----

----

**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Form      10-Q/A**

**_____**

**Amendment      No. 2**

**[X]      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 Common                Stock, par value $.001 | Outstanding                at March 21,                2007 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**

----

|                                                                                                             |   | **March                31, 2006** |        | **December                31, 2005** |   |
|------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|--------------------------------------|--------|
|                                                                                                             |   | (restated)                        |        |                            |   |
| **Current                Assets:**                                                                               |   |                              |        |                            |   |
| Cash                and cash equivalents                                                                    |   | $                                 | 35,193,006  |                                 | $      | 6,874,653 |   |
| Loan                and accrued interest receivable                                                         |   |                              | 100,547     |                                 |   | - |   |
| Prepaid                expenses and other                                                                   |   |                              | 96,572      |                                 |   | 137,577 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|  Total                current assets                                                                        |   |                              | 35,390,125  |                                 |   | 7,012,230 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
| **Property                and Equipment (net of accumulated depreciation of                $885,786)**           |   |                              | 360,418     |                                 |   | 397,416 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
| **Other                Assets**                                                                                  |   |                              |        |                                 |   |   |   |
| Intangible                assets (net of accumulated amortization of $23,088)                               |   |                              | 437,626     |                                 |   | 355,218 |   |
| Investment                in Joint Venture                                                                  |   |                              | 138,774     |                                 |   | 139,550 |   |
| Deposits                                                                                                    |   |                              | 48,672      |                                 |   | 140,822 |   |
| Deferred                tax asset (net of valuation allowance of                $10,347,231)                |   |                              | -           |                                 |   | - |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|  Total                other assets                                                                          |   |                              | 625,072     |                                 |   | 635,590 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|  Total                assets                                                                                |   | $                                 | 36,375,615  |                                 | $      | 8,045,236 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
| **Current                Liabilities**                                                                           |   |                              |        |                                 |   |   |   |
| Accounts                payable and accrued liabilities                                                     |   | $                                 | 1,570,077   |                                 | $      | 779,413 |   |
| Refundable                deposit                                                                           |   |                              | 550,000     |                                 |   | 550,000 |   |
| Accrued                fees and interest                                                                    |   |                              | 1,231,595   |                                 |   | 1,035,572 |   |
| Related                party note payable                                                                   |   |                              | 500,000     |                                 |   | 500,000 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|  Total                current liabilities                                                                   |   |                              | 3,851,672   |                                 |   | 2,864,985 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
| **Long                Term Related Party Note Payable**                                                          |   |                              | 7,000,000   |                                 |   | 7,000,000 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
| **Commitments                and Contingencies**                                                                 |   |                              | -           |                                 |   | - |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|  Total                liabilities                                                                           |   |                              | 10,851,672  |                                 |   | 9,864,985 |   |
|                                                                                                             |   |                              |        |                                 |   |   |   |
| **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)                |   |                              |        |                                 |   |   |   |
|  72,470,910                shares issued and outstanding at March 31, 2006                                  |   |                              | 72,471      |                                 |   | 60,537 |   |
| Paid                in capital                                                                              |   |                              | 67,115,761  |                                 |   | 30,604,342 |   |
| Stock                subscriptions receivable                                                               |   |                              | (744,500    | )                                    |   | (744,500 | ) |
| Deficit                accumulated during the development stage                                             |   |                              | (40,919,789 | )                                    |   | (31,740,128 | ) |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|  Total                stockholders' equity (deficiency)                                                     |   |                              | 25,523,943  |                                 |   | (1,819,749 | ) |
|                                                                                                             |   |                              |        |                                 |   |   |   |
|  Total                liabilities and stockholders' equity (deficiency)                                     |   | $                                 | 36,375,615  |                                 | $      | 8,045,236 |   |

