**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Form      10-Q/A**

**Amendment      No. 2**

**[**
**Ö**
**]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT      OF 1934**

**[        ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**S**
**ULPH**
**C**
**O, INC.**
** **

| **Nevada**(State                or other jurisdiction of incorporation or organization) |   | **88-0224817**(I.R.S.                Employer Identification Number) |
|-----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|

| **850                Spice Islands Drive, Sparks, NV**(Address                of principal executive offices) |   | **89431**(Zip                Code) |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------------------|

**(775)      829-1310**

| Class                                   | Outstanding                at March 21, 2007 |
|----------------------------------------------|----------------------------------------------|
|                                         |                                         |
| Common                Stock, par value $.001 | 76,355,478                shares             |

----

**EXPLANATORY      NOTE**

|   | · | Building                and infrastructure. |
|--------|--------|---------------------------------------------|

|   | · | Successful                testing of the probe transducer                assembly. |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | Contracting                for testing oil and trucking                thereof. |
|--------|--------|---------------------------------------------------------------------------------|

----

**PART      I**

**Item      1. Financial Statements**

----

|                                                                                                           |   | **June                  30,****2006** |        | **December                  31,****2005** |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-------------|-------------------------------------------|--------|
|                                                                                                           |   | (restated)                            |        |                                 |   |
| **Current                  Assets:**                                                                           |   |                                  |        |                                      |   |   |   |
| Cash                  and cash equivalents                                                                     |   | $                                     | 16,310,160  |                                      | $      | 6,874,653 |   |
| Loan                  and accrued interest receivable                                                          |   |                                  | 203,985     |                                      |   | - |   |
| Prepaid                  expenses and other                                                                    |   |                                  | 97,600      |                                      |   | 137,577 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| Total                  current assets                                                                          |   |                                  | 16,611,745  |                                      |   | 7,012,230 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| **Property                  and Equipment (net of accumulated depreciation of                  $936,818)**     |   |                                  | 327,139     |                                      |   | 397,416 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| **Other                  Assets**                                                                              |   |                                  |        |                                      |   |   |   |
| Intangible                  assets (net of accumulated amortization of $30,310)                                |   |                                  | 451,540     |                                      |   | 355,218 |   |
| Investment                  in Joint Venture                                                                   |   |                                  | 123,375     |                                      |   | 139,550 |   |
| Deposits                                                                                                       |   |                                  | 48,672      |                                      |   | 140,822 |   |
| Deferred                  tax asset (net of valuation allowance of $16,703,199)                                |   |                                  | -           |                                      |   | - |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| Total                  other assets                                                                            |   |                                  | 623,587     |                                      |   | 635,590 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| Total                  assets                                                                                  |   | $                                     | 17,562,471  |                                      | $      | 8,045,236 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| **Current                  Liabilities**                                                                       |   |                                  |        |                                      |   |   |   |
| Accounts                  payable and accrued liabilities                                                      |   | $                                     | 2,921,840   |                                      | $      | 779,413 |   |
| Refundable                  deposit                                                                            |   |                                  | 550,000     |                                      |   | 550,000 |   |
| Accrued                  fees and interest                                                                     |   |                                  | 1,115,266   |                                      |   | 1,035,572 |   |
| Related                  party note payable                                                                    |   |                                  | -           |                                      |   | 500,000 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| Total                  current liabilities                                                                     |   |                                  | 4,587,106   |                                      |   | 2,864,985 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| **Long                  Term Related Party Note Payable**                                                      |   |                                  | 5,000,000   |                                      |   | 7,000,000 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| Total                  liabilities                                                                             |   |                                  | 9,587,106   |                                      |   | 9,864,985 |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| **Commitments                  and Contingencies**                                                             |   |                                  | -           |                                      |   | - |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| **Stockholders'                  Equity (Deficiency)**                                                         |   |                                  |        |                                      |   |   |   |
| Preferred                  stock: 10,000,000 shares authorized ($0.001 par value) none                  issued |   |                                  | -           |                                      |   | - |   |
| Common                  stock: 100,000,000 shares authorized ($0.001 par value)                                |   |                                  |        |                                      |   |   |   |
| 72,520,910                  shares issued and outstanding at March 31, 2006                                    |   |                                  | 72,521      |                                      |   | 60,537 |   |
| Paid                  in capital                                                                               |   |                                  | 68,122,339  |                                      |   | 30,604,342 |   |
| Stock                  subscriptions receivable                                                                |   |                                  | (744,500    | )                                         |   | (744,500 | ) |
| Deficit                  accumulated during the development stage                                              |   |                                  | (59,471,539 | )                                         |   | (31,740,128 | ) |
| Accumlated                  other comprehensive loss                                                           |   |                                  | (3,456      | )                                         |   | - |   |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| Total                  stockholders' equity (deficiency)                                                       |   |                                  | 7,975,365   |                                      |   | (1,819,749 | ) |
|                                                                                                           |   |                                  |        |                                      |   |   |   |
| Total                  liabilities and stockholders' equity (deficiency)                                       |   | $                                     | 17,562,471  |                                      | $      | 8,045,236 |   |

