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 September
                30,
                2005.





o
              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)





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 filing requirements for the past 90 days. Yes x  No o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x





Number
      of
      shares outstanding of each of the issuer's classes of common equity, as of
      the
      latest practicable date: 56,807,045 shares of common stock issued and
      outstanding as of September 30, 2005.





Transitional
      Small Business Disclosure Format: Yes o No x









**PART
      I**


**Item
      1. Financial Statements** .




SULPHCO,
      INC.


(A
      Company in the Development Stage)


BALANCE
      SHEET


September
      30, 2005


(unaudited)


**September
                30, 2005****Current
                Assets:**Cash
                and cash equivalents
            
            $
            6,245,996Prepaid
                expenses
            
            
            53,842Total
                current assets
            
            
            6,299,838**Property
                and Equipment (net of accumulated depreciation of
                $767,181)**
            
            
            524,460**Other
                Assets**Deferred
                tax asset (net of valuation allowance of $9,805,937)
            
            
            –Intangible
                assets (net of accumulated amortization of $9,774)
            
            
            324,341Other
            
            
            36,822Total
                other assets
            
            
            361,163Total
                assets
            
            $
            7,185,461**Current
                Liabilities**Accounts
                payable
            
            $
            281,377Unearned
                revenue
            
            
            550,000Accrued
                liabilities
            
            
            337,246Related
                party accrued interest
            
            
            207,657Accrued
                late registration fees
            
            
            760,240Short
                term note payable
            
            
            24,771Related
                party notes payable
            
            
            1,000,000Total
                current liabilities
            
            
            3,161,291**Long
                Term Related Party Note Payable**
            
            
            7,000,000**Commitment
                and Contingencies**
            
            
            –Total
                liabilities
            
            
            10,161,291**Stockholders'
                Equity**Preferred
                stock: 10,000,000 shares authorized($0.001
                par value) none issued
            
            
            –Common
                stock: 100,000,000 shares authorized($0.001
                par value) 56,807,045 sharesissued
                and outstanding at September 30, 2005
            
            
            56,807Paid
                in capital
            
            
            26,548,273Prepaid
                expense via stock issuance
            
            
            –Stock
                subscription receivable
            
            
            (744,500
            )Deficit
                accumulated during the development stage
            
            
            (28,836,410
            )Total
                stockholders' equity
            
            
            (2,975,830
            )Total
                liabilities and stockholders' equity
            
            $
            7,185,461




The
      Accompanying Notes are an Integral Part of the
      Financial Statements


-2-




SULPHCO,
        INC.
 (A
        Company in the Development Stage)
 STATEMENT
        OF OPERATIONS
 September
        30, 2005
 (unaudited)


**Three
                  Months Ended**
              
              **Nine
                  Months Ended****September
                  30**
              
              **September
                  30**
              
              **Inception****2005**
              
              **2004**
              
              **2005**
              
              **2004**
              
              **to
                  date****Revenue**Sales
              
              $
              –
              
              $
              –
              
              $
              –
              
              $
              –
              
              $
              42,967**Expenses**General
                  and administrative expenses
              
              
              (1,070,379
              )
              
              (709,039
              )
              
              (4,160,395
              )
              
              (1,818,520
              )
              
              (23,590,623
              )Research
                  and development expenses
              
              
              (655,188
              )
              
              (115,582
              )
              
              (1,102,345
              )
              
              (342,108
              )
              
              (2,843,057
              )Depreciation
                  & amortization
              
              
              (39,359
              )
              
              (21,777
              )
              
              (146,871
              )
              
              (71,546
              )
              
              (816,760
              )Loss
                  on disposal of asset
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              (221,711
              )Loss
                  on impairment of asset
              
              
              –
              
              
              –
              
              
              (233,900
              )
              
              –
              
              
              (233,900
              )Total
                  operating expenses
              
              
              (1,764,926
              )
              
              (846,398
              )
              
              (5,643,511
              )
              
              (2,232,174
              )
              
              (27,706,051
              )Loss
                  from operations
              
              
              (1,764,926
              )
              
              (846,398
              )
              
              (5,643,511
              )
              
              (2,232,174
              )
              
              (27,663,084
              )**Other
                  income (expense)**Interest
                  income
              
              
              52,976
              
              
              4,919
              
              
              146,930
              
              
              4,919
              
              
              203,542Interest
                  expense
              
              
              (117,868
              )
              
              (74,000
              )
              
              (267,831
              )
              
              (228,000
              )
              
              (616,628
              )Late
                  registration fees
              
              
              –
              
              
              –
              
              
              (760,240
              )
              
              –
              
              
              (760,240
              )Loss
                  before taxes
              
              
              (1,829,818
              )
              
              (915,479
              )
              
              (6,524,652
              )
              
              (2,455,255
              )
              
              (28,836,410
              )Income
                  tax benefit (provision)
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –Net
                  loss
              
