UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

|FORM 10-KSB/A  
|---------------
|               
|               
|               
|Amendment No. 6

|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------
|  |                                                                               
|o | TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES ACT 1934       

For the fiscal year ended December 31, 2003

Commission file number 0-27599

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

|Nevada                                                          |  | 88-0224817                           
|--------------------------------------------------------------- |  | -------------------------------------
|                                                                |  |                                      
|(State or other jurisdiction 
of incorporation or organization) |  | (I.R.S. Employer 
Identification No.)
|                                                                |  |                                      
|850 Spice Islands Drive, Sparks, NV                             |  | 89431                                
|                                                                |  |                                      
|(Address of principal executive offices)                        |  | (Zip Code)                           

|Issuers Telephone number:(775) 829-1310                        
|----------------------------------------------------------------
|Securities registered pursuant to Section 12(b) of the Act: None
|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.YesxNoo

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 Company had no revenue for the year ending December 31, 2003.

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 October 29, 2004, the aggregate market value of the voting and non-voting common equity held by non-affiliates, based on the closing price of the common equity on that date, equals $36,388,355.

---



EXPLANATORY NOTE

SulphCo, Inc. (the Company) is filing this Form 10-KSB/A (Amendment No. 6) to amend its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003 (the Original Filing) filed on March 29, 2004 with the Securities and Exchange Commission (SEC), as amended by Amendment No. 1 filed with the SEC on June 14, 2004 (Amendment No. 1), and amended by Amendment No. 2 filed with the SEC on July 1, 2004 (Amendment No. 2), and amended by Amendment No. 3 filed with the SEC on November 12, 2004 (Amendment No. 3), and amended by Amendment No. 4 filed with the SEC on November 24, 2004 (Amendment No. 4), and amended by Amendment No. 5 filed with the SEC on January 26, 2005 (Amendment No. 5) in order to (i) refile in its entirety Part I - Item 7. Financial Statements
to include restated audited financial statements for the years ended December 31, 2003 and December 31, 2002 and the report thereon prepared by the Companys new independent auditors, Mark Bailey & Company, Ltd. dated June 17, 2004, and the report of Daniel J. Forbush, Certified Public Accountant, dated May 13, 2002, and (ii) to refile in its entirety Part III - Item 13. Exhibits and Reports on Form 8-K to reflect the updated certifications of our Chief Executive Officer and Principal Accounting Officer included with this Amendment.

This Amendment No. 6 does not amend any other information previously filed in the Original Filing as amended by Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4 and Amendment No. 5. The Original Filing as amended by Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4 and Amendment No. 5 is hereby superseded and amended with respect to the section set forth in this Amendment.

---



ITEM 7. FINANCIAL STATEMENTS

SULPHCO, INC.

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

FOR THE YEARS ENDED

DECEMBER 31, 2003

AND

DECEMBER 31, 2002

WITH

AUDIT REPORT OF

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

---



TABLE OF CONTENTS

|Independent Auditors Report                  | 2  | 
|--------------------------------------------- | -- | 
|Predecessor Independent Auditors Report      | 4  | 
|Balance Sheet                                 | 5  | 
|Statements of Operations                      | 6  | 
|Statement of Changes in Shareholders Deficit | 7  | 
|Statements of Cash Flows                      | 10 | 
|Notes to Financial Statements                 | 11 | 

---



MARK BAILEY & CO. LTD.

Certified Public AccountantsManagement Consultants

|Office Address: 
    1495 Ridgeview Drive, Ste. 200 
    Reno, Nevada 89509-6634 | Phone: 775/332.4200
    Fax: 775/332.4210 | Mailing Address: 
    P.O. Box 6060
    Reno, Nevada 89513
|-------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------------------------
|                                                                                 |                                           |                                                           

Independent Auditors Report

|June 17, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Board of Directors
  Sulphco, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|We have audited the accompanying balance sheet of Sulphco, Inc., (a company in the development stage)
as of December 31, 2003, and the related statements of operations, shareholders deficit and
cash flows for the years ended December 31, 2003 and 2002. These financial statements are the responsibility
of the Companys management.Our responsibility is to express an opinion on these financial statements based on our audits. The
financial statements of SulphCo, Inc. from inception to December 31, 2001 were audited by other auditors
whose report dated May 13, 2002, expressed an unqualified opinion, including an explanatory paragraph
regarding a going concern on those statements.                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. The statements of operations, changes in shareholders
equity, and statements of cash flows of the Company from inception to December 31, 2001 were audited
by other independent accountants whose report dated May 13, 2002 expressed an unqualified opinion
on those statements.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Sulphco, Inc., (a company in the development stage), as of December 31,
2003, and the results of its operations and its cash flows from inception and for the years ended
December 31, 2003 and 2002, in conformity with accounting principles generally accepted in the United
States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

- 2 -

---



|As discussed in note 2 of the financial statements, certain errors resulting in an understatement of
additional paid in capital and net loss as of December 31, 2002, were discovered by management of
the Company during the current year. Accordingly, an adjustment has been made to the retained earnings
as of December 31, 2002 to correct the error.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|/s/ Mark Bailey & Company, Ltd.                                                                                                                                                                                                                                                                                                                            
|Mark Bailey & Company, Ltd.                                                                                                                                                                                                                                                                                                                                
|Reno, Nevada                                                                                                                                                                                                                                                                                                                                               

- 3 -

---



Daniel J. ForbushCertified Public Accountant

INDEPENDENT AUDITORS REPORT

To the Board of DirectorsAnd Shareholders ofSulphCo, Inc.

I have audited the balance sheet of SulphCo, Inc. (A Development Stage Company) as of December 31,
2001 and the related statements of operations, stockholders equity, and cash flows for the
year then ended. For the comparative statements I relied upon the predecessor auditors report
issued June 13, 2001 for the year ended December 31, 2000 and the period from inception to December
31, 1999, on which an unqualified opinion was given. Some reclassifications of prior year items were
entered to facilitate comparisons. These financial statements are the responsibility of the Companys
management. My responsibility is to express an opinion on the financial statements based on my audit.

