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

FORM      10-QSB

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x         QUARTERLY      REPORT      UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the      quarterly period ended June 30, 2005.

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

Commission      File No. 0-27599

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

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

| 850                Spice Islands Drive, Sparks, NV 89431 |
|----------------------------------------------------------|
|                                                          |
| (Address                of principal executive offices)  |
|                                                     |
| (775)                829-1310                            |
|                                                          |
| (Issuer’s                telephone number)         |

Number      of      shares outstanding of each of the issuer’s classes of common equity, as of the      latest practicable date: 56,644,385 shares of common stock issued and      outstanding as of August 10, 2005.

Transitional      Small Business Disclosure Format: Yes o      No x

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**PART      I**

**Item      1.   Financial Statements**.

| SULPHCO,                INC.(A Company in the Development Stage)BALANCE                SHEETJune 30, 2005(unaudited)                                                                                                                                                                                                                                                                         |                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                         |  **June                30,                2005** |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                  |   |   |
| **Current              Assets:**                                                                                                                                                                                                                                                                                                                                                             |                                                  |   |   |
|        Cash              and cash              equivalents                                                                                                                                                                                                                                                                                                | $                                                     | 7,527,078 |   |
|        Prepaid              expenses                                                                                                                                                                                                                                                                                                                      |                                                  | 26,054 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
|               Total              current assets                                                                                                                                                                                                                                                                        |                                                  | 7,553,132 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
| **Property              and Equipment (net of accumulated depreciation              of $731,647)**                                                                                                                                                                                                                                                                                           |                                                  | 507,133 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
| **Other              Assets**                                                                                                                                                                                                                                                                                                                                                                |                                                  |   |   |
|        Deferred              tax asset (net              of valuation allowance of $9,145,004)                                                                                                                                                                                                                                                            |                                                  | — |   |
|        Intangible              assets (net of              accumulated amortization of $5,949)                                                                                                                                                                                                                                                            |                                                  | 292,662 |   |
|        Other                                                                                                                                                                                                                                                                                                                                              |                                                  | 36,822 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
|               Total              other assets                                                                                                                                                                                                                                                                          |                                                  | 329,484 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
|                 Total              assets                                                                                                                                                                                                                                                                    | $                                                     | 8,389,749 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
| **Current              Liabilities**                                                                                                                                                                                                                                                                                                                                                         |                                                  |   |   |
|        Accounts              payable                                                                                                                                                                                                                                                                                                                      | $                                                     | 196,068 |   |
|        Unearned              revenue                                                                                                                                                                                                                                                                                                                      |                                                  | 500,000 |   |
|        Accrued              liabilities                                                                                                                                                                                                                                                                                                                   |                                                  | 263,898 |   |
|        Accrued              late registration              fees                                                                                                                                                                                                                                                                                           |                                                  | 760,240 |   |
|        Related              party notes              payable                                                                                                                                                                                                                                                                                              |                                                  | 1,000,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
|               Total              current liabilities                                                                                                                                                                                                                                                                   |                                                  | 2,720,206 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                  |   |   |
| **Long              Term Related Party Note Payable**                                                                                                                                                                                                                                                                                                                                        |                                                  | 7,000,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
| **Commitment              and Contingencies**                                                                                                                                                                                                                                                                                                                                                |                                                  | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
|               Total              liabilities                                                                                                                                                                                                                                                                           |                                                  | 9,720,206 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
| **Stockholder’s              Equity**                                                                                                                                                                                                                                                                                                                                                  |                                                  |   |   |
|        Preferred              stock:              10,000,000 shares authorized              ($0.001              par value) none issued                                                                                                                                             |                                                  | — |   |
|        Common              stock: 100,000,000              shares authorized              ($0.001              par value) 56,644,385 shares              issued              and outstanding at June 30, 2005 |                                                  | 56,644 |   |
|        Paid              in capital                                                                                                                                                                                                                                                                                                                       |                                                  | 26,374,714 |   |
|        Prepaid              expense via stock              issuance                                                                                                                                                                                                                                                                                       |                                                  | (10,725 | ) |
|        Stock              subscription              receivable                                                                                                                                                                                                                                                                                            |                                                  | (744,500 | ) |
|        Deficit              accumulated              during the development stage                                                                                                                                                                                                                                                                         |                                                  | (27,006,590 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
|               Total              stockholder’s equity                                                                                                                                                                                                                                                            |                                                  | (1,330,457 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                       |   |
|                 Total              liabilities and stockholder’s equity                                                                                                                                                                                                                                | $                                                     | 8,389,749 |   |
|                                                                                                                                                                                                                                                                                                                                                                                         |                                                  |   |
| The                Accompanying Notes are an Integral Part of the Financial                Statements                                                                                                                                                                                                                                                                                        |                                                  |