----

|                                                                 |   | **Three                  Months Ended** |       |          |   |
|----------------------------------------------------------------------|--------|-----------------------------------------|------------|---------------|--------|
|                                                                 |   | **March                  31**           |       | **Inception** |   |
|                                                                 |   | **2006**                                |       | **2005**      |   | **to                  date** |   |
|                                                                 |   | (restated)                              |       |          |   | (restated) |   |
| **Revenue**                                                          |   |                                    |       |          |   |   |   |
| Sales                                                           |   | $                                       | -          |          | $      | - |   | $ | 42,967 |   |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
| **Expenses**                                                         |   |                                    |       |          |   |   |   |   |   |   |
| Selling,                  general, and administrative expenses  |   |                                    | (3,475,486 | )             |   | (1,220,025 | ) |   | (30,366,599 | ) |
| Research                  and development expenses:             |   |                                    |       |          |   |   |   |   |   |   |
|  Fujairah                  test facility                        |   |                                    | (5,117,640 | )             |   | - |   |   | (5,117,640 | ) |
|  Other                                                          |   |                                    | (514,429   | )             |   | (400,124 | ) |   | (3,697,238 | ) |
| Loss                  on disposal of asset                      |   |                                    | -          |          |   | - |   |   | (221,711 | ) |
| Loss                  on impairment of asset                    |   |                                    | -          |          |   | (233,900 | ) |   | (233,900 | ) |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
|  Total                  operating expenses                      |   |                                    | (9,107,555 | )             |   | (1,854,049 | ) |   | (39,637,088 | ) |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
|  Loss                  from operations                          |   |                                    | (9,107,555 | )             |   | (1,854,049 | ) |   | (39,594,121 | ) |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
| **Other                  income (expense)**                          |   |                                    |       |          |   |   |   |   |   |   |
| Interest                  income                                |   |                                    | 53,092     |          |   | 39,377 |   |   | 303,691 |   |
| Interest                  expense                               |   |                                    | (125,199   | )             |   | (70,750 | ) |   | (869,119 | ) |
| Late                  registration fees                         |   |                                    | -          |          |   | (438,000 | ) |   | (760,240 | ) |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
|  Loss                  before taxes                             |   |                                    | (9,179,662 | )             |   | (2,323,422 | ) |   | (40,919,789 | ) |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
| Income                  tax benefit (provision)                      |   |                                    | -          |          |   | - |   |   | - |   |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
|  Net                  loss                                      |   | $                                       | (9,179,662 | )             | $      | (2,323,422 | ) | $ | (40,919,789 | ) |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
| Loss                  per share - basic and diluted                  |   | $                                       | (0.14      | )             | $      | (0.04 | ) | $ | (1.05 | ) |
|                                                                 |   |                                    |       |          |   |   |   |   |   |   |
| Weighted                  average shares - basic and diluted         |   |                                    | 65,354,635 |          |   | 56,529,385 |   |   | 38,934,386 |   |

