UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.20549FORM 10--QSB----------------------

| {X}            | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934 for the quarterly period ended September 30, 2004. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------|
|           |
| {  } | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT for thetransition period from _______ to ________.                  |

Commission File No. 0--27599SULPHCO,INC.------------------------------------------------------------------------------------------(Nameof the small business issuer)
Nevada
88--0224817
------------------------------------------------
------------------------------------------------------------------------
(State of Incorporation)
(I.R.S. Employer Identification No.)

850 Spice Islands Drive, Sparks, NV89431--------------------------------------------------------------------------------------------------------------(Addressof principal executive offices)
(775)829--1310--------------------------------------(Issuer’’stelephone number)

Number of shares outstanding of each of the issuer’’s classes ofcommon equity, as of the latest practicable date: 56,129,385 shares of commonstock issued and outstanding as of November 4, 2004.
 
Transitional Small Business Disclosure Format: Yes {  } No {X}

****   

PART I
ITEM 1. FINANCIAL STATEMENTS.
SULPHCO, INC. AND SUBSIDIARIES(A Company in the DevelopmentStage)BALANCE SHEETSeptember 30, 2004(unaudited)
**ASSETS**  
**September 30, 2004** 
**(unaudited)**
**Current Assets**
   
  Cash
 
$  1,350,946  
  Related party accounts receivable (net of allowance for bad debts of$15,373) 

15,474  
  Prepaid expenses
 
189,874 
     
     Total current assets
 
1,556,294 
     
**Property and equipment (net of accumulated depreciation of$597,388)**
 
192,518 
     
**Other Assets**
   
  Deferred tax asset (net of valuation allowance of $7,007,805)
 
--  
  Desulphurization prototype
 
427,630  
  Deposits
 
36,822 
     
     Total other assets
 
464,452 
     
          Total assets
 
 $  2,213,264 
     
**LIABILITIES AND STOCKHOLDERS’’EQUITY**    
**Current Liabilities**
   
  Accounts payable 
 
$       90,634  
  Accrued expenses
 
49,934  
  Related party notes payable
 
1,000,000 
     
     Total current liabilities
 
1,140,569 
     
**Stockholders’’ Equity**
   
  Common stock, $.001 par value, 100,000,000 shares authorized
   
    53,662,234 shares issued and outstanding
 
53,662  
  Additional paid--in--capital
 
22,121,241  
  Stock subscriptions receivable
 
(812,000) 
  Deficit accumulated during the development stage
 
  (20,290,208)
     
     Total stockholders’’ equity
 
1,072,695 
     
          Total liabilitiesand stockholders’’ equity
 
 $  2,213,264
     
The Accompanying Notes are an Integral Part of the FinancialStatements****   

SULPHCO, INC. AND SUBSIDIARIES(A Company in the DevelopmentStage)STATEMENTS OF OPERATIONSFor the Nine Months Ended September 30,2004 and 2003 (unaudited)
   
**For the Three Months Ended** 
**For the Nine Months Ended** 
**Inception** 
**September**
**September 30** 
**to date**
 
**2004**
   
**2003**
 
**2004**
   
**2003**
              
**Revenue**
             
  Sales

$            42,967  
$                  --    
$                 --  
$                --    
$                     -- 
  Interest income

44,228 
 
4,919 
   
1 
 
4,919 
   
3 
              
     Total revenue

87,195  
4,919    
1  
4,919    
3               
**Expenses**
                           
  Salary and wage expense

(8,176,381) 
 (240,352)   
 (500,280) 
 (685,973)   
 (612,710)
    Director fees

(195,500) 
--    
--  
--    
 (18,500)
  General and administrative expenses 

(9,258,238) 
 (468,685)   
164,929  
 (1,193,383)   
 (583,474)
  Research and development expenses

(1,614,371) 
 (115,582)   
 (88,891) 
 (382,878)   
 (262,000)
  Depreciation expense

 (637,193)
 
 (21,777)
   
 (46,090)
 
 (71,546)
   
 (139,978)
              
     Total expenses

 (19,881,683) 
 (846,396)   
(470,332) 
(2,333,780)   
(1,616,662)              
        Loss fromoperations

 (19,794,488)
 
 (841,477)
   
 (470,331)
 
 (2,328,861)
   
 (1,616,659)
              
  Loss on disposal of assets

(221,711)
 
-- 
   
-- 
 
-- 
   
-- 
              
        Loss beforeinterest expense and income taxes

(20,016,199) 
(841,477)   
(470,331) 
(2,328,861)   
(1,616,659)              
  Interest expense 

(274,011)
 
 (74,000)
   
 (6,000)
 
 (228,000)
   
 (20,298)
              
        Loss beforeincome taxes 

(20,290,210) 
(915,477)   
(476,331) 
(2,556,861)   
(1,636,957)              
  Provision for income taxes 

-- 
 
-- 
   
-- 
 
-- 
   
-- 
              
        Net loss

(20,290,210)
 
(915,477)
   
(476,331)
 
(2,556,861)
   
(1,636,957)
              
  Loss per share:-- basic

$             (0.60)
 
$             (0.02)
   