----

| SULPHCO,                INC.(A Company in the Development                Stage)STATEMENT OF OPERATIONSJune 30,                2005(unaudited) |                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                                                                                                                                          |                                                      |   |   |   |   |   |
|                                                                                                                                          | **Six                Months                EndedJune 30** |   | **Three                Months                EndedJune 30** |   | **Inceptionto                date** |   |
|                                                                                                                                          | **2005**                                                  |   | **2004** |   | **2005** |   | **2004** |   |   |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |
| **Revenue**                                                                                                                                   |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Sales                                                                                                           | $                                                         | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 42,967 |   |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Expenses**                                                                                                                                  |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      General              and administrative              expenses                                                   |                                                      | (3,094,546 | ) |   | (1,109,481 | ) |   | (1,660,431 | ) |   | (545,966 | ) |   | (22,521,422 | ) |
|      Research              and development              expenses                                                     |                                                      | (442,627 | ) |   | (226,526 | ) |   | (246,119 | ) |   | (114,032 | ) |   | (2,183,338 | ) |
|      Depreciation&              amortization                                                                     |                                                      | (107,512 | ) |   | (49,769 | ) |   | (62,993 | ) |   | (2,387 | ) |   | (780,751 | ) |
|      Loss              on disposal of asset                                                                          |                                                      | — |   |   | — |   |   | — |   |   | — |   |   | (221,711 | ) |
|      Loss              on impairment of asset                                                                        |                                                      | (233,900 | ) |   | — |   |   | — |   |   | — |   |   | (233,900 | ) |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |
|           Total              operating expenses                                             |                                                      | (3,878,585 | ) |   | (1,385,776 | ) |   | (1,969,543 | ) |   | (662,385 | ) |   | (25,941,122 | ) |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Loss              from operations                                                 |                                                      | (3,878,585 | ) |   | (1,385,776 | ) |   | (1,969,543 | ) |   | (662,385 | ) |   | (25,898,155 | ) |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other              income              (expense)**                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Interest              income                                                                                    |                                                      | 93,954 |   |   | — |   |   | 54,576 |   |   | — |   |   | 150,565 |   |
|      Interest              expense                                                                                   |                                                      | (149,963 | ) |   | (154,000 | ) |   | (79,213 | ) |   | (74,000 | ) |   | (498,760 | ) |
|      Late              registration fees                                                                             |                                                      | (760,240 | ) |   | — |   |   | (322,240 | ) |   | — |   |   | (760,240 | ) |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |
|           Loss              before taxes                                                    |                                                      | (4,694,834 | ) |   | (1,539,776 | ) |   | (2,316,420 | ) |   | (736,385 | ) |   | (27,006,590 | ) |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income              tax              benefit (provision)                                                                                      |                                                      | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |
|           Net              loss                                                             | $                                                         | (4,694,834 | ) | $ | (1,539,776 | ) | $ | (2,316,420 | ) | $ | (736,385 | ) | $ | (27,006,590 | ) |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss              per share:              basic and diluted                                                                                   | $                                                         | (0.08 | ) | $ | (0.03 | ) | $ | (0.04 | ) | $ | (0.01 | ) | $ | (0.74 | ) |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |   |
| Weighted              average              shares     basic              and diluted                                 |                                                      | 56,578,552 |   |   | 51,026,611 |   |   | 56,627,718 |   |   | 51,316,473 |   |   | 36,603,456 |   |
|                                                                                                                                          |                                                           |   |  |   |  |   |  |   |  |   |

|                                                                                                  |
|-------------------------------------------------------------------------------------------------------|
| The                Accompanying Notes are an Integral Part of the Financial                Statements |

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| SULPHCO,                INC.(A Company in the Development                Stage)STATEMENT OF CASH FLOWSJune 30,                2005(unaudited) |                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                                                                                                                                     | **Six                Months                EndedJune 30** |   |  **Inceptionto                date** |   |
|                                                                                                                                          | **2005**                                                  |   | **2004** |   |   |
| **Cash              Flows From              Operating Activities**                                                                            |                                                      |   |   |   |   |   |   |   |   |
| Net              loss                                                                                                                         | $                                                         | (4,694,834 | ) | $ | (1,539,776 | ) | $ | (27,006,590 | ) |
|    Adjustments              to reconcile net loss to cash used in              operating activities:                           |                                                      |   |   |   |   |   |   |   |   |
|       Depreciation&              amortization                                                               |                                                      | 107,512 |   |   | 49,769 |   |   | 777,401 |   |
|       Shares              issued for              services                                                      |                                                      | 887,500 |   |   | 85,000 |   |   | 6,666,293 |   |
|       Shares              issued for compensation              expense                                          |                                                      | 204,000 |   |   | — |   |   | 204,000 |   |
|       Shares              issued for interest              expense                                              |                                                      | — |   |   | 148,000 |   |   | 296,000 |   |
|       Contribution              from              stockholder                                                   |                                                      | — |   |   | — |   |   | 555,000 |   |
|       Shares              subscribed for              services                                                  |                                                      | — |   |   | — |   |   | 21,000 |   |
|       Loss              on disposal of              subsidiary                                                  |                                                      | — |   |   | — |   |   | 221,711 |   |
|       (Increase)              decrease in accounts              receivable                                      |                                                      | 317,800 |   |   | (15,244 | ) |   | — |   |
|       (Increase)              decrease in prepaid              expenses                                         |                                                      | 12,806 |   |   | 10,973 |   |   | (24,553 | ) |
|       Decrease              in accounts              payable                                                    |                                                      | (98,445 | ) |   | 98,634 |   |   | 172,684 |   |
|       Decrease              in accrued              liabilities                                                 |                                                      | (222,072 | ) |   | (32,450 | ) |   | 287,281 |   |
|       Accrued              late registration              fees                                                  |                                                      | 760,240 |   |   | — |   |   | 760,240 |   |
|       Loss              on impairment of              asset                                                     |                                                      | 233,900 |   |   | — |   |   | 233,900 |   |
|       Increase              in unearned              revenue                                                    |                                                      | 500,000 |   |   | — |   |   | 500,000 |   |
|       Decrease              in legal              settlement                                                    |                                                      | — |   |   | (13,636 | ) |   | — |   |
|          Net              cash used              in operating activities                         |                                                      | (1,991,593 | ) |   | (1,208,730 | ) |   | (16,335,633 | ) |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |
| **Cash              Flows From              Investing Activities**                                                                            |                                                      |   |   |   |   |   |   |   |   |
|       Purchase              of property and              equipment                                              |                                                      | (238,186 | ) |   | (6,470 | ) |   | (1,134,313 | ) |
|       Investment              in              subsidiary                                                        |                                                      | — |   |   | — |   |   | (221,711 | ) |
|       Return              / (payment) of              deposit                                                   |                                                      | 10,000 |   |   | — |   |   | (36,822 | ) |
|       Development              of intangible              assets                                                |                                                      | (125,982 | ) |   | — |   |   | (314,454 | ) |
|          Net              cash used              in investing activities                         |                                                      | (354,168 | ) |   | (6,470 | ) |   | (1,707,300 | ) |
|                                                                                                                                          |                                                      |   |   |   |   |   |   |   |   |
| **Cash              Flows from              Financing Activities**                                                                            |                                                      |   |   |   |   |   |   |   |   |
|       Proceeds              from issuance of              stock                                                 |                                                      | — |   |   | 2,480,474 |   |   | 11,779,652 |   |
|       Proceeds              from stock              subscription                                                |                                                      | — |   |   | — |   |   | 4,240,887 |   |
|       Proceeds              from issuance of              related party notes payable                           |                                                      | — |   |   | 500,000 |   |   | 11,000,000 |   |
|       Proceeds              from issuance of line              of credit                                        |                                                      | — |   |   | — |   |   | 750,000 |   |
|       Return              on capital                                                                            |                                                      | — |   |   | — |   |   | (118,427 | ) |
|       Principal              payments on related              party notes payable                               |                                                      | — |   |   | (250,000 | ) |   | (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                     |                                                      | — |   |   | 2,730,474 |   |   | 25,570,012 |   |
|                                                                                                                                          |                                                           |   |  |   |  |   |
| Net              increase (decrease) in cash and cash equivalents                                                                             |                                                      | (2,345,761 | ) |   | 1,515,274 |   |   | 7,527,078 |   |
| Cash              and cash              equivalents at beginning of period                                                                    |                                                      | 9,872,839 |   |   | 735,733 |   |   | — |   |
|                                                                                                                                          |                                                           |   |  |   |  |   |
| Cash              and cash              equivalents at end of period                                                                          | $                                                         | 7,527,078 |   | $ | 2,251,007 |   | $ | 7,527,078 |   |

