<PAGE>

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


                                   FORM 10-QSB

                                   -----------


{X}      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 for the quarterly period ended June 30, 2004.

{ }      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT for
         the transition period from _______ to ________.

                           Commission File No. 0-27599


                                  SULPHCO, INC.
                  ---------------------------------------------
                       (Name of the small business issuer)

         Nevada                                        88-0224817
------------------------                   ------------------------------------
(State of Incorporation)                   (I.R.S. Employer Identification No.)


                    850 Spice Islands Drive, Sparks, NV 89431
             -------------------------------------------------------
                     Address of principal executive offices)

                                 (775) 829-1310
                                -----------------
                           (Issuer's telephone number)

Number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 53,669,734 shares of common stock issued and
outstanding as of August 13, 2004.

Transitional Small Business Disclosure Format: Yes { } No {X}

<PAGE>
<TABLE>

                                     PART I

ITEM 1.  FINANCIAL STATEMENTS.

                                 SULPHCO, INC.
                      (A Company in the Development Stage)
                                 BALANCE SHEET
                                 -------------
                                  (Unaudited)
                                  -----------

                                     ASSETS
                                     ------
                                                                     June 30, 2004
                                                                     -------------
<S>                                                                  <C>
CURRENT ASSETS
--------------
   Cash                                                              $  2,251,007
   Related party accounts receivable
     (net of allowance for doubtful debts of $15,373)                      15,475
                                                                     -------------

    Total current assets                                                2,266,482
                                                                     -------------

PROPERTY AND EQUIPMENT
----------------------
  (net of accumulated depreciation of $575,611)                           179,216
                                                                     -------------

OTHER ASSETS
------------
  Deferred tax asset (net of valuation allowance of $6,689,018)                --
  Desulphurization prototype                                              427,630
  Deposits                                                                 36,822
                                                                     -------------

    Total other assets                                                    464,452
                                                                     -------------

      Total assets                                                   $  2,910,150
                                                                     =============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      -------------------------------------

CURRENT LIABILITIES
-------------------
  Accounts payable                                                   $    148,272
  Accrued expenses                                                         47,926
  Related party notes payable                                           1,000,000
                                                                     -------------

    Total current liabilities                                           1,196,198
                                                                     -------------


COMMITMENTS AND CONTINGENCIES                                                  --
                                                                     -------------

STOCKHOLDERS' DEFICIT
---------------------
  Common stock, $.001 par value, 100,000,000 shares authorized
   53,624,733 shares issued and outstanding                                53,625
  Additional paid-in-capital                                           22,293,908
  Interest prepaid via issuance of stock                                 (148,000)
  Stock subscriptions receivable                                         (812,000)
  Deficit accumulated during the development stage                    (19,673,581)
                                                                     -------------

Total stockholders' deficit                                             1,713,952
                                                                     -------------

Total liabilities and stockholders' deficit                          $  2,910,150
                                                                     =============
</TABLE>

    The Accompanying Notes are an Integral Part of the Financial Statements

                                       2
<PAGE>
<TABLE>

                                                          SULPHCO, INC.
                                               (A Company in the Development Stage)
                                                     STATEMENTS OF OPERATIONS
                                                     ------------------------


                                                                FOR THE SIX MONTHS ENDED          FOR THE THREE MONTHS ENDED
                                             INCEPTION         JUNE 30,           JUNE 30,         JUNE 30,        JUNE 30,
                                              TO DATE            2004               2003             2004              2003
                                           -------------     -------------     -------------     -------------     -------------
<S>                                        <C>               <C>               <C>               <C>               <C>
REVENUE
-------
  Sales                                    $     42,967      $         --      $         --      $         --      $         --
  Interest income                                39,309                --                --                --                --
                                           -------------     -------------     -------------     -------------     -------------

      Total revenue                              82,276                --                --                --                --

EXPENSES
--------

   Salary and wage expense                   (7,902,046)         (411,638)         (379,565)         (203,336)         (164,639)
   Director fees                             (4,702,000)               --           (18,500)               --           (18,500)
   General and administrative expenses       (4,555,048)         (697,843)         (481,068)         (342,630)         (212,915)
   Research and development expenses         (1,559,625)         (328,132)         (173,309)         (222,002)         (102,267)
   Depreciation expense                        (615,416)          (49,769)          (93,888)           (2,387)          (53,388)
                                           -------------     -------------     -------------     -------------     -------------

     Total expenses                         (19,334,135)       (1,487,382)       (1,146,330)         (770,355)         (551,709)

Loss from operations                        (19,251,859)       (1,487,382)       (1,146,330)         (770,355)         (551,709)
                                           -------------     -------------     -------------     -------------     -------------

Loss on disposal of assets                     (221,711)               --                --                --                --
                                           -------------     -------------     -------------     -------------     -------------

    Loss before interest expense
      and income taxes                      (19,473,570)       (1,487,382)       (1,146,330)         (770,355)         (551,709)

Interest expense                               (200,011)         (154,000)          (14,298)          (74,000)           (4,622)
                                           -------------     -------------     -------------     -------------     -------------