I have conducted my audit in accordance with auditing standards generally accepted in the United States
of America. Those standards require that I plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. I believe that my audit provides
a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of SulphCo, Inc. (A Development Stage Company) as of December 31, 2001 and
the related statements of operations, stockholders equity, and cash flows for the year then
ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been presented assuming that the Company will continue as
a going concern. As discussed in Note 6 to the financial statements, the Company has suffered losses
from operations and has yet to make a sale of the process, which raises doubt about its ability to
continue as a going concern. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

/s/ Daniel J. Forbush

Reno, NevadaMay 13, 2002

- 4 -

---

SULPHCO, INC.(A Company in the Development Stage)
  BALANCE SHEET
  
December 31, 2003

|Assets                                                              
|--------------------------------------------------------------------
|
|                                                                    
|Current Assets                                                      
|Cash                                                                
|Accounts receivable                                                 
|Spare parts inventory                                               
|Prepaid expenses                                                    
|                                                                    
|Total current assets                                                
|                                                                    
|Fixed Assets                                                        
|Property and equipment (net of accumulated depreciation of $525,842)
|Desulphurization unit                                               
|                                                                    
|Total fixed assets                                                  
|                                                                    
|Other Assets                                                        
|Deferred tax asset (net of valuation allowance of $6,130,948)       
|Deposits                                                            
|                                                                    
|Total other assets                                                  
|                                                                    
|Total assets                                                        
|                                                                    
|LIABILITIES AND STOCKHOLDERS EQUITY                                
|                                                                    
|Current Liabilities                                                 
|Accounts payable                                                    
|Accrued expenses                                                    
|Settlement liability                                                
|Related party notes payable                                         
|                                                                    
|Total current liabilities                                           
|                                                                    
|                                                                    
|Commitments and Contingencies                                       
|                                                                    
|Stockholders Equity                                                
|Common stock, $.001 par value, 100,000,000 shares authorized        
|49,670,083 shares issued and outstanding                            
|Additional paid-in-capital (restated for 2002)                      
|Stock issued for prepaid expense                                    
|Stock subscriptions receivable                                      
|Common stock subscribed                                             
|Deficit accumulated during the development stage (restated for 2002)
|                                                                    
|Total stockholders equity                                          
|                                                                    
|Total liabilities and stockholders equity                          
|                                                                    

The Accompanying Notes are an Integral Part of the Financial Statements

- 5 -

---



SULPHCO, INC.(A Company in the Development Stage)STATEMENTS OF OPERATIONSFrom Inception and for the Years Ended December 31, 2003 and 2002

|                                                        |                         |             |   | For the Years Ended     |   |           
|------------------------------------------------------- | ----------------------- | ----------- | - | ----------------------- | - | ----------
|                                                        | Inception
      to date |             |   | December 31,
      2003 |   |           
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Revenue                                                 |                         |             |   |                         |   |           
|Sales                                                   | $                       | 42,967      |   |                         | $ |          
|Interest income                                         |                         | 39,309      |   |                         |   |          
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Total revenue                                           |                         | 82,276      |   |                         |   |          
|                                                        |                         |             |   |                         |   |           
|Expenses                                                |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Salary and wage expense                                 |                         | (7,490,408  | ) |                         |   | (781,023  
|Director fees                                           |                         | (195,500    | ) |                         |   | (39,500   
|General and administrative expenses (restated for 2002) |                         | (8,395,205  | ) |                         |   | (1,290,777
|Research and development expenses                       |                         | (1,231,493  | ) |                         |   | (518,810  
|Loss on disposal of investment                          |                         | (221,711    | ) |                         |   | (221,711  
|Depreciation expense                                    |                         | (565,647    | ) |                         |   | (191,043  
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Total expenses                                          |                         | (18,099,964 | ) |                         |   | (3,042,864
|                                                        |                         |             |   |                         |   |           
|Loss from operations                                    |                         | (18,017,688 | ) |                         |   | (3,042,864
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Interest expense                                        |                         | (46,011     | ) |                         |   | (26,489   
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Loss before income taxes                                |                         | (18,063,699 | ) |                         |   | (3,069,353
|                                                        |                         |             |   |                         |   |           
|Provision for income taxes                              |                         |            |   |                         |   |          
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Net loss (restated for 2002)                            | $                       | (18,063,699 | ) |                         | $ | (3,069,353
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Loss per share - basic and dilutited                    | $                       | (0.58       | ) |                         | $ | (0.06     
|                                                        |                         |             |   |                         |   |           
|                                                        |                         |             |   |                         |   |           
|Weighted average shares outstanding - basic and diluted |                         | 31,321,421  |   |                         |   | 47,635,663
|                                                        |                         |             |   |                         |   |           

The Accompanying Notes are an Integral Part of the Financial Statements

- 6 -

---



SULPHCO, INC.(A Company in the Development Stage)STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYFrom Inception and For the Years Ended December 31, 2003 and 2002

|                                            |              |  |  |        |        |                    | AdditionalPaid-inCapital |   |           |   |  |            | Stock issuedfor prepaidinterest |  |             | CommonStockSubscribed |  |   | StockSubscriptionsReceivable |  |            |   |  |  
|------------------------------------------- | ------------ |  |  | ------ | ------ | ------------------ | ------------------------ | - | --------- | - |  | ---------- | ------------------------------- |  | ----------- | --------------------- |  | - | ---------------------------- |  | ---------- | - |  | -
|                                            | Common Stock |  |  |        |        | AccumulatedDeficit |                          |   |           |   |  |            |                                 |  | TotalEquity |                       | 
|                                            | Shares       |  |  | Amount |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Balance, January 13, 1999                   |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued for cash at $167 per share     | 1,000        |  |  | $      | 1      |                    |                          | $ | 166,999   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  | $
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Restate from recapitalization of GRD, Inc   | 19,999,000   |  |  |        | 19,999 |                    |                          |   | (19,999   | ) |  |           |                                 |  |             |                       |  |   |                              |  |           |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Net loss                                    |              |  |  |        |        |                    |                          |   |           |   |  | (128,802   | )                               |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Balance at December 31, 1999                | 20,000,000   |  |  |        | 20,000 |                    |                          |   | 147,000   |   |  | (128,802   | )                               |  |             |                       |  |  |                              |  |           |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Contributions from stockholders             |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|in December 2000                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Cash                                        |              |  |  |        |        |                    |                          |   | 169,168   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Equipment                                   |              |  |  |        |        |                    |                          |   | 362,331   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Acquisition of Filmworld, Inc               | 1,200,000    |  |  |        | 1,200  |                    |                          |   | (251,200  | ) |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued for cash and subscription      |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|receivable at $0.50 per share               | 820,000      |  |  |        | 820    |                    |                          |   | 409,180   |   |  |            |                                 |  |             |                       |  |   |                              |  | (208,500   | ) |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock options issued at $.50 per share      |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|in December 2000                            |              |  |  |        |        |                    |                          |   | 919,401   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock options issued at $1.50 per share     |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|in December 2000                            |              |  |  |        |        |                    |                          |   | 94,799    |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Net loss                                    |              |  |  |        |        |                    |                          |   |           |   |  | (1,364,393 | )                               |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Balance at  December 31, 2000               | 22,020,000   |  |  |        | 22,020 |                    |                          |   | 1,850,679 |   |  | (1,493,195 | )                               |  |             |                       |  |  |                              |  | (208,500   | ) |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued for intangible assets at $4.25 |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|per share in January 2001                   | 292,800      |  |  |        | 293    |                    |                          |   | 1,244,107 |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued for intangible assets at $2.85 |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|per share in February 2001                  | 400,000      |  |  |        | 400    |                    |                          |   | 1,139,600 |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock sold to a related party at $1.47      |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|per share February 2001                     | 24,750       |  |  |        | 25     |                    |                          |   | 36,431    |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued for marketing services         |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|at $2.86 per share April 2001               | 200,000      |  |  |        | 200    |                    |                          |   | 571,800   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Issuance of options to related parties for  |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|services in June 2001                       |              |  |  |        |        |                    |                          |   | 773,931   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued in exchange for notes payable  |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|at $0.50 per share in June 2001             | 9,556,000    |  |  |        | 9,556  |                    |                          |   | 4,768,444 |   |  |            |                                 |  |             |                       |  |   |                              |  | (4,778,000 | ) |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued in exchange for notes payable  |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|at $1.50 per share in June 2001             | 425,000      |  |  |        | 425    |                    |                          |   | 637,075   |   |  |            |                                 |  |             |                       |  |   |                              |  | (637,500   | ) |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock sold for cash at $2.94 per share      |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|in June 2001                                | 100,000      |  |  |        | 100    |                    |                          |   | 293,900   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued for a note receivable at $1.41 |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|per share in June 2001                      | 200,000      |  |  |        | 200    |                    |                          |   | 281,800   |   |  |            |                                 |  |             |                       |  |   |                              |  | (282,000   | ) |  |  
|                                            |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|Stock issued to a related party for cash at |              |  |  |        |        |                    |                          |   |           |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  
|$0.50 per share in June 2001                | 350,000      |  |  |        | 350    |                    |                          |   | 174,650   |   |  |            |                                 |  |             |                       |  |   |                              |  |            |   |  |  