|                                                                                                                                                                                                                                                            |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Supplemental              Information and non cash transactions**                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                            |
| During              the six months ended June 30, 2005, and 2004, the Company              paid $79,213 and $154,000 in interest, respectively. The Company paid              no              income taxes during the six months ended June 30, 2005, and 2004. |
| The                Accompanying Notes are an Integral Part of the Financial                Statements                                                                                                                                                           |

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SULPHCO,      INC.(A Company in the Development Stage)NOTES TO THE      INTERIM FINANCIAL STATEMENTSJune 30, 2005 (unaudited)

| **1.** | **Basis              of Presentation**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The              accompanying unaudited interim financial statements of Sulphco,              Inc., (the “Company”) have been prepared by the Company in accordance with              generally accepted accounting principles in the United States of America,              pursuant to the Securities and Exchange Commission rules and regulations.              In management’s opinion, all adjustments necessary for a fair presentation              of the results for the interim periods have been reflected in the interim              financial statements. The results of operations for any interim period              are              not necessarily indicative of the results for a full year. All adjustments              to the financial statements are of a normal recurring nature. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Certain              information and footnote disclosures normally included in              financial statements prepared in accordance with generally accepted              accounting principles have been condensed or omitted. Such disclosures              are              those that would substantially duplicate information contained in the              most              recent audited financial statements of the Company, such as significant              accounting policies and stock options. Management presumes that users              of              the interim statements have read or have access to the audited financial              statements and notes thereto included in the Company’s most recent annual              report on Form 10-KSB.                                        |

|   |                                                                                                                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2.** | **Loss              On Impairment of Asset**                                                                                                                                                                                                                                                                                                                           |
|        |                                                                                                                                                                                                                                                                                                                                                                   |
|        | In              March 2005, a desulfurizing unit, previously classified as work              in progress, was determined to be obsolete based on our current              technological improvements. The estimated salvage value of the reusable              components as of March 31, 2005 was $197,517, resulting in an impairment              loss of $233,900. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **3.** | **Unearned              Revenue**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | During              2005, the Company has received $500,000 in unearned              revenue, which represents the first two installments on the sale              of a              Sonocracking TM  pilot plant to OIL-SC for $1 million, as noted in the              8-K filed with the SEC on February 25, 2005. In accordance with the              terms              of the agreement, the Sonocracking TM unit shall be installed and              operational within six months from the date of the contract. The first              payment of $300,000 was received on March 15 and the second payment              of              $200,000 was received on June 30. The two remaining payments of $50,000              and $450,000 will be received on or before September 1, 2005 and December              1, 2005, respectively. |

|   |                                                                                                                                                                                                                                                                                                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **4.** | **Prepaid              Expenses**                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                     |
|   | Prepaid              expenses include $16,054 in prepaid insurance which is              amortized over the life of the policy, and a $10,000 advance payment              for a              consulting agreement. The insurance policy expires in November of 2005              and              the consulting agreement expires in December of 2005. |

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SULPHCO,      INC.(A Company in the Development Stage)NOTES TO THE      INTERIM FINANCIAL STATEMENTSJune 30, 2005 (unaudited)

| **5.** | **Notes              Payable**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The              Company’s notes payable consist of the following as of June 30,              2005:                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | As              of June 30, 2005, the Company had outstanding short-term notes              payable due to related parties in the amount of $1,000,000. The notes              carry an annual interest rate of 8%, payable quarterly, and mature              on              December 30, 2005. Interest of $40,000 has been paid on these notes              for              the six months ended June 30, 2005.                                                                                                                                                   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | On              December 31, 2004, under the Board’s approval, the Company              issued a $7,000,000 note to the Chairman and CEO. Interest on the note              will be based at the rate of 3-month LIBOR plus 0.5% per annum, with              payments due and payable December 31 of 2005, 2006, and on the note              maturity date of December 31, 2007, at which time the principal is              also              due. As of June 30, 2005, interest payable of $110,082 has been accrued              on              this note. |

|   |                                                                                                                                                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **6.** | **Related              Party Transactions**                                                                                                                                                              |
|   |                                                                                                                                                                                                     |
|   | The              CEO was paid $90,000 during the quarter, under              a consulting agreement. The agreement is set to terminate              on              July 1, 2006.              |
|        |                                                                                                                                                                                                     |
|   | In              June 2005, an interest payment of $10,000 was made to the              Chairman and CEO in connection with an outstanding note payable.                                                  |
|        |                                                                                                                                                                                                     |
|   | In              June 2005 an interest payment of $10,000 was made to a related              party in connection with an outstanding note payable.                                                        |
|        |                                                                                                                                                                                                     |
|   | The              Company has a consulting agreement with a Director and, as of              June 30, 2005, have paid $59,791 in consulting fees and $7,436 in travel              related expenses.      |
|        |                                                                                                                                                                                                     |
|   | The              Company had a consulting agreement with a related party and, as              of June 30, 2005, has paid $50,000 in consulting fees and $50,015 in              travel related expenses. |