----

|                                                                 |   | **Three                  Months Ended** |        | **Six                  Months Ended** |   |          |   |
|----------------------------------------------------------------------|--------|-----------------------------------------|-------------|---------------------------------------|--------|---------------|--------|
|                                                                 |   | **June**                                |        | **June**                              |   | **Inception** |   |
|                                                                 |   | **2006**                                |        | **2005**                              |   | **2006**      |   | **2005** |   | **to                  date** |   |
|                                                                 |   | (restated)                              |        |                                  |   | (restated)    |   |   |   | (restated) |   |
| **Revenue**                                                          |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Sales                                                           |   | $                                       | -           |                                  | $      | -             |   | $ | - |   | $ | - |   | $ | 42,967 |   |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| **Expenses**                                                         |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Selling,                  general, and administrative expenses  |   |                                    | (4,632,823  | )                                     |   | (1,447,363    | )      |   | (8,107,533 | ) |   | (2,667,388 | ) |   | (36,072,799 | ) |
| Research                  and development expenses:             |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Fujairah                  test facility                              |   |                                    | (12,234,653 | )                                     |   | -             |   |   | (17,352,293 | ) |   | - |   |   | (17,352,293 | ) |
| Other                                                                |   |                                    | (1,651,402  | )                                     |   | (522,180      | )      |   | (2,265,832 | ) |   | (977,297 | ) |   | (4,374,486 | ) |
| Loss                  on investment in joint venture            |   |                                    | (11,944     | )                                     |   | -             |   |   | (12,720 | ) |   | - |   |   | (12,720 | ) |
| Loss                  on disposal of asset                      |   |                                    | (423        | )                                     |   | -             |   |   | (423 | ) |   | - |   |   | (222,134 | ) |
| Loss                  on impairment of asset                    |   |                                    | -           |                                  |   | -             |   |   | - |   |   | (233,900 | ) |   | (233,900 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Total                  operating expenses                            |   |                                    | (18,531,245 | )                                     |   | (1,969,543    | )      |   | (27,738,801 | ) |   | (3,878,585 | ) |   | (58,268,332 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Loss                  from operations                                |   |                                    | (18,531,245 | )                                     |   | (1,969,543    | )      |   | (27,738,801 | ) |   | (3,878,585 | ) |   | (58,225,365 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| **Other                  income (expense)**                          |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Interest                  income                                |   |                                    | 194,440     |                                  |   | 54,576        |   |   | 247,533 |   |   | 93,954 |   |   | 498,132 |   |
| Interest                  expense                               |   |                                    | (114,947    | )                                     |   | (79,213       | )      |   | (240,146 | ) |   | (149,963 | ) |   | (984,066 | ) |
| Late                  registration fees                         |   |                                    | -           |                                  |   | (322,240      | )      |   | - |   |   | (760,240 | ) |   | (760,240 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Loss                  before taxes                                   |   |                                    | (18,451,752 | )                                     |   | (2,316,420    | )      |   | (27,731,414 | ) |   | (4,694,834 | ) |   | (59,471,539 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Income                  tax benefit (provision)                      |   |                                    | -           |                                  |   | -             |   |   | - |   |   | - |   |   | - |   |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| **Net                  loss**                                        |   | $                                       | (18,451,752 | )                                     | $      | (2,316,420    | )      | $ | (27,731,414 | ) | $ | (4,694,834 | ) | $ | (59,471,539 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| **Other                  comprehensive income (loss)**               |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Foreign                  currency translation loss              |   |                                    | (3,456      | )                                     |   | -             |   |   | (3,456 | ) |   | - |   |   | (3,456 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| **Net                  comprehensive loss**                          |   | $                                       | (18,455,208 | )                                     | $      | (2,316,420    | )      | $ | (27,734,870 | ) | $ | (4,694,834 | ) | $ | (59,474,995 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Loss                  per share - basic and diluted                  |   | $                                       | (0.25       | )                                     | $      | (0.04         | )      | $ | (0.40 | ) | $ | (0.08 | ) | $ | (1.48 | ) |
|                                                                 |   |                                    |        |                                  |   |          |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares - basic and diluted         |   |                                    | 72,520,910  |                                  |   | 56,627,718    |   |   | 68,937,781 |   |   | 56,578,552 |   |   | 40,256,027 |   |