----

|                                                                                                                                       |   | **Three                  Months Ended** |       |          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|------------|---------------|--------|
|                                                                                                                                       |   | **March                  31**           |       | **Inception** |   |
|                                                                                                                                       |   | **2006**                                |       | **2005**      |   | **to                  date** |   |
| **Cash                  Flows From Operating Activities**                                                                                  |   | (restated)                              |       |          |   | (restated) |   |
| Net                  loss                                                                                                                  |   | $                                       | (9,179,662 | )             | $      | (2,323,422 | ) | $ | (40,919,789 | ) |
| Adjustments                  to reconcile net loss to cash used in                  operating activities:                                  |   |                                    |       |          |   |   |   |   |   |   |
| Depreciation                  & amortization                                                                                           |   |                                    | 63,312     |          |   | 44,519 |   |   | 948,678 |   |
| Stock                  and options issued for services                                                                                     |   |                                    | 1,214,250  |          |   | 509,675 |   |   | 8,583,767 |   |
| Stock                  issued for interest expense                                                                                         |   |                                    | -          |          |   | - |   |   | 296,000 |   |
| Contribution                  from stockholder                                                                                             |   |                                    | -          |          |   | - |   |   | 555,000 |   |
| Loss                  from joint venture                                                                                                   |   |                                    | 776        |          |   | - |   |   | 776 |   |
| Loss                  on disposal of subsidiary                                                                                            |   |                                    | -          |          |   | - |   |   | 221,711 |   |
| Loss                  on impairment of asset                                                                                               |   |                                    | -          |          |   | 233,900 |   |   | 233,900 |   |
| Deposit                  used for expense                                                                                                  |   |                                    | 100,000    |          |   |   |   |   | 100,000 |   |
| (Increase)                  decrease in receivables                                                                                        |   |                                    | (547       | )             |   | 317,800 |   |   | (547 | ) |
| (Increase)                  decrease in prepaid expenses                                                                                   |   |                                    | 41,005     |          |   | 11,683 |   |   | (96,572 | ) |
| Increase                    (decrease) in accounts payable and accrued                    liabilities                                      |   |                                    | 790,665    |          |   | (354,620 | ) |   | 1,570,078 |   |
| Increase                  in refundable deposit                                                                                            |   |                                    | -          |          |   | 300,000 |   |   | 550,000 |   |
| Increase                  in accrued fees and interest                                                                                     |   |                                    | 115,199    |          |   | 438,000 |   |   | 936,184 |   |
| Net                  cash used in operating activities                                                                                     |   |                                    | (6,855,002 | )             |   | (822,465 | ) |   | (27,020,814 | ) |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| **Cash                  Flows From Investing Activities**                                                                                  |   |                                    |       |          |   |   |   |   |   |   |
| Advances                  for loan receivable                                                                                              |   |                                    | (100,000   | )             |   | - |   |   | (100,000 | ) |
| Purchase                  of property and equipment                                                                                        |   |                                    | (20,648    | )             |   | (133,565 | ) |   | (1,141,736 | ) |
| Investments                  in joint ventures and subsidiaries                                                                            |   |                                    | -          |          |   | - |   |   | (361,261 | ) |
| Payment                  of deposits                                                                                                       |   |                                    | (7,850     | )             |   | - |   |   | (148,672 | ) |
| Investments                  in intangible assets                                                                                          |   |                                    | (88,074    | )             |   | (88,522 | ) |   | (476,556 | ) |
| Net                  cash used in investing activities                                                                                     |   |                                    | (216,572   | )             |   | (222,087 | ) |   | (2,228,225 | ) |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| **Cash                  Flows from Financing Activities**                                                                                  |   |                                    |       |          |   |   |   |   |   |   |
| Proceeds                  from issuance of stock                                                                                           |   |                                    | 35,389,927 |          |   | - |   |   | 51,151,685 |   |
| 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                                                                         |   |                                    | -          |          |   | - |   |   | (750,000 | ) |
| 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                                                                                 |   |                                    | 35,389,927 |          |   | - |   |   | 64,442,045 |   |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| Net                  increase (decrease) in cash and cash equivalents                                                                      |   |                                    | 28,318,353 |          |   | (1,044,552 | ) |   | 35,193,006 |   |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| Cash                  and cash equivalents at beginning of period                                                                          |   |                                    | 6,874,653  |          |   | 9,872,839 |   |   | - |   |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| Cash                  and cash equivalents at end of period                                                                                |   | $                                       | 35,193,006 |          | $      | 8,828,287 |   | $ | 35,193,006 |   |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| **Supplemental                  Information and non cash transactions**                                                                    |   |                                    |       |          |   |   |   |   |   |   |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| Total                  interest payments included in operations                                                                            |   | $                                       | 135,199    |          | $      | 70,750 |   |   |   |   |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| The                  Company paid no income taxes during the three months ended March                  31, 2006                  and 2005. |   |                                    |       |          |   |   |   |   |   |   |
|                                                                                                                                       |   |                                    |       |          |   |   |   |   |   |   |
| Noncash                  investing and financing activity:                                                                                 |   |                                    |       |          |   |   |   |   |   |   |
| The                  Company incurred fees payable of $411,039 in issuing                  securities.                                     |   |                                    |       |          |   |   |   |   |   |   |
| The                  Company issued stock in exchange for a payable of                  $330,215.                                          |   |                                    |       |          |   |   |   |   |   |   |