|   |                                                                                                                                                                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **7.** | **Capital              Stock**                                                                                                                                                                     |
|   |                                                                                                                                                                                               |
|   | In              January 2005, fifty thousand restricted shares of common stock              were issued at $5.47 per share, to a Director for services valued at              $273,500.            |
|        |                                                                                                                                                                                               |
|   | In              January 2005, fifty thousand restricted shares of common stock              were issued at $4.08 per share to an Officer for compensation expense              valued at $204,000. |
|        |                                                                                                                                                                                               |
|   | In              April 2005, fifteen thousand shares of common stock were issued              at $5.91 in exchange for consulting services valued at              $88,650.                          |
|        |                                                                                                                                                                                               |
|   | In              April 2005, fifty thousand restricted shares of common stock              were issued at $5.68 per share to a Director for services valued at              $284,000.               |
|        |                                                                                                                                                                                               |
|   | In              May 2005, fifty thousand restricted shares of common stock were              issued at $3.54 per share to a Director for services valued at              $177,000.                 |

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SULPHCO,      INC. (A Company in the Development Stage)NOTES TO THE      INTERIM FINANCIAL STATEMENTSJune 30, 2005 (unaudited)

|   | The              issue prices of the shares above reflect the fair market value              of the Company’s common stock at the market close on the date of              issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The              Company is obligated to pay $760,240 in late registration fees              due to the registration statement related to a private placement having              not yet gone effective, as per the agreement. The agreement requires              SulphCo to pay late registration fees to the selling security holders              at              the rate of 2% per month of the invested amount if the registration              covering the placement shares is not declared effective by the SEC              within              90 days of the date of the investment. As of June 30, 2005, the full              amount of fees has been accrued. The registration statement was declared              effective by the SEC on June 27, 2005. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **8.** | **Commitments              and Contingencies**                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Financial              instruments, which potentially subject the Company to              concentrations of credit risk, consist mainly of cash equivalents.              The              Company maintains amounts on deposit with financial institutions, which              exceed federally insured limits. The Company has not experienced any              significant losses in such accounts, nor does management believe it              is              exposed to any significant credit risk. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | There              are various claims and lawsuits pending against the Company              arising in the normal course of the Company’s business. Although the              amount of liability at June 30, 2005, cannot be ascertained, management              is              of the opinion that any resulting liability will not materially affect              the              Company’s financial position.                                                                          |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

| **9.     ** | **Subsequent              Events**                                                                                                                                                                                  |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      |                                                                                                                                                                                                                |
|                                 | On              July 12, 2005, SulphCo signed an agreement with Jaie Haour Group              of Taiwan for the manufacture of major structural components for SulphCo’s              Sonocracking(TM) units. |

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**Item      2.   Plan of Operation**

**Our      Business**

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

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

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

**Development      and Commercialization Activities**

                We      have been developing our SonocrackingTM technology on an ongoing basis since      January 1999. Testing has been done through in-house facilities, and more      recently by ChevronTexaco Energy Technology Co. (“ChevronTexaco”), a unit of      ChevronTexaco Corp. Beginning in mid-2002 our development activities have      centered around re-designing, upgrading and testing of laboratory scale      prototypes utilizing more powerful ultrasonic generators, and redesigning these      prototypes to accommodate the more powerful generators. Substantially all of      the      development work to date has been conducted by SulphCo personnel. 

                In      January 2005 ChevronTexaco installed a 2,000 bbl/day SonocrackingTM system in its      pilot plant at the Richmond Technology Center in Richmond, California, using      components owned by us to further evaluate our technology. Our collaboration      agreement with ChevronTexaco expired by its terms on July 6, 2005. We are unable      to predict when or if we will enter into any new business agreements with      ChevronTexaco or the terms of any such agreements.

                We      are completing construction of our first commercial 5,000 bbl/day Sonocracking      unit at our facilities in Sparks, Nevada. Construction of the unit is a      culmination of months of testing of the internal components of the unit at      our      facility. The 5,000 bbl/day unit is designed to be modular in order to      facilitate both scalability and maintenance. We intend to configure five of      the      5,000 bbl/day units to make up a single 25,000 bbl/day unit.

                SulphCo      is continuing      its SonocrackingTM development work on crude oil, primarily through data      generated from its pilot plant located at its headquarters in Sparks, Nevada.      SulphCo is also developing and testing improved ultrasonic probes and associated      electrical components at the same facility. 

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                During      the next 12 months we intend to continue development and commercialization      activities currently underway and to explore new activities. In this      regard:

|  | • | We              completed design and engineering work for a 25,000 bbl or more              per day SonocrackerTM unit during the second quarter of 2005. Once the              design and engineering work for the 25,000 bbl unit is fully tested,              we              intend to manufacture two initial 25,000 bbl units in anticipation              of              receipt of a customer order. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |         |                                                                                                                                                                                                                                                                                                                                                                                                                |
|  | • | We              plan to continue to engage in development and testing              activities, both at our facility and in collaboration with other parties.                                                                                                                                                                                                                                                        |
|  |         |                                                                                                                                                                                                                                                                                                                                                                                                                |
|  | • | We              expect to continue to explore partnerships, joint ventures,              licensing and other relationships conducive to the further development              and              deployment of our SonocrackingTM technology.                                                                                                                                                                     |

                In      February 2005 we entered into an agreement with OIL-SC, Ltd (OIL-SC) based      in      Seoul, South Korea, which provides for the sale by us to OIL-SC of a      SonocrackerTM pilot plant utilizing our SonocrackingTM technology for $1      million and the appointment of OIL-SC as our marketing representative for oil      refiners in South Korea. The pilot plant, which is expected to have a processing      capacity of up to 2,000 bbl/day, will be located in South Korea, and is intended      to both serve as a demonstration unit for our SonocrackingTM technology to South      Korean refiners and to upgrade petroleum products which OIL-SC purchases on      the      open market. We recently completed construction and testing of the plant      components and expect to deliver and assemble the SonocrackerTM unit in South      Korea in August 2005. We will also provide start-up assistance in connection      with OIL-SC’s operation of the pilot plant. 