----

|                                                                                                                                      |   | **Six                  Months Ended** |        |          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-------------|---------------|--------|
|                                                                                                                                      |   | **June                  30**          |        | **Inception** |   |
|                                                                                                                                      |   | **2006**                              |        | **2005**      |   | **to                  date** |   |
| **Cash                  Flows From Operating Activities**                                                                                 |   | (restated)                            |        |          |   | (restated) |   |
| Net                  loss                                                                                                                 |   | $                                     | (27,731,414 | )             | $      | (4,694,834 | ) | $ | (59,471,539 | ) |
| Adjustments                  to reconcile net loss to cash used                                                                           |   |                                  |        |          |   |   |   |   |   |   |
| in                  operating activities:                                                                                                 |   |                                  |        |          |   |   |   |   |   |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| Depreciation                  & amortization                                                                                          |   |                                  | 123,039     |          |   | 107,512 |   |   | 1,008,405 |   |
| Stock                  issued for services                                                                                                |   |                                  | 2,292,513   |          |   | 1,091,500 |   |   | 9,662,030 |   |
| Stock                  issued for interest expense                                                                                        |   |                                  | -           |          |   | - |   |   | 296,000 |   |
| Contribution                  from stockholder                                                                                            |   |                                  | -           |          |   | - |   |   | 555,000 |   |
| Loss                  from joint venture                                                                                                  |   |                                  | 12,720      |          |   | - |   |   | 12,720 |   |
| Losses                  on disposal and impairment of assets                                                                              |   |                                  | 423         |          |   | 233,900 |   |   | 456,034 |   |
| Deposit                  used for expense                                                                                                 |   |                                  | 100,000     |          |   |   |   |   | 100,000 |   |
| (Increase)                  decrease in receivables                                                                                       |   |                                  | (3,384      | )             |   | 317,800 |   |   | (3,384 | ) |
| (Increase)                  decrease in prepaid expenses                                                                                  |   |                                  | 39,376      |          |   | 12,806 |   |   | (98,201 | ) |
| Increase                  (decrease) in accounts payable                                                                                  |   |                                  |        |          |   |   |   |   |   |   |
| and                  accrued liabilities                                                                                                  |   |                                  | 2,136,820   |          |   | (320,517 | ) |   | 2,916,233 |   |
| Increase                  in refundable deposit                                                                                           |   |                                  | -           |          |   | 500,000 |   |   | 550,000 |   |
| Increase                  in accrued fees and interest                                                                                    |   |                                  | 79,811      |          |   | 760,240 |   |   | 900,796 |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| Net                  cash used in operating activities                                                                                    |   |                                  | (22,950,096 | )             |   | (1,991,593 | ) |   | (43,115,906 | ) |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| **Cash                  Flows From Investing Activities**                                                                                 |   |                                  |        |          |   |   |   |   |   |   |
| Advances                  for loan receivable                                                                                             |   |                                  | (200,000    | )             |   | - |   |   | (200,000 | ) |
| Purchase                  of property and equipment                                                                                       |   |                                  | (40,298     | )             |   | (238,186 | ) |   | (1,161,386 | ) |
| Investments                  in joint ventures and subsidiaries                                                                           |   |                                  | -           |          |   | - |   |   | (361,261 | ) |
| Payment                  of deposits                                                                                                      |   |                                  | (7,850      | )             |   | 10,000 |   |   | (148,672 | ) |
| Investments                  in intangible assets                                                                                         |   |                                  | (103,602    | )             |   | (125,982 | ) |   | (492,084 | ) |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| Net                  cash used in investing activities                                                                                    |   |                                  | (351,750    | )             |   | (354,168 | ) |   | (2,363,403 | ) |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| **Cash                  Flows from Financing Activities**                                                                                 |   |                                  |        |          |   |   |   |   |   |   |
| Net                  proceeds from issuance of stock                                                                                      |   |                                  | 35,237,353  |          |   | - |   |   | 50,999,109 |   |
| Proceeds                  from stock subscriptions                                                                                        |   |                                  | -           |          |   | - |   |   | 4,240,887 |   |
| Proceeds                  from issuance of related party notes payable                                                                    |   |                                  | -           |          |   | - |   |   | 11,000,000 |   |
| Proceeds                  from issuance of line of credit                                                                                 |   |                                  | -           |          |   | - |   |   | 750,000 |   |
| Return                  on capital                                                                                                        |   |                                  | -           |          |   | - |   |   | (118,427 | ) |
| Principal                  payments on related party notes payable                                                                        |   |                                  | (2,500,000  | )             |   | - |   |   | (3,250,000 | ) |
| Decrease                  in related party receivable                                                                                     |   |                                  | -           |          |   | - |   |   | 1,359,185 |   |
| Payments                  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                                                                                |   |                                  | 32,737,353  |          |   | - |   |   | 61,789,469 |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| Net                  increase (decrease) in cash and cash equivalents                                                                     |   |                                  | 9,435,507   |          |   | (2,345,761 | ) |   | 16,310,160 |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| Cash                  and cash equivalents at beginning of period                                                                         |   |                                  | 6,874,653   |          |   | 9,872,839 |   |   | - |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| Cash                  and cash equivalents at end of period                                                                               |   | $                                     | 16,310,160  |          | $      | 7,527,078 |   | $ | 16,310,160 |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| **Supplemental                  Information and non cash transactions**                                                                   |   |                                  |        |          |   |   |   |   |   |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| Total                  interest payments included in operations                                                                           |   | $                                     | 160,335     |          | $      | 149,963 |   |   |   |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| The                  Company paid no income taxes during the three months ended June                  30, 2006                  and 2005. |   |                                  |        |          |   |   |   |   |   |   |
|                                                                                                                                      |   |                                  |        |          |   |   |   |   |   |   |
| The                  Company had the following noncash investing and financing activities                  in                  2006:      |   |                                  |        |          |   |   |   |   |   |   |
| Incurred                  fees payable for issuing securities                                                                             |   | $                                     | 330,098     |          |   |   |   |   |   |   |
| Issued                  stock in exchange for a payable                                                                                   |   |                                  | 330,215     |          |   |   |   |   |   |   |
| Incurred                  a payable for intangible assets                                                                                 |   |                                  | 5,607       |          |   |   |   |   |   |   |