              $
              (1,829,818
              )
              $
              (915,479
              )
              $
              (6,524,652
              )
              $
              (2,455,255
              )
              $
              (28,836,410
              )Loss
                  per share: basic and diluted
              
              $
              (0.03
              )
              $
              (0.02
              )
              $
              (0.12
              )
              $
              (0.05
              )
              $
              (0.77
              )Weighted
                  average shares basic and diluted
              
              
              56,670,862
              
              
              53,679,734
              
              
              56,603,766
              
              
              51,910,985
              
              
              37,345,459


The
        Accompanying Notes are an Integral Part of the
        Financial Statements
 -3-
  SULPHCO,
            INC.
 (A
            Company in the Development Stage)
 STATEMENT
            OF CASH FLOWS
 September
            30, 2005
 (unaudited)


**Nine
                    Months Ended****September
                    30**
                
                **Inception****2005**
                
                **2004**
                
                **to
                    date****Cash
                    Flows From Operating Activities**Net
                    loss
                
                $
                (6,524,652
                )
                $
                (2,455,255
                )
                $
                (28,836,410
                )Adjustments
                    to reconcile net loss to cash used in operating
                    activities:Depreciation
                    & amortization
                
                
                146,871
                
                
                71,546
                
                
                816,760Shares
                    issued for services
                
                
                823,150
                
                
                106,450
                
                
                6,601,943Shares
                    issued for compensation expense
                
                
                204,000
                
                
                –
                
                
                204,000Shares
                    issued for interest expense
                
                
                –
                
                
                222,000
                
                
                296,000Contribution
                    from stockholder
                
                
                –
                
                
                –
                
                
                555,000Shares
                    subscribed for services
                
                
                –
                
                
                –
                
                
                21,000Loss
                    on disposal of subsidiary
                
                
                –
                
                
                –
                
                
                221,711(Increase)
                    decrease in accounts receivable
                
                
                317,800
                
                
                (15,244
                )
                
                –Decrease
                    in prepaid expenses
                
                
                60,092
                
                
                2,352
                
                
                22,733(Decrease)
                    increase in accounts payable
                
                
                (13,136
                )
                
                40,995
                
                
                257,993(Decrease)
                    increase in accrued liabilities
                
                
                (148,723
                )
                
                (30,442
                )
                
                360,630(Decrease)
                    increase in related party accrued interest
                
                
                207,657
                
                
                –
                
                
                207,657Accrued
                    late registration fees
                
                
                760,240
                
                
                –
                
                
                760,240Loss
                    on impairment of asset
                
                
                233,900
                
                
                –
                
                
                233,900Increase
                    in unearned revenue
                
                
                550,000
                
                
                –
                
                
                550,000Decrease
                    in legal settlement
                
                
                –
                
                
                (13,636
                )
                
                –Net
                    cash used in operating activities
                
                
                (3,382,801
                )
                
                (2,071,234
                )
                
                (17,726,843
                )**Cash
                    Flows From Investing Activities**Purchase
                    of property and equipment
                
                
                (291,047
                )
                
                (41,548
                )
                
                (1,187,173
                )Investment
                    in subsidiary
                
                
                –
                
                
                –
                
                
                (221,711
                )Return
                    / (payment) of deposit
                
                
                10,000
                
                
                –
                
                
                (36,822
                )Development
                    of intangible assets
                
                
                (161,486
                )
                
                –
                
                
                (349,958
                )Net
                    cash used in investing activities
                
                
                (442,533
                )
                
                (41,548
                )
                
                (1,795,664
                )**Cash
                    Flows from Financing Activities**Proceeds
                    from issuance of stock
                
                
                –
                
                
                2,477,995
                
                
                11,779,652Proceeds
                    from warrant exercise
                
                
                173,721
                
                
                –
                
                
                173,721Proceeds
                    from stock subscription
                
                
                –
                
                
                –
                
                
                4,240,887Proceeds
                    from issuance of related party notes payable
                
                
                –
                
                
                500,000
                
                
                11,000,000Proceeds
                    from issuance of line of credit
                
                
                –
                
                
                –
                
                
                750,000Return
                    on capital
                
                
                –
                
                
                –
                
                
                (118,427
                )Principal
                    payments on related party notes payable
                
                
                –
                
                
                (250,000
                )
                
                (250,000
                )Proceeds
                    from note payable on financing agreement
                
                
                33,027
                
                
                –
                
                
                33,027Payments
                    on note payable on financing agreement
                
                
                (8,257
                )
                
                –
                
                
                (8,257
                )Decrease
                    in related party receivable
                
                
                –
                
                
                –
                
                
                1,359,185Payments
                    on contract payable
                
                
                –
                
                
                –
                
                
                (250,000
                )Principal
                    payments on line of credit
                
                
                –
                
                
                –
                
                
                (750,000
                )Principal
                    payments on advance from related party
                
                
                –
                
                
                –
                
                
                (2,191,285
                )Net
                    cash provided by financing activities
                
                
                198,491
                
                
                2,727,995
                
                
                25,768,503Net
                    increase (decrease) in cash and cash equivalents
                
                
                (3,626,843
                )
                
                615,213
                
                
                6,245,996Cash
                    and cash equivalents at beginning of period
                
                
                9,872,839
                
                
                735,733
                
                
                –Cash
                    and cash equivalents at end of period
                
                $
                6,245,996
                
                $
                1,350,946
                
                $
                6,245,996
  **Supplemental
                    Information and non cash transactions**During
                    the nine months ended September 30, 2005, and 2004, the Company
                    paid
                    $237,165 and $228,000 in interest, respectively.
                    The Company paid no income taxes during the nine months ended
                    September
                    30, 2005, and
                    2004.