                The      agreement with      OIL-SC calls for the $1 million purchase price for the pilot plant to be paid      to      us in installments. The initial installment of $300,000 was paid to us on March      15, 2005 and the second installment of $200,000 was paid to us on June 30,      2005.      Additional installments of $50,000 and $450,000 are payable on September 1      and      December 1, 2005. This agreement also provides that OIL-SC is entitled to a      full      refund of all payments if the pilot plant does not operate within agreed      specifications within 90 days of the installation of the pilot plant. These      specifications call for the pilot plant to upgrade a specified grade of medium      weight crude oil (Arab Medium Crude) by increasing its gravity (API) by 9.8%,      reducing sulfur weight content by 29.4%, and reducing nitrogen content by 29.9%.      As the payment of the $1 million purchase price is refundable if the pilot      plant      does not meet the agreed specifications, no portion of the purchase price has      been or will be recorded as revenue in our financial statements until the pilot      plant is successfully installed and tested under the agreement with      OIL-SC.

                In      July 2005, we      entered into a Manufacturing Agreement with Jaie Haour Group of Taiwan (“JH      Group”) which provides for the manufacture by JH Group of major structural      components for our SonocrackingTM units. The agreement specifies that JH Group      will manufacture, the frames, tanks, piping and certain other components for      the      Sonocracking units, as well as provide component sourcing, technical design      and      development assistance. JH Group will also assist SulphCo by providing personnel      for equipment installation support. JH Group has constructed components for      a      SonocrackingTM unit for our customer, OIL-SC, in South Korea.

                In      May 2005, we      entered into a Manufacturing Agreement with Märkisches Werk GmbH (“MWH”) which      provides for the manufacture by MWH of our Sonocracking probe assembly and      reactor (“Equipment”). Under the terms of the Manufacturing Agreement we are      required to purchase Equipment we may require from time to time exclusively      from      MWH, so long as MWH is able to meet certain requirements as to price, quality      and delivery schedules. The Manufacturing Agreement has a term of five years,      subject to earlier termination upon the occurrence of specified      defaults.

                In      February 2004 we formed a joint venture with two Kuwaiti nationals to engage      in      the marketing of our technology in Kuwait. To date, marketing activities by      the      Kuwait joint venture have been limited to exploring sales of demonstration      units      in Kuwait. We have not licensed our Sonocracking technology to the joint venture      and we are unable to determine at this time what activities, if any, the Kuwait      joint venture will undertake in the future. 

4

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                The      nature and timing      of our activities over the next 12 months and beyond cannot be predicted with      certainty, as they are dependent upon a number of factors, including the timing      of completion of development and commercialization milestones and the business      requirements of third parties. We do not expect to generate any revenues from      the sale of SonocrackerTM units or the licensing of our technology until at least      the second half of 2005. 

**Liquidity      and Financial Results   **

                As      of July 31, 2005,      we had $7,138,457 in available cash reserves. Included in this amount is      $500,000 in refundable installment payments (unearned revenue) received related      to the pending delivery of a pilot plant by us to OIL-SC. Additional refundable      installments of $50,000 and $450,000 are payable on September 1 and December      1,      2005. We believe our current cash reserves, excluding the unearned revenue      noted      above, are sufficient to meet our current obligations and fund our operations      for the next 12 months.

                We      currently have a      total of $1,000,000 due to related parties that is payable December 31, 2005      and      carries an 8% interest rate. We also have a $7,000,000 note payable to a related      party due December 31, 2007 with a variable interest rate of LIBOR plus .5%      adjusted quarterly, based on the one-month LIBOR rate (See “Financing      Activities” below). We currently use the proceeds to fund our day to day      operations and meet our current obligations. 

                We      are a development      stage company and have not generated any material revenues since we commenced      our current line of business in 1999. We do not anticipate generating any      material revenues on a sustained basis unless and until a licensing agreement,      sale of an initial production scale unit, or other commercial arrangement is      entered into with respect to our technology. 

                As      of June 30, 2005,      we had an accumulated deficit of approximately $27.0 million, which includes      approximately $6.9 million of stock-based compensation. For the six months      ended      June 30, 2005, we incurred losses of $4.7 million, of which approximately $1.1      million represents stock-based compensation payable to directors, officers      and      consultants. 

                These      losses are      principally associated with the research and development of our upgrading and      desulfurization technologies, development of pre-production prototypes, and      related marketing activity, and we expect to continue to incur expenses in      the      future for development, commercialization and sales and marketing activities      related to the commercialization of our technologies. 

                The      $4.7 million loss      for the six months ended June 30, 2005, also includes: (1)      approximately $760,000 of accrued late registration fees payable to investors      in      our June 2004 private placements resulting from delays in an SEC registration      completed in June 2005 (See “Financing Activities below”); (2) a $234,000 loss      on impairment of asset, as we have determined that a previously capitalized      prototype no longer reflects the value of our commercially viable technology.      

5

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                Our      estimated monthly      cash outflow, or cash burn rate, as of the date of this report, for fixed and      normal recurring operating expenses, is approximately $400,000 per month, as      follows:

|         | Salaries              and consulting expenses |         | $            | 177,000      |         |         |
|--------------|-----------------------------------------------|--------------|--------------|--------------|--------------|--------------|
|         | Plant              and property leases        |         |         | 37,000       |         |         |
|         | Professional              fees                |         |         | 60,000       |         |         |
|         | R&D              Expenses                 |         |         | 31,500       |         |         |
|         | Interest              expense                 |         |         | 26,000       |         |         |
|         | Office,              phone, utilities         |         |         | 8,000        |         |         |
|         | Patent              costs                     |         |         | 30,000       |         |         |
|         | Travel              and entertainment         |         |         | 23,500       |         |         |
|         | Miscellaneous                                 |         |         | 7,000        |         |         |
|         |                                          |         |              |         |         |
|    |                                     |    |    |    |    |    |
|         |      Total           |         | $            | 400,000      |         |         |
|         |                                          |         |              |         |         |

                The      foregoing amounts      represent fixed and normal recurring cash operating expenses, and are exclusive      of non-recurring items such as capital expenditures. Additional funding      requirements during the next 12 months may arise upon the placement of an order      by a future customer for one or more SonocrackerTM units. We expect that funding      for the cost of manufacturing of any particular unit would be available either      from current cash reserves or from potential customers before we commence      manufacturing the unit. In addition, as we are unable to determine the precise      timing of development activities or receipt of customer orders, monthly cash      outflow may increase significantly as we increase our research and development      activities, and prepare for additional assembly and manufacturing duties      associated with the deployment of the SonocrackingTM technology.