----

| **1.** | **Basis                  of Presentation** |
|--------|--------------------------------------------|

**Restatement        of Construction Work-in-Progress to Research and        Development**

----

| **SulphCo,                  Inc.**                                                                                                                         |   |                               |        |            |   |                               |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-------------|-----------------|--------|------------------------------------|--------|
| **(a                  Development Stage Company)**                                                                                                         |   |                               |        |            |   |                               |   |
| **Balance                  Sheet (unaudited)**                                                                                                             |   | **June                  30, 2006** |        | **Adjustments** |   | **June                  30, 2006** |   |
|                                                                                                                                                       |   | **(as                  reported)** |        |            |   | **(as                  restated)** |   |
| Current                  Assets:                                                                                                                           |   |                               |        |            |   |                               |   |   |   |   |
| Cash                  and cash equivalents                                                                                                                 |   | $                                  | 16,310,160  |            | $      | -                                  |   | $ | 16,310,160 |   |
| Loan                  and accrued interest receivable                                                                                                      |   |                               | 203,985     |            |   | -                                  |   |   | 203,985 |   |
| Prepaid                  expenses and other                                                                                                                |   |                               | 97,600      |            |   | -                                  |   |   | 97,600 |   |
| Total                  current assets                                                                                                                      |   |                               | 16,611,745  |            |   | -                                  |   |   | 16,611,745 |   |
| Property                  and Equipment (net of accumulated depreciation of                  $936,818)                                                     |   |                               | 16,208,194  |            |   | (15,881,055                        | )      |   | 327,139 |   |
| Other                  Assets                                                                                                                              |   |                               |        |            |   |                               |   |   |   |   |
| Intangible                  assets (net of accumulated amortization of $30,310)                                                                            |   |                               | 451,540     |            |   | -                                  |   |   | 451,540 |   |
| Investment                  in Joint Venture                                                                                                               |   |                               | 947,740     |            |   | (824,365                           | )      |   | 123,375 |   |
| Deposits                                                                                                                                                   |   |                               | 48,672      |            |   | -                                  |   |   | 48,672 |   |
| Deferred                  tax asset (net of valuation allowance of $16,703,199)                                                                            |   |                               | -           |            |   | -                                  |   |   | - |   |
| Total                  other assets                                                                                                                        |   |                               | 1,447,952   |            |   | (824,365                           | )      |   | 623,587 |   |
|                                                                                                                                                       |   |                               |        |            |   |                               |   |   |   |   |
| Total                  assets                                                                                                                              |   | $                                  | 34,267,891  |            | $      | (16,705,420                        | )      | $ | 17,562,471 |   |
|                                                                                                                                                       |   |                               |        |            |   |                               |   |   |   |   |
| Current                  Liabilities                                                                                                                       |   |                               |        |            |   |                               |   |   |   |   |
| Accounts                  payable and accrued liabilities                                                                                                  |   | $                                  | 2,921,840   |            | $      | -                                  |   | $ | 2,921,840 |   |
| Refundable                  deposit                                                                                                                        |   |                               | 550,000     |            |   | -                                  |   |   | 550,000 |   |
| Accrued                  fees and interest                                                                                                                 |   |                               | 1,115,266   |            |   | -                                  |   |   | 1,115,266 |   |
| Related                  party note payable                                                                                                                |   |                               | -           |            |   | -                                  |   |   | - |   |
| Total                  current liabilities                                                                                                                 |   |                               | 4,587,106   |            |   | -                                  |   |   | 4,587,106 |   |
|                                                                                                                                                       |   |                               |        |            |   |                               |   |   |   |   |
| Long                  Term Related Party Note Payable                                                                                                      |   |                               | 5,000,000   |            |   | -                                  |   |   | 5,000,000 |   |
| Total                  liabilities                                                                                                                         |   |                               | 9,587,106   |            |   | -                                  |   |   | 9,587,106 |   |
| Commitments                  and Contingencies                                                                                                             |   |                               | -           |            |   | -                                  |   |   | - |   |
|                                                                                                                                                       |   |                               |        |            |   |                               |   |   |   |   |
| Stockholders'                  Equity (Deficiency)                                                                                                         |   |                               |        |            |   |                               |   |   |   |   |
| Preferred                  stock: 10,000,000 shares authorized ($0.001 par value) none                  issued                                             |   |                               | -           |            |   | -                                  |   |   | - |   |
| Common                  stock: 100,000,000 shares authorized ($0.001 par value) 72,520,910                  shares                  issued and outstanding |   |                               | 72,521      |            |   | -                                  |   |   | 72,521 |   |
| Paid                  in capital                                                                                                                           |   |                               | 68,301,101  |            |   | (178,763                           | )      |   | 68,122,339 |   |
| Stock                  subscriptions receivable                                                                                                            |   |                               | (744,500    | )               |   | -                                  |   |   | (744,500 | ) |
| Deficit                  accumulated during the development stage                                                                                          |   |                               | (42,944,246 | )               |   | (16,527,293                        | )      |   | (59,471,539 | ) |
| Accumlated                  other comprehensive loss                                                                                                       |   |                               | (4,091      | )               |   | 635                                |   |   | (3,456 | ) |
|                                                                                                                                                       |   |                               |        |            |   |                               |   |   |   |   |
| Total                  stockholders' equity (deficiency)                                                                                                   |   |                               | 24,680,785  |            |   | (16,705,420                        | )      |   | 7,975,365 |   |
|                                                                                                                                                       |   |                               |        |            |   |                               |   |   |   |   |
| Total                  liabilities and stockholders' equity (deficiency)                                                                                   |   | $                                  | 34,267,891  |            | $      | (16,705,420                        | )      | $ | 17,562,471 |   |

