The course of the desulfurization reaction of 4-nitro-N,2-diphenyl-3-(phenylamino)isothiazol-5(2H)-imine (3) is investigated and the formation of the unstable 3-imino-2-nitroprop-2-enamidine (A) as intermediate is discussed. Addition of amines and thiophenol to the reaction mixture yielded the amidine derivatives 5 and the thioimidate 6, respectively, via nucleophilic addition of the respective reagent to A (Scheme 2). Benzoic acid and thiobenzoic acid afforded the amide 7 and the thioamide 8, respectively, as secondary products of the expected adducts 7a and 8a (Schemes 3 and 4). The presence of (benzylidene)(methyl)amine in the reaction mixture of the desulfurization of 3 led to the 1,2,4-oxadiazole derivative 10, together with the quinoxaline N-oxide 4 as a minor product. Reaction mechanisms involving an intermediate ketene imine and participation of the NO2 group in the reaction leading to 1,2,4-oxadiazole 10 are proposed. Ab initio calculations of model structures for the nitroketene imine were performed and the results correlated with the experimental results. The structures of 8 and 10 were established by X-ray crystal-structure analysis.