                “Salary      and consulting      expenses” represents salary and payroll costs for all of our full time employees      and consulting payments. 

                Monthly      fixed and recurring expenses for “Plant and property leases” of $37,000      represents the monthly lease payment to an unaffiliated third party      for our      facility located at 850 Spice Islands Drive for approximately 93,000 square      feet      of executive offices, research facilities and manufacturing space.

**                **      Included in professional fees are estimated recurring legal fees paid to outside      corporate and patent counsel and ongoing litigation expenses, audit and review      fees paid to our independent accountants, and fees paid for investor      relations.

                We      anticipate that our      existing capital resources will be sufficient to fund our cash requirements      through the next 12 months. The extent and timing of our future capital      requirements will depend primarily upon the rate of our progress in the      development and commercialization of our technologies, the terms of any future      commercial arrangements, and the timing of future customer orders.

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

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

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                     *Financing Activities*

                As      of June 30, 2005, a      short-term promissory note in the amount of $500,000 was outstanding and payable      to Dr. Gunnerman. The note is due December 30, 2005 and carries an interest      rate      of 8 percent per annum. The agreement provides for mandatory prepayments from      revenues we receive from the sale of our products or the licensing of our      technology or otherwise, and from the amount of unrestricted loan or equity      financings we receive.

                As      of June 30, 2005, a      short-term promissory note in the amount of $500,000 was outstanding and payable      to Erika Herrmann, the sister-in-law of Dr. Gunnerman. The note is due December      30, 2005 and carries an interest rate of 8 percent per annum. The agreement      provides for mandatory prepayments from revenues we receive from the sale of      our      products or the licensing of our technology or otherwise, and from the amount      of      unrestricted loan or equity financings we receive.

                In      June 2004 we      conducted two private placements with institutional and other third party      investors for the sale of units consisting of our common stock, warrants, and      rights to acquire additional stock and warrants, generating net cash proceeds      of      approximately $2.3 million. Additional cash proceeds of $2.3 million were      generated as of November 2, 2004, when investors in the June 2004 placements      acquired the remaining unpurchased units pursuant to the terms of the June      2004      placements, and up to $15.2 million may be generated upon exercise of warrants      and rights if investors in the June 2004 private placements exercise all      available warrants and rights. The rights expire on March 15, 2006, and warrants      expire three years from the date of their issuance. 

                As      of June 30, 2005,      we were obligated to pay approximately $760,000 in the aggregate to investors      in      the private placements as late registration fees. Our agreement also provides      for interest to accrue on this amount at the rate of 18% per annum. We have      had      informal discussions with some of the private placement investors who have      expressed interest in receiving restricted shares in lieu of cash fees and      we      expect that we will reach agreement with most of the investors to pay these      fees      with restricted shares in lieu of cash. However, as of the date of this report      no formal agreements have been entered into with any investors to pay these      fees      by issuing additional restricted shares.

                In      December 2004 Dr.      Gunnerman advanced $7 million to us as a loan. The loan is evidenced by a      promissory note which bears interest at the rate of 0.5% above the 30 day“LIBOR” rate, adjusted quarterly and payable annually, and the entire principal      amount is due and payable in December 2007. The “LIBOR” rate, which stands for      London Interbank Offered Rate, is a reference rate for short-term loans between      banks in the London interbank market. The initial loan rate under the promissory      note on December 31, 2004, was 2.9% (0.5% above the “LIBOR” rate), and the      interest rate under the note is adjusted quarterly. The “LIBOR” rate as of June      30, 2005 was 3.34%, making the interest associated with the note 3.84%.

**Research      and Development**

                For      the six months      ended June 30, 2005 we incurred approximately $443,000 related to research      and      development of our Sonocracking technology. Of this amount, approximately      $130,000 was paid to our engineers as wages and related benefits for the design      and testing of the pilot plant being sold to OIL-SC. Also included in this      amount is approximately $142,000 for the procurement of control panels, probes,      centrifuges, and generators related to the development of the 2,000 bbl/ unit      for OIL-SC and the 1,000 bbl / unit currently located at our Sparks, Nevada      facility used for test purposes. The remainder of our research and development      costs in this six-month period relate to outside labor costs and recurring      monthly expenses related to the maintenance of our warehouse facilities. We      continue to design, test, and purchase parts that we expect to use in the      production of a large scale commercial unit.

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                We      intend to continue      our research and development program during the next 12 months in order to      expand the development of the design and manufacture of commercial SonocrackerTM      units which embody our proprietary technology. Management anticipates that      our      research and development costs, including a portion of salaries for full time      employees, will be approximately $50,000 per month, or $600,000 during the      next      12 months. 

**Employees**

                As      of July 31, 2005,      we had 17 full-time employees and a consulting agreement with RWG, Inc., for      the      full-time services of our chairman and CEO, Rudolf W. Gunnerman. We do not      expect any material changes in the number of our employees during the next      12      months unless required to service future customer orders. 