The Accompanying Notes are an Integral Part of the Financial Statements

- 7 -

---



SULPHCO, INC.(A Company in the Development Stage)STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYFrom Inception and For the Years Ended December 31, 2003 and 2002

|                                             | Common Stock |   |  | AdditionalPaid-inCapital |   |  | AccumulatedDeficit |   |  | Stock issuedfor prepaidinterest |   | CommonStockSubscribed |   | StockSubscriptionsReceivable |   |  | TotalEquity |   | 
|-------------------------------------------- | ------------ | - |  | ------------------------ | - |  | ------------------ | - |  | ------------------------------- | - | --------------------- | - | ---------------------------- | - |  | ----------- | - | 
|                                             | Shares       |   |  | Amount                   |   |  |                    |   |  |                                 |   |                       |   |                              |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Cash received for subscription               |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|in July 2001                                 |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  | 282,000     |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Cash received for subscriptions              |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|in August 2001                               |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  | 340,000     |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares issued for subscription receivable    |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|of $2,000,000 in September 2001              | 2,758,620    |   |  | 2,759                    |   |  | 1,997,241          |   |  |                                 |   |                       |   |                              |   |  | (2,000,000  | ) | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares issued to a related party for         |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|consulting fees at $0.85 per share           |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|in November 2001                             | 4,000,000    |   |  | 4,000                    |   |  | 3,396,000          |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares returned in November 2001             | (300,000     | ) |  | (300                     | ) |  | (1,558,147         | ) |  |                                 |   |                       |   |                              |   |  | 784,500     |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Cash received for subscriptions              |              |   |  |                          |   |  |                    |   |  |                                |   |                       |   |                              |   |  | 200,000     |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares returned in December 2001             | (100,000     | ) |  | (100                     | ) |  | (49,900            | ) |  |                                 |   |                       |   |                              |   |  | 50,000      |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Stock options issued at a weighted           |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|average issue price of $0.75 per share       |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|in October 2001                              |              |   |  |                          |   |  | 89,020             |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Net loss                                     |              |   |  |                          |   |  |                    |   |  | (6,927,524                      | ) |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Balance at December 31, 2001                 | 39,927,170   |   |  | 39,928                   |   |  | 15,646,632         |   |  | (8,420,719                      | ) |                       |  |                              |  |  | (6,249,500  | ) | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Stock issued for related party services      |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|at $0.50 per share in March 2002             | 10,000,000   |   |  | 10,000                   |   |  | 4,990,000          |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares returned in May 2002                  | (1,000,000   | ) |  | (1,000                   | ) |  | (499,000           | ) |  |                                 |   |                       |   |                              |   |  | 500,000     |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares returned in June 2002                 | (100,000     | ) |  | (100                     | ) |  | (71,900            | ) |  |                                 |   |                       |   |                              |   |  | 72,000      |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares returned in July 2002                 | (25,000      | ) |  | (25                      | ) |  | (37,475            | ) |  |                                 |   |                       |   |                              |   |  | 37,500      |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Payment on stock subscription received       |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|in July 2002                                 |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  | 515,500     |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares returned in July 2002                 | (1,000,000   | ) |  | (1,000                   | ) |  | (499,000           | ) |  |                                 |   |                       |   |                              |   |  | 500,000     |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Stock issued for services at $0.10 per       |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|share in September 2002                      | 50,000       |   |  | 50                       |   |  | 4,950              |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares returned in September 2002            | (431,000     | ) |  | (431                     | ) |  | (440,069           | ) |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares issued for services at $0.27 per      |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|share in October 2002                        | 50,000       |   |  | 50                       |   |  | 13,450             |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Stock Options issued in November 2002        |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|for $0.10 per share (restated)               |              |   |  |                          |   |  | 31,500             |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|                                             |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|Shares issued to a related party for cash at |              |   |  |                          |   |  |                    |   |  |                                 |   |                       |   |                              |   |  |             |   | 
|$0.10 per share in November 2002             | 100,000      |   |  | 100                      |   |  | 9,900              |   |  |                                 |   |                       |   |                              |   |  |             |   | 

The Accompanying Notes are an Integral Part of the Financial Statements

- 8 -

---



SULPHCO, INC.
(A Company in the Development Stage)STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYFrom Inception and For the Years Ended December 31, 2003 and 2002