$             (0.01)
 
$           (0.05)
   
$              (0.03)
              
  Weighted average -- basic

33,887,420 
 
53,679,734 
   
47,589,920 
 
51,910,985 
   
47,649,642 
              
  Loss per share:-- diluted

$             (0.60)
 
$           (0.01)
   
$              1.00 
 
$           (0.05)
   
$               1.00 
              
  Weighted average -- diluted

34,059,001 
 
61,261,665 
   
47,589,920 
 
55,143,449 
   
47,649,642 
                            
The Accompanying Notes are an Integral Part of the FinancialStatements****   
SULPHCO, INC. AND SUBSIDIARIES(A Company in the DevelopmentStage)STATEMENT OF CASH FLOWSSeptember 30, 2004
  
**Inception** 
**September 30,** 
**September 30,**  
**to Date**
 
**2004**
 
**2003**

**Cash Flows from Operating Activities**
      
     Net loss
 
 (20,290,210) 
 (2,556,861) 
 (1,636,957)       
Adjustments to reconcile net loss to net cash 
      
used in operating activities:
      
     Depreciation expense
 
637,193  
71,546  
139,978 
     Shares issued forservices
 
5,523,518  
213,700  
16,000 
     Shares issued for interestexpense
 
74,000  
74,000  
-- 
     Increase in allowance for doubtfuldebts
 
36,373  
15,373  
-- 
     (Increase) in accountsreceivable
 
 (30,848) 
 (30,617) 
-- 
     Decrease in related partyreceivable
 
1,359,185  
--  
-- 
     Decrease in prepaidexpenses
 
33,627  
43,099  
 (4,477)
     Increase in accountspayable
 
67,250  
40,996  
 (114,054)
     Decrease in accruedliabilities
 
73,316  
 (30,442) 
 (29,700)
     Decrease in legalsettlement
 
-- 
 
 (13,636)
 
 (65,909)
       
     Net cash used in operatingactivities
 
 (12,516,596)
 
 (2,172,842)
 
 (1,695,119)
       
**Cash Flows from Investing Activities**
      
     Sale of capital assets
 
 (659,076) 
60,061  
 (768,186)
     Investment in subsidiary
 
 (220,086) 
--  
-- 
     Payment of deposits
 
 (36,822) 
--  
 (13,245)
     Development of intangibleassets
 
 (15,843)
 
-- 
 
-- 
       
     Net cash provided by (used in)investing activities 
 
 (931,827)
 
60,061 
 
 (781,431)
       
**Cash Flows from Financing Activities**
      
     Proceeds from issuance ofstock
 
9,222,944  
2,332,744  
-- 
     Proceeds from exercise of stockoptions
 
145,250  
145,250  
16,500 
     Proceeds from stocksubscriptions
 
4,240,887  
--  
3,575,000 
     Proceeds from issuance of relatedparty notes payable
 
4,170,000  
500,000  
-- 
     Proceeds from issuance of line ofcredit
 
750,000  
--  
-- 
     Return of capital
 
 (118,427) 
--  
-- 
     Principal payments on related partynotes payable
 
 (420,000) 
 (250,000) 
 (170,000)
     Payments on contractspayable
 
 (250,000) 
--  
-- 
     Principal payments on line ofcredit
 
 (750,000) 
--  
 (500,000)
     Principal payments on advance fromrelated party
 
 (2,191,285)
 
-- 
 
-- 
       
     Net cash provided by financingactivities
 
14,799,369 
 
2,727,994 
 
2,921,500 
       
     Net increase in cash and cashequivalents
 
1,350,946  
615,213  
444,950        
Cash and cash equivalents at inception, 
      
     period ending December 31, 2003 and2002
 
-- 
 
735,733 
 
13,574 
       
Cash and cash equivalents at September 30, 2004
 
1,350,946 
 
1,350,946 
 
458,524 
       
**Supplemental Information and NoncashTransactions**

During the nine months ended September 30, 2004, and 2003, $6,000and $20,298 were paid for interest, respectively, and no amounts were paid forincome taxes.
 
In January 2004 one million subscribed shares were issued forinterest expense of $74,000 and prepaid interest of $222,000.
 
In March 2004 fifty thousand subscribed shares were issued forthe services of a director. 
 
In July 2004 forty--five thousand shares were issued formarketing consulting in the amount of $128,700.
****   
SULPHCO, INC. AND SUBSIDIARIES (A Company in the DevelopmentStage)NOTES TO THE INTERIM FINANCIAL STATEMENTSSeptember 30, 2004(unaudited)

**1.**

**Basis of Presentation**
 
The accompanying unaudited interim financial statements of Sulphco, Inc. (the““Company”“) have been prepared by the Company inaccordance with generally accepted accounting principles in the United States ofAmerica, pursuant to the Securities and Exchange Commission rules andregulations. In management’’s opinion, all adjustments necessary fora fair presentation of the results for the interim periods have been reflectedin the interim financial statements. The results of operations for any interimperiod are not necessarily indicative of the results for a full year. Alladjustments to the financial statements are of a normal recurring nature. 
  