    Loss before income taxes                (19,673,581)       (1,641,382)       (1,160,628)         (844,355)         (556,331)

Provision for income taxes                           --                --                --                --                --
                                           -------------     -------------     -------------     -------------     -------------

    Net loss                               $(19,673,581)     $ (1,641,382)     $ (1,160,628)     $   (844,355)     $   (556,331)
                                           =============     =============     =============     =============     =============

Loss per share - basic and diluted         $      (0.60)     $      (0.03)     $      (0.02)     $      (0.02)     $      (0.01)
                                           =============     =============     =============     =============     =============

Weighted average - basic                     32,965,206        51,026,611        47,654,503        51,316,473        47,671,170
                                           =============     =============     =============     =============     =============

Weighted average - diluted                   33,025,341        52,488,091        47,654,503        53,439,431        47,671,170
                                           =============     =============     =============     =============     =============

                              The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>
                                                                3
<PAGE>
<TABLE>

                                                      SULPHCO, INC.
                                          (A Company in the Development Stage)
                                                STATEMENTS OF CASH FLOWS
                                                ------------------------
                                                      (Unaudited)
                                                      -----------

                                                               INCEPTION          JUNE 30,           JUNE 30,
                                                                TO DATE             2004               2003
                                                             -------------      -------------      -------------
<S>                                                          <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
   Net loss                                                  $(19,673,581)      $ (1,641,382)      $ (1,160,628)

Adjustments to reconcile net loss to net cash
used in operating activities:
  Depreciation expense                                            615,416             49,769             93,888
  Shares issued for services                                    5,693,668             85,000             16,000
  Shares issued for interest expense                               74,000             74,000                 --
  Increase in allowance for doubtful debts                         36,373             15,373                 --
  Increase in accounts receivable                                 (30,948)           (30,717)            (1,715)
  Decrease in related party receivable                          1,359,185                 --                 --
  (Increase) decrease in prepaid expenses                          75,501             84,973            (15,103)
  Decrease in accounts payable                                     97,307             71,053            (52,096)
  Increase in accrued liabilities                                  98,989             (4,769)           (14,320)
  Decrease in legal settlement                                         --            (13,636)           (45,455)
                                                             -------------      -------------      -------------

  Net cash used in operating activities                       (11,654,090)        (1,310,336)        (1,179,429)
                                                             -------------      -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
  Purchase of capital assets                                     (624,001)            95,136           (396,899)
  Investment in subsidiary                                       (220,086)                --                 --
  Payment of deposits                                             (36,822)                --            (28,669)
  Development of intangible assets                                (15,843)                --                 --
                                                             -------------      -------------      -------------

  Net cash provided by (used in) investing activities            (896,752)            95,136           (425,568)
                                                             -------------      -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
  Proceeds from issuance of stock                               9,225,674          2,335,474                 --
  Proceeds from exercise of stock options                         145,000            145,000             16,500
  Proceeds from stock subscriptions                             4,240,887                 --          3,575,000
  Proceeds from issuance of related party notes payable         4,170,000            500,000                 --
  Proceeds from issuance of line of credit                        750,000                 --                 --
  Return of capital                                              (118,427)                --                 --
  Principal payments on related party notes payable              (420,000)          (250,000)          (170,000)
  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                    14,801,849          2,730,474          2,921,500
                                                             -------------      -------------      -------------

  Net increase in cash and cash equivalents                     2,251,007          1,515,274          1,316,503

Cash and cash equivalents at inception,
  December 31, 2003 and 2002                                           --            735,733             13,574
                                                             -------------      -------------      -------------

Cash and cash equivalents at June 30, 2004 and 2003          $  2,251,007       $  2,251,007       $  1,330,077
                                                             =============      =============      =============


SUPPLEMENTAL INFORMATION AND NONCASH TRANSACTIONS
-------------------------------------------------
During the six months ended June 30, 2004, and 2003, $6,000 and $14,298 were
paid for interest, respectively, and no amounts were paid for income taxes.

In January 2004 one million subscribed shares were issued for interest expense
of $74,000 and prepaid interest of $222,000.

In March 2004 fifty thousand subscribed shares were issued for the services of a
director.


                        The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>

                                                           4
<PAGE>

                                  SULPHCO, INC.
                      (A Company in the Development Stage)
                    NOTES TO THE INTERIM FINANCIAL STATEMENTS
                    -----------------------------------------
                            June 30, 2004 (unaudited)


1.       BASIS OF PRESENTATION
         ---------------------
         The accompanying unaudited interim financial statements of Sulphco,
         Inc., (the "Company") have been prepared by the Company in accordance
         with generally accepted accounting principles in the United States of
         America, pursuant to the Securities and Exchange Commission rules and
         regulations. In management's opinion, all adjustments necessary for a
         fair presentation of the results for the interim periods have been
         reflected in the interim financial statements. The results of
         operations for any interim period are not necessarily indicative of the
         results for a full year. All adjustments to the financial statements
         are of a normal recurring nature.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted. Such disclosures
         are those that would substantially duplicate information contained in
         the most recent audited financial statements of the Company, such as
         significant accounting policies and stock options. Management presumes
         that users of the interim statements have read or have access to the
         audited financial statements and notes thereto included in the
         Company's most recent annual report on Form 10-KSB.