----

| **SulphCo,                  Inc.**                             |   |                                                   |       |            |   |                                                   |   |
|----------------------------------------------------------------|--------|--------------------------------------------------------|------------|-----------------|--------|--------------------------------------------------------|--------|
| **(a                  Develoment Stage Company)**              |   |                                              |       |       |   |                                              |   |
| **Statement                  of Operations (unaudited)**       |   |                                              |       |       |   |                                              |   |
|                                                           |   | **Three                  Months Ended March 31, 2006** |       | **Adjustments** |   | **Three                  Months Ended March 31, 2006** |   |
|                                                           |   | **(as                  reported)**                     |       |       |   | **(as                  restated)**                     |   |
| Revenue                                                        |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Sales                                                          |   | $                                                      | -          |            | $      | -                                                      |   | $ | - |   |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Expenses                                                       |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Selling,                  general, and administrative expenses |   |                                                   | (4,632,823 | )               |   | -                                                      |   |   | (4,632,823 | ) |
| Research                  and development expenses:            |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Fujairah                  test facility                        |   |                                                   | -          |            |   | (12,234,653                                            | )      |   | (12,234,653 | ) |
| Other                                                          |   |                                                   | (1,651,402 | )               |   | -                                                      |   |   | (1,651,402 | ) |
| Loss                  on investment in joint venture           |   |                                                   | (836,944   | )               |   | 825,000                                                |   |   | (11,944 | ) |
| Loss                  on disposal of asset                     |   |                                                   | (423       | )               |   | -                                                      |   |   | (423 | ) |
| Loss                  on impairment of asset                   |   |                                                   | -          |            |   | -                                                      |   |   | - |   |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Total                  operating expenses                      |   |                                                   | (7,121,592 | )               |   | (11,409,653                                            | )      |   | (18,531,245 | ) |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Loss                  from operations                          |   |                                                   | (7,121,592 | )               |   | (11,409,653                                            | )      |   | (18,531,245 | ) |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Other                  income (expense)                        |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Interest                  income                               |   |                                                   | 194,440    |            |   | -                                                      |   |   | 194,440 |   |
| Interest                  expense                              |   |                                                   | (114,947   | )               |   | -                                                      |   |   | (114,947 | ) |
| Late                  registration fees                        |   |                                                   | -          |            |   | -                                                      |   |   | - |   |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Loss                  before taxes                             |   |                                                   | (7,042,099 | )               |   | (11,409,653                                            | )      |   | (18,451,752 | ) |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Income                  tax benefit (provision)                |   |                                                   | -          |            |   | -                                                      |   |   | - |   |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| **Net                  loss**                                  |   | $                                                      | (7,042,099 | )               | $      | (11,409,653                                            | )      | $ | (18,451,752 | ) |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| **Other                  comprehensive income (loss)**         |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Foreign                  currency translation loss             |   |                                                   | (3,456     | )               |   | -                                                      |   |   | (3,456 | ) |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| **Net                  comprehensive loss**                    |   | $                                                      | (7,045,555 | )               | $      | (11,409,653                                            | )      | $ | (18,455,208 | ) |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Loss                  per share - basic and diluted            |   | $                                                      | (0.10      | )               | $      | (0.16                                                  | )      | $ | (0.25 | ) |
|                                                           |   |                                                   |       |            |   |                                                   |   |   |   |   |
| Weighted                  average shares - basic and diluted   |   |                                                   | 72,520,910 |            |   | 72,520,910                                             |   |   | 72,520,910 |   |

