**UNITED
STATES**


**SECURITIES
AND EXCHANGE COMMISSION**


**WASHINGTON,
DC 20549**





**FORM
10-QSB**





x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





For the
quarterly period ended March 31, 2005





o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934





Commission
file number 0-28829





SHARP
HOLDING CORPORATION





(Name of
Small Business Issuer in Its Charter)





DELAWARE
    
    65-0970516(State
      or Other Jurisdiction of Incorporation or Organization)
    
    (IRS
      Employer Identification No.)





13231
CHAMPION FOREST DRIVE, SUITE 213, HOUSTON, TEXAS 77069





(Address
of Principal Executive Offices) (Zip Code)





(713)
960-9100





(Issuer's
Telephone Number, Including Area code)










APPLICABLE
ONLY TO CORPORATE ISSUERS





As of May
19, 2005 there were 40,837,603 shares of common stock, $.001 par value,
outstanding.





Transitional
Small Business Disclosure Format (check one): Yes o No x







1





**TABLE OF CONTENTS**








PART
      IItem
      1.
    Financial StatementsItem
      2.
    Management's Discussion and Analysis or Plan of
      OperationsItem
      3.
    Controls and ProceduresPART
      IIItem
      1.
    Legal ProceedingsItem
      2.
    Unregistered Sales of Equity Securities and Use of
      ProceedsItem
      6.
    Exhibits




2
 *Table of Contents*





**PART
I**





ITEM 1.
    FINANCIAL STATEMENTS





Consolidated Balance Sheets as of


March 31, 2005 (unaudited) and December 31,
2004





Consolidated Statements of Operations for
the


three months ended March 31, 2005 and 2004
(unaudited)





Consolidated Statement of Stockholders' Deficit for the


three months ended March 31, 2005 (unaudited)





Consolidated Statements of Cash Flows for the


three months ended March 31, 2005 and 2004
(unaudited)





3
 *Table of Contents*





**SHARP HOLDING CORPORATION AND
SUBSIDIARIES**


**CONSOLIDATED
BALANCE SHEETS**


**March
31, 2005 and December 31, 2004**


**__________**





**March
      31, 2005**
    
    **December
      31, 2004********ASSETS**
    
    **(Unaudited)**
    
    **(Note)**Current
      assets:Cash
      and cash equivalents
    
    $
    6,474
    
    $
    35,074Other
      current assets
    
    
    44,394
    
    
    42,700Total
      current assets
    
    
    50,868
    
    
    77,774Property
      and equipment, net
    
    
    51,978
    
    
    56,348Deferred
      technology license, net
    
    
    149,020
    
    
    180,955Other
      noncurrent assets
    
    
    16,152
    
    
    16,152Total
      assets
    
    $
    268,018
    
    $
    331,229**LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)**Current
      liabilities:Accounts
      payable
    
    $
    666,955
    
    $
    657,400Accrued
      payroll taxes
    
    
    322,253
    
    
    322,253Accrued
      payroll and contract labor
    
    
    585,037
    
    
    635,897Other
      accrued liabilities
    
    
    791,760
    
    
    778,568Notes
      payable to related parties
    
    
    943,449
    
    
    1,006,315Notes
      payable
    
    
    1,530,844
    
    
    1,530,844Deferred
      revenue
    
    
    224,485
    
    
    224,485Total
      current liabilities
    
    
    5,064,783
    
    
    5,155,762Long
      term notes payable
    
    
    57,044
    
    
    68,222Total
      liabilities
    
    
    5,121,827
    
    
    5,223,984Commitments
      and contingenciesStockholders'
      equity (deficit):Common
      stock, $.001 par value, 80,000,000 shares authorized,
      33,462,603 shares and 27,075,452 shares issued and outstanding,
      respectively
    
    
    33,463
    
    
    27,076Additional
      paid-in capital
    
    
    9,543,748
    
    
    8,610,718Accumulated
      deficit
    
    
    (14,431,020
    )
    
    (13,530,549
    )Total
      stockholders' equity (deficit)
    
    
    (4,853,809
    )
    
    (4,892,755
    )Total
      liabilities and stockholders' equity (deficit)
    
    $
    268,018
    
    $
    331,229





Note: The
balance sheet at December 31, 2004 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.




See
accompanying notes to unaudited condensed consolidated financial
statements.