Certain information and footnote disclosures normally included in financialstatements prepared in accordance with generally accepted accounting principleshave been condensed or omitted. Such disclosures are those that wouldsubstantially duplicate information contained in the most recent auditedfinancial statements of the Company, such as significant accounting policies andstock options.  Management presumes that users of the interim statements haveread or have access to the audited financial statements and notes theretoincluded in the Company’s most recent annual report on Form 10--KSB. 
 
**2.**

**Consolidation**
  
The Company owns 49% of a joint venture that it is the primary beneficiary of,to market and deploy the Company’’s technology in Kuwait. There wasno activity in the entity during the quarter ended September 30, 2004. TheCompany and this entity make up the consolidation group (See Note 4).
  
Generally accepted accounting principles require consolidation of allmajority--owned subsidiaries even if they have““non--homogeneous”“ operations, as well as the primarybeneficiary of a variable interest entity. The consolidated financial statementsinclude all such subsidiaries. All material inter--company transactions havebeen eliminated.
 
**3.**

**Prepaid Expenses via Issuance of Stock**
  
In January 2004 the Company issued one million shares of common stock, to arelated party, in lieu of interest for two loans totaling $1,000,000. AtSeptember 30, 2004 the prepaid interest balance was $74,000. The prepaidinterest is amortized over one year (the life of the loan). (See Note 5).
  
In July 2004 the Company issued forty--five thousand shares of common stock asconsideration for consulting service for a one year period.  The total value ofthe services was $128,700.  As of September 30, 2004 the prepaid consultingexpense was $107,250.
 
**4.**

**Investments**
  
In April 2004 the Company entered into an agreement with Kuwaiti nationals todeploy the Company’s technology in the Kuwait. The Company owns 49% of thejoint venture and will consolidate the entity. As of the end of the three monthsended September 30, 2004, there was no investment in or expenses from the jointventure.
 
****   
SULPHCO, INC. AND SUBSIDIARIES (A Company in the DevelopmentStage)NOTES TO THE INTERIM FINANCIAL STATEMENTSSeptember 30, 2004(unaudited)

**5.**

**Related Party Transactions**
  
In March 2004 the Company issued 50,000 shares of subscribed common stock to adirector at $0.42 per share for director services in the prior year.
  
An officer was paid consulting fees of $120,000 during the quarter, under anemployment contract.  The agreement is set to terminate on June 30, 2005.
  
The Company had outstanding at September 30, 2004, a $500,000 note due to arelated party, as well as a $500,000 note payable to an officer. The Companyissued 500,000 shares to each, the related party and officer, in lieu ofinterest on these notes resulting in an effective interest rate of 29.6%.
 
**6.**

**Capital Stock**
  
In January 2004 one million subscribed common shares were issued for prepaidinterest of $296,000. (See Note 3).
  
Also in January 2004 one hundred thousand shares were issued at $0.85 per sharefor consulting services valued at $85,000.
  
In March 2004 fifty thousand subscribed common shares were issued for Directorservices valued in the prior year at $21,000.
  
In June 2004 the Company entered into two private placements. The first privateplacement was to sell 2,978,333 shares of common stock at $0.90 per share,warrants exercisable at $1.125 per share for 1,073,217 shares of common stock,and additional investment rights entitling the purchaser to purchase up to6,132,667 shares of common stock at a purchase price of $0.90 and a warrant topurchase up to 2,146,433 shares at $1.125 per share. The second privateplacement was to sell 2,030,960 shares of common stock at $1.25 per share,warrants exercisable at $1.5625 per share for 731,846 shares of common stock,and additional investment rights entitling the purchaser to purchase up to2,090,989 shares of common stock at $1.25 per share and a warrant to purchase upto 1,463,692 shares at $1.5625 per share. The investors purchased 2,504,650units of shares for $2,335,477 net of offering costs of $274,126. Each unitconsists of one share of common stock, a warrant entitling the purchaser topurchase 0.35 shares of common stock, and an additional investment rightentitling the purchaser to purchase up to one additional share and a warrant topurchase up to 0.70 shares.
  
In July 2004 forty--five thousand shares were issued at $2.86 per share forconsulting services valued at $128,700.  (See Note 3)
 
**7.**

**Stock Options**
  
No additional stock options were exercised during the 3 months ended September30, 2004.
 
**8.**

**Commitments and Contingencies**
  
The Company is currently the subject of an SEC investigation. The SEC allegesviolations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1934 andSection 10(b) of the Securities Act of 1934 and Rule 10b--5 thereunder.  TheCompany has retained council and has responded to the inquiry and is awaitingresponse from the SEC.  The outcome of the action is not determinable at thistime. Any such action could have a material adverse effect on the Company. 
 ****   
SULPHCO, INC. AND SUBSIDIARIES (A Company in the DevelopmentStage)NOTES TO THE INTERIM FINANCIAL STATEMENTSSeptember 30, 2004(unaudited)
 
Financial instruments, which potentially subject the Company to concentrationsof credit risk, consist mainly of cash equivalents. The Company maintainsamounts on deposit with financial institutions, which exceed federally insuredlimits. The Company has not experienced any significant losses in such accounts,nor does management believe it is exposed to any significant credit risk.
  