----

| **SulphCo,                  Inc.**                             |   |                                                |        |            |   |                                                |   |
|----------------------------------------------------------------|--------|-----------------------------------------------------|-------------|-----------------|--------|-----------------------------------------------------|--------|
| **(a                  Develoment Stage Company)**              |   |                                                |        |            |   |                                                |   |
| **Statement                  of Operations (unaudited)**       |   |                                                |        |            |   |                                                |   |
|                                                           |   | **Six                  Months Ended June 30, 2006** |        | **Adjustments** |   | **Six                  Months Ended June 30, 2006** |   |
|                                                           |   | **(as                  reported)**                  |        |            |   | **(as                  restated)**                  |   |
| Revenue                                                        |   |                                                |        |            |   |                                                |   |   |   |   |
| Sales                                                          |   | $                                                   | -           |            | $      | -                                                   |   | $ | - |   |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Expenses                                                       |   |                                                |        |            |   |                                                |   |   |   |   |
| Selling,                  general, and administrative expenses |   |                                                | (8,107,533  | )               |   | -                                                   |   |   | (8,107,533 | ) |
| Research                  and development expenses:            |   |                                                |        |            |   |                                                |   |   |   |   |
| Fujairah                  test facility                        |   |                                                | -           |            |   | (17,352,293                                         | )      |   | (17,352,293 | ) |
| Other                                                          |   |                                                | (2,265,832  | )               |   | -                                                   |   |   | (2,265,832 | ) |
| Loss                  on investment in joint venture           |   |                                                | (837,720    | )               |   | 825,000                                             |   |   | (12,720 | ) |
| Loss                  on disposal of asset                     |   |                                                | (423        | )               |   | -                                                   |   |   | (423 | ) |
| Loss                  on impairment of asset                   |   |                                                | -           |            |   | -                                                   |   |   | - |   |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Total                  operating expenses                      |   |                                                | (11,211,508 | )               |   | (16,527,293                                         | )      |   | (27,738,801 | ) |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Loss                  from operations                          |   |                                                | (11,211,508 | )               |   | (16,527,293                                         | )      |   | (27,738,801 | ) |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Other                  income (expense)                        |   |                                                |        |            |   |                                                |   |   |   |   |
| Interest                  income                               |   |                                                | 247,533     |            |   | -                                                   |   |   | 247,533 |   |
| Interest                  expense                              |   |                                                | (240,146    | )               |   | -                                                   |   |   | (240,146 | ) |
| Late                  registration fees                        |   |                                                | -           |            |   | -                                                   |   |   | - |   |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Loss                  before taxes                             |   |                                                | (11,204,121 | )               |   | (16,527,293                                         | )      |   | (27,731,414 | ) |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Income                  tax benefit (provision)                |   |                                                | -           |            |   | -                                                   |   |   | - |   |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Net                  loss                                      |   | $                                                   | (11,204,121 | )               | $      | (16,527,293                                         | )      | $ | (27,731,414 | ) |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Other                  comprehensive income (loss)             |   |                                                |        |            |   |                                                |   |   |   |   |
| Foreign                  currency translation loss             |   |                                                | (3,456      | )               |   | -                                                   |   |   | (3,456 | ) |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Net                  comprehensive loss                        |   | $                                                   | (11,207,577 | )               | $      | (16,527,293                                         | )      | $ | (27,734,870 | ) |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Loss                  per share - basic and diluted            |   | $                                                   | (0.16       | )               | $      | (0.24                                               | )      | $ | (0.40 | ) |
|                                                           |   |                                                |        |            |   |                                                |   |   |   |   |
| Weighted                  average shares - basic and diluted   |   |                                                | 68,937,781  |            |   | 68,937,781                                          |   |   | 68,937,781 |   |

----

| **SulphCo,                  Inc.**                             |   |                                |        |            |   |                                |   |
|----------------------------------------------------------------|--------|-------------------------------------|-------------|-----------------|--------|-------------------------------------|--------|
| **(a                  Develoment Stage Company)**              |   |                                |        |            |   |                                |   |
| **Statement                  of Operations (unaudited)**       |   |                                |        |            |   |                                |   |
|                                                           |   | **From                  Inception** |        | **Adjustments** |   | **From                  Inception** |   |
|                                                           |   | **(as                  reported)**  |        |            |   | **(as                  restated)**  |   |
| Revenue                                                        |   |                                |        |            |   |                                |   |   |   |   |
| Sales                                                          |   | $                                   | 42,967      |            | $      | -                                   |   | $ | 42,967 |   |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Expenses                                                       |   |                                |        |            |   |                                |   |   |   |   |
| Selling,                  general, and administrative expenses |   |                                | (36,072,799 | )               |   | -                                   |   |   | (36,072,799 | ) |
| Research                  and development expenses:            |   |                                |        |            |   |                                |   |   |   |   |
| Fujairah                  test facility                        |   |                                | -           |            |   | (17,352,293                         | )      |   | (17,352,293 | ) |
| Other                                                          |   |                                | (4,374,486  | )               |   | -                                   |   |   | (4,374,486 | ) |
| Loss                  on investment in joint venture           |   |                                | (837,720    | )               |   | 825,000                             |   |   | (12,720 | ) |
| Loss                  on disposal of asset                     |   |                                | (222,134    | )               |   | -                                   |   |   | (222,134 | ) |
| Loss                  on impairment of asset                   |   |                                | (233,900    | )               |   | -                                   |   |   | (233,900 | ) |
| Total                  operating expenses                      |   |                                |        |            |   |                                |   |   |   |   |
|                                                           |   |                                | (41,741,039 | )               |   | (16,527,293                         | )      |   | (58,268,332 | ) |
| Loss                  from operations                          |   |                                |        |            |   |                                |   |   |   |   |
|                                                           |   |                                | (41,698,072 | )               |   | (16,527,293                         | )      |   | (58,225,365 | ) |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Other                  income (expense)                        |   |                                |        |            |   |                                |   |   |   |   |
| Interest                  income                               |   |                                | 498,132     |            |   | -                                   |   |   | 498,132 |   |
| Interest                  expense                              |   |                                | (984,066    | )               |   | -                                   |   |   | (984,066 | ) |
| Late                  registration fees                        |   |                                | (760,240    | )               |   | -                                   |   |   | (760,240 | ) |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Loss                  before taxes                             |   |                                | (42,944,246 | )               |   | (16,527,293                         | )      |   | (59,471,539 | ) |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Income                  tax benefit (provision)                |   |                                | -           |            |   | -                                   |   |   | - |   |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Net                  loss                                      |   | $                                   | (42,944,246 | )               | $      | (16,527,293                         | )      | $ | (59,471,539 | ) |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Other                  comprehensive income (loss)             |   |                                |        |            |   |                                |   |   |   |   |
| Foreign                  currency translation loss             |   |                                | (3,456      | )               |   | -                                   |   |   | (3,456 | ) |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Net                  comprehensive loss                        |   | $                                   | (42,947,702 | )               | $      | (16,527,293                         | )      | $ | (59,474,995 | ) |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Loss                  per share - basic and diluted            |   | $                                   | (1.07       | )               | $      | (0.41                               | )      | $ | (1.48 | ) |
|                                                           |   |                                |        |            |   |                                |   |   |   |   |
| Weighted                  average shares - basic and diluted   |   |                                | 40,256,027  |            |   | 40,256,027                          |   |   | 40,256,027 |   |