----

**1.    **
**Basis      of Presentation**

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

----

| **SulphCo,                Inc.****(a                Company in the Development Stage)**                                                              |   |                                 |        |            |   |                                 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-------------|-----------------|--------|--------------------------------------|--------|
|  **Balance                Sheet (unaudited)**                                                                                                   |   | **March                31,****2006** |        | **Adjustments** |   | **March                31,****2006** |   |
|                                                                                                                                                 |   | **(as                reported)**     |        |            |   | **(as                restated)**     |   |
| Current                Assets:                                                                                                                       |   |                                 |        |            |   |                                 |   |
| Cash                and cash equivalents                                                                                                             |   | $                                    | 35,193,006  |            | $      | -                                    |   | $ | 35,193,006 |   |
| Loan                and accrued interest receivable                                                                                                  |   |                                 | 100,547     |            |   | -                                    |   |   | 100,547 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Prepaid                expenses and other                                                                                                            |   |                                 | 96,572      |            |   | -                                    |   |   | 96,572 |   |
| Total                current assets                                                                                                                  |   |                                 | 35,390,125  |            |   | -                                    |   |   | 35,390,125 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Property                and Equipment (net of accumulated depreciation of                $885,786)                                                   |   |                                 | 5,035,583   |            |   | (4,675,165                           | )      |   | 360,418 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Other                Assets                                                                                                                          |   |                                 |        |            |   |                                 |   |   |   |   |
| Intangible                assets (net of accumulated amortization of $23,088)                                                                        |   |                                 | 437,626     |            |   | -                                    |   |   | 437,626 |   |
| Investment                in Joint Venture                                                                                                           |   |                                 | 938,774     |            |   | (800,000                             | )      |   | 138,774 |   |
| Deposits                                                                                                                                             |   |                                 | 48,672      |            |   | -                                    |   |   | 48,672 |   |
| Deferred                tax asset (net of valuation allowance of $10,347,231)                                                                        |   |                                 | -           |            |   | -                                    |   |   | - |   |
| Total                other assets                                                                                                                    |   |                                 | 1,425,072   |            |   | (800,000                             | )      |   | 625,072 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Total                assets                                                                                                                          |   | $                                    | 41,850,780  |            | $      | (5,475,165                           | )      | $ | 36,375,615 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Current                Liabilities                                                                                                                   |   |                                 |        |            |   |                                 |   |   |   |   |
| Accounts                payable and accrued liabilities                                                                                              |   | $                                    | 1,570,077   |            | $      | -                                    |   | $ | 1,570,077 |   |
| Refundable                deposit                                                                                                                    |   |                                 | 550,000     |            |   | -                                    |   |   | 550,000 |   |
| Accrued                fees and interest                                                                                                             |   |                                 | 1,231,595   |            |   | -                                    |   |   | 1,231,595 |   |
| Related                party note payable                                                                                                            |   |                                 | 500,000     |            |   | -                                    |   |   | 500,000 |   |
| Total                current liabilities                                                                                                             |   |                                 | 3,851,672   |            |   | -                                    |   |   | 3,851,672 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Long                Term Related Party Note Payable                                                                                                  |   |                                 | 7,000,000   |            |   | -                                    |   |   | 7,000,000 |   |
| Commitments                and Contingencies                                                                                                         |   |                                 | -           |            |   | -                                    |   |   | - |   |
| Total                liabilities                                                                                                                     |   |                                 | 10,851,672  |            |   | -                                    |   |   | 10,851,672 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| 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) 72,470,910                shares                issued and outstanding |   |                                 | 72,471      |            |   | -                                    |   |   | 72,471 |   |
| Paid                in capital                                                                                                                       |   |                                 | 67,473,286  |            |   | (357,525                             | )      |   | 67,115,761 |   |
| Stock                subscriptions receivable                                                                                                        |   |                                 | (744,500    | )               |   | -                                    |   |   | (744,500 | ) |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Deficit                accumulated during the development stage                                                                                      |   |                                 | (35,802,149 | )               |   | (5,117,640                           | )      |   | (40,919,789 | ) |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Total                stockholders' equity (deficiency)                                                                                               |   |                                 | 30,999,108  |            |   | (5,475,165                           | )      |   | 25,523,943 |   |
|                                                                                                                                                 |   |                                 |        |            |   |                                 |   |   |   |   |
| Total                liabilities and stockholders' equity (deficiency)                                                                               |   | $                                    | 41,850,780  |            | $      | (5,475,165                           | )      | $ | 36,375,615 |   |