There are various claims pending against the Company arising in the normalcourse of the Company’’s business. Although the amount of liabilityat September 30, 2004, cannot be ascertained, management is of the opinion thatany resulting liability will not materially affect the Company’’sfinancial position.
  
In January 2004 the Company filed suit against a former director and theirformer stock transfer agent for the remittance of $737,000 for the balance of astock subscription payable to the Company.

****   
ITEM 2. PLAN OF OPERATION.
OUR BUSINESS
       We are engaged in the business ofdeveloping and commercializing our patented and proprietary technology for thereduction of the sulfur content of crude oils and petroleum products, and the"upgrading" of crude oil by reducing its density. Our patented and proprietaryprocess is based upon the novel use of high power ultrasonics -- the applicationof high energy, high frequency sound waves -- to effect beneficial changes inthe chemical composition in crude oil and other petroleum streams. Originallydeveloped by us for low cost desulfurization of diesel fuel, our developmentefforts have expanded to include the desulfurization of crude oil and the"upgrading" of crude oil by reducing its density. Our process is expected toprovide an alternative or supplement to conventional refinery processescurrently used to remove sulfur from crude oil. We also believe that our processis unique by reason of its ability to desulfurize and upgrade crude oil prior toentering the traditional refinery process.
       We have developed and demonstrated aprototype in a laboratory setting using a revolutionary low pressure, lowtemperature process that uses high power ultrasound to reduce the sulfur contentof crude oil and other petroleum streams. We have been developing and testingour desulfurization technologies since January 1999. Testing has been donethrough in--house facilities, independent laboratories, and more recently byChevronTexaco Energy Technology Co., a unit of ChevronTexaco Corp. To date, ourtesting has been limited to samples produced by laboratory prototypes whichprocess one to ten gallons of crude oil in a laboratory setting. Recentlaboratory testing has also demonstrated the ability of our process to““upgrade”“ crude oils through the conversion of certainheavy components of petroleum to lighter components. We are also investigatingthe potential additional "upgrading" benefit our process may have through thereduction of nitrogen, acids, salts and certain metals in crude oil.
       We have completed the design andfabrication of a pre--production prototype of a continuous flow desulfurizationunit (deSNTM unit) which is intended to process up to 1,000 bbl perday.  After upgrading and retrofitting, we plan to place this unit atChevronTexaco Product Company’’s refinery in El Segundo, Californiafor final installation and testing, which is expected to occur in the first halfof 2005.  We have begun the design of a production scale deSN(TM) unit which isintended to process 25,000 or more bbl per day. We intend to construct this unitat our facilities following successful testing of the first 1,000 bbl per dayunit and receipt of an initial customer order.
       We are continuing to developultrasound technology to help provide the high power ultrasound necessary to ourprocess. Our ultrasound technology is intended to increase the ultrasonicintensity generated within our desulfurization units and to improve on existingcommercially available ultrasound technologies.
       The market for our technology and ourdesulfurization units is expected to be crude oil producers and refiners. Crudeoil price differentials are driven largely by both sulfur content and crude oildensity. These price differentials reflect the relative economic value of crudeoil to the ultimate consumer of most crude oil, the oil refiner. Because ourtechnology is expected to both reduce sulfur content and reduce crude oildensity at a significantly reduced cost, the successful commercialization of ourtechnology can be expected to produce significant economic benefits to ourfuture customers.****   
RECENT ACTIVITIES
       We have been developing ourdesulfurization technologies on an ongoing basis since January 1999. Testing hasbeen done through in--house facilities, independent laboratories, and morerecently by ChevronTexaco Energy Technology Co., a unit of ChevronTexaco Corp.To date, such testing has been limited to samples produced by prototypes whichhave processed from one to ten gallons of crude oil in a laboratory setting.Beginning in mid--2002 our development activities have centered aroundre--designing, upgrading and testing of laboratory scale prototypes utilizingmore powerful ultrasonic generators, and redesigning these prototypes toaccommodate the more powerful generators. Substantially all of the developmentwork to date has been conducted by SulphCo personnel.
       More recently we conducted laboratorytesting of our prototypes at our facilities from May 2004 through July 2004,which testing was observed from time to time by ChevronTexaco Energy TechnologyCo., a unit of ChevronTexaco Corp., and we generated sample materials for theiranalysis. The testing gave positive indication to both parties that there wassufficient sulfur removal and increase in the amount of lighter petroleumcomponents in the crude oil to justify a joint collaboration to bring ourtechnology to a stage of development suitable for a refinery test of our 1,000bbl per day pre--production prototype and for eventual large scale commercialuse. Accordingly, on August 6, 2004, we entered into a Collaboration Agreementwith ChevronTexaco Energy Technology Co. to engage in joint activities tofurther evaluate, develop and commercialize our proprietary ultrasoundtechnology. Our the 1,000 bbl deSNTM unit was initially placed atChevronTexaco Product Company’’s refinery in El Segundo, California,but has now been returned to our facility in Sparks, Nevada for upgrading of thereactor and installation of a more powerful ultrasonics system.  We expect to beable to retrofit the 1,000 bbl deSNTM unit by December 31, 2004, andreturn the unit to the El Segundo, California refinery for final installationand testing. We expect final installation and testing of the unit at thisrefinery to commence in the first half of 2005.
       We are currently in the process ofdesigning a desulfurization unit intended to process 25,000 or more bbl per dayand we expect to complete remaining design and engineering work by December 31,2004. We estimate that following completion of the remaining design andengineering work construction of the initial 25,000 bbl prototype could becompleted in approximately 45 days. However, we do not intend to commenceconstruction of this unit until we receive an order from a customer. We expectthat this activity will be coordinated with ChevronTexaco Energy Technology Co.under our Collaboration Agreement with them. We cannot assure you that we willbe successful in completing the 25,000 bbl unit or when or if we will receiveany customer orders for this unit.
PLAN OF OPERATION DURING THE NEXT 12 MONTHS 
       During the next 12 months we intend tocontinue development and commercialization activities currently underway and toexplore new activities, pursuant to the Collaboration Agreement entered into onAugust 6, 2004, with ChevronTexaco Energy Technology Co. In this regard: 