The
        Accompanying Notes are an Integral Part of the
        Financial Statements


-4-


SULPHCO,
          INC.
 (A
          Company in the Development Stage)
 NOTES
          TO THE INTERIM FINANCIAL
          STATEMENTS
 September
          30, 2005
 (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 for interim financial statements 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 audited financial
        statements prepared in accordance with generally accepted accounting principles
        for audited financial statements 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 recent
        accounting pronouncements 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.**
              **Unearned
                  Revenue**
 
 During
        2005, the Company received $550,000 in unearned revenue, which represents
        the
        first three installments on the sale of a Sonocracking TM pilot
        plant to OIL-SC, LTD for $1 million, as noted in the 8-K filed with the SEC
        on
        February 25, 2005. In accordance with the terms of the agreement by and between
        the Company and OIL-SC, Ltd., dated as of February 22, 2005, the
        Sonocracking TM unit
        was
        installed and operational within six months from the date of the contract.
        This
        is followed by a thirty day commissioning period and a sixty day period to
        modify the unit, if necessary. The first payment of $300,000 was received
        on
        March 15, 2005, the second payment of $200,000 was received on June 30, 2005,
        and the third payment was received on August 29, 2005. The Company has agreed
        to
        receive the remaining payment of $450,000 (subject to contingencies as detailed
        in Note 7) within seven days after the first commercial license agreement
        for
        the SonocrackingTM technology between the Company and a Korean refining company,
        provided that OIL-SC, Ltd. uses the funds for continued marketing activities
        regarding the SonocrackingTM technology in Korea.
 
 **3.**
              **Prepaid
                  Expenses**
 
 Prepaid
        expenses include $16,221 in prepaid insurance which is amortized over the
        life
        of the policy, and a $10,000 advance payment for a consulting agreement.
        The
        insurance policy expires in November of 2005 and the consulting agreement
        expires in December of 2005.
 
 **4.**
              **Notes
                  Payable**
  The
        Company’s notes payable consist of the following as of September 30,
        2005:
 
 As
        of
        September 30, 2005, the Company had outstanding short-term notes payable
        due to
        the Chairman and CEO, Dr. Rudolf Gunnerman, and his sister-in-law Erika Herrmann
        in the amounts of $500,000 each. The notes carry an annual interest rate
        of 8%,
        payable quarterly, and mature on December 30, 2005. Interest of $30,000 has
        been
        paid on each of these notes for the nine months ended September 30,
        2005.
   -5-
 SULPHCO,
          INC.
 (A
          Company in the Development Stage)
 NOTES
          TO THE INTERIM FINANCIAL
          STATEMENTS
 September
          30, 2005
 (unaudited)
 
 On
        December 31, 2004, under the Board’s approval, the Company issued a $7,000,000
        note to the Chairman and CEO. Interest on the note is based at the rate of
        3-month LIBOR plus 0.5% per annum, with payments due and payable December
        31 of
        2005, 2006, and on the note maturity date of December 31, 2007, at which
        time
        the principal is also due. As of September 30, 2005, interest payable of
        $177,284 has been accrued on this note.
 
 As
          of
          September 30, 2005, the Company had an outstanding short-term note payable
          related to a financing agreement for an insurance policy. The note, dated
          June
          28, 2005, in the amount of $33,027 carries an annual interest rate of 8.45%
          and
          is amortized over a period of one year, ending on the maturity date of
          June 30,
          2006. The note will be paid in twelve equal monthly payments of $2,752
          and as of
          September 30, 2005, three payments totaling $8,257 have been made.
 **5.**
              **Related
                  Party Transactions**
 
 The
        CEO
        was paid $90,000 during the quarter, under a consulting agreement. The current
        agreement is set to terminate on July 1, 2006.
 
 In
        September 2005, an interest payment of $10,000 was made to the Chairman and
        CEO
        in connection with an outstanding note payable.
 
 In
        September 2005, an interest payment of $10,000 was made to Erika Herrmann,
        sister-in-law of the Dr. Rudolf Gunnerman, the Chairman and CEO, in connection
        with an outstanding note payable.
 
 The
        Company has a consulting agreement with a Director, Dick Masica, and, as
        of
        September 30, 2005, have paid $55,400 in consulting fees and $17,755 in travel
        related expenses.
 
