxes  (Notes 2 and 8)              --                 --                 --                --
                                                         ---------          ---------          ---------         ---------

    NET INCOME (LOSS)                                    $ (69,240)         $(197,011)         $ 185,818         $(264,050)
                                                         =========          =========          =========         =========

Earnings (Loss ) Per Common Share (Note 2)               $  (0.007)         $  (0.010)         $   0.238
                                                         =========          =========          =========
Fully diluted earnings (loss) per common share
    (Note 2)                                                                                   $   0.227
                                                                                               =========
</TABLE>

     The accompany notes are an integral part of these financial statements

                                       F-4

<PAGE>

<TABLE>
<CAPTION>

                    FILMWORLD, INC. AND SUBSIDIARY GRD, INC.
                  STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
                 FOR THE YEARS ENDING DECEMBER 31, 2000 AND 1999

                                                                                                                        Deficit
                                                         Capital                                                       Accumulated
                                                          Stock                           Paid-in         Retained     During Dev.
                                              Number                 Amount               Capital         Earnings        Stage
                                           -----------            -----------            -----------    -----------    -----------

<S>                                            <C>                  <C>                    <C>          <C>             <C>
Balance, December 31, 1997                     779,266                    779              1,141,812     (1,346,683)          --
Stockholder's contribution to                     --
    paid in capital                               --                     --                    4,836           --             --
Net profit for the year ending                    --
    December 31, 1998                             --                     --                     --          185,818           --
                                           -----------            -----------            -----------    -----------    -----------


Balance, December 31, 1998                     779,266                    779              1,146,648     (1,160,865)          --
Stockholder's Contribution to
    paid in capital                               --                     --                   12,883           --             --
Stock issued for cash                          615,034                    615                 52,150           --             --
Stock issued for services at par             1,168,898                  1,169                   --             --             --
Stock  issued for film inventory
    (at cost)                                5,229,460                  5,230                514,770           --             --
Stock issued for services at par                55,859                     56                   --             --             --
Quasi Reorganization                              --                     --               (1,163,065)     1,163,065           --
Net (loss) for the year
    ending December 31, 1999                      --                     --                     --           (2,200)      (194,810)
                                           -----------            -----------            -----------    -----------    -----------


Balance, December 31, 1999                   7,848,517                  7,849                563,386           --         (194,810)

Stock Relinquished                          (6,648,517)                (6,649)              (477,252)          --             --
Stock Issued on Acquisition
    Of GRD, Inc.                            20,000,000                 20,000                536,412           --             --

Net (loss) for the year ending
    December 31, 2000                             --                     --                     --             --          (69,240)
                                           -----------            -----------            -----------    -----------    -----------

Balance, December 31, 2000                  21,200,000            $    21,200            $   622,136    $      --      $  (264,050)
                                           ===========            ===========            ===========    ===========    ===========

Stock Subscribed (Note 6)                      820,000            $       820
                                           ===========            ===========
</TABLE>

     The accompany notes are an integral part of these financial statements

                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                    FILMWORLD, INC. AND SUBSIDIARY GRD, INC.
                            STATEMENTS OF CASH FLOWS
          FOR THE YEARS ENDING DECEMBER 31, 2000,1999 AND 1998 AND FROM
    INCEPTION OF DEVELOPMENT STAGE (JULY 16, 1999) THROUGH DECEMBER 31, 2000

                                                                                                                From inception
                                                                                                                of development
                                                             2000              1999               1998               stage
                                                          ---------          ---------          ---------          ---------
Cash Flows  Operating Activities:

<S>                                                       <C>                <C>                <C>                <C>
Net Income (Loss)                                         $ (69,240)         $(197,011)         $ 185,818          $(264,050)
    Adjustments to Reconcile Net Income
     to Net Cash provided by operating activities
      Depreciation and Amortization                           6,718                310             15,492              7,028
    Stock for services                                         --                   56               --                   56
      Forgiveness of Debt                                      --                 --             (308,466)              --
    (Increase) Decrease in:
      Change in Receivable                                   (1,500)              --                 --               (1,500)
      Change on Other Assets                                  4,050               (400)             3,316              4,450
    Increase (Decrease) in:
      Change in Accounts Payable                             17,463             (5,994)            (8,540)            18,308
      Change in Other Current Liability                      24,191                300               --               24,491
                                                          ---------          ---------          ---------          ---------
    Net Cash Provided (Used) by

        Operating Activities                                (18,318)          (202,739)          (112,380)          (211,217)
                                                          ---------          ---------          ---------          ---------