4
 *Table of Contents*





**SHARP HOLDING CORPORATION AND
SUBSIDIARIES**


**UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS**


**for
the three months ended March 31, 2005 and 2004**


**__________**








**2005**
    
    **2004**Revenues
    
    $
    5,035
    
    $
    22,084Operating
      expenses:Cost
      of sales and services
    
    
    52,814
    
    
    46,620Selling,
      general and administrative
    
    
    615,477
    
    
    307,994Total
      operating expenses
    
    
    668,291
    
    
    354,614Loss
      from operations
    
    
    (663,256
    )
    
    (332,530
    )Interest
      expense
    
    
    (537,215
    )
    
    (23,478
    )Gain
      from settlement of lawsuit
    
    
    300,000
    
    
    -Net
      loss
    
    $
    (900,471
    )
    $
    (356,008
    )Basic
      and diluted net loss per share
    
    $
    (0.03
    )
    $
    (0.01
    )Weighted
      average shares used in computing basic and diluted net loss per
      share
    
    
    28,154,074
    
    
    25,492,074





See
accompanying notes to unaudited condensed consolidated financial
statements.





5
 *Table of Contents*





**SHARP HOLDING CORPORATION AND SUBSIDIARIES**


**UNAUDITED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)**


**for
the three months ended March 31, 2005**


**__________**





**Common
      Stock****Shares**
    
    **Value**
    
    **Additional
      Paid-In****Capital**
    
    **Accumulated****Deficit**
    
    **Total
      Stockholders' Equity****(Deficit)**Balance
      at December 31, 2004
    
    
    27,075,452
    
    $
    27,076
    
    $
    8,610,718
    
    $
    (13,530,549
    )
    $
    (4,892,755
    )Issuance
      of common stock on exercise of warrants
    
    
    310,731
    
    
    311
    
    
    50,796
    
    
    -
    
    
    51,107Issuance
      of common stock and warrants as compensation to
consultants
    
    
    750,000
    
    
    750
    
    
    95,650
    
    
    -
    
    
    96,400Issuance
      of warrants in conjunction with notes payable agreements
    
    
    -
    
    
    -
    
    
    95,082
    
    
    -
    
    
    95,082Effect
      of beneficial conversion feature
    
    
    -
    
    
    -
    
    
    204,918
    
    
    -
    
    
    204,918Issuance
      of common stock upon election to convert notes payable
    
    
    5,326,420
    
    
    5,326
    
    
    486,584
    
    
    -
    
    
    491,910Net
      loss
    
    
    -
    
    
    -
    
    
    -
    
    
    (900,471
    )
    
    (900,471
    )Balance
      at March 31, 2005
    
    
    33,462,603
    
    $
    33,463
    
    $
    9,543,748
    
    $
    (14,431,020
    )
    $
    (4,853,809
    )





See
accompanying notes to unaudited condensed consolidated financial
statements.





6
 *Table of Contents*





**SHARP HOLDING CORPORATION AND
SUBSIDIARIES**


**UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS**


**for
the three months ended March 31, 2005 and 2004**


**__________**





**2005**
    
    **2004**Cash
      flows from operating activities:Net
      loss
    
    $
    (900,471
    )
    $
    (356,008
    )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Stock-based
      consideration for services and financing costs
    
    
    96,400
    
    
    -Amortization
      of debt discount
    
    
    480,732
    
    
    -Depreciation
      and amortization
    
    
    38,522
    
    
    33,699Changes
      in operating assets and liabilities-Increase
      in accounts receivable
    
    
    -
    
    
    (6,810
    )Increase
      in other current assets
    
    
    (1,694
    )
    
    -(Decrease)
      Increase in accounts payable and accrued liabilities
    
    
    (28,113
    )
    
    392,131Decrease
      in deferred revenue
    
    
    -
    
    
    (5,515
    )Net
      cash provided by (used in) operating activities
    
    
    (314,624
    )
    
    57,497Cash
      flows from investing activitiesPurchases
      of property and equipment
    
    
    (2,217
    )
    
    -Net
      cash used in investing activities
    
    
    (2,217
    )
    
    -Cash
      flows from financing activities:Proceeds
      from issuance of stock
    
    
    51,107
    
    
    30,000Proceeds
      from borrowings
    
    
    375,000
    
    
    -Repayment
      of borrowings
    
    
    (137,866
    )
    
    (11,647
    )Net
      cash provided by financing activities
    
    
    288,241
    
    
    18,353Net
      increase (decrease) in cash and cash equivalents
    
    
    (28,600
    )
    