2.       INTEREST PREPAID VIA ISSUANCE OF STOCK
         --------------------------------------
         In January 2004 the Company issued one million shares of common stock
         in lieu of interest for two loans totaling $1,000,000. At June 30, 2004
         the prepaid interest balance was $148,000. The prepaid interest is
         amortized over one year (the life of the loan). (See Note 4).

3.       RELATED PARTY TRANSACTIONS
         --------------------------
         In March 2004 the Company issued 50,000 shares of subscribed common
         stock to a director at $0.42 per share for director services in the
         prior year.

         An officer was paid consulting fees of $75,000 during the quarter,
         under an employment contract. The agreement is set to terminate on July
         1, 2004.

                                       5
<PAGE>

                                  SULPHCO, INC.
                      (A Company in the Development Stage)
                    NOTES TO THE INTERIM FINANCIAL STATEMENTS
                    -----------------------------------------
                            June 30, 2004 (unaudited)


         The Company had outstanding at June 30, 2004, a $500,000 note due to a
         related party, as well as a $500,000 note payable to an officer. The
         Company issued 500,000 shares to each, the related party and officer,
         in lieu of interest on these notes resulting in an interest rate of
         29.6%.

4.       CAPITAL STOCK
         -------------
         In January 2004 one million subscribed common shares were issued for
         prepaid interest of $296,000. (See Note 3).

         Also in January 2004 one hundred thousand shares were issued at $0.85
         per share for consulting services valued at $85,000.

         In March 2004 fifty thousand subscribed common shares were issued for
         Director services valued in the prior year at $21,000.

         In June 2004 the Company entered into two private placements. The first
         private placement was to sell 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 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. The investors
         purchased 2,504,650 units of shares for $2,335,477 net of offering
         costs of $274,126. Each unit consists of one share of common stock, a
         warrant entitling the purchaser to purchase 0.35 shares of common
         stock, and an additional investment right entitling the purchaser to
         purchase up to one additional share and a warrant to purchase up to
         0.70 shares.

5.       STOCK OPTIONS
         -------------
         During the three months ended June 30, 2004, stock options were
         exercised for 300,000 shares of common stock for $145,000.

                                       6
<PAGE>

                                  SULPHCO, INC.
                      (A Company in the Development Stage)
                    NOTES TO THE INTERIM FINANCIAL STATEMENTS
                    -----------------------------------------
                            June 30, 2004 (unaudited)


6.       COMMITMENTS AND CONTINGENCIES
         -----------------------------
         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.

         There are various claims pending against the Company arising in the
         normal course of the Company's business. Although the amount of
         liability at June 30, 2004, cannot be ascertained, management is of the
         opinion that any resulting liability will not materially affect the
         Company's financial position.

         In January 2004 the Company filed suit against a former director and
         their former stock transfer agent for the remittance of $737,000 for
         the balance of a stock subscription payable to the Company.

7.       SUBSEQUENT EVENTS
         -----------------
         In August 2004 the Company entered into a Collaboration Agreement with
         ChevronTexaco Energy Technology Co., to further evaluate and develop
         the Company's ultrasound technology.


                                       7
<PAGE>

ITEM 2.  PLAN OF OPERATION.

OUR BUSINESS

         We are engaged in the business of developing and commercializing our
patented and proprietary technology for the reduction of the sulfur content of
crude oils and petroleum products, and the "upgrading" of crude oil by reducing
its density. Our patented and proprietary process is based upon the novel use of
high power ultrasonics - the application of high energy, high frequency sound
waves - to effect beneficial changes in the chemical composition in crude oil
and other petroleum streams. Originally developed by us for low cost
desulfurization of diesel fuel, our development efforts have expanded to include
the desulfurization of crude oil and the "upgrading" of crude oil by reducing
its density. Our process is expected to provide a highly cost-effective
alternative or supplement to conventional refinery processes currently used to
remove sulfur from crude oil. We also believe that our process is unique by
reason of its ability to desulfurize and upgrade crude oil prior to entering the
traditional refinery process.

         We have developed and demonstrated a prototype in a laboratory setting
using a revolutionary low pressure, low temperature process that uses high power
ultrasound to reduce the sulfur content of crude oil and other petroleum
streams. We have been developing and testing our desulfurization technologies
since January 1999. Testing has been done through in-house facilities,
independent laboratories, and more recently by ChevronTexaco Energy Technology
Co., a unit of ChevronTexaco Corp. To date, our testing has been limited to
samples produced by laboratory prototypes which process one to ten gallons of
crude oil in a laboratory setting. Recent laboratory testing has also
demonstrated the ability of our process to upgrade crude oils through the
conversion of certain heavy components of petroleum to lighter components. We
are also investigating the potential additional "upgrading" benefit our process
may have through the reduction of nitrogen, acids, salts and certain metals in
crude oil.