Cash Flows Investment Activities:

    Investments in film rights                                 --             (536,400)              --             (536,400)
    Investments in plant and equipment                       (6,745)            (3,096)              --               (9,841)
                                                          ---------          ---------          ---------          ---------

    Net Cash (Used) by

          Investment Activities                              (6,745)          (539,496)              --             (546,241)
                                                          ---------          ---------          ---------          ---------
Cash Flows Financing Activities:

    Stockholder Loan                                           --                9,335            113,602              9,335
    Repayment of long term debt                                --                 --              (10,359)              --
    Contributions to Capital                                123,000            586,817              4,836            696,133
    Increase in long term debt                                 --              150,000               --              150,000
                                                          ---------          ---------          ---------          ---------
    Net Cash Provided (Used)

         by Financing Activities                            123,000            746,152            108,079            855,468
                                                          ---------          ---------          ---------          ---------

Increase (Decrease) in Cash and Cash

    Equivalents                                              97,937              3,917             (4,301)            98,010
Cash at Beginning of Year                                        73             (3,844)               457               --
                                                          ---------          ---------          ---------          ---------

Cash at End of Year                                       $  98,010          $      73          $  (3,844)         $  98,010
                                                          =========          =========          =========          =========
</TABLE>

     The accompany notes are an integral part of these financial statements

                                       F-6
<PAGE>

                         FILMWORLD, INC. AND SUBSIDIARY
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

Note 1 - ORGANIZATION AND NATURE OF BUSINESS

FilmWorld,  Inc. ("the Company") is a Development Stage Enterprise as defined by
FASB  statement  No.  7,   "Accounting   and  Reporting  by  Development   Stage
Enterprises."

The Company was  originally  organized  under the laws of the State of Nevada on
December 23, 1986,  under the name Hair Life Inc.  The Company  became  inactive
during 1987 and remained inactive until September 1, 1994. On September 1, 1994,
the  shareholders  of the Hair  Life,  Inc.  and the "The  Patterson  Group"  (a
California S Corporation)  approved a reverse acquisition  agreement whereby The
Patterson Group became a wholly owned subsidiary of Hair Life, Inc., in exchange
for  4,500,000  shares of common stock (after  giving  effect to a reverse stock
split) of Hair Life.  Hair Life,  Inc.  then  changed its name to The  Patterson
Group. The Patterson Group changed its  capitalization by a reverse split of the
then  outstanding  common stock of one new share for each forty old shares.  The
Patterson Group conducted operations via 2 subsidiaries until approximately June
1998,  at  which  time one  subsidiary  sought  relief  under  Chapter  7 of the
bankruptcy laws in the United States  Bankruptcy  Court for the Central District
of California. The effects of the bankruptcy were reflected in the 1997 audit of
the Patterson Group. Another subsidiary, APF Holdings (aka Blue Parrot Holdings)
also  discontinued  operations  in 1998,  after which time the  Patterson  Group
transferred  all interest in it to the  majority  shareholder  of The  Patterson
Group. By December 31, 1998, the Patterson Group had discontinued all operations
and remained dormant until May 1999.

In May of 1999, the majority  shareholder of the Patterson Group sold his common
stock in the Patterson  Group  (equaling  approximately  90% of the  outstanding
common  stock).  On or about  July 18,  1999,  the new  shareholders  funded the
Company  with  $50,000 and film  rights with a cost basis of $525,000  (which is
also the current fair market value) after giving effect to a ten for one reverse
split and changing the corporate name to FilmWorld,  Inc. The Company authorized
a capitalization of 100,000,000  shares of common stock and 10,000,000 shares of
preferred stock, with a par value of $0.001 per share.

On July 19, 1999, the  stockholders  of the Company  approved a plan of informal
quasi  reorganization.  This  plan  eliminated  its  then  retained  deficit  of
$1,163,065 and lowered additional paid in capital by the same amount.

On December 4, 2000,  through a reverse  merger the Company  acquired GRD, Inc.,
see note 3. The  shareholders of GRD, Inc. became the shareholders of Filmworld,
Inc.

                                       F-7

<PAGE>

                         FILMWORLD, INC. AND SUBSIDIARY
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPALS OF CONSOLIDATION:
The accompanying  consolidated  financial statements include the accounts of the
company and it's subsidiary  GRD, Inc.  Intercompany  transactions  and balances
have been eliminated in consolidation.

CASH EQUIVALENTS:
The Company records as cash equivalents all highly liquid short-term investments
with original maturates of three months or less.