|                                             | Common Stock |   |  | Additional
      Paid-in
      Capital |        |   | Accumulated
      Deficit |   |            | Stock issued
    for prepaid
interest |  |   | Common 
Stock
    Subscribed |   | Stock
      Subscriptions
    Receivable |   |          | Total
    Equity |  |  
|-------------------------------------------- | ------------ | - |  | -------------------------------------- | ------ | - | ------------------------- | - | ---------- | ------------------------------------- |  | - | ---------------------------- | - | ---------------------------------------- | - | -------- | ---------------- |  | -
|Shares                                       |              |   |  | Amount                                 |        |   |                           |   |            |                                       | 
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Shares issued to a related party for cash at |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|$0.10 per share in December 2002             | 50,000       |   |  |                                        | 50     |   |                           |   | 4,950      |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Net loss (restated)                          |              |   |  |                                        |        |   |                           |   |            |                                       |  |   | (6,573,627                   | ) |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Balance at December 31, 2002                 | 47,621,170   |   |  |                                        | 47,621 |   |                           |   | 19,153,938 |                                       |  |   | (14,994,346                  | ) |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Stock subscribed for services at $0.42 per   |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|share in February 2003                       |              |   |  |                                        |        |   |                           |   | 20,950     |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Payment on stock subscription                |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|received in February 2003                    |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Shares issued to a related party for cash at |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|$0.33 per share in March 2003                | 50,000       |   |  |                                        | 50     |   |                           |   | 16,450     |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Stock issued for services at $0.32 per       |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|share in June 2003                           | 50,000       |   |  |                                        | 50     |   |                           |   | 15,950     |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Shares returned in August 2003               | (196,870     | ) |  |                                        | (197   | ) |                           |   | (196,678   | )                                     |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Shares returned in September 2003            | (3,130       | ) |  |                                        | (3     | ) |                           |   | (3,322     | )                                     |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Shares issued to a related party for cash at |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|$0.23 per share in November 2003             | 2,173,913    |   |  |                                        | 2,174  |   |                           |   | 497,826    |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Shares returned in December 2003             | (25,000      | ) |  |                                        | (25    | ) |                           |   | (37,275    | )                                     |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Stock subscribed for prepaid interest        |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|at $0.296 per share in December 2003         |              |   |  |                                        |        |   |                           |   | 295,000    |                                       |  |   |                              |   |                                          |   | (296,000 | )                |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Net loss                                     |              |   |  |                                        |        |   |                           |   |            |                                       |  |   | (3,069,353                   | ) |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  
|Balance at December 31, 2003                 | 49,670,083   |   |  | $                                      | 49,670 |   |                           | $ | 19,762,839 |                                       |  | $ | (18,063,699                  | ) |                                          | $ | (296,000 | )                |  | $
|                                             |              |   |  |                                        |        |   |                           |   |            |                                       |  |   |                              |   |                                          |   |          |                  |  |  

The Accompanying Notes are an Integral Part of the Financial Statements

- 9 -

---



SULPHCO, INC.(A Company in the Development Stage)STATEMENTS OF CASH FLOWSFrom Inception and For the Years Ended December 31, 2003 and 2002

|                                                        | Inception
      to Date |             |   | 2003 |   |            | 2002 |  |  
|------------------------------------------------------- | ----------------------- | ----------- | - | ---- | - | ---------- | ---- |  | -
|                                                        |                         |             |   |      |   |            |      |  |  
|Cash Flows from Operating Activities                    |                         |             |   |      |   |            |      |  |  
|Net loss                                                | $                       | (18,063,699 | ) |      | $ | (3,069,353 | )    |  | $
|                                                        |                         |             |   |      |   |            |      |  |  
|Adjustments to reconcile net loss to net cash           |                         |             |   |      |   |            |      |  |  
|used in operating activities:                           |                         |             |   |      |   |            |      |  |  
|Depreciation expense                                    |                         | 565,647     |   |      |   | 191,043    |      |  |  
|Shares issued for services                              |                         | 5,309,818   |   |      |   | 16,000     |      |  |  
|Shares subscribed for services                          |                         | 21,000      |   |      |   | 21,000     |      |  |  
|Loss on disposal of subsidiary                          |                         | 220,086     |   |      |   |           |      |  |  
|Increase in accounts receivable                         |                         | (231        | ) |      |   | (231       | )    |  |  
|Increase in spare parts inventory                       |                         | (101,606    | ) |      |   | (101,606   | )    |  |  
|Decrease in related party receivable                    |                         | 1,359,185   |   |      |   |           |      |  |  
|Increase in work in progress                            |                         | (583,470    | ) |      |   |           |      |  |  
|(Increase) decrease in prepaid expenses                 |                         | (9,472      | ) |      |   | 211        |      |  |  
|Increase (decrease) in accounts payable                 |                         | 26,254      |   |      |   | (103,800   | )    |  |  
|Increase in accrued liabilities                         |                         | 103,758     |   |      |   | 4,644      |      |  |  
|Increase (decrease) in legal settlement                 |                         | 13,636      |   |      |   | (86,364    | )    |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Net cash used in operating activities                   |                         | (11,139,094 | ) |      |   | (3,128,456 | )    |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Cash Flows from Investing Activities                    |                         |             |   |      |   |            |      |  |  
|Purchase of capital assets                              |                         | (254,147    | ) |      |   | (55,143    | )    |  |  
|Investment in subsidiary                                |                         | (220,086    | ) |      |   |           |      |  |  
|Payment of deposits                                     |                         | (36,822     | ) |      |   | (15,742    | )    |  |  
|Development of intangible assets                        |                         | (15,843     | ) |      |   |           |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Net cash used in investing activities                   |                         | (526,898    | ) |      |   | (70,885    | )    |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Cash Flows from Financing Activities                    |                         |             |   |      |   |            |      |  |  
|Proceeds from issuance of stock                         |                         | 6,890,200   |   |      |   | 516,500    |      |  |  
|Proceeds from (return of) stock subscriptions           |                         | 4,571,237   |   |      |   | 1,655,000  |      |  |  
|Proceeds from issuance of related party notes payable   |                         | 3,500,000   |   |      |   | 2,250,000  |      |  |  
|Proceeds from issuance of line of credit                |                         | 750,000     |   |      |   |           |      |  |  
|Return of capital                                       |                         | (118,427    | ) |      |   |           |      |  |  
|Payments on contracts payable                           |                         | (250,000    | ) |      |   |           |      |  |  
|Principal payments on line of credit                    |                         | (750,000    | ) |      |   | (500,000   | )    |  |  
|Principal payments on advance from related party        |                         | (2,191,285  | ) |      |   |           |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Net cash provided by financing activities               |                         | 12,401,725  |   |      |   | 3,921,500  |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Net increase (decrease) in cash and cash equivalents    |                         | 735,733     |   |      |   | 722,159    |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Cash and cash equivalents at inception,                 |                         |             |   |      |   |            |      |  |  
|December 31, 2002 and 2001                              |                         |            |   |      |   | 13,574     |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|                                                        |                         |             |   |      |   |            |      |  |  
|Cash and cash equivalents at December 31, 2003 and 2002 | $                       | 735,733     |   |      | $ | 735,733    |      |  | $
|                                                        |                         |             |   |      |   |            |      |  |  

|Supplemental Information and Noncash Transactions                                                                                                       
|--------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                        
|During the years ended December 31, 2003, and 2002, $27,950 and $16,869 were paid for interest, respectively, and no amounts were paid for income taxes.
|                                                                                                                                                        
|In December 2003 one million common shares were subscribed at $0.296 per share for prepaid interest
of $296,000.                                        
|                                                                                                                                                        
|In February 2003 a stock subscription of $3,575,000 was paid with $1,655,000 in cash and the relief
of notes payable of $1,920,000.                     
|                                                                                                                                                        
|In 2002 notes payable of $1,000,000 were relieved with the decrease of $1,000,000 in subscriptions
payable.                                             