 The
        Company had a consulting agreement with the COO and President, Peter Gunnerman,
        and, as of September 30, 2005, had paid $50,000 in consulting fees and $50,015
        in travel related expenses.
 
 **6.**
              **Capital
                  Stock**
 
 In
        January 2005, fifty thousand restricted shares of common stock were issued
        at
        $5.47 per share, to a Director, Dick Masica, for services valued at
        $273,500.
 
 In
        January 2005, fifty thousand restricted shares of common stock were issued
        at
        $4.08 per share to the CFO, Alan Austin, Jr., for compensation expense valued
        at
        $204,000.
 
 In
        April
        2005, fifteen thousand shares of common stock were issued at $5.91 in exchange
        for consulting services valued at $88,650.
 
 In
        April
        2005, fifty thousand restricted shares of common stock were issued at $5.68
        per
        share to a Director, Robert Van Maasdijk, for services valued at
        $284,000.
 
 In
        May
        2005, fifty thousand restricted shares of common stock were issued at $3.54
        per
        share to a Director, Raad Alkadiri, for services valued at
        $177,000.
   -6-
 SULPHCO,
          INC.
 (A
          Company in the Development Stage)
 NOTES
          TO THE INTERIM FINANCIAL
          STATEMENTS
 September
          30, 2005
 (unaudited)
 
 In
        August
        2005, seventy nine thousand, four hundred and thirty shares were issued to
        investors who exercised warrants for $85,612.35.
 
 In
        September 2005, eighty three thousand, two hundred and thirty shares were
        issued
        to investors who exercised warrants for $88,108.83.
 
 The
        issue
        prices of the shares above reflect the fair market value of the Company’s common
        stock at the market close on the date of issuance.
  The
          Company is obligated to pay $760,240 in late registration fees due to the
          registration statement related to a private placement not having gone effective
          on time, as per the agreement with the investors. The agreement requires
          SulphCo
          to pay late registration fees to the selling security holders at the rate
          of 2%
          per month of the invested amount if the registration covering the placement
          shares is not declared effective by the SEC within 90 days of the date
          of the
          investment. The registration statement was declared effective by the SEC
          on June
          27, 2005. Additionally, interest accrues on the late registration fees
          at the
          rate of 18% per annum. As of September 30, 2005, $30,373 of interest was
          accrued
          and appears in Related Party accrued interest.
  
 **7.**
              **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. Balances
        in
        excess of insured amounts were $6,265,109 as of September 30, 2005.
 
 There
        are
        various claims and lawsuits pending against the Company arising in the normal
        course of the Company’s business. Although the amount of liability at September
        30, 2005, cannot be ascertained, management is of the opinion that any resulting
        liability will not materially affect the Company’s financial
        position.
 
 At
        September 30, 2005, the Company had an obligation to purchase inventory in
        the
        amount of $385,050 for delivery to the company during the fourth quarter
        of
        2005. In November, 2005, the agreement was renegotiated, reducing the Company’s
        obligation to approximately $77,000.
 
 At
        September 30, 2005, the Company has $550,000 in unearned revenue in connection
        with an agreement with OIL-SC for a pilot plant in Korea. Once OIL-SC accepts
        in
        writing the results of the Sonocracking TM pilot
        plant, the unearned revenue of $550,000 can be recognized as revenue, and
        the
        final payment of $450,000 will be due as specified in Note 2.
 
 
 **8.**
              **Subsequent
                  Events**
 
 On
        October 3, 2005, the Company’s application to be listed on the American Stock
        Exchange was accepted and on October 7, 2005, the Company’s stock began trading
        on the American Stock Exchange under the ticker symbol SUF.
 
 On
        October 11, 2005, the Company announced that it had entered into a test
        agreement with Total France to evaluate the Company’s SonocrackingTM technology
        on oil related assets of Total France.
  **9.**
                **Stock
                    Options**
  The
          financial statements of the Company for 2004 stated that at December 31,
          2004,
          there were outstanding options for 100,000 shares. Those options are still
          outstanding and, to clarify, are not options granted directly by the Company,
          but are actually the ones referred to in the related party footnote at
          that
          date, reiterated as follows:
 
 On
          December 28, 2004, Rudolf Gunnerman, Chairman and Chief Executive Officer,
          personally granted to Mr. Schumacher, former Chief Financial Officer, an
          option
          to acquire 100,000 shares of SulphCo, Inc. Common Stock owned by Mr. Gunnerman
          at an exercise price of $0.55. This option expires in February
          2006.