    75,850Cash
      and cash equivalents at beginning of period
    
    
    35,074
    
    
    7,479Cash
      and cash equivalents at end of period
    
    $
    6,474
    
    $
    83,329Supplemental
      disclosure of cash flow information:Cash
      paid for interest
    
    $
    545
    
    $
    1,764Cash
      paid for income taxes
    
    $
    -
    
    $
    -Non-Cash
      Investing and Financing Activity:Issuance
      of warrants in conjunction with notes payable agreements
    
    $
    95,082
    
    $
    -Beneficial
      conversion feature on notes payable
    
    $
    204,918
    
    $
    -Issuance
      of common stock upon election to convert notes payable
    
    $
    491,910
    
    $
    -





See
accompanying notes to unaudited condensed consolidated financial
statements.





7
 *Table of Contents*





**SHARP HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**


**__________**





**1.**
    **Basis
      Of Presentation**





The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB of Regulation S-B. They do not include
all information and footnotes required by generally accepted accounting
principles for complete financial statements. However, except as disclosed
herein, there has been no material change in the information disclosed in the
notes to the financial statements for the year ended December 31, 2004 included
in the Company's 2004 Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission. The interim unaudited financial statements should be read
in conjunction with those financial statements included in the Form 10-KSB. In
the opinion of Management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the three-month period ended March 31, 2005, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2005.





**2.**
    **Organization
      and Operations**





The
consolidated financial statements of Sharp Holding Corporation (the "Company")
include Sharp Holding Corporation ("Sharp"), a Delaware corporation, along with
its wholly owned subsidiaries Sharp Technology, Inc. ("Sharp Technology"), a
Delaware corporation; Reserve Energy Corporation ("Reserve"), a Delaware
corporation incorporated in February 2004 (which began operations in May 2004);
and SCAN USA Corporation ("SCAN"), a Delaware corporation incorporated in
September 2003 (which began operations in June 2004), (collectively, the
"Company").





Sharp
provides capital resources, management and technical expertise to its subsidiary
companies. Sharp Technology is a developer and marketer of internet-related
software products and provides innovative marketing solutions to strategic
partners. Reserve plans to deploy proprietary filtering technology that can turn
sub-quality natural gas from shut-in and abandoned wells into pipeline quality
natural gas. SCAN is developing, with corporate sponsors, a national alert
system that will enable local police departments and other authorities to send
alerts to localized recipients.





The
Company has reported recurring losses of $900,471 and $356,008 for the
three-month periods ended March 31, 2005 and 2004, respectively. These recurring
losses have produced an accumulated deficit of $14,431,020, and a working
capital deficit of $5,013,915 as of March 31, 2005. As a result of shortfalls in
anticipated funding, the Company is delinquent on certain payroll tax deposits
due the IRS. The Company is also delinquent on payments under certain note
payable agreements. The Company expects cash flow deficits will continue, which
will necessitate additional financing. There can be no assurances that future
debt or equity funding will be available or have terms the Company will find
acceptable. These events raise a substantial doubt as to the Company's ability
to continue as a going concern. As a result, the report of our independent
accountants, which accompanied our consolidated financial statements for the
year ended December 31, 2004, was qualified with respect to that
risk.





**3.**
    **Notes
      Payable**





Notes
payable to related parties are included in related-party transactions Footnote
4. Other notes payable outstanding at March 31, 2005 and December 31, 2004
consist of the following:





**2005**
    
    **2004**Note
      payable to an individual, bearing interest of 10% per year, payable on
      demand, uncollateralized
    
    $
    245,000
    
    $
    245,000




8
 *Table of Contents*





**SHARP
HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**__________**








**3.**
    **Notes
      Payable, continued**





Note
      payable to an individual
    
    
    465,000
    
    
    465,000Note
      payable to a company, bearing interest of 12% per year, payable on
      December 31, 2003, uncollateralized
    
    
    75,000
    
    
    75,000Note
      payable to a company, bearing interest of 6% per year, payable May 31,
      2005, uncollateralized
    
    
    370,000
    
    
    370,000Notes
      payable to one company and one individual, bearing interest of 6%, payable
      in May and July 2005, collateralized by 630,000 shares of the Company's
      common stock
    
    
    210,000
    
    
    210,000Callable
      convertible secured notes payable to four companies, bearing interest of
      8%, maturing in November 2006 through January 2007, collateralized by
      substantially all assets and intellectual property as well as registration
      rights, net of debt discount of $451,045 at March 31, 2005 and $631,778 at
      December 31, 2004
    
    
    57,044
    
    
    68,222Notes
      payable to two companies and one individual, non-interest bearing, due in
      monthly installments, with maturities in 2003 and 2004
    
    
    165,844
    
    
    165,844$
    1,587,888
    
    $
    1,599,066





The
Company is in default on $705,844 of the total notes payable balance as a result
of being past due on payments as of March 31, 2005.