         We have completed the design and fabrication of a pre-production
prototype of a continuous flow desulfurization unit (deSN(TM) unit) which is
intended to process up to 1,000 bbl per day. This unit has been placed at
ChevronTexaco Product Company's refinery in El Segundo, California, and is
awaiting final installation and testing, which is expected to occur in the first
half of 2005. We have also begun the design of a production scale deSN(TM) unit
which is intended to process 25,000 or more bbl per day. We intend to construct
this unit at our facilities following successful testing of our 1,000 bbl per
day unit and receipt of an initial customer order.

         We are continuing to develop ultrasound technology to help provide the
high power ultrasound necessary to our process. Our ultrasound technology is
intended to increase the ultrasonic intensity generated within our
desulfurization units and to improve on existing commercially available
ultrasound technologies.

         The market for our technology and our desulfurization units is expected
to be crude oil producers and refiners. Crude oil price differentials are driven
largely by both sulfur content and crude oil density. These price differentials
reflect the relative economic value of crude oil to the ultimate consumer of
most crude oil, the oil refiner. Because our technology is expected to both
reduce sulfur content and reduce crude oil density at a significantly reduced
cost, the successful commercialization of our technology can be expected to
produce significant economic benefits to our future customers.

         RECENT DEVELOPMENT AND TESTING ACTIVITIES

         We have been developing our desulfurization technologies on an ongoing
basis since January 1999. Testing has been done through in-house facilities,
independent laboratories, and more recently by ChevronTexaco Energy Technology
Co., a unit of ChevronTexaco Corp. To date, such testing has been limited to
samples produced by prototypes which have processed from one to ten gallons of
crude oil in a laboratory setting. Beginning in mid-2002 our development
activities have centered around re-designing, upgrading and testing of
laboratory scale prototypes utilizing more powerful ultrasonic generators, and
redesigning these prototypes to accommodate the more powerful generators.
Substantially all of the development work to date has been conducted by SulphCo
personnel.

         More recently we conducted laboratory testing of our prototypes at our
facilities from May 2004 through July 2004, which testing was observed from time
to time by ChevronTexaco Energy Technology Co., a unit of ChevronTexaco Corp.,
and we generated sample materials for their analysis. The testing gave positive
indication to both parties that there was sufficient sulfur removal and increase


                                       8
<PAGE>

in the amount of lighter petroleum components in the crude oil to justify a
joint collaboration to bring our technology to a stage of development suitable
for a refinery test of our 1,000 bbl per day pre-production prototype and for
eventual large scale commercial use. Accordingly, on August 6, 2004, we entered
into a Collaboration Agreement with ChevronTexaco Energy Technology Co. to
engage in joint activities to further evaluate, develop and commercialize our
proprietary ultrasound technology. Our 1,000 bbl unit has been placed at
ChevronTexaco Product Company's refinery in El Segundo, California, and is
awaiting final installation and testing. We expect final installation and
testing of the unit at this refinery to commence in the first half of 2005.

         We are in the process of building a more powerful ultrasonic system for
utilization in our prototypes, which we believe will be more powerful than
ultrasonic systems currently available for purchase from third parties. We
intend to retrofit our existing 1,000 bbl pre-production unit with this system
when it is completed. The retrofit is expected to occur while the 1,000 bbl unit
is being installed within the El Segundo, California refinery.

         We are currently in the process of designing a desulfurization unit
intended to process 25,000 or more bbl per day and we expect to complete
remaining design and engineering work by October 2004. We estimate that
following completion of the remaining design and engineering work construction
of the initial 25,000 bbl prototype could be completed in approximately 45 days.
However, we do not intend to commence construction of this unit until we receive
an order from a customer. We expect that this activity will be coordinated with
ChevronTexaco Energy Technology Co. under our Collaboration Agreement with them.
We cannot assure you that we will be successful in completing the 25,000 bbl
unit or when or if we will receive any customer orders for this unit.

PLAN OF OPERATION DURING THE NEXT 12 MONTHS

          During the next 12 months we intend to continue development and
commercialization activities currently underway and to explore new activities,
pursuant to the Collaboration Agreement entered into on August 6, 2004, with
ChevronTexaco Energy Technology Co. In this regard:

         o        We recently completed the development and fabrication of a
                  pre-production desulfurization unit which is expected to
                  process up to 1,000 bbl per day. This unit has been delivered
                  to ChevronTexaco Products Company's El Segundo, California
                  refinery for refinery testing, which is expected to occur in
                  the first half of 2005. If the refinery testing of the 1,000
                  bbl per day desulfurization unit is successful, we intend to
                  construct a larger desulfurization unit which will process
                  25,000 or more bbl per day of crude oil.

         o        We expect to complete to complete remaining design and
                  engineering work for a 25,000 bbl per day unit on or about
                  October 2004. Once the design and engineering work for the
                  25,000 bbl unit is fully developed and tested, and subject to
                  satisfactory refinery testing of the 1,000 bbl unit, we intend
                  to manufacture the initial 25,000 bbl unit following receipt
                  of a customer order. We estimate that we will require
                  approximately 45 days to manufacture the initial 25,000 bbl
                  unit, which we intend to fabricate at our facility in Sparks,
                  Nevada.

         o        We plan to engage in ongoing development and testing
                  activities in collaboration with ChevronTexaco during the next
                  12 months, including laboratory testing at ChevronTexaco's
                  facilities, intended to demonstrate the commercial potential
                  of our technology and optimize the technology for use in a
                  commercial setting.