NATURE OF BUSINESS:  Filmworld Inc. is a holding  company;  its subsidiary  GRD,
Inc. has an application for a product patent,  which is a  desulfurization  unit
that removes sulfur from crude oils.

PATENT COSTS:
Patent costs consist of attorney fees for patent application.

PROPERTY, PLANT, AND EQUIPMENT:
Equipment is recorded at cost or estimated costs, see note, and depreciated over
its useful life generally on a double declining balance method.

INCOME TAXES:
The Company  adopted  Financial  Accounting  Statement No. 109,  "Accounting for
Income Taxes," which requires recognition of deferred tax liabilities and assets
for the expected  future tax  consequences  of events that have been included in
the  financial  statements  or  tax  returns.  The  Company  made  the  required
calculation based upon the difference between financial statements and tax bases
of assets  and  liabilities  using tax rates in effect for the year in which the
differences were expected to reverse. See also Note 8.

                                        F-8

<PAGE>

                         FILMWORLD, INC. AND SUBSIDIARY
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

EARNINGS PER SHARE AND OPTIONS:
Except as discussed  immediately  below,  the earnings per share  calculation is
based on the weighted  average number of shares of common stock and common stock
equivalents  outstanding  during the period:  8,961,140  for  December 31, 2000;
4,286,000 for December, 1999; and 779,266 for December 31, 1998.

Currently  outstanding  are options to purchase 37,000 shares of common stock at
$5 per  share,  issued  prior  to  the  reorganization.  On  December  31,  2000
additional options for 9,600,000  exercisable at $0.50 per share were granted to
four individuals. Except for 1998, the options were not included in the earnings
per common share calculation, as the options are anti-dilutive.

USE OF ESTIMATES:
The preparation of financial  statements in conformity  with generally  accepted
accounting principals requires management to make estimates and assumptions that
affect certain  reported amounts and  disclosures.  Accordingly,  actual results
could differ from management's estimates.

ORGANIZATIONAL COSTS:
The Company has adopted  Statement of Position  ("SOP") 98-5;  "Reporting on the
Costs of Start-up  Activities" issued in April 1998 by the Accounting  Standards
Executive  Committee of the American Institute of Certified Public  Accountants.
Pursuant to SOP 98-5,  organizational  costs are expensed as incurred instead of
being capitalized and amortized.

Note 3 - ACQUISITION OF SUBSIDIARY:

On December 4, 2000, in a reverse merger, GRD, Inc. acquired the majority of the
outstanding stock of Filmworld,  Inc.  simultaneously  exchanged  Filmworld Inc.
stock for GRD, Inc. stock and  transferred the GRD, Inc. stock to Filmworld Inc.
prior to the stock  acquisition,  most of Filmworld Inc.  assets and liabilities
were  distributed to the  stockholders.  The  transaction was accounted for as a
purchase,  because of the relationship between the corporations,  the assets and
liabilities  are stated at book value  similar  to a pooling  of  interest.  The
results of  operations of GRD,  Inc. is included in the  accompanying  financial
statements since the date of acquisition.

Filmworld reacquired and retired 6,648,517 shares of its common stock and issued
20,000,000  shares of common stock (94%) to the new  shareholders.  The net book
value of GRD,  Inc.  at  December  4, 2000 was  $285,099.  GRD,  Inc.  assets at
December 4, 2000 consisted of assets  contributed to the Company by its majority
shareholder.  The assets were transferred at estimated cost,  including value of
Dr R. W.  Gunnerman's  time.  The major asset was  machinery  and  equipment for
design and manufacture of the Sulph-Co self-contained petroleum  desulfurization
machine with technical and machine design engineering.

                                        F-9

<PAGE>

                         FILMWORLD, INC. AND SUBSIDIARY
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>

Note 3 - ACQUISITION OF SUBSIDIARY (CONTINUED)

The  following   summarized  pro  forma  (unaudited)   information  assumes  the
acquisition had occurred on January 1, 1999.