----

**Reclassification**

| Quarter                  ended                                                                                                             |   | March,2005 |      | June,2005 |   | September,                  2005 |   | December,2005 |      | March,2006 |   | June,2006 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|-----------|-----------|--------|----------------------------------|--------|---------------|-----------|------------|--------|-----------|--------|
|                                                                                                                                            |   |       |      |      |   |                             |   |          |      |       |   |      |   |   | (restated) |   |   | (restated) |   |
| Sales,                  general, & administrative                  expenses                                                            |   |       |      |      |   |                             |   |          |      |       |   |      |   |   |   |   |   |   |   |
| Original                  filing                                                                                                           |   | $          | 1,434,115 |      | $      | 1,660,431                        |   | $             | 1,070,379 |       | $      | 2,479,202 |   | $ | 3,770,144 |   | $ | 4,632,823 |   |
| Depreciation                  & Amortization                  (separately                  stated in original                  filing) |   |       | 44,519    |      |   | 62,993                           |   |          | 39,359    |       |   | -         |   |   | - |   |   | - |   |
| Reclassifications                                                                                                                          |   |       | (258,609  | )         |   | (276,061                         | )      |          | (275,196  | )          |   | (266,053  | )      |   | (294,658 | ) |   | - |   |
| Reclassified                                                                                                                               |   | $          | 1,220,025 |      | $      | 1,447,363                        |   | $             | 834,542   |       | $      | 2,213,149 |   | $ | 3,475,486 |   | $ | 4,632,823 |   |
|                                                                                                                                       |   |       |      |      |   |                             |   |          |      |       |   |      |   |   |   |   |   |   |   |
| Research                  & development                                                                                                |   |       |      |      |   |                             |   |          |      |       |   |      |   |   |   |   |   |   |   |
| Original                  filing                                                                                                           |   | $          | 141,515   |      | $      | 246,119                          |   | $             | 655,188   |       | $      | 399,274   |   | $ | 219,771 |   | $ | - |   |
| Reclassifications                                                                                                                          |   |       | 258,609   |      |   | 276,061                          |   |          | 275,196   |       |   | 266,053   |   |   | 294,658 |   |   | 12,234,653 |   |
| Reclassified                                                                                                                               |   | $          | 400,124   |      | $      | 522,180                          |   | $             | 930,384   |       | $      | 665,327   |   | $ | 514,429 |   | $ | 12,234,653 |   |

| **2.** | **Loan                  and Receivable and Accrued                  Interest** |
|--------|--------------------------------------------------------------------------------|

| **3.** | **Prepaid                  Expenses** |
|--------|---------------------------------------|

| **4.** | **Property                  and Equipment** |
|--------|---------------------------------------------|

----

|                                            |   | **June                  30, 2006** |       | **Adjustments** |   | **June                  30,2006** |   |
|-------------------------------------------------|--------|------------------------------------|------------|-----------------|--------|-----------------------------------|--------|
|                                            |   | (as                  reported)     |       |            |   | (as                  restated)    |   |
| Construction                  Work-in-Progress  |   | $                                  | 15,881,055 |            | $      | (15,881,055                       | )      | $ | 0 |   |
| Equipment                                       |   |                               | 923,884    |            |   | -                                 |   |   | 923,884 |   |
| Computers                                       |   |                               | 199,582    |            |   | -                                 |   |   | 199,582 |   |
| Office                  furniture               |   |                               | 57,116     |            |   | -                                 |   |   | 57,116 |   |
| Leasehold                  improvements         |   |                               | 83,375     |            |   | -                                 |   |   | 83,375 |   |
|                                            |   |                               | 17,145,012 |            |   | (15,881,055                       | )      |   | 1,263,957 |   |
| Less:                  Accumulated depreciation |   |                               | (936,818   | )               |   | -                                 |   |   | (936,818 | ) |
| Total                                           |   | $                                  | 16,208,194 |            | $      | (15,881,055                       | )      | $ | 327,139 |   |

| **5.** | **Investment                  in Joint Venture** |
|--------|--------------------------------------------------|