•

We have now completed the development and fabrication of a pre--productiondesulfurization unit which is expected to process up to 1,000 bbl per day. Theunit is now being upgraded with our newer reactor and with our more powerfulultrasonics system.  We expect to complete this retrofitting by December 31,2004. After retrofitting, this unit will be delivered to ChevronTexaco ProductsCompany’’s El Segundo, California refinery for final installationand refinery testing, which is expected to occur in the first half of 2005.  Ifthe refinery testing of the 1,000 bbl per day desulfurization unit issuccessful, we intend to construct a larger desulfurization unit which willprocess 25,000 or more bbl per day of crude oil.
 
•

We expect to complete remaining design and engineering work for a 25,000 bbl perday unit on or about December  2004. Once the design and engineering work forthe 25,000 bbl unit is fully developed and tested, and subject to satisfactoryrefinery testing of the 1,000 bbl unit, we intend to manufacture the initial25,000 bbl unit following receipt of a customer order. We estimate that we willrequire approximately 45 days to manufacture the initial 25,000 bbl unit, whichwe intend to fabricate at our facility in Sparks, Nevada.
 
•

We plan to engage in ongoing development and testing activities in collaborationwith ChevronTexaco during the next 12 months, including laboratory testing atChevronTexaco’’s facilities, intended to demonstrate the commercialpotential of our technology and optimize the technology for use in a commercialsetting.
****   
       The precise timing of the activitiesunder the Collaboration Agreement (and any additional agreements) over the next12 months and beyond cannot be predicted with certainty, as they are dependentupon the timing of completion of development and commercialization milestonesand the requirements of our collaborative partner.

LIQUIDITY AND FINANCIAL RESULTS
       As of November 4, 2004, we had$3,324,767 in available cash reserves. As we are a development stage company, wehave not generated any material revenues since we commenced our current line ofbusiness in 1999, and we do not anticipate generating any material revenuesunless and until a licensing agreement, sale of an initial production scale unitor other commercial arrangement is entered into with respect to ourtechnology.
       As of September 30, 2004, we had anaccumulated deficit of approximately $20.6 million which includes approximately$5.7 million of stock--based compensation expense, and we incurred losses of$2,578,992 in the nine month period ending September 30, 2004 (which includesapproximately $145,000 of stock based compensation). These losses areprincipally associated with the research and development of our desulfurizationand upgrading technologies, development of pre--production prototypes andrelated marketing activity, and we expect to continue to incur expenses in thefuture for development, commercialization and sales and marketing activitiesrelated to the commercialization of our technologies.
       Our current monthly cash outflow, orcash burn rate, is approximately $250,000 per month for fixed and normalrecurring expenses, as follows:

Salaries and related payroll costs 

$95,000
Consulting contract

30,000
Plant and property leases

37,000
Professional fees

32,000
R&D Expenses (excluding Salaries)