The Accompanying Notes are an Integral Part of the Financial Statements

- 10 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

|1. | Organization and Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Sulphco, Inc. (the Company), formerly Film World, Inc., 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 1994. In September 1994, through a reverse acquisition agreement, the Patterson Group became a wholly owned subsidiary of Hair Life, Inc. Operations were conducted via two subsidiaries until 1998, at which time all operations were discontinued and the Company remained dormant until July 1999.                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In July 1999, the Company acquired film rights and changed the corporate name to Film World, Inc. In December 2000, the Company discontinued its film operations and distributed all assets and liabilities related to that business to certain shareholders in exchange for their stock.                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In December 2000, the Company entered into an exchange agreement with GRD, Inc. (DBA Sulphco) and issued 1,200,000 shares in exchange for all of the outstanding shares of GRD, Inc. Since the shareholders of GRD, Inc. continue to control the Company, the merger was accounted for as a reverse acquisition of Film World, Inc., and the name was changed to SulphCo, Inc.                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company is still considered a developmental stage company in 2003, as defined by Statement of Financial Accounting Standards (SFAS) No. 7. The Company is engaged in the business of developing and marketing equipment and a process for removing sulfur from petroleum.                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Use of Estimates in the Preparation of Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures, of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The markets for the Companys products and services are characterized by competition, rapid technological development, regulatory changes, and new product introductions, all of which may impact the future value of the Companys assets.

- 11 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | For the purpose of the statements of cash flows, all highly liquid investments with maturities of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2003 and 2002.                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Deposit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The Company paid a deposit for its leased premises. The deposit is refundable at the end of the lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | Property and equipment are recorded at cost, less accumulated depreciation. In accordance with FASB 144, the Company reviews its long-lived assets for impairment. Whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recovered through undiscounted future cash flows, such loss is recognized in the statement of operations. During the year ended December 31, 2003, the Company abandoned an investment with a cost of $221,711 (See Note 3).                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The cost of property, plant, and equipment is depreciated over the remaining estimated useful lives of the assets. Leasehold improvements are depreciated over the lesser of the terms of the lease or the estimated useful lives of the assets. Depreciation is computed on the straight line method for both financial reporting and income tax purposes. Expenditures for maintenance and repairs are expensed when incurred. Betterments are capitalized. Gains and losses on the sale of property and equipment are reflected in the statement of operations.

- 12 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | The following is a summary of property, plant, and equipment  at cost, less accumulated depreciation and the estimated useful lives:
| | -------------------------------------------------------------------------------------------------------------------------------------

|                               |  | 
|------------------------------ |  | 
|
|Equipment                      |  | 
|Computers                      |  | 
|Office furniture               |  | 
|Leasehold improvements         |  | 
|                               |  | 
|                               |  | 
|Less: Accumulated depreciation |  | 
|                               |  | 
|Total                          |  | 
|                               |  | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has an uncommissioned desulfurization unit. This unit consists of a trailer containing
equipment to be used to remove sulfur from crude oil. The Company incurred $65,872 in costs during
the year ended December 31, 2003 and $321,167 in costs and accrued $40,591 in sales taxes on
this unit during the year ended December 31, 2002 for a total cost of $427,630. The unit was classified
as property, plant and equipment because the Company intended to own the unit and receive a rental
payment for it. In 2003 management determined that the unit may be sold, so $427,630 was reclassified
to fixed assets from construction-in-progress as of December 31, 2003 and the sales tax accrual was
removed from the accounts of the Company. As parts to the unit are upgraded or replaced, the Company
adjusts the cost accordingly.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Research and Development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | The Company expenses research and development costs as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | Income Taxes                                                                                                                                                                                         
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                      
| | The Company provides for income taxes under the provisions of SFAS No. 109 Accounting for Income Taxes. SFAS No. 109 requires an asset and liability based approach in accounting for income taxes.

- 13 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | Deferred income tax assets and liabilities are recorded to reflect the tax consequences in future years
of temporary differences between revenue and expense items for financial statement and income tax
purposes. Valuation allowances are provided against assets that are not likely to be realized. Deferred
tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | The computation of basic and diluted earnings per common share is based on the weighted average number
of shares outstanding during the year, plus the common stock equivalents. Common stock equivalents
are not included in the diluted loss per share calculation when their effect is antidilutive.                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In 2000, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements. Pursuant to SAB No. 101 and the relevant
generally accepted accounting principles, the Company will recognize revenue upon the passage of
title, ownership and the risk of loss to the customer. During the period ended December 31, 2003,
there was no revenue. In 2002 the Company was awarded a contract from the U. S. Navy for research
relating to the desulfurization process. Revenue was recognized on the contract at its completion. The Company plans to collect royalties from licensing and the deployment of their desulfurization units.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | In April 2003 the Financial Accounting Standards Board (FASB) issued SFAS 149 Amendment of Statement
133 on Derivative Instruments and Hedging Activities. This statement, which amends and clarifies
existing accounting pronouncements, addresses financial accounting and reporting for derivative or other hybrid instruments. This Statement requires that contracts with comparable characteristics be accounted for similarly. It is effective for contracts entered into or modified after September 30, 2003. The Company does not expect the adoption of SFAS 149 to have any impact on the financial statements.                                                                                 

- 14 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which is effective at the beginning of the first interim period beginning after March 15, 2003. This statement establishes standards for the Companys classification of liabilities in the financial statements that have characteristics of both liabilities and equity. The Company believes the adoption of SFAS 150 will have no effect on the Companys financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | In December 2003, the FASB issued SFAS 132R, Employers Disclosures about Pensions and Other Postretirement Benefitsan amendment of SFAS 87, 88, and 106. This Statement revises employers disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by SFAS 87, Employers Accounting for Pensions, SFAS 88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and SFAS 106, Employers Accounting for Postretirement Benefits Other Than Pensions. This Statement retains the disclosure requirements contained in SFAS 132, Employers Disclosures about Pensions and Other Postretirement Benefits, which it replaces. It requires additional disclosures to those in the original Statement 132
about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The required information is required to be provided separately for pension plans and for other postretirement benefit plans. The Company has no Pension or Other Postretirement Benefits.