**Forward      Looking Statements**

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

|  | • | implementing              our business strategy;                                                                                                                                                   |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |         |                                                                                                                                                                                               |
|  | • | commercialization              and marketing of our products under development;                                                                                                                    |
|  |         |                                                                                                                                                                                               |
|  | • | our              intellectual property;                                                                                                                                                            |
|  |         |                                                                                                                                                                                               |
|  | • | our              estimates of future revenue and profitability;                                                                                                                                    |
|  |         |                                                                                                                                                                                               |
|  | • | our              estimates or expectations of continued losses;                                                                                                                                    |
|  |         |                                                                                                                                                                                               |
|  | • | our              expectations regarding future expenses, including research and              development, sales and marketing, manufacturing and general and              administrative expenses; |
|  |         |                                                                                                                                                                                               |
|  | • | difficulty              or inability to raise additional financing, if needed,              on terms acceptable to us;                                                                             |
|  |         |                                                                                                                                                                                               |
|  | • | our              estimates regarding our capital requirements and our needs for              additional financing;                                                                                 |
|  |         |                                                                                                                                                                                               |
|  | • | attracting              and retaining customers and employees;                                                                                                                                     |
|  |         |                                                                                                                                                                                               |
|  | • | sources              of revenue and anticipated revenue; and                                                                                                                                       |
|  |         |                                                                                                                                                                                               |
|  | • | competition              in our market.                                                                                                                                                            |

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

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**Item      3.   Controls and Procedures**

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

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**PART      II**

**Item      1.   Legal Proceedings.**

                On      June 9, 2005, our      company and our CEO, Rudolf Gunnerman, were named as defendants in two separate      legal actions commenced in Reno, Nevada. Though the plaintiffs, factual      allegations and theories of recovery asserted in the two cases are different,      they both allege claims to intellectual property belonging to us, which claims      we and the other named defendants regard as wholly without merit. The fact      that      the two cases were filed on the same day and were endorsed by the same counsel      suggests a concerted effort between the two plaintiffs to induce an undeserved      settlement from us and/or other named defendants. We intend to defend ourselves      vigorously. Following is a description of the plaintiffs’ allegations, the      relief sought and the present status of these proceedings.

                *Talisman      Capital      Talon Fund, Ltd. v. Rudolf Gunnerman and Sulphco, Inc*. was commenced in the      United States District Court for the District of Nevada (Case No.      CV-N-05-0354-HDM-RAM) by an offshore company purportedly based in Tortola,      British Virgin Islands, against SulphCo, Inc. and Rudolf W. Gunnerman. The      Talisman Fund complaint alleges that the predecessor-in-interest of Talisman,      Capital Strategies Fund, Ltd., entered into an agreement with Dr. Gunnerman      in      April 2003 in which Dr. Gunnerman purportedly assigned to Capital Strategies      Fund, Ltd. all rights to specified intellectual property then owned by us or      subsequently acquired or developed by us, including two patents issued to us      prior to the April 2003 agreement (US Patent Nos. 6,402,939, 6,500,219), four      patents issued to SulphCo subsequent to April 2003 (US Patent Nos. 6,827,844,      6,652,992, and 6,897,628), and a patent application filed by us subsequent      to      April 2003. The Talisman Fund complaint further alleges claims against us for      tortious interference with Talisman’s contractual rights under the April 2003      agreement, conversion and unjust enrichment, and seeks as relief both      unspecified damages and a declaration that Talisman is the exclusive owner      of      the claimed intellectual property. Talisman claims rights under and related      to      the April 2003 agreement purportedly as the result of an assignment by Capital      Strategies Fund, Ltd. to Talisman Fund in May 2005 of its rights under the      April      2003 agreement. Both SulphCo and Dr. Gunnerman deny the validity of the claims      of the Talisman Fund, including claims that rights to any of our company’s      intellectual property are covered by the April 2003 agreement and further deny      that the Talisman Fund has any rights to technology owned or used by us. On      July      28, 2005, the defendants (including SulphCo) filed a Motion for Judgment on      the      Pleadings, seeking dismissal of all counts in the complaint as to all counts.      The defendants also filed an Original Answer denying the allegations in the      complaint.

                The      second action      commenced on June 9, 2005, *Clean Fuels Technology v. Rudolf W. Gunnerman,      Peter Gunnerman, RWG, Inc. and SulphCo, Inc.*, was filed in the Second      Judicial District Court of the State of Nevada in and for the County of Washoe      (Case No. CV05 01346). The complaint alleges that under an exclusive license      agreement originally entered into between Dr. Gunnerman and the legal      predecessor-in-interest of plaintiff Clean Fuels Technology (“CFT”) in 1994, and      which agreement was amended at various times after 1994, CFT owns the exclusive      rights to “sulfur removal technology” originally developed by Professor Teh Fu      Yen and Dr. Gunnerman with financial assistance provided by Dr. Gunnerman.      The      CFT complaint alleges that Rudolf Gunnerman, Peter Gunnerman, our President      and      COO, and RWG, Inc., a company owned by Dr. Gunnerman, wrongfully transferred      the“sulfur removal technology” to SulphCo, Inc. in violation of the terms of the      exclusive license agreement and other legal duties allegedly owed by them to      CFT. The CFT complaint further alleges, on the basis of unspecified “information      and belief,” that we conspired with Rudolf and Peter Gunnerman and RWG, Inc. to      conceal the sulfur removal technology from CFT in breach of alleged fiduciary      duties owed by SulphCo, Inc. and the other defendants to CFT; that SulphCo,      Inc.      committed unspecified “intentional acts” to “pilfer” CFT’s rights in the sulfur      removal technology, and that CFT is entitled to a constructive trust over the      “sulfur removal technology” as well as damages against the named defendants.      Both SulphCo, Inc. and the other defendants deny the validity of CFT’s claims,      including claims to any rights to technology owned or used by us. Both Rudolf      Gunnerman and Peter Gunnerman were co-founders of CFT as well as its      predecessor-in-interest, and both Dr. Gunnerman and Peter Gunnerman are      shareholders of CFT. On July 28, 2005, the defendants (including SulphCo) filed      a Motion for Judgment on the Pleadings, seeking dismissal of all counts in      the      complaint as to all counts except a single count alleged only against Rudolf      and      Peter Gunnerman. The plaintiff has yet to respond to SulphCo’s dispositive      motion. The defendants also filed an Original Answer denying the allegations      in      the complaint.

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                No      amounts have been      provided for in our financial statements for any pending proceedings.

**Item      2.   Changes in Securities.**

                During      the three      months ended June 30, 2005, we sold and issued unregistered securities in the      following transactions.

                In      consideration of      Mr. Robert van Maasdijk’s agreement to join the Company’s Board of Directors in      April 2005, SulphCo agreed to grant Mr. van Maasdijk 50,000 shares of our common      stock valued at $5.68 per share. The agreement to issue 50,000 shares was based      upon SulphCo’s determination of the value of the services rendered and to be      rendered by Mr. van Maasdijk as a director. 