On
November 30, 2004, December 30, 2004 and January 19, 2005 the Company entered
into agreements to issue convertible promissory notes and warrants to purchase a
total of 1,000,000 shares of the Company's common stock in exchange for gross
proceeds of $1,000,000, $300,000 of which was received in the three months ended
March 31, 2005. The notes are for a term of two years, bear interest at 8% per
annum, require monthly interest payments, and are collateralized by
substantially all assets and intellectual property as well as registration
rights of the Company. The holder of the note has the option to convert the note
at any time after the issuance date of the note. The note is convertible at the
lesser of $.21 or 65% multiplied by the average of the lowest three trading
prices for the common stock during the twenty trading day period ending one
trading day prior to the date the conversion notice is sent by the holder to the
Company. The notes are collateralized by accounts receivable, general
intangibles, contracts, and contract rights of the Company.





In
accordance with generally accepted accounting principles, in the event the
conversion price is less than the Company's stock price on the date of issuance,
the difference is considered to be a beneficial conversion feature and is
amortized as additional interest expense over the period from the date of
issuance to the stated redemption date of the notes. The Company has calculated
the beneficial conversion feature of these notes to be $709,039, $204,918 of
which was associated with the $300,000 note payable agreement entered into on
January 19, 2005. Through March 31, 2005, the Company recognized $392,797 in
interest expense related to the amortization of the beneficial conversion
feature recorded on these convertible promissory notes, $377,653 of which was
recorded in the three months ended March 31, 2005.





9
 *Table of Contents*





**SHARP
HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**__________**








**3.**
    **Notes
      Payable, continued**





During
the 3 months ended March 31, 2005, four individual holders of these convertible
promissory notes elected to convert $491,910 of these notes pursuant to the
original terms of conversion and were issued 5,326,420 shares of common stock.
Subsequent to March 31, 2005, four holders of these promissory notes elected to
convert an additional $109,930 of these notes pursuant to the original terms of
conversion and were issued 5,900,000 shares of common stock.





The
warrants entitle the holders to purchase 1,000,000 shares of the Company's
common stock at $0.17 per share and expire five years from the date of issuance.
The Company allocates the proceeds received from debt or convertible debt with
detachable warrants using the relative fair value of the individual elements at
the time of issuance. The amount allocated to the warrants as a debt discount
was calculated at $241,797, $95,082 of which related to the warrants issued on
January 19, 2005, and will be recognized as interest expense over the period
until the notes mature. In the event the debt is settled prior to the maturity
date, an expense will be recognized based on the difference between the carrying
amount and the amount of the payment. Through March 31, 2005, the Company
recognized $106,994 in interest expense related to the accretion of the debt
discount associated with the warrants, $103,079 of which was recorded in the
three months ended March 31, 2005.





**4.**
    **Related-Party
      Transactions**





During
April and July 2000, the Company incurred a related party accounts payable
liability to a company owned by a shareholder. The total amount owed of $68,500
is included in accounts payable at March 31, 2005.





During
April and June of 2002, the Company entered into two notes payable agreements
with a stockholder in the amount of $140,000 and $130,000, respectively. The
notes bear interest at 10 percent per annum and were payable in January 2003 and
September 2002, respectively. As of March 31, 2005, the entire balance of both
notes was past due.





On March
20, 2003, the Company entered into a note payable agreement with a stockholder
in the amount of $175,000 bearing interest at 10% per annum and payable on June
30, 2003. On May 12, 2003, the Company extinguished this note payable plus
$21,875 of accrued interest on such note through issuance of 1,000,000 shares of
common stock and a new note in the amount of $96,875 bearing interest at 10
percent per annum and payable in 24 monthly installments beginning July 1, 2003.
At March 31, 2005, the balance on this note is $13,190.