----

| **SulphCo,                    Inc.****(A                    Company in the Development                    Stage)****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                                                                                                                                    |   |                                                                            | (3,770,144 | )                     |   | 294,658                                                    |   |   | (3,475,486 | ) |
| Research                and development expenses:                                                                                                                                               |   |                                                                            |       |                  |   |                                                       |   |   |   |   |
| Test                facility                                                                                                                                                                    |   |                                                                            | -          |                  |   | (5,117,640                                                 | )      |   | (5,117,640 | ) |
| Other                                                                                                                                                                                           |   |                                                                            | (219,771   | )                     |   | (294,658                                                   | )      |   | (514,429 | ) |
| Loss                on disposal of asset                                                                                                                                                        |   |                                                                            | -          |                  |   | -                                                          |   |   | - |   |
| Loss                on impairment of asset                                                                                                                                                      |   |                                                                            | -          |                  |   | -                                                          |   |   | - |   |
|                                                                                                                                                                                            |   |                                                                            |       |                  |   |                                                       |   |   |   |   |
|                                                                                                                                                                                            |   |                                                                            | (3,989,915 | )                     |   | (5,117,640                                                 | )      |   | (9,107,555 | ) |
| Loss                from operations                                                                                                                                                             |   |                                                                            | (3,989,915 | )                     |   | (5,117,640                                                 | )      |   | (9,107,555 | ) |
| Other                income (expense)                                                                                                                                                           |   |                                                                            |       |                  |   |                                                       |   |   |   |   |
| Interest                income                                                                                                                                                                  |   |                                                                            | 53,092     |                  |   | -                                                          |   |   | 53,092 |   |
| Interest                expense                                                                                                                                                                 |   |                                                                            | (125,199   | )                     |   | -                                                          |   |   | (125,199 | ) |
| Late                registration fees                                                                                                                                                           |   |                                                                            | -          |                  |   | -                                                          |   |   | - |   |
| Loss                before taxes                                                                                                                                                                |   |                                                                            | (4,062,022 | )                     |   | (5,117,640                                                 | )      |   | (9,179,662 | ) |
| Income                tax benefit (provision)                                                                                                                                                   |   |                                                                            | -          |                  |   | -                                                          |   |   | - |   |
| Net                loss                                                                                                                                                                         |   | $                                                                               | (4,062,022 | )                     | $      | (5,117,640                                                 | )      | $ | (9,179,662 | ) |
|                                                                                                                                                                                            |   |                                                                            |       |                  |   |                                                       |   |   |   |   |
| Loss                per share - basic and diluted                                                                                                                                               |   | $                                                                               | (0.06      | )                     | $      | (0.08                                                      | )      | $ | (0.14 | ) |
|                                                                                                                                                                                            |   |                                                                            |       |                  |   |                                                       |   |   |   |   |
| Weighted                average shares - basic and diluted                                                                                                                                      |   |                                                                            | 65,354,635 |                  |   | 65,354,635                                                 |   |   | 65,354,635 |   |