                In      consideration of      Ralf Klug’s agreement to serve as a consultant effective April 1, 2005, SulphCo      agreed to grant Mr. Klug 15,000 shares of our common stock valued at $5.91      per      share. The agreement to issue 15,000 shares was based upon SulphCo’s      determination of the value of the services rendered and to be rendered by Mr.      Klug as a consultant to the Company. 

                In      consideration of      Dr. Raad Alkadiri’s agreement to join the Company’s Board of Directors in May      2005, SulphCo agreed to grant Dr. Alkadiri 50,000 shares of our common stock      valued at $3.54 per share. The agreement to issue 50,000 shares was based upon      SulphCo’s determination of the value of the services rendered and to be rendered      by Dr. Alkadiri as a director. 

                All      such securities      were issued and sold in reliance on the exemption from registration contained      in      Section 4(2) of the Securities Act of 1933, and the certificates representing      such securities contain a restrictive legend reflecting the limitations on      future transfer of those securities. The offer and sale of these securities      was      made without public solicitation or advertising. The investors represented      to us      that they were knowledgeable and sophisticated, and were experienced in business      and financial matters so as to be capable of evaluating an investment in our      securities and were an “accredited investor” within the meaning of Regulation D      promulgated under the Securities Act of 1933. Each of these investors was      afforded full access to information regarding our business, including reports      filed with the SEC.

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**Item      6.   Exhibits and Reports on Form 8-K.**

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

| **            #** | 10.1         Employment              Agreement dated as of June 1, 2005, by and between SulphCo, Inc. and              Peter              Gunnerman.                             |
|-------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                               |                                                                                                                                                                                                                          |
|                                                                          | 31.1         Certification              of Chief Executive Officer pursuant to Rule 13a-14 under the Securities              Exchange Act of 1934.                               |
|                                                                               |                                                                                                                                                                                                                          |
|                                                                          | 31.2         Certification              of Chief Financial Officer pursuant to Rule 13a-14 under the Securities              Exchange Act of 1934.                               |
|                                                                               |                                                                                                                                                                                                                          |
|                                                                          | 32.1         Certification              of CEO and CFO Pursuant to 18 U.S.C.ss.1350, as Adopted Pursuant to              ss.              906 of the Sarbanes-Oxley Act of 2002. |
|                                                                          |                                                                                                                                                                                                                          |
|                                                                          | —————————————                                                                                                                                   |
|                                                                          |                                                                                                                                                                                                                          |
|                                                                          | #              Incorporated by reference from our Form 8-K filed on June 10,              2005.                                                                                                                               |

**(b)**       **Reports on Form      8-K.**

                On      April 15, 2005, we filed a Current Report on Form 8-K under Item 5.02 to report      the appointment of Robert Henri Charles van Maasdijk as a director.

                On      April 26, 2005, we filed a Current Report on Form 8-K under Item 5.02 to report      the resignation of Harry P. Holman as a director.

                On      May 2, 2005, we filed a Current Report on Form 8-K under Item 1.01 to report      an      amendment to the Collaboration Agreement with ChevronTexaco Energy Technology      Co. in order to extend the Agreement to July 6, 2005.

                On      May 16, 2005, we filed a Current Report on Form 8-K under Item 8.01 to report      the issuance of press release announcing that we had received written      notification from the Salt Lake District Office of the SEC that the      investigation captioned In the Matter of SulphCo, Inc. (SL-02337) had been      terminated.

                On      May 23, 2005, we filed a Current Report on Form 8-K under Item 5.02 to report      the appointment of Dr. Raad Alkadiri as a director.

                On      June 10, 2005, we filed a Current Report on Form 8-K under Items 5.02 and 9.01      to report the appointment of Peter Gunnerman as President and COO.

                On      June 15, 2005, we filed a Current Report on Form 8-K under Items 8.01 and 9.01      to report the issuance of a press release announcing that on June 9, 2005,      the      Company was named as a defendant in two actions, the first brought in the United      States District Court for the District of Nevada by Talisman Capital Talon      Fund,      Ltd., an offshore company purportedly based in Tortola, British Virgin Islands,      and the second brought by Clean Fuels Technology of Nevada.

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**SIGNATURES**

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

| Dated:              August 11, 2005 | SULPHCO,              INC. (Registrant)                                                              |
|-------------------------------------|------------------------------------------------------------------------------------------------------|
|                                |                                                                                                 |
|                                |                                                                                                 |
|                                | /s/              Rudolf W. Gunnerman                                                                 |
|                                |      —————————— |
|                                | By:              Rudolf W. Gunnerman                                                                 |
|                                | Its:              Chairman of the Board of Directors                                                 |
|                                |   and              Chief Executive              Officer                                    |

|   |                                                                                   |
|--------|----------------------------------------------------------------------------------------|
|   |                                                                                   |
|   | /s/              Alan L. Austin, Jr.                                                   |
|   |      ———————— |
|   | By:               Alan L. Austin, Jr.                                             |
|   | Its:              Vice President of Finance,                                           |
|   | Chief              Financial Officer                                                   |
|   | (Principal              Financial and Accounting              Officer)                 |

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**EXHIBIT      INDEX**

| **#** | 10.1 | Employment              Agreement dated as of June 1, 2005, by and between              SulphCo, Inc. and Peter Gunnerman. |
|-------|------|----------------------------------------------------------------------------------------------------------------------------|
|       |      |                                                                                                                       |

|         | 31.1                                                                                                         | Certification              of Chief Executive Officer pursuant to Rule 13a-14              under the Securities Exchange Act of 1934.                               |
|--------------|--------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |                                                                                                              |                                                                                                                                                                |
|         | 31.2                                                                                                         | Certification              of Chief Financial Officer pursuant to Rule 13a-14              under the Securities Exchange Act of 1934.                               |
|              |                                                                                                              |                                                                                                                                                                |
|         | 32.1                                                                                                         | Certification              of CEO and CFO Pursuant to 18 U.S.C.ss.1350, as              Adopted Pursuant to ss. 906 of the Sarbanes-Oxley Act of              2002. |
|    |
|         | ———————————————    |
|    |
|         | #              Incorporated              by reference from our Form 8-K filed on June 10,              2005. |

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