-7-


**Item
      2. Plan of Operation**




Forward
      Looking Statements




This
      report contains forward-looking statements within the meaning of the federal
      securities laws that relate to future events or our future financial
      performance. In some cases, you can identify forward-looking statements by
      terminology, such as "may," "will," "should," "could," "expect," "plan,"
      "anticipate," "believe," "estimate," "project," "predict," "intend," "potential"
      or "continue" or the negative of such terms or other comparable terminology,
      although not all forward-looking statements contain such terms. In addition,
      these forward-looking statements include, but are not limited to, statements
      regarding:




·
            implementing
                our business strategy;


·
            commercialization
                and marketing of our products under development;


·
            our
                intellectual property;


·
            our
                estimates of future revenue and profitability;


·
            our
                estimates or expectations of continued losses;


·
            our
                expectations regarding future expenses, including research and
                development, sales and marketing, manufacturing and general and
                administrative expenses;


·
            difficulty
                or inability to raise additional financing, if needed, on terms acceptable
                to us;


·
            our
                estimates regarding our capital requirements and our needs for additional
                financing;


·
            attracting
                and retaining customers and employees;


·
            sources
                of revenue and anticipated revenue;
                and


·
            competition
                in our market.




These
      statements are only predictions. Although we believe that the expectations
      reflected in these forward-looking statements are reasonable, we cannot
      guarantee future results, levels of activity, performance or achievements.
      We
      are not required to and do not intend to update any of the forward-looking
      statements after the date of this report or to conform these statements to
      actual results. In light of these risks, uncertainties and assumptions, the
      forward-looking events discussed in this report might not occur. Actual results,
      levels of activity, performance, achievements and events may vary significantly
      from those implied by the forward-looking statements. In this report, we refer
      to information regarding our potential markets and other industry data. We
      believe that we have obtained this information from reliable sources that
      customarily are relied upon by companies in our industry, but we have not
      independently verified any of this information.




**Our
      Business**




We
      are engaged in the business of developing and commercializing our patented
      and
      proprietary technology for the “upgrading” of crude oil. Our patented and
      proprietary process, which we refer to as “SonocrackingTM”, 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
      of crude oil. These beneficial changes include an increase in the gravity of
      the
      crude oil and a corresponding increase in the amount of lighter oils that can
      be
      recovered during refining processes. Other beneficial changes to the crude
      oil
      as a result of the SonocrackingTM technology include a reduction in the weight
      percentage of sulfur as well as a reduction in the parts per million of
      nitrogen. Although our primary focus has been the application of the
      SonocrackingTM technology to crude oil, we believe that beneficial changes to
      other petroleum products and chemicals are also possible.




The
      initial markets for our SonocrackingTM technology and our SonocrackerTM units are
      expected to be crude oil producers and refiners. The economic value of crude
      oil
      is driven largely by both the gravity of the crude and sulfur content. Because
      our technology is expected to increase the gravity of the crude oil and at
      the
      same time reduce the sulfur content in a cost-effective way, the successful
      commercialization of our technology can be expected to produce economic benefits
      to future customers in these markets.




-8-




References
      in this report to “we,”“us,”“our company” and SulphCo refer to SulphCo, Inc., a
      Nevada corporation.




**Development
      and Commercialization Activities**




We
      are currently involved in negotiations with prospective customers interested
      in
      contracts whereby we would receive a percentage of the increase in value of
      the
      oil processed by our equipment. We also expect to sell equipment to prospective
      customers. To date we have not entered into any definitive agreements. While
      no
      assurances can be given, we plan to enter into one or more of such agreements
      within the next three months.  Once
      an
      agreement is in place, we intend over the next 12 months and beyond to have
      the
      required equipment manufactured and installed. For the manufacturing we plan
      to
      utilize our plant, as well as existing agreements with Jaie Haour Group and
      M’rkisches Werk GmbH, and other manufacturers as needed.




We
      also
      plan over the next 12 months to continue to engage in development and testing
      activities, to continue negotiations with interested parties, and to market
      our
      process to other potential customers.





In
      October 2005, we entered into an agreement with Total France to test our
      SonocrackingTM process on select barrels of their crude oil between now and April
      30. 2006.


In
      accordance with the terms of our agreement with OIL-SC, Ltd. (OIL-SC) based
      in
      Shiheung-Si, South Korea, we have completed the timely installation of a 2,000
      bbl/day Sonocracker TM pilot
      plant at their facility in South Korea. The plant was designed by SulphCo and
      major components were constructed by Jai Haour Group in Taiwan. Jai Haour Group
      and SulphCo personnel assisted in the installation of the plant in South Korea.





The
      commissioning and qualification phase commenced and is continuing as per the
      contract. Initial results have demonstrated SulphCo’s ability to meet the unit
      guarantees. Final qualification testing is expected to be completed and approved
      by November 22, 2005, as called for by the agreement, whereupon we will
      recognize revenue. Should the final qualification testing not confirm the
      results outlined in the contract, the $550,000 received to date is fully
      refundable, but the contract terms could be renegotiated. We have agreed to
      receive the remaining payment of $450,000 within seven days after entering
      into
      the first commercial license agreement for the SonocrackingTM technology between
      the Company and a Korean refining company, provided that OIL-SC, Ltd. uses
      the
      funds for continued marketing activities regarding the SonocrackingTM technology
      in Korea. See Part II, Item 5 and Exhibit 10.1.