         The precise timing of the activities under the Collaboration Agreement
(and any additional agreements) over the next 12 months and beyond cannot be
predicted with certainty, as they are dependent upon the timing of completion of
development and commercialization milestones and the requirements of our
collaborative partner.

                                       9
<PAGE>

LIQUIDITY AND FINANCIAL RESULTS

         As of August 12, 2004, we had $1,723,077 in available cash reserves. As
we are a development stage company, we have not generated any material revenues
since we commenced our current line of business in 1999, and we do not
anticipate generating any material revenues unless and until a licensing
agreement, sale of an initial production scale unit or other commercial
arrangement is entered into with respect to our technology.

         As of June 30, 2004, we had an accumulated deficit of approximately
$19.7 million which includes approximately $5.7 million of stock-based
compensation expense, and we incurred losses of $1,641,382 in the six month
period ending June 30, 2004 (which includes approximately $85,000 of stock based
compensation). These losses are principally associated with the research and
development of our desulfurization and upgrading technologies, development of
pre-production prototypes and related marketing activity, and we expect to
continue to incur expenses in the future for development, commercialization and
sales and marketing activities related to the commercialization of our
technologies.

         Our current monthly cash outflow, or cash burn rate, is approximately
$200,000 per month for fixed and normal recurring expenses, as follows:

         Salaries and related payroll costs                      $84,000
         Consulting contract                                      40,000
         Plant and property leases                                37,000
         Professional fees                                        22,000
         Office, phone, utilities                                  5,000
         Patent renewal and maintenance                            6,000
         Travel and entertainment                                  6,000
                                                                --------
                        Total                                   $200,000
                                                                --------

         We intend to continue to incur expenditures during the next 12 months
for development of the deSN(TM) units. These expenditures will relate to the
design of the deSN(TM) units which is included in the monthly cash outflow
described above. Additional funding requirements during the next 12 months may
arise upon the placement of an order for one or more deSN(TM) units. We intend
that the funding for the cost to manufacture of any particular unit would be
available from a customer before we commence manufacture of the unit. Our
preliminary estimates of the cost of a deSN(TM) unit range from $2 million to $4
million. However, there is no assurance that our cost estimates will be accurate
or that we will receive funds received prior to the commencement of manufacture
sufficient to manufacture this unit.

         Under the Collaboration Agreement entered into with ChevronTexaco
effective August 6, 2004, each party is required to bear its own expenses in
connection with the activities conducted and proposed to be conducted under such
agreement.

         In the past we have financed our research and development activities
primarily through debt and equity financings from our principal shareholder,
Rudolf W. Gunnerman. In June 2004 we conducted two private placements with
institutional and other third party investors for the sale of units consisting
of our common stock, warrants, and rights to acquire additional stock and
warrants, generating net cash proceeds of approximately $2.4 million. The
commitment made by Rudolf W. Gunnerman, the Chairman and CEO of the Company, in
April 2004 to fund up to an additional $2,000,000 in loans to the Company, of
which $250,000 had been advanced in June 2004, has now been repaid, and the
commitment by Dr. Gunnerman has been superseded by funding received by the
Company in June 2004 from these two private placements.

         THE JUNE 3, 2004 PLACEMENT. Pursuant to a securities purchase agreement
effective June 3, 2004, between our company and accredited investors, we agreed
to issue and sell to 22 of the selling security holders approximately 2.98
million units, at $0.90 per unit. Each unit in the June 3 placement has a
purchase price of $0.90 and consists of one share of common stock, a warrant
entitling the purchaser to purchase 0.35 shares of common stock at $1.125 per
share for each share acquired, and an additional investment right entitling the
purchaser to purchase up to two additional shares at a purchase price of $0.90
per share and a warrant to purchase up to 0.35 shares at $1.125 per share for
each additional share acquired under the additional investment right. The


                                       10
<PAGE>

securities purchase agreement provided for the sale of one-half of the 2.98
million units to these purchasers on June 3, 2004, and we received aggregate
gross cash proceeds of $1.34 million, before deduction of selling expenses of
approximately $91,367. Under the terms of the June 3 placement the investors
have the right to purchase up to the remaining unpurchased 1.49million of units
at any time prior to October 31, 2004, and we have the right (subject to
customary closing conditions) to require the investors to purchase these
additional 1.49 million of units within 5 days of the announcement of our entry
into a collaboration agreement with a major international oil producer on terms
satisfactory to a majority of the investors. On August 9, 2004, we issued a
public announcement of our entry into a Collaboration Agreement with
ChevronTexaco on August 6, 2004. As of the date of this report we have not been
advised by a majority of the investors that the terms of the Collaboration
Agreement are satisfactory to them. Accordingly, we have no assurances that the
investors will purchase the remaining unpurchased units prior to the expiration
of these rights on October 31, 2004. As of the date of this report one of the
investors has exercised his right to acquire his remaining 22,500 unpurchased
units, resulting in proceeds to us of $20,250.