25,000
Office, phone, utilities

5,000
Patent renewal and maintenance

10,000
Travel and entertainment

6,000
Miscellaneous

10,000  
 Total

$250,000

       ““Salary and relatedpayroll costs”“ represents salary and payroll costs for all of ourfull time employees other than our CEO, Rudolf W. Gunnerman.  Included in thisamount are monthly salaries and related payroll costs to officers and directorsand members of their immediate family as follows:  Kirk Schumacher -- $25,000;Michael Abend -- $5,000 and Kristina Gunnerman--Ligon -- $13,000; and anaggregate of approximately $1,000 per month of other monthly payroll costs forthese individuals.  As of July 1, 2004, payments of $40,000 per month for Dr.Gunnerman’’s full time services as our CEO have been made pursuantto a consulting agreement with RWG, Inc., a company wholly--owned by Dr.Gunnerman.  Effective November 1, 2004, this amount has been reduced by mutualagreement to $30,000 per month until our Company receives substantial additionalfunds.
       Monthly fixed and recurring expensesfor ““Plant and property leases”“ of $37,000 representsthe monthly lease payment to an unaffiliated third party for our facilitylocated at 850 Spice Island Drive, Sparks, Nevada, which includes our executiveoffices (8,752 square feet), research facilities (5,988 square feet andmanufacturing space (77,385 square feet).****   
**       **Included in professional feesare estimated recurring legal fees paid to outside corporate and patent counseland ongoing litigation expenses, audit and review fees paid to our independentaccountants, fees paid for investor relations, and $1,500 per month paid to ourdirector, Loren Kalmen, for tax consulting services.
       Under the Collaboration Agreemententered into with ChevronTexaco effective August 6, 2004, each party is requiredto bear its own expenses in connection with the activities conducted andproposed to be conducted under such agreement. Estimated increased monthlyexpenses expected to be incurred by us during the term of the CollaborationAgreement relate primarily to development activities and include an additional$11,000 of salary expense per month for the addition of two engineers, $25,000per month of additional research and development costs, $4,000 of additionalpatent expenses, and $10,000 per month of additional miscellaneous expenses suchas outside non--professional services, shipping costs and equipment rental.**** Research and development costs include the cost of laboratory equipment andmodifications to our demonstration unit. All of these incremental amountsrelating to the Collaboration Agreement are included in our total estimate of$250,000 per month for fixed and normal recurring expenses.
       We intend to continue to incuradditional expenditures during the next 12 months for development andmanufacture of the deSNTM units, including the development andmanufacture of the prototype second generation deSNTM unit.  Theexpenditures related to the development of the deSNTM units areincluded in the monthly cash outflow described above. Additional fundingrequirements during the next 12 months may arise upon the placement of an orderby a future customer for one or more deSNTM units. We expect thatfunding for the cost of manufacturing of any particular unit would be availablefrom a customer before we commence manufacture of the unit. Our preliminaryestimates of the cost of a deSNTM unit range from $2 million to $4million. However, we cannot assure you that our cost estimates will be accurateor that we will receive funds received prior to the commencement of manufacturesufficient to manufacture any particular unit.
       THE JUNE 3, 2004 PLACEMENT. Pursuantto a securities purchase agreement effective June 3, 2004, between our companyand accredited investors, we agreed to issue and sell to 22 of the sellingsecurity holders approximately 2.98 million units, at $0.90 per unit. Each unitin the June 3 placement has a purchase price of $0.90 and consists of one shareof common stock, a warrant entitling the purchaser to purchase 0.35 shares ofcommon stock at $1.125 per share for each share acquired, and an additionalinvestment right entitling the purchaser to purchase up to two additional sharesat a purchase price of $0.90 per share and a warrant to purchase up to 0.35shares at $1.125 per share for each additional share acquired under theadditional investment right. The securities purchase agreement provided for thesale of one--half of the 2.98 million units to these purchasers on June 3, 2004,and we received aggregate gross cash proceeds of $1.34 million, before deductionof selling expenses of approximately $91,367. Under the terms of the June 3placement the investors had the right to purchase up to the remainingunpurchased 1.49 million of units at any time prior to October 31, 2004, and wehad the right (subject to customary closing conditions) to require the investorsto purchase these additional 1.49 million of units within 5 days of theannouncement of our entry into a collaboration agreement with a majorinternational oil producer on terms satisfactory to a majority of the investors.As of November 3, 2004, all of these rights were exercised by the investors,resulting in additional cash proceeds of $1,340,250 before deduction of sellingexpenses of approximately $93,818. 
       JUNE 15, 2004 PLACEMENT. Pursuant to asecurities purchase agreement effective June 15, 2004, between our company andaccredited investors, we agreed to issue and sell to each of the investors inthe June 3 placement and seven other accredited investors approximately 2.03million units, at $1.25 per unit. Each unit in the June 15 placement has apurchase price of $1.25 and consists of one share of common stock, a warrantentitling the purchaser to purchase 0.35 shares of common stock at $1.5625 pershare for each share acquired, and an additional investment right entitling thepurchaser to purchase up to one additional share at a purchase price of $1.25per share and a warrant to purchase up to 0.70 shares at $1.5625 per share foreach additional share acquired under the additional investment right. Thesecurities purchase agreement provided for the sale of one--half of the 2.03million of units to these purchasers on June 15, 2004, and we received aggregategross cash proceeds of approximately $1.27 million, in each case, beforededuction of selling expenses of approximately $87,542. Under the terms of theJune 15 placement the investors had the right to purchase up to the remainingunpurchased 1.02 million of units at any time prior to October 31, 2004, anduntil October 31, 2004 we had the right (subject to customary closingconditions) to require the investors to purchase these additional 1.02 millionof units within 5 days of the announcement of our entry into a collaborationagreement with a major international oil producer on terms satisfactory to amajority of the investors.   