----

| **SulphCo,                    Inc.****(A                      Company in the Development Stage)****Statement                of Operations (unaudited)** |   | **Inception                to date**  |        | **Adjustments**  |   | **Inception                to date**  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-------------|-----------------------|--------|--------------------------------------------|--------|
|                                                                                                                                                    |   | **(as                reported)**           |        |                  |   | **(as                restated)**           |   |
| Revenue                                                                                                                                                 |   |                                       |        |                  |   |                                       |   |
| Sales                                                                                                                                                   |   | $                                          | 42,967      |                  | $      | -                                          |   | $ | 42,967 |   |
| Expenses                                                                                                                                                |   |                                       |        |                  |   |                                       |   |   |   |   |
| Selling,                general, and administrative expenses                                                                                            |   |                                       | (30,661,257 | )                     |   | 294,658                                    |   |   | (30,366,599 | ) |
| Research                and development expenses:                                                                                                       |   |                                       |        |                  |   |                                       |   |   |   |   |
| Test                facility                                                                                                                            |   |                                       | (5,475,165  | )                     |   | 357,525                                    |   |   | (5,117,640 | ) |
| Other                                                                                                                                                   |   |                                       | (3,402,580  | )                     |   | (294,658                                   | )      |   | (3,697,238 | ) |
| Loss                on disposal of asset                                                                                                                |   |                                       | (221,711    | )                     |   | -                                          |   |   | (221,711 | ) |
| Loss                on impairment of asset                                                                                                              |   |                                       | (233,900    | )                     |   | -                                          |   |   | (233,900 | ) |
| Total                operating expenses                                                                                                                 |   |                                       | (39,994,613 | )                     |   | 357,525                                    |   |   | (39,637,088 | ) |
| Loss                from operations                                                                                                                     |   |                                       | (39,951,646 | )                     |   | 357,525                                    |   |   | (39,594,121 | ) |
| Other                income (expense)                                                                                                                   |   |                                       |        |                  |   |                                       |   |   |   |   |
| Interest                income                                                                                                                          |   |                                       | 303,691     |                  |   | -                                          |   |   | 303,691 |   |
| Interest                expense                                                                                                                         |   |                                       | (869,119    | )                     |   | -                                          |   |   | (869,119 | ) |
| Late                registration fees                                                                                                                   |   |                                       | (760,240    | )                     |   | -                                          |   |   | (760,240 | ) |
| Loss                before taxes                                                                                                                        |   |                                       | (41,277,314 | )                     |   | 357,525                                    |   |   | (40,919,789 | ) |
| Income                tax benefit (provision)                                                                                                           |   |                                       | -           |                  |   | -                                          |   |   | - |   |
|                                                                                                                                                    |   |                                       |        |                  |   |                                       |   |   |   |   |
| Net                loss                                                                                                                                 |   | $                                          | (41,277,314 | )                     | $      | 357,525                                    |   | $ | (40,919,789 | ) |
|                                                                                                                                                    |   |                                       |        |                  |   |                                       |   |   |   |   |
| Loss                per share - basic and diluted                                                                                                       |   | $                                          | (1.06       | )                     | $      | 0.01                                       |   | $ | (1.05 | ) |
|                                                                                                                                                    |   |                                       |        |                  |   |                                       |   |   |   |   |
| Weighted                average shares - basic and diluted                                                                                              |   |                                       | 38,934,386  |                  |   | 38,934,386                                 |   |   | 38,934,386 |   |