         JUNE 15, 2004 PLACEMENT. Pursuant to a securities purchase agreement
effective June 15, 2004, between our company and accredited investors, we agreed
to issue and sell to each of the investors in the June 3 placement and seven
other accredited investors approximately 2.03 million units, at $1.25 per unit.
Each unit in the June 15 placement has a purchase price of $1.25 and consists of
one share of common stock, a warrant entitling the purchaser to purchase 0.35
shares of common stock at $1.5625 per share for each share acquired, and an
additional investment right entitling the purchaser to purchase up to one
additional share at a purchase price of $1.25 per share and a warrant to
purchase up to 0.70 shares at $1.5625 per share for each additional share
acquired under the additional investment right. The securities purchase
agreement provided for the sale of one-half of the 2.03 million of units to
these purchasers on June 15, 2004, and we received aggregate gross cash proceeds
of approximately $1.27 million, in each case, before deduction of selling
expenses of approximately $87,542. Under the terms of the June 15 placement the
investors have the right to purchase up to the remaining unpurchased 1.02
million of units at any time prior to October 31, 2004, and until October 31,
2004 we have the right (subject to customary closing conditions) to require the
investors to purchase these additional 1.02 million of units within 5 days of
the announcement of our entry into a collaboration agreement with a major
international oil producer on terms satisfactory to a majority of the investors.
On August 9, 2004, we issued a public announcement of our entry into a
Collaboration Agreement with ChevronTexaco on August 6, 2004. As of the date of
this report we have not been advised by a majority of the investors that the
terms of the Collaboration Agreement are satisfactory to them. Accordingly, we
have no assurances that the investors will purchase the remaining unpurchased
units prior to the expiration of these rights on October 31, 2004. As of the
date of this report one of the investors has exercised his right to acquire his
remaining 15,000 unpurchased units, resulting in proceeds to us of $18,750.

         The additional investment rights we issued in connection with the June
3 and June 15 placements are exercisable at any time from the date of their
issuance 180 trading days from the date an SEC registration statement covering
the resale of the private placement shares becomes effective.

         The warrants we issued or which may be issued in connection with the
June 3 and June 15 placements upon exercise of the additional investment rights
are exercisable for a period of 30 months commencing on their date of issuance.
In addition to anti-dilution provisions providing for proportionate adjustments
in the event of stock splits, stock dividends, reverse stock splits and similar
events, the exercise price of the warrants is subject to downward adjustment
upon the issuance by us of common stock or securities convertible into common
stock at a price per share of less than the then current exercise price. Payment
of the exercise price of the warrants may be made, at the option of the warrant
holder, either in cash or by a "cashless exercise." Upon a cashless exercise, in
lieu of paying the exercise price in cash, the warrant holder would receive
shares of common stock with a value equal to the difference between the market
price (the average of the closing prices of the common stock for the five
trading days immediately preceding the exercise date) at the time of exercise
and the then current exercise price multiplied by the number of shares so
exercised.

         We anticipate that our existing capital resources will be sufficient to
fund our cash requirements through at least April 2005 from cash presently on
hand, based upon our current levels of expenditures and anticipated needs during
this period. However, additional financing will be required in order to meet our
working capital requirements by April 2005 or to complete the manufacture of a
25,000 bbl unit. The extent and timing of our future capital requirements will
depend primarily upon the rate of our progress in the development and
commercialization of our technologies, and our ability to maintain our
collaborative arrangement with ChevronTexaco.

                                       11
<PAGE>

         To date we have generated no material revenues from our business
operations. We are unable to predict when or if we will be able to generate
revenues from commercial activities or the amounts expected from such
activities. These revenue streams may be generated by us or in conjunction with
collaborative partners or third party licensing arrangements, and may include
provisions for one-time, lump sum payments in addition to ongoing royalty
payments or other revenue sharing arrangements. However, we presently have no
commitments for any such payments.

         Sources of additional capital include proceeds from future closings of
the two June 2004 private placements, the exercise of additional investment
rights and warrants issued or which may be issued in the future to investors in
the June 2004 private placements, and funding through future collaborative
arrangements, licensing arrangements and debt and equity financings. We do not
know whether additional financing will be available when needed, if at all. If
we cannot raise funds on acceptable terms, we may not be able to successfully
commercialize our technologies, take advantage of future opportunities or
respond to unanticipated requirements. If we are unable to secure such
additional financing when needed, we will have to curtail or suspend all or a
portion of our business activities and we could be required to cease operations
entirely. Further, if we issue equity securities, our shareholders may
experience severe dilution of their ownership percentage.

RESEARCH AND DEVELOPMENT

         We intend to continue our research and development program during the
next 12 months in order to expand the development of the design of commercial
desulfurization units which embody our proprietary technology. Management
anticipates that our research and development costs will be approximately
$50,000 per month or $600,000 during the next 12 months. The $50,000 anticipated
monthly expenditure for research and development is included within our current
monthly cash outflow, or cash burn rate, of approximately $200,000 per month for
fixed and normal recurring expenses, as described above.