- 15 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

|2. | Restatement of 2002 Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In 2004, the Company became aware of 150,000 options at $0.10 granted in 2002, which were previously
unrecorded, necessitating that the financial statements be restated. The change resulting from this
restatement increases the loss and additional paid in capital by $31,500, and had no material effect
on the loss per share. Also the Company reclassified the prepaid interest expense by the issuance
of common stock, from a current asset to a contra equity account, resulting in a decrease to total
assets and a decrease to equity by $296,000.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

|3. | Investment in Subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On November 1, 2001, the Company formed a joint venture to implement its desulfurization process throughout Europe. To initiate the
program, the company granted an exclusive technology license to Innovative Clean Technologies S.A.,
a Luxembourg corporation and wholly owned subsidiary of Eliop International. Eliop International
is a Luxembourg corporation that was owned 50.5% by the Company. These corporations are managed by Mr. Luigi Profumo, who controls Eliop, a major petroleum refinery
in Genoa, Italy. This investment was valued in 2001 based on the net book value of equipment provided
to the refinery in Italy under the licensing agreement with Innovative Clean Technologies S.A. (ICT).
Innovative Clean Technologies has not fulfilled the requirements of its license in that it has not
submitted the monthly reports along with the royalty payments envisioned in the agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The joint venture agreement was cancelled as of August 5, 2002. As of this date, ICT has no authority to represent the Company and demand has been made to return the Companys equipment valued at $221,771. The Company does not believe that the assets will be received.
The Company has written off the investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

- 16 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

|4. | Line of Credit                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                           
|   | In 2002 the Company negotiated a $500,000 revolving line of credit with Nevada State Bank at an interest rate of prime (4.25 percent), with the Chairman and CEO of the Company as the guarantor. The funds assisted the Company in meeting short-term cash flow requirements. The line of credit expired on May 24, 2003.

| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | At December 31, 2003 and 2002, the Company owed $-0- and $500,000, respectively, to Nevada State Bank
under the line of credit agreement.
| |                                                                                                                                          

|5. | Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Companys notes payable consist of the following as of December 31, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company has a $250,000 note due to a related party with an interest rate of 9.6 percent, and requires
monthly interest payments of $2,000. This note matures on March 1, 2004. Any unpaid accrued interest
will be due with the principal when the note matures. In 2003 the Company paid $24,000 of interest
on the note. The principal amount of $250,000 was still outstanding at December 31, 2003 (See Note
8).                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On December 30, 2003, the Company issued a $500,000 note to the Chairman and CEO and a $500,000 note
to a related party. From each of these notes, $250,000 was obtained before year end. The balance
of $250,000 for each note will be obtained when the Company needs it. Each note required 500,000
shares of the Companys common stock, in lieu of interest, to be delivered to the note holder
by January 15, 2004. The notes are due on demand. In January 2004 the Company issued 500,000 shares
to the Chairman and CEO and 500,000 shares to the related party. (See Note 8)
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|6. | Operating Lease                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                         
|   | In March 2003, the Company entered into a lease agreement on a location in Sparks, Nevada. In February
2004, the Company extended its lease term for one additional year to March 3, 2005. (See Note 14)

- 17 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | Following is a schedule of payments required under the rental lease agreement with the landlord, Dermody Industrial Group:
| | --------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                           

|2004                         |  |  | $ | 443,068 | 
|---------------------------- |  |  | - | ------- | 
|2005                         |  |  |   | 73,845  | 
|2006                         |  |  |   | -0-     | 
|2007                         |  |  |   | -0-     | 
|2008                         |  |  |   | -0-     | 
|After 2008                   |  |  |   | -0-     | 
|                             |  |  |   |        
|Total minimum lease payments |  |  | $ | 516,913 | 
|                             |  |  |   |        

| |                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In 2003, the Company was also obligated for the lease of another property from the Chairman and CEO
under a non-cancelable lease agreement. The lease required that the Company make payments until either
the lease term expired in February 2004, or the property was sold. The property sold in November
2003.
| |                                                                                                                                                                                                                                                                                                                  
| | The Company paid $427,138 and $78,315 for rent expense in 2003 and 2002, respectively.                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                  

|7. | Contingent Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company is currently the subject of an SEC investigation. The SEC alleges violations of Sections
5(a), 5(c) and 17(a) of the Securities Act of 1934 and Section 10(b) of the Securities Act of 1934
and Rule 10b-5 thereunder. The Company has retained counsel and has responded to the inquiry and
is awaiting response from the SEC. The outcome of the action is not determinable at this time. Any
such action could have a materially adverse effect on the Company.                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In November 2001, a former employee filed a complaint against the Company, claiming that an employment
agreement between the Company and the former employee had been breached. A settlement was reached
in February 2003. The former employee received the 2 million shares of common stock that were previously
cancelled when his employment ended with the Company. The Company was also required to pay $100,000
to the former employee on an installment basis. As of December 31, 2003, the Company owes $13,636.

- 18 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

|   | Financial instruments which potentially subject the Company to concentrations of credit risk consist mainly of cash equivalents. The Company maintains amounts on deposit with financial institutions which exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk.                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In December 2001, the Chairman and CEO of the Company borrowed $1,360,685 from the Company. The notes were payable upon demand and carried interest at the prime rate on the date of each note. At December 31, 2000, the Company had advances from the Chairman payable on demand with no interest in the amount of $100,000. The Chairman used the advances to offset the receivable and repaid the balance of the receivable during 2002.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In May 2002, the Company borrowed $500,000 under a line of credit at 4.23% from Nevada State Bank naming the Chairman and CEO as a guarantor of the loan. The line of credit matured in May 2003 (See Note 5).                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In August 2002, the Company issued a note to a related party at an interest rate of 9.6%. The note is due in March 2004. For the year ended 2003, the Company paid a total of $24,000 in interest and the balance of the note was $250,000 at December 31, 2003 (See Note
    4).                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In 2003, the Company leased property from the Chairman and CEO under a non-cancelable lease agreement. The rent paid to the Chairman in 2003, and 2002, was $71,500 and $78,315, respectively.                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In December 2003, the Company borrowed $250,000 from the Chairman and CEO (See Note 5).                                                                                                                                                                                                                                                                                                                                                     

- 19 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | In November 2003, the Company issued 2,173,913 shares of the Company stock at $0.23 per share to the
Chairman and CEO for $500,000 (See Note 9).                                                                                                                                                                                                    
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                     
| | In June 2003, the Company issued 50,000 shares at $0.32 per share for the services of a Director valued
at $16,000 (See Note 9).                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                     
| | In March 2003, the Company issued 50,000 shares at $0.33 per share to a director for cash of $16,500
(See Note 9).                                                                                                                                                                                                                                  
| |                                                                                                                                                                                                                                                                                                                                                     
| | In February 2003, the Company subscribed 50,000 shares of common stock to a director at $0.42 per share
for director services of $21,000. These shares were issued in March 2004. (See Note 14).                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                     
| | The Chairman and CEO was paid consulting fees of $300,000 and $250,000 in 2003 and 2002, respectively,
under an employment contract. The agreement is set to terminate on July 1, 2004.                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                     
| | In December 2003, the Company issued a $500,000 note to a related party. Upon signing the note, $250,000
of the principal was obtained, with the balance of $250,000 to be obtained upon demand by the Company
(See Note 5). In January 2004, the Company issued 500,000 shares to the related party in lieu of
interest on this note. (See Note 14)
| |                                                                                                                                                                                                                                                                                                                                                     

|9. | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Holders of common stock are entitled to one vote per share on all matters submitted to a vote of holders of common stock. The holders of common stock do not have cumulative voting rights. The election of directors is determined by a plurality of votes cast, and, except as otherwise required by law, the certificate of incorporation or bylaws, all other matters are determined by a majority of the votes cast. The common stock has no preemptive rights and is not convertible, redeemable or assessable. The holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the board out of legally available funds, subject to any preferential dividend rights of outstanding preferred stock. Upon any liquidation, dissolution or winding up of the Company, after
payment of all debts and liabilities, and after payment of any liquidation preferences of then outstanding preferred stock, the holders of common stock will be entitled to receive a portion of all remaining assets that are legally available for distribution. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of preferred stock which may be designated and issued in the future.