----

| Condensed                  Balance Sheet, June 30, 2006:                |   | (unaudited) |    |
|-------------------------------------------------------------------------|--------|-------------|---------|
| Current                  assets                                         |   | $           | 132,377 |   |
| Depreciable                  assets (net)                               |   |        | 112,740 |   |
| Other                  assets                                           |   |        | 1,633   |   |
| Total                  assets                                           |   | $           | 246,750 |   |
|                                                                    |   |        |    |   |
| Liabilities                                                             |   | $           | -       |   |
| Members’                  equity                                  |   | $           | 246,750 |   |
|                                                                    |   |        |    |   |
| Operating                  Statement, Six Months Ended June 30, 2006:   |   |        |    |   |
| Revenue                                                                 |   | $           | -       |   |
| Operating                  expenses                                     |   |        | (22,043 | ) |
| Non-operating                  expense                                  |   |        | (3,397  | ) |
| Net                  loss                                               |   | $           | (25,440 | ) |
|                                                                    |   |        |    |   |
| Operating                  Statement, Three Months Ended June 30, 2006: |   |        |    |   |
| Revenue                                                                 |   | $           | -       |   |
| Operating                  expenses                                     |   |        | (20,491 | ) |
| Non-operating                  expense                                  |   |        | (3,397  | ) |
| Net                  loss                                               |   | $           | (23,888 | ) |

| **6.** | **Deposits** |
|--------|--------------|

| **7.** | **Note                  Payable** |
|--------|-----------------------------------|

| **8.** | **Capital                  Stock** |
|--------|------------------------------------|

----

| **9.** | **Loss                  Per Share** |
|--------|-------------------------------------|

| **10.** | **Stock                  Plans and Share-Based                  Compensation** |
|---------|--------------------------------------------------------------------------------|

----

----

|                                                    | Nardi                                  | Mustang                    | van                  Maasdijk |
|---------------------------------------------------------|----------------------------------------|----------------------------|-------------------------------|
| Dates                  of options                       | 2/28/06                  & 3/31/06 | 3/29/06                    | 6/19/06                       |
| Term                                                    | One                  year              | to                  4/1/10 | to                  5/22/09   |
| Expected                  volatility                    | 129%                  - 131%           | 162%                       | 147%                          |
| Expected                  dividends                     | None                                   | None                       | None                          |
| Risk-free                  interest rate                | 5%                                     | 5%                         | 5.2%                          |
| Discount                  for post-vesting restrictions | None                                   | None                       | None                          |
| Vesting                  date                           | 2/28/2006                              | 3/31/2006                  | 9/29/2006                     |

| Date                  of option                         | 6/19/2006                   |
|---------------------------------------------------------|-----------------------------|
| Term                                                    | to                  5/22/09 |
| Expected                  term used to calculate value  | 646                  Days   |
| Expected                  volatility                    | 117%                        |
| Expected                  dividends                     | None                        |
| Risk-free                  interest rate                | 5.2%                        |
| Discount                  for post-vesting restrictions | None                        |

| **11.** | **Commitments                  and Contingencies** |
|---------|----------------------------------------------------|

| **12.** | **Related                  Party Transactions** |
|---------|-------------------------------------------------|

----

----

**Item      2. Management’s Discussion and Analysis of Financial Condition and Results of      Operations**

**Results      of Operations**

***Three      and six months ended June 30, 2006 compared to the three and six months ended      June 30, 2005***

**Research      and Development Expenses**

**Selling,      General and Administrative Expenses**

----

**Interest      Expense**

**Late      Registration **

----

**Depreciation      and Amortization**

**Loss      on Impairment of Asset**

*Accounting      for the Impairment or Disposal of Long Lived Assets*

**Net      Loss**

**Liquidity      and Capital Resources**

----

***Recent      Financing Activities***

**Forward-Looking      Statements**

----

**Item      4. Controls and Procedures**

----

**PART      II. OTHER INFORMATION**

**Item      6.**
**      Exhibits **

----

**SIGNATURES**

|                                                |                                                            |                             |
|-----------------------------------------------------|-----------------------------------------------------------------|----------------------------------|
|                                                | SULPHCO,                INC.(Registrant)                        |
|                                           |                                                       |                        |
| Date: March              27,              2007 | By:                                                   | /s/ Larry              Ryan |
|                                                |                                                                 |
|                                                | Larry                RyanChief                Executive Officer |

|   |                                                                                                                                                    |                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|
|   | By:                                                                                                                                           | /s/ Michael              A. Abend |
|   |                                                                                                                                                         |
|   | Michael                A. AbendInterim                Chief Financial Officer(Principal                Financial and Accounting                Officer) |