                                                                       2000                    1999
                                                                   ----------               ----------
<S>                                                                <C>                      <C>
Net Sales                                                                --                      --

General and Administrative Expenses                                $   72,226               $  75,598
Research and Development                                              182,810                 100,215
Organizational Costs                                                     --                   150,000

Net Income (loss)                                                  $ (355.036)              $(432,220)
                                                                   ----------               ----------
Note 4 - NOTE PAYABLE:

Note Payable consist of the following:
                                                                         2000                   1999
                                                                   ----------               ----------
Note payable to  Whyteburg Limited Unsecured

payable on demand with interest a 12% per annum                          --                    9,334
                                                                   ----------               ----------

Note 5 - NOTES PAYABLE TO SHAREHOLDERS:
Notes Payable to Shareholder consisted of the following as of
December 31, 2000 and 1999
                                                                         2000                   1999
                                                                   ----------               ----------

Amount due on contract  dated  7/23/99 and revised On December 4, 2000 to Hidden
Splendor Resources,

payable on demand with no interest.                                  $200,000                $150,000

Advances from R. W. Gunnerman payable on
Demand with no interest, see note 3.                                 $100,000                    --
</TABLE>

Note 6 - STOCK SUBSCRIPTIONS RECEIVABLE:

Two shareholders have signed promissory notes for the purchase of 820,000 shares
of common stock at $0.50 per share.  Total stock  subscriptions were $410,000 of
which $201,500 was paid prior to year end and the remaining was paid by February
14, 2000.

                                       F-10
<PAGE>



                         FILMWORLD, INC. AND SUBSIDIARY
                        NOTES TO THE FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999

Note 7 - LEASE COMMITMENTS

The  Company  leases  its  office  space  from Neil Road  Properties  whose sole
proprietor is Dr. R. W. Gunnerman (the majority stockholder of the Company). The
lease  commenced  September  1, 2000 with rent of $4,650  per  month.  The lease
expires August 30, 2003.

Lease payments due for future calendar years are as follows:

200    $   55,802
2002       55,802
2003       37,201
-----------------
       $  148,805

Note 8 -  INCOME TAXES

The Company has net  operating  loss carry  forwards of  approximately  $69,000,
which can be carry  forward to offset  future  taxable  earnings  until the year
2015.  Prior losses will be of nominal value because of the change in ownership.
See also Note 2.

Note 9 -  DIVIDEND POLICY

The Company has paid no dividends since inception.

NOTE 10 - RELATED PARTY TRANSACTIONS:
See notes 3, 5 and 6.

NOTE 11 - RESEARCH AND DEVELOPMENT EXPENSE:

The  Company  has a  contract  with  Professor  T. F. Yen at the  University  of
Southern  California wherein he performs research for the Company.  The original
agreement  required  payments  of  $100,000  each in 1999 and  2000.  In 2000 an
additional  $75,000 was paid.  The  contract  was  extended  through 2001 for an
additional $100,000.

                                       F-11

<PAGE>


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

         There  have  been  no  disagreements  with  the  Company's  independent
accountant  over any item  involving the  Company's  financial  statements.  The
Company's independent accountant is W. Dale McGhie, Certified Public Accountant,
Town & Country Plaza, 1539 Vassar Street, Reno, Nevada 89502.


                                    PART III

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

(a)  Directors and Executive Officers

         As of March 1,  2001,  the  directors  and  executive  officers  of the
Company,  their  ages,  positions  in the  Company,  the dates of their  initial
election or appointment as director or executive officer,  and the expiration of
the terms as directors are as follows:


                                       23
<PAGE>


                                                             Period Served As
Name                       Age     Position                  Officer/Director*
----                       ---     --------                  -----------------
Dr. Rudolph Gunnerman      72      Chairman of the Board     12-4-00 to Present
                                   and a Director

Dr. Mart T. Cullen         44      President, CEO and        12-4-00 to Present
                                   a Director

Paul C. Knauff             75      Chief Financial Officer   12-4-00 to Present
                                   and Treasurer

Alexander H. Walker, Jr.   74      Secretary and Director    7-1-99 to Present

Joseph W. Sutton           54      Director                  Feb.2001 to Present


*The Company's  directors are elected at the annual meeting of stockholders  and
hold office until their  successors  are elected and  qualified.  The  Company's
officers  are  appointed  annually  by the Board of  Directors  and serve at the
pleasure of the Board.


                                       24
<PAGE>


(b)      Business Experience:

         Dr.  Rudolph  Gunnerman,  Director  and the  Company's  Chairman of the
Board, is a 72- year-old entrepreneur who studied mathematics and physics at the
University of Munich,  Germany  before he immigrated to the United  States.  Dr.
Gunnerman has invented a series of successful technologies,  including fireproof
building materials and wood pellets.  Thereafter, in his quest to reduce Nitrous
Oxide,  a major source of ozone  depletion,  Dr.  Gunnerman  invented A-55 Clean
Fuels and is currently  Chairman of Clean Fuels  Technology,  Inc. Dr. Gunnerman
holds three honorary doctorate degrees.