The
      plant
      is intended to upgrade petroleum products that OIL-SC purchases on the open
      market and to serve as a demonstration unit for our SonocrackingTM technology to
      South Korean refiners with the appointment of OIL-SC as our marketing
      representative. We also intend to use the plant as a demonstration unit for
      other potential Asian customers, as stated in the agreement, with whom we would
      contract.




We
      have
      modified our engineering design from a 25,000 bbl/day unit to a 30,000 bbl/day
      unit as a result of our continuing development work, affording us a more
      practical, permanent design concept.




We
      have
      completed construction of a 5,000 bbl/day SonocrackingTM unit at our facilities
      in Sparks, Nevada, which culminates months of testing the internal components
      of
      the unit at our facility. The 5,000 bbl/day unit is designed to be modular
      in
      order to facilitate both scalability and maintenance. We are nearing completion
      of a 15,000 bbl/day unit which incorporates three reactor probe assemblies
      and
      associated equipment as used in the 5,000 bbl/day unit. Both the 5,000 and
      15,000 bbl/day units are prototypes used for demonstration to customers who
      may
      request customized alterations to fit their processing needs. These systems
      are
      automated using programmable logic controllers and come equipped with touch
      screen interfaces.




In
      February 2004, we formed a joint venture with two Kuwaiti nationals to engage
      in
      the marketing of our technology in Kuwait. Kuwait requires that companies doing
      business there must have Kuwaiti owners. We are currently negotiating a contract
      with Kuwait Oil Company and the Oil Ministry of Kuwait.




-9-




The
      nature and timing of our activities over the next 12 months and beyond cannot
      be
      predicted with certainty. We expect to generate revenue from the sale of the
      SonocrackerTM unit in South Korea in the fourth quarter of 2005. We also expect
      to generate additional revenue from contracts and/or sales of units beginning
      in
      the first quarter of 2006.





**Liquidity
      and Financial Results**




**Liquidity**




Although
      we have historically been unable to generate cash from operations sufficient
      to
      cover our current activities, we have been successful in generating sufficient
      resources through equity offerings and related party debt arrangements. We
      believe that our current cash reserves are sufficient to fund our activities
      through the next 12 months. At September 30, 2005, our cash reserves were
      $6,245,996, which includes the $550,000 of unearned income discussed above.
      We
      also expect to generate cash from sales of our SonocrackerTM units and/or
      contracts for processing oil using our technology, and from the exercise by
      our
      investors of stock warrants and rights.




**Financial
      Results**




As
      a
      development stage company, we have not generated any material revenues since
      we
      commenced our current line of business in 1999. We anticipate generating
      material revenue on a sustained basis beginning in the next 12 months. When
      we
      emerge from the development stage, our reporting will change to reflect costs
      of
      sales against revenues. As revenue increases and prior tax losses are offset,
      the deferred tax estimate will need revision.




**Research
      & Development Expenses**




For
      the
      three months and the nine months ended September 30, 2005 we incurred
      approximately $655,000 and $1,102,000, respectively, related to research and
      development of our SonocrackingTM technology. This compares to approximately
      $116,000 and $342,000 for the respective periods in 2004. These large increases
      reflect our concerted efforts to become ready to transition from research and
      development activities into commercial production.




For
      the
      three months and nine months ended September 30, 2005 approximately $82,000
      and
      $199,000, respectively, were paid to our engineers as wages and related benefits
      and for design and testing of our SonocrackerTM units. Approximately $527,000 and
      $739,000, respectively, were paid for the procurement of control panels, probes,
      centrifuges, and generators related to the 2,000 bbl/day unit shipped to OIL-SC
      and the 5,000 and 15,000 bbl/day units currently located at our Sparks, Nevada
      facility. The remainder of our research and development costs relate to outside
      testing costs and recurring monthly expenses related to the maintenance of
      our
      warehouse facilities.




We
      expect
      our research and development expenses to maintain or exceed the current average
      monthly level of approximately $85,000 **** per
      month, which excludes expenditures related to OIL-SC, until we begin installing
      commercially viable units.




-10-




**General
      & Administrative Expenses**




For
      the
      three months and the nine months ended September 30, 2005 we have incurred
      approximately $1,070,000 and $4,160,000, respectively, in general and
      administrative expenses. This compares to approximately $709,000 and $1,819,000
      for the same periods last year.




The
      most
      significant increase for the nine months ended September 30, 2005 was $734,500
      in stock issuances to three new directors, which occurred during the first
      half
      of 2005.




Legal
      and
      accounting fees were approximately $167,000 and $581,000, respectively, for
      the
      three months and the nine months ended September 30, 2005, reflecting increases
      of approximately $26,000 and $363,000 (18% and 167%), respectively. These
      increases were primarily due to the filing of our SB-2 and our application
      to be
      listed on the American Stock Exchange.