As of November 3, 2004, all of these rights wereexercised by the investors, resulting in additional cash proceeds of $1,120,369before deduction of selling expenses of approximately $78,426.  The additionalinvestment rights we issued in connection with the June 3 and June 15 placementsare exercisable at any time from the date of their issuance 180 trading daysfrom the date an SEC registration statement covering the resale of the privateplacement shares becomes effective.****   
       Accordingly, we anticipate that ourexisting capital resources will be sufficient to fund our cash requirementsthrough at least November 2005 from cash presently on hand, based upon ourcurrent levels of expenditures and anticipated needs during this period,assuming we receive no additional proceeds from the exercise of warrants andrights issued in the June 2004 placements and assuming the $1,000,000 of relatedparty loans due December 30, 2004 are extended.  However, additional financingwill be required in order to meet our working capital requirements by December2005 or to complete the manufacture of a 25,000 bbl unit.  The extent and timingof our future capital requirements will depend primarily upon the rate of ourprogress in the development and commercialization of our technologies, ourability to maintain our collaborative arrangement with Chevron Texaco, and thetiming of future customer orders.
       To date we have generated no materialrevenues from our business operations. We are unable to predict when or if wewill be able to generate revenues from commercial activities or the amountsexpected from such activities. These revenue streams may be generated by us orin conjunction with collaborative partners or third party licensingarrangements, and may include provisions for one--time, lump sum payments inaddition to ongoing royalty payments or other revenue sharing arrangements.However, we presently have no commitments for any such payments.
       Sources of additional capital includeproceeds from the exercise of additional investment rights and warrants issuedto investors in the June 2004 private placements, and funding through futurecollaborative arrangements, licensing arrangements and debt and equityfinancings. We do not know whether additional financing will be available whenneeded, if at all. If we cannot raise funds on acceptable terms, we may not beable to successfully commercialize our technologies, take advantage of futureopportunities or respond to unanticipated requirements. If we are unable tosecure such additional financing when needed, we will have to curtail or suspendall or a portion of our business activities and we could be required to ceaseoperations entirely. Further, if we issue equity securities, our shareholdersmay experience severe dilution of their ownership percentage.
RESEARCH AND DEVELOPMENT
       We intend to continue our research anddevelopment program during the next 12 months in order to expand the developmentof the design of commercial desulfurization units which embody our proprietarytechnology. Management anticipates that our research and development costs willbe approximately $50,000 per month or $600,000 during the next 12 months. The$50,000 anticipated monthly expenditure for research and development is includedwithin our current monthly cash outflow, or cash burn rate, of approximately$250,000 per month for fixed and normal recurring expenses, as describedabove.
EMPLOYEES
       As of November 3, 2004, the Companyhad 14 full--time employees and a consulting agreement with RWG, Inc., anaffiliate of Rudolf W. Gunnerman our chairman and CEO, for the full--timeservices of Dr. Gunnerman. One of our directors also provides tax accountingservices on a non--exclusive basis. We do not expect any material changes in thenumber of our employees during the next 12 months.
FORWARD--LOOKING STATEMENTS
       Statements contained in this Item andelsewhere in this report that are not historical facts are forward--lookingstatements, as that term is defined by the Private Securities Litigation ReformAct of 1995. Although we believe that expectations reflected in suchforward--looking statements are reasonable, the forward--looking statements aresubject to risks and uncertainties that could cause results to differ from thoseprojected. We caution investors that any forward--looking statements made by usare not guarantees of future performance and that actual results may differmaterially from those in the forward--looking statements. Such risks anduncertainties include, without limitation: well established competitors who havesubstantially greater financial resources and longer operating histories, risksinherent in the development and commercialization of new technologies, changesin the regulatory environment in which we compete, and access to sources ofcapital. ****   
ITEM 3. CONTROLS AND PROCEDURES.
       The Company maintains disclosurecontrols and procedures designed to ensure that information required to bedisclosed in reports filed under the Securities Exchange Act of 1934, asamended, is recorded, processed, summarized and reported within the specifiedtime periods. As of the end of the period covered by this report, theCompany’’s Chief Executive Officer and Chief Financial Officerevaluated, with the participation of the Company’’s management, theeffectiveness of the Company’’s disclosure controls and procedures.Based on the evaluation, which disclosed no significant deficiencies or materialweaknesses, the Company’’s Chief Executive Officer and ChiefFinancial Officer concluded that the Company’’s disclosure controlsand procedures are effective. There were no changes in theCompany’’s internal control over financial reporting that occurredduring the Company’’s most recent fiscal quarter that havematerially affected, or are reasonably likely to materially affect, theCompany’’s internal control over financial reporting. 
PART II
ITEM 1. LEGAL PROCEEDINGS.