         Dr.  Mark T.  Cullen  is 44  years  old and a  Director  and the  Chief
Executive  Officer  and  President  of the  Company.  He  received  his B.S.  in
Chemistry and pursued a medical  career.  After receiving his M.D. degree he did
post graduate work at Yale University, first as a Post Doctoral Research Fellow,
then as Resident and Fellow in the Department of Obstetrics and  Gynecology.  He
was director of The Fetal  Diagnostic  Program at the  University  of Florida at


                                       25
<PAGE>


Jacksonville and Director of Obstetrics and Gynecology,  Florida  Hospital.  Dr.
Cullen was  Medical  Director  of  Obsterix,  Nevada.  (NASD).  He is  currently
Chairman of the Board of NuStem,  a startup  biotech  firm and Director of Idria
Oil and Gas, Inc.,  Geneva  Switzerland.  Dr. Cullen has authored 26 peer review
papers and  contributed to several  chapters in medical books and is also member
of Sterling's Who's Who.

         Paul C. Knauff,  age 75, Chief Financial  Officer and Treasurer,  has a
business  background  which includes  positions as Chief  Executive  Officer and
Chief  Financial  Officer of several  Fortune 1,000  companies.  Mr. Knauff also
specializes  in  domestic  and  international  acquisitions.  He  was  Financial
Controller of Union  Carbide's  Olefin  Division for five years.  Mr. Knauff has
served as director for numerous private and publicly owned companies. Mr. Knauff
received his B.S. in Accounting and Finance at Rider University,  Lawrenceville,
New  Jersey  and  participated  in a  graduate  degree  tax  program at New York
University, New York, New York.

         Alexander  H.  Walker,  Jr.,  age 74, has  served as a director  of the
Company  since  July 1, 1999.  He was  elected as  Secretary  of the  Company on
December 18, 2000. He received his B.A. from Waynesburg  College in 1950 and his
J.D. from the  University of Pittsburgh  School of Law in 1952.  Since 1956, Mr.
Walker has been a practicing  attorney,  which  practice has included  trial and
transactional  work,  with an emphasis on corporate  securities  matters.  After
serving  as the  Attorney  Advisor  for the  Division  of  Corporate  Finance in
Washington,  D.C. from 1954 to 1955, Mr. Walker served as the Attorney in Charge
of the Salt Lake City, Utah Branch of the United States  Securities and Exchange
Commission  from 1955 to 1956.  From 1956  through the present,  Mr.  Walker has
maintained  a  private  practice.   He  maintains  licenses  in  both  Utah  and
Pennsylvania.


                                       26
<PAGE>


         Joseph W.  Sutton,  age 54, was  appointed  a director  by the Board of
Directors of the Company in February of 2001.  Mr.  Sutton  recently  retired as
Vice Chairman of Enron Corp. Enron Corp. is an energy and communications company
with its home office located in Houston,  Texas. Enron produces  electricity and
natural gas;  develops,  constructs and operates  energy  facilities  worldwide;
delivers  physical  commodities  and financial and risk  management  services to
customers  around the world;  and is  developing  a leading  broadband  services
business.  Prior to departing  Enron,  Mr.  Sutton was a member of the three man
Office of the Chairman of Enron Corp. In this rose,  Mr. Sutton was  responsible
for the oversight of Enron's retail  business (Enron Energy  Services),  Enron's
full range international businesses,  Enron Consruction and Engineering Company,
all of Enron's North America  pipelines,  Enron's  Global E&P Business,  Enron's
Investment  Partners,  Enron  Wind  Company,  and a  large  portion  of  Enron's
Wholesale  Energy business.  During his time as Vice Chairman,  Enron formed its
new Broadband  Services  business and  introduced  Enron OnLine.  Before joining
Enron,  Mr.  Sutton was a career  officer in the U.S.  Army.  Mr.  Sutton  holds
B.B.A., M.S. and M.B.A. degrees from Ohio, Indiana and Long Island Universities.
He currently serves on the US-India Business Council,  EXIM Advisory  Committee,
the Board of Directors  of the Boy  Scounts,  Cynthia  Woods  Mitchell  Pavilion
Board, Ohio  University-School of Business Executive Advisory Board, and Houston
Minority Business Council - Executive  Advisory Board,  among several others. He
also served on several Enron affiliate boards of directors  throughout the world
and was a member of the Executive and Management Committee of Enron Corp.