Consulting
      fees, payroll and related expenses were approximately $484,000 and $1,775,000,
      respectively, for the three months and nine months ended September 30, 2005
      reflecting increases of approximately $88,000 and $681,000 (22% and 62%),
      respectively. Included in the increase for nine months is approximately $293,000
      of stock issuances. Travel expenses were approximately $105,000 and $317,000,
      respectively, for the three months and nine months ended September 30, 2005
      reflecting increases of approximately $68,000 and $286,000 (184% and 923%),
      respectively. These increases primarily resulted from our expanded marketing
      efforts and in securing suppliers.




The
      remainder of the amounts incurred relate to normal recurring operating expenses
      such as utilities, travel, and marketing/investor relations.




**Interest
      Expense**




Interest
      expense was approximately $118,000 and $268,000, respectively, for the three
      months and nine months ended September 30, 2005 reflecting increases of
      approximately $44,000 and $40,000 (59% and 18%), respectively. Of the increase,
      approximately $30,000 is due to the interest on the late registration (see
      below). Otherwise the interest on our $7million note payable to Dr. Rudolf
      Gunnerman has been increasing as it is indexed to a LIBOR rate which has
      increased.




**Late
      Registration**




In
      accordance with our most recent security offering agreement, we have accrued
      late fees of approximately $760,000, plus approximately $30,000 accrued interest
      thereon, due to a delayed effective date of our registration statement. Our
      registration statement was declared effective June 27, 2005. We have had
      informal discussions with some of the private placement investors who have
      expressed interest in receiving restricted shares in lieu of cash fees, and
      we
      expect that we will reach agreement with most of the investors to pay these
      fees
      with restricted shares in lieu of cash. However, as of the date of this report
      no formal agreements have been entered into with any investors to pay these
      fees
      by issuing additional restricted shares and there can be no assurances when
      and
      if such agreements will be entered into..




**Depreciation
      and Amortization**




For
      the
      nine months ended September 30, 2005 we have expended approximately $453,000
      to
      improve our equipment and maintain exclusivity for the sale and/or licensing
      of
      our SonocrackingTM technology in the United States and abroad. Our depreciation
      and amortization expense related to these additions, and to our previously
      capitalized equipment and rights, for the three months and nine months ended
      September 30, 2005 was approximately $39,000 and $147,000, respectively,
      reflecting increases of approximately $18,000 and $75,000 (86% and 104%),
      respectively. We expect to continue our pursuit of exclusive distribution and
      licensing of our technology and purchasing equipment for the manufacture and
      upgrading of our SonocrackingTM technology.




-11-




**Loss
      on Impairment of Asset**




In
      accordance with SFAS No. 144 *Accounting
      for the Impairment or Disposal of Long Lived Assets* we
      determined in the first quarter of 2005 that a previously capitalized prototype
      no longer reflects the value of our commercially viable technology resulting
      in
      an impairment loss of approximately $234,000.




**General**




As
      of
      September 30, 2005, we had an accumulated deficit of approximately $28.8 million
      and we incurred losses of $1.8 million and $6.5 million for the three and nine
      month periods ending September 30, 2005, respectively. These compare to losses
      of $0.9 million and $2.5 million for similar periods in 2004.




Due
      to
      uncertainty in our worldwide activities, we are unable to accurately estimate
      our monthly expenditures. However, we expect that our current level of
      expenditures will increase over the next 12 months as we continue to develop
      a
      commercially viable unit based on our internally developed
      technology.


**Capital
      Resources**





Warrants
      and rights to acquire additional stock and warrants were granted in the June
      2004 private placements of our common stock. We expect that many of these
      warrants and rights will be exercised before expiration. As reflected in the
      notes to the financial statements, $173,720 was generated in August 2005 from
      exercises of warrants and rights. Subsequently $22,516 has been generated.
      Up to
      approximately an additional $15 million may be generated upon exercise of
      warrants and rights if investors in the June 2004 private placements exercise
      all available warrants and rights. The rights expire on March 15, 2006, and
      warrants expire three years from the date of their issuance.





The
      short-term promissory notes in the amounts of $500,000 each payable to Dr.
      Gunnerman and his sister-in-law Erika Herrmann are expected to be paid off
      from
      the proceeds of the exercise by our investors of stock warrants and rights.
      Should such proceeds be insufficient to pay off the notes by their December
      30,
      2005, due dates, the we intend to seek extensions of the notes.





For
      the
      note payable to Dr. Gunnerman of $7 million, we plan to use future revenues.
      Effective October 1, 2005 the interest rate according to the terms of note,
      as
      indexed by a specific LIBOR rate, is 4.36%.





In
      the
      past we have financed our research and development activities primarily through
      debt and equity financings from our principal shareholder, Dr. Rudolf W.
      Gunnerman, and other parties, including the June 2004 private placements which
      yielded approximately $4.6 million. Sources of additional capital include the
      exercise of additional investment rights and warrants issued to investors in
      the
      June 2004 private placements and funding through future contracts and debt
      and
      equity financings. We do not know whether additional financing will be available
      on commercially acceptable terms when needed. If we are unable to secure such
      additional financing when needed, we may have to curtail or suspend all or
      a
      portion of our business activities. Further, if we issue equity securities,
      our
      shareholders may experience dilution of their ownership percentage.