- 20 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | The Company has the authority, subject to certain limitations prescribed by law, to issue from time to time up to an aggregate of 10,000,000 shares of preferred stock in one or more classes or series and to determine the designation and the number of shares of any class or series as well as the voting rights, preferences, limitations and special rights, if any, of the shares of any class or series, including dividend rights, dividend rates, conversion rights and terms, redemption rights and terms, and liquidation preferences. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change of control. There are no shares of preferred stock outstanding, and the Company currently has no plans to issue any shares of preferred stock.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | In December 2003, one million common shares were subscribed for prepaid interest of $296,000 on related party notes. Also in December 25,000 shares of common stock were returned to the Company to cancel a subscription receivable of $37,300.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | In November 2003, the Company issued 2,173,913 shares of the Company stock at $0.23 per share to the Chairman and CEO for $500,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | In August 2003, 196,870 shares were returned to the Company to cancel part of a subscription receivable of $200,000. In September 2003, 3,130 shares were returned to the Company to cancel the balance of the subscription receivable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

- 21 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | In June 2003, the Company issued 50,000 shares at $0.32 per share for the services of a Director valued
at $16,000.                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                            
| | In March 2003, the Company issued 50,000 shares at $0.33 per share for cash of $16,500.                                                                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                            
| | In February 2003, the Company subscribed 50,000 shares of common stock to a director at $0.42 per share
for director services of $21,000. These shares were issued in March 2004. In February 2003, a subscription
of $3,575,000 was completed when a loan of $1,920,000 was forgiven, and cash of $1,655,000 was received.
| |                                                                                                                                                                                                                                                                                                                            

|10. | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based
Compensation. Accordingly, no compensation cost has been recognized for employees in the financial
statements. On February 17, 2003, Kirk S. Schumacher, President of the Company, was granted stock options to purchase 1,000,000 shares of the Companys stock at an exercise price of $.55 per share, expiring February 14, 2005. On May 8, 2003, Pat Lacy, Controller of the Company, was granted stock options to purchase 100,000 shares of the Companys common stock at an exercise price of $.35 per share, expiring May 8, 2005. Had compensation cost for the Companys stock options been determined based on the fair value
at the grant date for awards in 2003 and 2002, consistent with the provisions of SFAS No. 123, the
Companys net earnings and earnings per share would have been reduced to the pro forma amounts
indicated below:
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                             |  |  | 2003 |           
|---------------------------- |  |  | ---- | ----------
|                             |  |  |      |           
|Net loss  as reported       |  |  | $    | (3,069,353
|                             |  | 
|Net loss  pro forma         |  |  | $    | (3,087,376
|                             |  | 
|Loss per share  as reported |  |  | $    | (0.06     
|                             |  | 
|Loss per share  pro forma   |  |  | $    | (0.06     
|                             |  | 

- 22 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing
model with the following assumptions:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                     

|                                |  |  | 2003 |          
|------------------------------- |  |  | ---- | ---------
|                                |  |  |      |          
|Expected Dividend yield         |  |  | $    | -0-      
|Expected stock price volatility |  |  |      | 272      
|Risk free interest rate         |  |  |      | 4.00-4.65
|Expected life of options        |  |  |      | 3 years  

| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | The following table summarizes information about stock options outstanding at December 31, 2003:
| |                                                                                                 

|                                               |  |  | Shares |            | Weighted Average
      Exercise Price |  
|---------------------------------------------- |  |  | ------ | ---------- | ------------------------------------- | -
|                                               |  |  |        |           
|Options outstanding, beginning of year         |  |  |        | -0-        |                                       | $
|                                               |  | 
|Options exercised                              |  |  |        | -0-        |                                       | $
|Options granted                                |  |  |        | 1,100,000  |                                       | $
|                                               |  |  |        |           
|                                               |  | 
|Options outstanding, end of year               |  |  |        | 1,100,000  |                                       | $
|                                               |  |  |        |           
|Option price range at end of year              |  |  | $      | 0.35-$0.55 |                                       |  
|                                               |  | 
|                                               |  | 
|Weighted-average fair value of options Granted |  | 
|during the year                                |  |  | $      | 0.59       |                                       |  

| | There were no stock options outstanding at December 31, 2002.                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                  
| | The Company has a Non-Officer Limited Stock Appreciation Rights Plan. In August 2003 ten employees
were granted awards for 2,500 Limited Stock Appreciation Rights, each with a multiplier of eighteen,
at a base price of $0.24.
| |                                                                                                                                                                                                                                  

|11. | Stock Subscriptions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In September 2001, the Company issued 2,758,620 shares under a subscription agreement in which a third party agreed to place the shares with investors interested in assisting the Company in reaching its objectives. The shares were valued at $0.725 per share for a total value of $2,000,000. At December 31, 2002, the Company had received $1,116,000 in cash from the third party. In early 2003 another $75,000 was received. In April 2002, the Company requested that the third party immediately remit the balance of $737,000 or return 1,023,611 shares for cancellation. This dispute has not yet been resolved as of the report date (See Note 14).

- 23 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | As of December 31, 2003, the total stock subscription receivable was $812,000. Of this amount, $737,000
was in dispute and $75,000 was due from a third party. At December 31, 2002, the stock subscription
receivable was $4,624,500.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                       

|12. | Provision for Income Taxes                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                    
|    | The Company recognizes deferred tax liabilities and benefits for the expected future tax consequences
of events that have been included in the financial statements or tax returns.
|    |                                                                                                                                                                                    
|    | Deferred tax liabilities and benefits are recognized using enacted tax rates in effect for the year
in which the differences are expected to reverse.                              
|    |                                                                                                                                                                                    
|    | The following is a schedule of the composition of the provision for income taxes:                                                                                                  
|    |                                                                                                                                                                                    

|                                         |  |  | 2003 |     | 2002 |  
|---------------------------------------- |  |  | ---- | --- | ---- | -
|                                         |  |  |      |    
|Federal                                  |  |  |      |     |      |  
|Current                                  |  |  | $    | -0- |      | $
|Deferred                                 |  |  |      | -0- |      |  
|                                         |  |  |      |    
|Total provision for federal income taxes |  |  | $    | -0- |      | $
|                                         |  |  |      |    

| | Deferred tax benefits and liabilities are calculated using enacted tax rates in effect for the year
in which the differences are expected to reverse.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                      
| | Deferred income taxes consist of future tax benefits and liabilities attributable to:                                                                

|                                        |  |  | 2003 |             | 2002 |  
|--------------------------------------- |  |  | ---- | ----------- | ---- | -
|                                        |  |  |      |            
|Net operating loss carryforward         |  |  | $    | 18,032,199  |      | $
|                                        |  | 
|                                        |  |  |      |            
|Net deferred federal income tax benefit |  |  |      | 18,032,199  |      |  
|Valuation                               |  |  |      | (18,032,199 | )    |  
|                                        |  |  |      |            
|Total provision for income taxes        |  |  | $    | -0-         |      | $
|                                        |  |  |      |            