                                       27
<PAGE>


         Dr. Teh Fu Yen, Chief Scientific  Advisor to SulphCo,  is a 72-year-old
Professor of Environmental  and Civil  Engineering at the University of Southern
California.  Dr. Yen has a B.S. in  Chemistry,  a M.S. in Chemistry and Chemical
Engineering  and a Ph.D.  in Organic and  Biochemistry.  Dr. Yen has completed a
Postgraduate program in Mathematics,  Certification of Bioengineering,  Columbia
University D.Sc.  (hon.) And an Energy  Engineering  certificate from Pepperdine
University D.Sc.  (hon.).  His positions have included Senior Research  Chemist,
Goodyear Tire and Rubber Co.,  Senior Fellow Mellon  Institute,  Carnegie-Mellon
University;  Associate Professor of Chemistry,  California State University, Los
Angeles.  Dr. Yen has authored and edited 26 books,  156  peer-reviewed  journal
papers  and 118  entries  for  book  chapters.  Dr.  Yen has 114  entries  under
conference proceedings and 17 U.S. patents listed.

(c)      Directors of Other Reporting Companies:

         Mr. Walker is an officer and director of Entertech Media Group, Inc., a
corporation  which filed a Form 10-SB with the  Commission  on or about June 11,
1999.  As of the filing of this Form  10-KSB,  Entertech  is  responding  to the
comments from NASD Regulation made in connection with that company's  efforts to
obtain a trading  symbol for the  shares of its  common  for  listing on the OTC
Bulletin Board.  Entertech's shares are not currently quoted on the OTC Bulletin
Board.


                                       28
<PAGE>


         Mr.  Walker also is a director of Talk Visual  Corp.  whose  shares are
traded under the symbol TVCP on the OTC  Bulletin  Board  market.  He also is an
officer and director of Harvard  Scientific  Corp. whose shares are traded under
the symbol "VGEN" on the Over-the-Counter NASDAQ Bulletin Board.

(d)      Employees:

         The Company has three (3)  full-time  employees and three (3) part-time
employees.  The five (5)  officers  and  directors  of the Company  also perform
services on behalf of the Company but do so on a non-exclusive basis.

(e)      Family Relationships:

         There are no family  relationships  between  the  directors,  executive
officers or any other  person who may be  selected  as a director  or  executive
officer of the Company.

(f)      Involvement in Certain Legal Proceedings:

         None of the officers,  directors,  promoters or control  persons of the
Company have been involved in the past five (5) years in any of the following:

         (1)      Any  bankruptcy  petition  filed by or against any business of
                  which such person was a general  partner or executive  officer
                  either at the time of the bankruptcy or within two years prior
                  to that time;


                                       29
<PAGE>


         (2)      Any conviction in a criminal proceedings or being subject to a
                  pending criminal proceeding  (excluding traffic violations and
                  other minor offenses);

         (3)      Being   subject  to  any  order,   judgment  or  decree,   not
                  subsequently  reversed,  suspended or vacated, or any Court of
                  competent jurisdiction,  permanently or temporarily enjoining,
                  barring,  suspending or otherwise  limiting his involvement in
                  any type of business, securities or banking activities; or

         (4)      Being found by a court of competent  jurisdiction  (in a civil
                  action),  the  Commission  or the  Commodity  Futures  Trading
                  Commission to have violated a federal or state securities laws
                  or  commodities  law, and the judgment has not been  reversed,
                  suspended, or vacated.

         The officers and directors  who are  identified  above are  significant
employees of the Company.

(g)      Section 16a Beneficial Ownership Compliance

         The officers,  directors and beneficial  owners of more than 10% of the
Company's common stock have filed their initial  statements of ownership on Form
3.  The  officers,  directors  and  beneficial  owners  of more  than 10% of the
Company's common stock have also filed the required Forms 4 or 5.


                                       30
<PAGE>


--------------------------------------------------------------------------------
ITEM 10.  EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

         The following table sets forth information  about  compensation paid or
accrued by the Company during the years ended  December 31, 2000,  1999 and 1998
to the Company's  officers and directors.  None of the Executive Officers of the
Company earned more than $100,000 during the years ended December 31, 2000, 1999
and 1998.
<TABLE>
<CAPTION>

                                       Summary Compensation Table
                                       --------------------------
                                                             Long Term Compensation
                                                             ----------------------
                             Annual Compensation        Awards                       Payouts
                             -------------------        ------                       -------
                                                   (e)                  (g)
                                                  Other      (f)      Securities             (i)
  (a)                                             Annual  Restricted  Under-      (h)      Other
Name and                           (c)     (d)    Compen-   Stock     Lying      LTIP     Compen-
Principal                (b)     Salary   Bonus   sation    Awards    Options/   Payouts   sation
Position                 Year    $         ($)     ($)       ($)       SARs(#)     ($)       ($)
--------                 ----    ------    ---     ---       ---       -------     ---       ---
<S>                      <C>     <C>     <C>      <C>       <C>        <C>         <C>       <C>
Rudolph Gunnerman
-----------------
Chairman of              2000    $ None  $ None   $ None    $ None     7,500,000   None      None
the Board                1999    $ None  $ None   $ None    $ None     None        None      None
and Director             1998    $ None  $ None   $ None    $ None     None        None      None