----

**Reclassification**

| Quarter                ended                                                                                        |   | March,2005 |      | June,2005 |   | September,2005 |   | December,2005 |      | March,2006 |   |
|---------------------------------------------------------------------------------------------------------------------|--------|------------|-----------|-----------|--------|----------------|--------|---------------|-----------|------------|--------|
| Sales,                general, & administrative                expenses                                         |   |       |      |      |   |           |   |          |      | (restated) |   |
| Original                filing                                                                                      |   | $          | 1,434,115 |      | $      | 1,660,431      |   | $             | 1,070,379 |       | $      | 2,479,202 |   | $ | 3,770,144 |   |
| 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 |   |
|                                                                                                                |   |       |      |      |   |           |   |          |      |       |   |   |   |   |   |   |
| 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 |   |
| Reclassified                                                                                                        |   | $          | 400,124   |      | $      | 522,180        |   | $             | 930,384   |       | $      | 665,327 |   | $ | 514,429 |   |

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

| **3.            ** | **Prepaid                Expenses and Other** |
|--------------------------------------------------------------------------------|-----------------------------------------------|

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

|                                           |   | **March                31, 2006** |      | **Adjustments** |   | **March                31,2006** |   |
|------------------------------------------------|--------|-----------------------------------|-----------|-----------------|--------|----------------------------------|--------|
|                                           |   | (as                reported)      |      |            |   | (as                restated)     |   |
| Construction                - Work-in-progress |   | $                                 | 4,675,165 |            | $      | (4,675,165                       | )      |   | - |   |
| Equipment                                      |   | $                                 | 913,306   |            |   | -                                |   | $ | 913,306 |   |
| Computers                                      |   |                              | 193,972   |            |   | -                                |   |   | 193,972 |   |
| Office                furniture                |   |                              | 55,551    |            |   | -                                |   |   | 55,551 |   |
| Leasehold                improvements          |   |                              | 83,375    |            |   | -                                |   |   | 83,375 |   |
|                                           |   |                              | 5,921,369 |            |   | -                                |   |   | 1,246,204 |   |
| Less:                Accumulated depreciation  |   |                              | (885,786  | )               |   | -                                |   |   | (885,786 | ) |
| Total                                          |   | $                                 | 5,035,583 |            | $      | (4,675,165                       | )      | $ | 360,418 |   |

----

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

| Condensed                Balance Sheet, March 31, 2006:                |   | (unaudited) |    |
|------------------------------------------------------------------------|--------|-------------|---------|
| Current                assets                                          |   | $           | 236,845 |   |
| Other                assets                                            |   |        | 42,294  |   |
| Total                assets                                            |   | $           | 279,139 |   |
|                                                                   |   |        |    |   |
| Liabilities                                                            |   | $           | 1,591   |   |
| Members’                equity                                   |   | $           | 277,548 |   |
|                                                                   |   |        |    |   |
| Operating                Statement, Three Months Ended March 31, 2006: |   |        |    |   |
| Revenue                                                                |   | $           | -       |   |
| Operating                expenses                                      |   | $           | (1,552  | ) |
| Net                loss                                                |   | $           | (1,552  | ) |

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

----

| **7.             ** | **Notes                Payable** |
|--------------------------------------------------------------------------------------|----------------------------------|

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

----

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

** **

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

----

|                                                                                                                                           | Nardi                   |   | Nardi                   |   | Mustang                       |
|------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------|-------------------------|--------|-------------------------------|
| Date                of option                                                                                                                  | 2/28/2006               |   | 3/31/2006               |   | 3/29/2006                     |
| Term                                                                                                                                           | One                year |   | One                year |   | Until                4/1/2010 |
| Expected                volatility (based upon calculatedhistorical                volatility of stock over                the same term) | 131%                    |   | 129%                    |   | 162%                          |
| Expected                dividends                                                                                                              | None                    |   | None                    |   | None                          |
| Risk-free                interest rate                                                                                                         | 5%                      |   | 5%                      |   | 5%                            |
| Discount                for post-vesting restrictions                                                                                          | None                    |   | None                    |   | None                          |
| Vesting                date                                                                                                                    | 2/28/2006               |   | 3/31/2006               |   | 9/29/2006                     |

| **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      months ended March 31, 2006 compared to the three months ended March 31,      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 Ryan                               |
|                              | Chief              Executive Officer     |

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