       We are not party to, and none of ourproperty is subject to, any pending or threatened legal, governmental,administrative or judicial proceedings that may have a materially adverse effectupon our financial condition or operations, except as follows:
       On or about March 4, 2002, the SaltLake City, Utah office of the Securities and Exchange Commission sent letters toSulphCo and our CEO, Rudolf W. Gunnerman, indicating that as a result of itsinvestigation captioned In the Matter of SulphCo, Inc. (SL--02337), the staff ofthe Salt Lake District Office was recommending that a civil injunctive action befiled naming SulphCo and Mr. Gunnerman as defendants. The letter to SulphCoalleges violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of1933, and Section 10(b) and Rule 10b--5 under the Securities Exchange Act of1934. The letter to Mr. Gunnerman alleges violations of Section 5(a), 5(c), and17(a) of the Securities Act of 1934 and Section 10(b) of the Securities Act of1934 and Rule 10b--5 and Rule 101 under Regulation M thereunder. The lettersinvited SulphCo and Mr. Gunnerman to submit written statements concerning thestaff’’s allegations. Such written statements are generally as knownas "Wells Committee Submissions." SulphCo and Mr. Gunnerman have denied theallegations made by staff in the letters and retained counsel who submitted aninitial response to the staff’’s allegations in March 2002. Inresponse to a second set of letters received in June 2003 detailing essentiallythe same allegations and including a proposed administrative proceeding againstthe Company and Mr. Gunnerman, SulphCo retained replacement counsel whosubmitted a second set of responses in August 2003. SulphCo met with the staffof the Salt Lake City, Utah office in February 2004 and was advised that thestaff is actively seeking authorization from the Securities and ExchangeCommission to commence the civil injunctive action and administrativeproceedings against SulphCo and Mr. Gunnerman. We are unable to predict theoutcome of any action, if commenced. Any such action could have a materialadverse effect on SulphCo.
       On January 5, 2004, we filed a lawsuitin the Second Judicial District Court for the State of Nevada, Case No.CV04--00013, against Alexander H. Walker, Jr., our former general counsel anddirector, and Nevada Agency & Trust Company, our former transfer agent. Thelawsuit alleges breaches of fiduciary duty, contract violations, conversion, andother related claims, in connection with the sale of shares of our common stockto Coldwater Capital, LLC and Mark Neuhaus in 2001. SulphCo claims it did notreceive approximately $737,000 of the purchase price for the shares sold. Thedefendants have answered the complaint, generally denying the allegations andraising affirmative defenses, and cross--complaining against Coldwater Capital,LLC and Mark Neuhaus for the payment of the funds owed to SulphCo.  Wesubsequently obtained an injunction requiring any proceeds of the sale of theSulphCo stock owned by Mr. Walker to be held by the court pendingtrial.****   
ITEM 2. CHANGES IN SECURITIES.
       On September 30, 2004, we retired totreasury 45,000 shares of our stock which we acquired from Todd P. Orme inexchange for our cancellation of a promissory note in the original principal sumof $75,000 which Mr. Orme made to us on May 22, 2001.  These shares were issuedon May 24, 2001, upon exercise of an option we granted to Mr. Orme pursuant to astock option agreement dated December 28, 2000.
       On August 16, 2004, one of theinvestors in the June 3 private placement exercised his right to acquire hisremaining 22,500 unpurchased units at $0.90 per unit, resulting in proceeds tous of $20,250.  On August 16, 2004, one of the investors exercised his right toacquire his remaining 15,000 unpurchased units at $1.25 per unit, resulting inproceeds to us of $18,750.  All such securities were issued in reliance on theexemption from registration contained in Section 4(2) of the Securities Act of1933, as amended, and Regulation D thereunder, and the certificates representingsuch securities were issued with a restrictive legend reflecting the limitationson future transfer of those shares.  These offerings were made without publicsolicitation or advertising, and the offerees and purchasers are believed tohave a pre--existing relationship with a finder and broker employed by us inconnection with these offerings.  Each of the investors represented to us thatthey were knowledgeable and sophisticated, and were experienced in business andfinancial matters so as to be capable of evaluating an investment in oursecurities.  Each of the investors was afforded full access to informationregarding our business, including our reports filed with the SEC.  The principalterms of these securities are described in this Report in the section entitled““Plan of Operation for the Next 12 Months -- Liquidity andFinancial Resources.”“
ITEM 3. SUBMISSION OF MATTER TO A VOTE OF THE SECURITIES HOLDERS.
       No matter was submitted during thequarter covered by this report to a vote of the securities holders through thesolicitation of proxies or otherwise.
ITEM 4. EXHIBITS AND REPORTS ON FORM 8--K.
(a) Exhibits.

31.1

Certification of Chief Executive Officer pursuant toRule 13a--14 under the Securities Exchange Act of 1934.
 
31.2

Certification of Chief Financial Officer pursuant toRule 13a--14 under the Securities Exchange Act of 1934.
 
32.1

Certification of CEO and CFO Pursuant to 18U.S.C.ss.1350, as Adopted Pursuant to ss. 906 of the Sarbanes--Oxley Act of2002.

(b) Reports on Form 8--K.
       On November 3, 2004, we filed aCurrent Report on Form 8--K under Items 3 and 9 to report the closing of thesale of  $2.6 million of units of our securities in two private placementpursuant to securities purchase agreements with certain institutional andindividual investors, including filing of the related pressrelease.****   
SIGNATURES
       In accordance with the requirements ofthe Securities Exchange Act of 1934, the registrant caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.

Dated: November 10, 2004 

SULPHCO, INC. (Registrant)
   
/s/ Rudolf W. Gunnerman
 
By: Rudolf W. Gunnerman
 
Its: Chairman of the Board of Directors
 
and Chief Executive Officer
   
/s/ Michael A. Abend

By: Michael A. Abend

Its: Interim Controller and Treasurer

(Principal Financial and Accounting Officer)