Mark T. Cullen
--------------
President,               2000    $50,001 $ None   $ None    $ None     1,000,000   None      None
CEO and                  1999    $ None  $ None   $ None    $ None     None        None      None
Director                 1998    $ None  $ None   $ None    $ None     None        None      None

Alexander H. Walker, Jr.
------------------------
Secretary and            2000    $ None  $ None   $ None    $ None     1,000,000   None      None
Director                 1999    $ None  $ None   $ None    $ None     None        None      None
                         1998    $ None  $ None   $ None    $ None     None        None      None

Paul Knauff
-----------
Chief Finan-             2000    $ None  $ None   $1,000    $ None     106,000     None      None
cial Officer             1999    $ None  $ None   $ None    $ None     None        None      None
and Treasurer            1998    $ None  $ None   $ None    $ None     None        None      None
</TABLE>


                                       31
<PAGE>


         The amount listed as other annual  compensation  for Paul Knauff in the
year 2000  represents  amounts  the Company  pays in a monthly fee to  McDermitt
Investment  Company,   Inc.  Mr.  Knauff's  wife  owns  and  controls  McDermitt
Investment  and this  monthly  fee is intended  as partial  compensation  to Mr.
Knauff for his services to the Company.  Pursuant to the  agreement  between the
Company's  subsidiary,  SulphCo.  and  McDermitt  Investment,  the Company  pays
McDermitt $1,000 per month plus an amount equal to $20.83 per hour for each hour
Mr.  Knauff  performs  his  duties as  SulphCo.,  which  includes 5 days of paid
holidays each year and 10 days of paid vacation each year. The agreement between
SulphCo.  and McDermitt is for a period of 12 months beginning November 16, 2000
and ending November 15, 2001.  Also, the 106,000 shares of the Company's  common
stock  subject to the option  listed  for Mr.  Knauff in 2000 are  subject to an
option granted McDermitt Investment Company, Inc.

         Options  granted  other  members of management in 2000 are described in
Item 12 below.


                                       32
<PAGE>


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

         The following information sets forth certain information as of March 6,
2001 about each person who is known to the Company to be the beneficial owner of
more than five  percent  (5%) of the  Company's  Common Stock and sets forth the
securities ownership of management:

(a)      5% Shareholders:

(1)                 (2)                     (3)                     (4)
Title          Name and Address     Amount And Nature of        Percent of
of Class        Of Benefical         Benefical Ownership           Class
                   Owner

Common         Rudolph Gunnerman        12,700,00                   55.9%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

Common         Peter Gunnerman          2,000,000                   08.8%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

Common         Kristina Gunnerman       2,000,000                   08.8%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

Common         Alex Paior               2,000,000                   08.8%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

Common         Mark T. Cullen           2,120,000                   09.3%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

                                       33
<PAGE>


(b)      Security Ownership of Management

(1)                 (2)                     (3)                     (4)
Title          Name and Address     Amount And Nature of        Percent of
of Class        Of Benefical          Benefical Ownership          Class
                   Owner

Common         Rudolph Gunnerman        12,700,00                   55.9%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

Common         Mark T. Cullen           2,120,000                   08.8%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

Common         Alexander H. Walker, Jr.   299,432 1                 08.8%
               50 West Liberty Street
               Suite 8803
               Reno, NV 89501

Common         Paul Knuaff                    300 2          Less than 1%
               5250 Neil Road
               Suite 303
               Reno, NV 89502

Common         Joseph W. Sutton           400,000 3                 01.7%
               1650 Meadow Wood Lane
               Reno, NV 89502

Common         All Directors and       15,519,732                   68.3%
               Officers as a Group

(c)      Changes in Control:

Other than the change in  control,  which took place in  December  2000
described in Item 1 above,  there is no arrangement which may result in a change
in control.

================================================================================
         1 Such shares are  beneficially  owned by  Alexander  H.  Walker,  Jr.,
Secretary and a Director of FilmWorld,  Inc.,  through his ownership and control
of Hidden  Splendor  Resources  the  registered  owner of record of the  299,432
shares.