-12-





**Employees**





As
      of
      September 30, 2005 we had 19 full-time employees and a consulting agreement
      with
      RWG, Inc. for the full-time services of our Chairman and CEO, Rudolf W.
      Gunnerman. To the extent we are able to enter into contracts in the near future,
      we anticipate a large increase in personnel to service such customer orders.





**Item
      3. Controls and Procedures**





The
      Company maintains disclosure controls and procedures designed to ensure that
      information required to be disclosed in reports filed or submitted 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, the Company's Chief Executive Officer and Chief Financial
      Officer concluded that the Company's disclosure controls and procedures were
      effective as of the end of the period. 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.





-13-


**PART
      II**





**Item
      1. Legal Proceedings**





The
      information required by this Item with respect to two separate legal actions
      commenced in Reno, Nevada on June 9, 2005 in which the Company and certain
      executive officers were named defendants was previously reported in the
      Company’s Form 10-QSB for the quarter ended June 30, 2005, which was filed with
      the Securities and Exchange Commission on August 11, 2005.





With
      respect to the *Talisman
      Capital Talon Fund, Ltd. v. Rudolf Gunnerman and SulphCo, Inc.* action
      (Case No. CV-N-05-0354-HDM-RAM), on October 19, 2005, the United States District
      Court for the District of Nevada denied the defendants' Motion for Judgment
      on
      the Pleadings without prejudice, and the parties have commenced with
      discovery.





With
      respect to the *Clean
      Fuels Technology v. Rudolf W. Gunnerman, Peter Gunnerman, RWG, Inc. and SulphCo,
      Inc.* action
      (Case No. CV05 01346), on September 15, 2005, the Second Judicial District
      Court
      of the State of Nevada in and for the County of Washoe denied the defendants'
      Motion for Judgment on the Pleadings without prejudice, and the parties have
      commenced with discovery.





On
      July
      12, 2005, Stan McLelland filed an arbitration demand against the Company before
      the American Arbitration Association. The demand alleges that Mr. McLelland
      was
      the Company’s president from August 13, 2001 until he resigned on September 12,
      2001. The demand seeks to exercise stock options that had not vested prior
      to
      Mr. McLelland’s resignation. Mr. McLelland also seeks salary for the six months
      following his resignation and $20,000 of alleged unpaid commuting expenses,
      as
      well as attorneys' fees and costs. The Company denies the validity of these
      claims.




**Item
        5. Other Information**
 
 On
        November 7, 2005, SulphCo and OIL-SC entered into a letter agreement which
        amends the terms of an agreement for the purchase and sales of assets by
        and
        between SulphCo and OIL_SC dated as of February 25, 2005. The Agreement provided
        for the sale by us to OIL-SC of a pilot plant utilizing the Company’s
        high-powered ultrasound SonocrackingTM technology for $1 million and the
        appointment of OIL-SC as the Company’s exclusive marketing representative for
        oil refiners in South Korea. The Agreement had called for the $1 million
        purchase price for the pilot plant to be paid to the Company in installments,
        with the initial installment of $300,000 payable on March 15, 2005, and
        additional installments of $200,000, $50,000 and $450,000 payable on July
        1,
        September 1 and December 1, 2005.
 
 In
        accordance with the terms of our agreement with OIL-SC, we have completed
        the
        timely installation of a 2,000 bbl/day Sonocracker TM pilot
        plant at their facility in South Korea.
 
 Under the terms of the letter agreement, we have agreed to delay the December
        1 st installment payment and receive the remaining payment of $450,000 within
        seven
        days after entering into the first commercial license agreement for the
        SonocrackingTM technology between the Company and a Korean refining company,
        provided that OIL-SC, Ltd. uses the funds for continued marketing activities
        regarding the SonocrackingTM technology in Korea. A copy of the letter agreement
        is attached to this Form 10-QSB as Exhibit 10.1.





-14-


**Item
      6. Exhibits.**





**(a)**
            **Exhibits.**




10.1
              Letter
                  Agreement by and between SulphCo and OIL-SC and dated as of November
                  9,
                  2005.


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





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





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








-15-


**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.




**SULPHCO,
                INC.**
              **(Registrant)**Date: November
              14, 2005
            
            /s/ Rudolf
              W. GunnermanBy:   
                Rudolf W. Gunnerman
              Its:    Chairman of the Board of
                Directors and Chief Executive Officer
              (Principal Executive Officer)


/s/ Loren
                  J. KalmenBy:   
                    Loren J. Kalmen
                  Its:    Chief Financial
                    Officer
                  (Principal Financial Officer and Accounting
                    Officer)


-16-


**EXHIBIT
      INDEX**




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 to ss. 906 of the Sarbanes-Oxley
                Act of
                2002.








-17-