EMPLOYEES

          As of August 13, 2004, the Company had 13 full-time employees and a
consulting agreement with RWG, Inc., an affiliate of Rudolf W. Gunnerman our
chairman and CEO, for the full-time services of Dr. Gunnerman. One of our
directors also provides tax accounting services on a non-exclusive basis. We do
not expect any material changes in the number of our employees during the next
12 months.

FORWARD-LOOKING STATEMENTS

         Statements contained in this Item and elsewhere in this report that are
not historical facts are forward-looking statements, as that term is defined by
the Private Securities Litigation Reform Act of 1995. Although we believe that
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause results to differ from those projected. We caution investors that any
forward-looking statements made by us are not guarantees of future performance
and that actual results may differ materially from those in the forward-looking
statements. Such risks and uncertainties include, without limitation: well
established competitors who have substantially greater financial resources and
longer operating histories, risks inherent in the development and
commercialization of new technologies, changes in the regulatory environment in
which we compete, and access to sources of capital.

ITEM 3.  CONTROLS AND PROCEDURES.

         The Company maintains disclosure controls and procedures designed to
ensure that information required to be disclosed in reports filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the specified time periods. As of the end of the period
covered by this report, the Company's Chief Executive Officer and Chief
Financial Officer evaluated, with the participation of the Company's management,
the effectiveness of the Company's disclosure controls and procedures. Based on
the evaluation, which disclosed no significant deficiencies or material
weaknesses, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There were no changes in the Company's internal control over financial reporting
that occurred during the Company's most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                       12
<PAGE>

                                     PART II

ITEM 1.  LEGAL PROCEEDINGS.

         We are not party to any material legal proceedings, except as set forth
in our Form 10-KSB filed on March 29, 2004, which is incorporated by reference.

ITEM 2.  CHANGES IN SECURITIES.

         On June 5, 2004, we completed the initial closing of the first of two
private placements of our securities. We received proceeds of $1,183,750 (net of
finders fees and offering expenses) for the sale of 1,489,171 units of our
securities. Each unit in the first private placement has a purchase price of
$0.90 per unit and consists of one share of common stock, a warrant entitling
the purchaser to purchase 0.35 shares of common stock at $1.125 per share, and
an additional investment right entitling the purchaser to purchase up to two
additional shares at a purchase price of $0.90 and a warrant to purchase up to
0.35 shares at $1.125 per share. The additional investment rights are
exercisable by the investors at any time until 180 trading days following the
effective date of our pending SB-2 registration statement. The warrants are
exercisable for up to 30 months following the date of issuance.

         On June 15, 2004, we completed the initial closing of the second of two
private placements of our securities. We received proceeds of $1,221,619 (net of
finders fees and offering expenses) for the sale of 1,015,450 units of our
securities. Each unit in the second private placement has a purchase price of
$1.25 per unit and consists of one share of common stock, a warrant entitling
the purchaser to purchase 0.35 shares of common stock at $1.5625 per share, and
an additional investment right entitling the purchaser to purchase up to one
additional share at a purchase price of $1.25 and a warrant to purchase up to
0.70 shares at $1.5625 per share. The additional investment rights are
exercisable by the investors at any time until 180 trading days following the
effective date of our pending SB2 registration statement. The warrants are
exercisable for up to 30 months following the date of issuance.

         Vantage Investments Group, Inc. ("Vantage") and Olympus Securities, LLC
("Olympus"), provided services to the Company in connection with the two private
placements. In addition to a cash fee of $179,942 for the two offerings, Vantage
and Olympus also split equally 46,200 warrants at $1.125 per share and 88,000 of
the additional investment rights issued in the first private placement which
entitle the holder to purchase up to two additional shares at a purchase price
of $0.90 and a warrant to purchase up to 0.35 shares at $1.125 per share, and
31,515 warrants at 1.5625 per share and 30,015 of the additional investment
rights issued in the second private placement which entitle the holder to
purchase up to one additional share at a purchase price of $1.25 and a warrant
to purchase up to 0.70 shares at $1.5625 per share.

         All of the shares issued pursuant to the two private placements were
issued in reliance on the exemption from registration contained in Section 4(2)
of the Securities Act of 1933, as amended, and Regulation D thereunder, and the
certificates representing such shares bear a restrictive legend reflecting the
limitations on future transfer of those shares. Each of the participants in the
offerings represented to the Company that they were accredited investors within
the meaning of Regulation D and are believed by the Company to be sophisticated
investors who had access to relevant information regarding the Company. Pursuant
to the terms of the securities purchase agreements and fee agreements with
Vantage and Olympus, we were contractually obligated to file a Form SB-2
registration statement relating to the resale of all of the common stock covered
by the units which we filed on July 1, 2004, and to cause such registration
statement to become effective and to thereafter maintain its effectiveness. In
the event we are delinquent in any of our registration obligations, including a
requirement that the registration become effective within 90 days of the
applicable closing date of the private placements, we could be liable for
payment of a late fee of 2% of the aggregate purchase price paid for the units
for each month of delinquency.