         2 Such shares are owned by McDermitt  Investment Company, a corporation
owned and controled by Mr. Knauff's wife.

         3 Such shares are owned  beneficially  by Joseph W. Sutton  through his
ownership and control of Sutton  Ventures  Group,  The  registered  owner of the
shares.


                                       34
<PAGE>

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

         During the past two (2)  years,  the  Company  has not  entered  into a
transaction  with a value in excess  of  $60,000  with a  director,  officer  or
beneficial  owner  of 5% or more  of the  Company's  capital  stock,  except  as
follows:

         On December 4, 2000, the Company issued a total of 20,000,000 shares of
its common stock to the following in the following amounts:



         Registered Owner                        No. Shares
         ----------------                        ----------
         Rudolph Gunnerman                       12,000,000
         Kristina Gunnerman                       2,000,000
         Peter Gunnerman                          2,000,000
         Alex Paior                               2,000,000
         Mark T. Cullen                           2,000,000



         The  shares  issued  were  issued  in  consideration  for  cash and the
proprietary  technology  acquired the Company pursuant to the Exchange Agreement
dated December 4, 2000. Such cash and patent had a value of at least $4,000,000.
All such  shares were issued in  reliance  on the  exemption  from  registration
contained in Section 4(2) of the  Securities  Act of 1933,  as amended,  and the
certificates  representing such shares bear a restrictive  legend reflecting the
limitations on future transfer of those shares.

                                       35
<PAGE>

         The  Company is  indebted  to Hidden  Splendor  Resources,  Ltd. in the
amount of $150,000.  Alexander H. Walker,  Jr. is the beneficial owner of Hidden
Splendor  Resources,  Ltd.  This  debt is for  legal  and  accounting  services,
transfer  fees,  filing  fees and other  expenses  incurred  as a result of this
corporate reorganization.

         On December 4, 2000, the Company's board of directors  approved several
options to purchase the Company's  shares of the Company's  common stock.  These
options are effective  for a period of two years.  Such options were approved in
the following amounts to the following individuals:

                                    Number of Shares
         Name                       Subject to Option     Option Price Per Share
         ----                       -----------------     ----------------------
         Rudolph Gunnerman              7,500,000                 $0.50
         Dr. Mark Cullen                1,000,000                 $0.50
         Alexander H. Walker, Jr.       1,000,000                 $0.50
         Harry Holman                     100,000                 $0.50

         In December of 2000,  Mr.  Gunnerman  exercised  his option  rights and
purchased 700,000 shares of the Company's common stock for cash in the amount of
$350,000.  Dr. Cullen also  exercised his option  rights in December  2000,  and
purchased 120,000 shares for cash in the amount of $60,000.

         Such  amounts  have been booked as  advances  payable on demand with no
interest.  Dr. Gunnerman has loaned  $250,000.00 to pay the current debts of the
Company.


                                       36
<PAGE>


--------------------------------------------------------------------------------
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

         The Company filed a Form 8-K on December 4, 2000.

Assigned
Number   Description
------   -----------

(2)      Plan  of  acquisition,  reorganization,  arrangement,  liquidation,  or
         succession:  None.

(3)(ii)  By-laws of the Company:  Incorporated  by reference  from the Company's
         October 8, 1999 Form 10-SB filing.

(4)      Instruments defining the rights of holders including indentures: None

(9)      Voting Trust Agreement:    None

(10)     Material Contracts:

         (a)     Desulfurization  Technology Agreement between SulphCo, Inc. and
                 Sinclair Oil Corporation dated January 3, 2001

         (b)     Memorandum of Understanding  between SulphCo,  Inc. and Bechtel
                 Corporation dated January 2, 2001


                                       37
<PAGE>


(11)     Statement regarding computation of per share earnings: Computations can
         be determined from financial statements.

(16)     Letter on change in certifying accountant:   None

(18)     Letter on Change in Accounting Principles: None

(21)     Subsidiaries of the registrant: GRD, Inc., a Nevada corporation,  doing
         business as SulphCo.

(22)     Published Report Regarding Matters Submitted to Vote: None

(23)     Consent of Experts and Counsel: None

(24)     Power of Attorney:   None

(99)     Additional Exhibits:   None


                                       38
<PAGE>


--------------------------------------------------------------------------------
                                   SIGNATURES
--------------------------------------------------------------------------------

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
hereunto duly authorized.

Dated:   March 6, 2001.

                                            FILMWORLD, INC.

                                            By /s/ Mark T. Cullen
                                            ---------------------
                                                   Mark T. Cullen
                                                   Chief Executive Officer
                                                   and President