- 24 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

| | Reconciliation of the statutory federal income tax rate to the Companys effective tax rate is
as follows:
| | ----------------------------------------------------------------------------------------------------------

|                                               |  |  | December 31 |           
|---------------------------------------------- |  |  | ----------- | ----------
|                                               |  |  | 2003        |           
|                                               |  |  |             |           
|Net loss before taxes                          |  |  | $           | (3,069,353
|U.S. statutory rate                            |  |  |             | 34.00     
|                                               |  |  |             |           
|Change in deferred tax                         |  |  |             | 1,043,580 
|Change in deferred tax asset valuation account |  |  |             | (1,043,580
|                                               |  |  |             |           
|Total tax expense                              |  |  | $           | 0.00      
|                                               |  |  |             |           
|Effective tax rate                             |  |  |             | 0.0       
|                                               |  |  |             |           

| | The net change in the valuation account was $1,043,580 and $2,224,323, in the years ended December
31, 2003, and 2002, respectively. The valuation allowance has been estimated in an amount equal to
the projected future benefit of the loss carryforward because there is no assumption that the Company
will generate sufficient income to utilize the tax benefit. The Company has incurred losses since
its inception. The Company has unused net operating losses available for carryforwards of approximately
$18,032,199 that will start to expire in 2019.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|13. | Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                            
|    | Financial Accounting Standards Board SFAS No. 107, Disclosure About Fair Value of Financial Instruments
is a part of a continuing process by the FASB to improve information on financial statements. The
following methods and assumptions were used by the Company in estimating its fair value disclosures
for such financial instruments as defined by the Statement.
|    |                                                                                                                                                                                                                                                                                                                                                                            
|    | The carrying amounts reported in the balance sheets for accounts receivable approximate fair value
due to their short-term nature. Notes payable approximate fair value as their stated interest rates
approximate a market rate available to the Company.                                                                                                                 

- 25 -

---



SULPHCO, INC.
  
  (A Company in the Development Stage)
  NOTES TO FINANCIAL STATEMENTS
  
  December 31, 2003, and 2002

|14. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In January 2004, the Company issued 500,000 shares to the Chairman and 500,000 shares to a related
party in lieu of prepaid interest of $296,000 on the notes payable to them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Also in January 2004, the Company filed suit for the remittance of $737,000, the balance of the stock
subscription that is in dispute (See Note 11).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In February 2004, the Company extended their lease term for an additional one year to March 3, 2005
(See Note 6).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In March 2004, the Company issued the 50,000 shares subscribed at $0.42 per share to a director for
director fees of $21,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Also in March 2004, the Company retired the note payable to a related party in the amount of $250,000
(See Note 5).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In June 2004, the Company entered into two private placements. The first private placement was to sell
2,978,333 units. The units consist of 2,978,333 shares of common stock at $0.90 per share, warrants
exercisable at $1.125 per share for 1,073,217 shares of common stock, and additional investment rights
entitling the purchaser to purchase up to 6,132,667 shares of common stock at a purchase price of
$0.90, and a warrant to purchase up to 2,146,433 shares at $1.125 per share. The second private placement
was to sell 2,030,960 units. The units consist of 2,030,960 shares of common stock at $1.25 per share,
warrants exercisable at $1.5625 per share for 731,846 shares of common stock, and additional investment
rights entitling the purchaser to purchase up to 2,090,989 shares of common stock at $1.25 per share
and a warrant to purchase up to 1,463,692 shares at $1.5625 per share.

- 26 -

---



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

|Assigned Number |  | Description                                                                                                                 
|--------------- |  | ----------------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                             
|**(3)(i)        |  | Restated Articles of Incorporation of SulphCo, Inc. as filed on December 30, 2003 with the Nevada Secretary of State.       
|                |  |                                                                                                                             
|*(3)(ii)        |  | Amended and Restated By-laws of the Company.                                                                                
|                |  |                                                                                                                             
|*(10.1)         |  | Executive Employment Agreement dated as of February 17, 2003, by and between SulphCo, Inc. and Kirk S. Schumacher.          
|                |  |                                                                                                                             
|**(10.2)        |  | 2003 Non-Officer Limited Stock Appreciation Rights Plan.                                                                    
|                |  |                                                                                                                             
|**(14)          |  | Code of Ethics, adopted by the Board of Directors on March 12, 2004.                                                        
|                |  |                                                                                                                             
|(23.1)          |  | Consent of Mark Bailey & Co. Ltd.                                                                                           
|                |  |                                                                                                                             
|(23.2)          |  | Consent of Daniel J. Forbush, Certified Public Accountant.                                                                  
|                |  |                                                                                                                             
|(31.1)          |  | Certifications of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.                
|                |  |                                                                                                                             
|(31.2)          |  | Certifications of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.                
|                |  |                                                                                                                             
|(32.1)          |  | Certifications of CEO and CFO Pursuant to 18 U.S.C. §. 1350, as Adopted Pursuant to §.906 of the Sarbanes-Oxley Act of 2002.

|  
|--
|* 
|  
|**
|  

---



SIGNATURES

In accordance with Section 13 of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                 | SULPHCO, INC.
|---------------- | -------------
|                 |              
|February 8, 2005 | By           
|                 |              
|                 |              
|                 |              

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|SIGNATURE               |  | POSITION                            |  | DATE            
|----------------------- |  | ----------------------------------- |  | ----------------
|                        |  |                                     |  |                 
|/s/ Rudolf W. Gunnerman |  | Chairman of the Board of Directors, |  | February 8, 2005
|           |  | Chief Executive Officer             |  |                 
|Rudolf W. Gunnerman     |  | (Principal Executive Officer)       |  |                 
|                        |  |                                     |  |                 
|/s/ Alan L. Austin, Jr. |  | Vice President of Finance and CFO,  |  | February 8, 2005
|           |  | (Principal Financial and            |  |                 
|                        |  | Accounting Officer)                 |  |                 
|                        |  |                                     |  |                 
|                        |  | Director                            |  | February 8, 2005
|           |  |                                     |  |                 
|Richard L. Masica       |  |                                     |  |                 
|                        |  |                                     |  |                 
|/s/ Harry P. Holman     |  | Director                            |  | February 8, 2005
|           |  |                                     |  |                 
|Harry P. Holman         |  |                                     |  |                 
|                        |  |                                     |  |                 
|/s/ Loren J. Kalmen     |  | Director                            |  | February 8, 2005
|           |  |                                     |  |                 
|Loren J. Kalmen         |  |                                     |  |                 
|                        |  |                                     |  |                 

---