         On June 30, 2004, Kirk S. Schumacher, our President, Secretary and a
Director, exercised 200,000 of the 1,000,000 options granted to him pursuant to
his employment agreement dated February 23, 2003, and Patrick E. Lacy, our
Controller, Treasurer and a Director, exercised all 100,000 options granted to
him pursuant to a stock option agreement dated to be effective as of May 8,
2003. The exercise price for the 200,000 shares exercised by Mr. Schumacher was
$0.55 per share resulting in proceeds of $110,000 to us and the exercise price
for the 100,000 shares exercised by Mr. Lacy was $0.35 per share resulting in
proceeds of $35,000 to us. The employees exercised their options in reliance
upon Section 4(2) of the Securities Act of 1933, because they were officers of
the Company who are knowledgeable, sophisticated and had access to relevant
information regarding the Company.

                                       13
<PAGE>

         On July 19, 2004, we issued 45,000 shares of our common stock to
InteSec Group, LLC for its consulting services with respect to U.S. government
grants. All of the shares issued to InteSec Group, LLC were issued in reliance
on the exemption from registration contained in Section 4(2) of the Securities
Act of 1933, as the purchaser was an accredited investor who was sophisticated
and had access to information regarding the Company. The certificates
representing such shares bear a restrictive legend reflecting the limitations on
future transfer of those shares

ITEM 3.  SUBMISSION OF MATTER TO A VOTE OF THE SECURITIES HOLDERS.

         No matter was submitted during the quarter covered by this report to a
vote of the securities holders through the solicitation of proxies or otherwise.

ITEM 4.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits.

         4.1+     Form of Additional Investment Rights initially issued on June
                  3, 2004.

         4.2++    Form of Additional Investment Rights initially issued on June
                  15, 2004.

         4.3+     Form of Warrant initially issued on June 3, 2004.

         4.4++    Form of Warrant initially issued on June 15, 2004.

         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.

         10.3+    Securities Purchase Agreement dated as of June 1, 2004, by and
                  between SulphCo, Inc. and the Purchasers parties thereto.

         10.4++   Securities Purchase Agreement dated as of June 14, 2004, by
                  and between SulphCo, Inc. and the Purchasers parties thereto.

         10.5     Stock Option Agreement dated to be effective as of May 23,
                  2003, between SulphCo, Inc. and Patrick E. Lacy.

         10.6     Letter dated April 28, 2004 from Rudolf W. Gunnerman to the
                  Board of Directors of SulphCo, Inc. regarding his financing
                  commitment.

         31.1     Certification of Chief Executive Officer pursuant to Rule
                  13a-14 under the Securities Exchange Act of 1934.

         31.2     Certification of Chief Financial Officer pursuant to Rule
                  13a-14 under the Securities Exchange Act of 1934.

         32.1     Certification of CEO and CFO Pursuant to 18 U.S.C.ss.1350, as
                  Adopted Pursuant toss.906 of the Sarbanes-Oxley Act of 2002.

                                       14
<PAGE>

----------------
* Incorporated by reference from the registrant's Annual Report on Form 10-KSB
(SEC File No. 333-27599) as filed with the SEC on March 29, 2004.

** Incorporated by reference from the registrant's Form 10-QSB for the quarter
ended March 31, 2003 (SEC File No. 27599) as filed with the SEC on May 14, 2003.

+ Incorporated by reference from the registrant's Form 8-K (SEC File No. 27599)
as filed with the SEC on June 4, 2004.

++ Incorporated by reference from the registrant's Form 8-K (SEC File No. 27599)
as filed with the SEC on June 16, 2004.

+++ Incorporated by reference from the registrant's Form 10-QSB for the quarter
ended March 31, 2004, (SEC File No. 27599) as filed with the SEC on May 17,
2004.

(b)      Reports on Form 8-K.

(1) On June 4, 2004, we filed a Current Report on Form 8-K under Items 5 and 7
to report the sale of up to $2.6 million of units of our securities in a private
placement pursuant to the securities purchase agreements with certain
institutional and individual investors, including filing the form of the
securities purchase agreement, warrant and additional investment rights, as well
as the related press release.

(2) On June 16, 2004, we filed a Current Report on Form 8-K under Items 5 and 7
to report the sale of up to $2.5 million of units of our securities in a private
placement pursuant to the securities purchase agreements with certain
institutional and individual investors, including filing the form of the
securities purchase agreement, warrant and additional investment rights, as well
as the related press release.


                                       15
<PAGE>

                                   SIGNATURES

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

Dated:  August 16, 2004                  SULPHCO, INC. (Registrant)


                                         /s/ Rudolf W. Gunnerman
                                         --------------------------
                                         By: Rudolf W. Gunnerman
                                         Its: Chairman of the Board of Directors
                                         and Chief Executive Officer


                                         /s/ Michael A. Abend
                                         --------------------------
                                         By: Michael A. Abend
                                         Its: Interim Controller and Treasurer
                                         (Principal Financial and
                                         Accounting Officer)



                                       16