On May
19, 2003, the Company converted accounts payable to a company owned by a
director of the Company to equity and a note payable through issuance of 300,000
shares of common stock and the signing of a note payable to the owner of such
company in the amount of $100,000 bearing interest at 10 percent per annum and
payable in 36 monthly installments beginning July 1, 2003. At March 31, 2005,
the balance of this note was $85,259 and the Company was in default on the note
due to non-payment of required monthly amounts due under the note.





10
 *Table of Contents*





**SHARP
HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**__________**








**4.**
    **Related-Party
      Transactions, continued**





On May
17, 2004, the Company entered into notes payable agreements with a director of a
subsidiary and two companies owned by such director in the amount of $700,000
bearing interest at 8% interest per annum and payable on May 15, 2005. Such
notes are callable by the Company at any time after 90 days from issue. The
notes are collateralized by 2.1 million shares of the Company's common stock.
The holder of the notes received 1,869,000 REC warrants to purchase shares of
the subsidiary's common stock at $.75 per share with a term of three years. The
Company allocates the proceeds received from debt with detachable warrants using
the relative fair value of the individual elements at the time of issuance. The
amount allocated to the warrants as a debt discount was calculated at $-0- due
to the fair value of the warrants being $-0-. At March 31, 2005, the balance of
these notes was $500,000.





On March
15, 2005, the Company entered into a note payable agreement with a stockholder
in the amount of $50,000 paying interest of $5,000 on maturity at April 30,
2005. At March 31, 2005, the balance on this note is $50,000.





On March
8, 2005, the Company entered into a note payable agreement with Commercial
Capital Trading Corporation, a company owned by our chief executive officer in
the amount of $25,000 paying interest of $5,000 on maturity at April 22, 2005.
At March 31, 2005, the balance on this note is $25,000.








**5.**
    **Commitments
      and Contingencies**





At March
31, 2005, the Company was delinquent on approximately $322,000 in payroll tax
deposits. The Company is subject to interest and penalties for making payroll
tax deposits with the Internal Revenue Service after the due date. The Company
has accrued estimated interest and penalties through March 31, 2005. Management
believes additional interest and penalties if any are levied will not be
material to the Company's financial position or results of
operations.





From time
to time, the Company is involved in various claims and other actions arising in
the ordinary course of business. Management believes these matters will not have
a material adverse effect on the financial position or results of operations of
the Company.








**6.**
    **Segment
      Reporting**





The
Company's operating segments include two of the Company's subsidiaries, Reserve
and Scan. Each of these subsidiaries represents a discrete operating segment
upon which management evaluates and measures financial performance. Therefore,
each of these operating subsidiaries represents a segment of the Company. A
third segment encompasses the activity of the Company's Sharp Technology
subsidiary and other technology related activity of Sharp. Each of the Company's
operating segments are engaged in business activities in the United States and,
as a result, all of the Company's revenues are generated and assets are held in
this country.





The
segments' accounting policies are the same as those described in the summary of
significant accounting policies in the notes to the financial statements for the
year ended December 31, 2004 included in the Company's 2004 Annual Report on
Form 10-KSB filed with the Securities and Exchange Commission. Transactions
between reportable segments are reported gross in segment reporting and are
eliminated in consolidation.





11
 *Table of Contents*





**SHARP
HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**__________**








**6.**
    **Segment
      Reporting**





The
following represents selected segment information for the three months ended
March 31, 2005:







**Other****Technology**
    
    **Reserve**
    
    **Scan**
    
    **Totals**Revenues
      from external customers
    
    $
    4,825
    
    $
    -
    
    $
    210
    
    $
    5,035Segment
      loss
    
    
    (35,529
    )
    
    (88,313
    )
    
    (300,361
    )
    
    (424,203
    )Segment
      assets
    
    
    150,630
    
    
    51,891
    
    
    20,365
    
    
    222,886








The
following represents selected segment information for the three months ended
March 31, 2004:





**Other****Technology**
    
    **Reserve**
    
    **Scan**
    
    **Totals**Revenues
      from external customers
    
    $
    22,084
    
    $
    -
    
    $
    -
    
    $
    22,084Segment
      loss
    
    
    (26,365
    )
    
    -
    
    
    -
    
    
    (26,365
    )Segment
      assets
    
    
    297,307
    
    
    -
    
    
    -
    
    
    297,307








The
following represents reconciliations from segment totals to the totals reflected
in the unaudited consolidated financial statements for the three-month periods
ended March 31, 2005 and 2004:





**2005**
    
    **2004****Profit
      or Loss**Total
      loss for reportable segments
    
    $
    (424,203
    )
    $
    (26,365
    )Corporate
      interest expense
    
    
    (518,516
    )
    
    (23,478
    )Gain
      from settlement of lawsuit
    
    
    300,000
    
    
    -Unallocated
      corporate general and administrative expenses
    
    
    (257,752
    )
    
    (306,165
    )Loss
      before income taxes
    
    $
    (900,471
    )
    $
    (356,008
    )**Assets**Total
      assets for reportable segments
    
    $
    222,886
    
    $
    297,307Assets
      held by corporate:Cash
    
    
    150
    
    
    83,081Accounts
      receivable
    
    
    -
    
    
    6,810Other
      current assets
    
    
    44,394
    
    
    -Other
      assets
    
    
    588
    
    
    588Total
      consolidated assets
    
    $
    268,018
    
    $
    387,786








**7.**
    **SETTLEMENT
      OF LAWSUIT**





In
November 1999, the Company entered into a development and distribution
partnership agreement with Qwest Communications ("Qwest", then US West).
Pursuant to the provisions of this agreement, the Company completed the
development of a certain Internet software application which Qwest agreed to
advertise and actively market for a period of three years to its current and
future Internet access customers. Qwest did not perform under this agreement.
The Company pursued its right to binding arbitration with Qwest for specific
performance under this agreement or compensation for a loss of
revenue.





12
 *Table of Contents*





**SHARP
HOLDING CORPORATION AND SUBSIDIARIES**


**NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**__________**








**7.**
    **SETTLEMENT
      OF LAWSUIT, CONTINUED**





In
connection with that same development and distribution partnership agreement
with Qwest, the Company engaged the software development services of the
Navi-Gates Corporation, a company controlled by our former chief financial
officer. As part of its compensation, Navi-Gates was to receive a royalty on
each unit of software sold by Qwest and the Company under this agreement. On May
15, 2002 Cause Number 2002-24598, "Navi-Gates Corporation vs. Sharp Technology,
Inc. and Qwest Communications, Inc., et al..." was filed against our subsidiary,
Sharp Technology, Inc. in the District Court of Harris County, Texas,
269 th Judicial
District. In the petition, Navi-Gates Corporation attempted to secure
reimbursement of its damages arising from the failure of Qwest to fulfill its
marketing commitments.





In June
2004 the above legal matters between Sharp Technology and Qwest and Navi-Gates
were scheduled for an arbitration hearing to be held at the Houston, Texas
offices of the American Arbitration Association in February 2005. On January 26,
2005 the matters were resolved to all parties' satisfaction with no additional
expense to the Company.


**8.**
    ****STOCK
      OPTIONS AND
  WARRANTS****


The
Company follows SFAS No. 123, "Accounting for Stock-Based Compensation," which
establishes fair value as the measurement for transactions in which an entity
acquires goods or services from non employees in exchange for equity
instruments.
 
 A summary
of the Company's stock options as of March 31, 2005 and December 31, 2004 is as
follows:
 
 **Weighted****Average****Number
      of**
    
    
    
    **Exercise**
    
    **Exercise****Shares**
    
    **Exercisable**
    
    **Price**
    
    **Price**Options
      outstanding atDecember
      31, 2004
    
    
    3,156,469
    
    
    3,156,469
    
    $
    0.10-$15.00
    
    $
    0.39Options
      expired
    
    
    (20,332
    )
    
    (20,332
    )
    $
    5.10-$6.00
    
    $
    5.48Options
      outstanding atMarch
      31, 2005
    
    
    3,136,137
    
    
    3,136,137
    
    $
    0.10-$15.00
    
    $
    0.36
 
 The
following table summarizes information about stock options outstanding and
exercisable at March 31, 2005:
 
 **Weighted****Outstanding**
    
    **Average**
    
    **Weighted****Range
      of**
    
    **as
      of**
    
    **Remaining**
    
    **Average****Exercise**
    
    **March
      31,**
    
    **Contractual**
    
    **Exercise****Prices**
    
    **2005**
    
    **Life
      (In Years)**
    
    **Price**$5.10-$15.00
    
    
    136,137
    
    
    .85
    
    $
    6.07$0.10
    
    
    3,000,000
    
    
    2.65
    
    $
    0.10$0.10-$15.00
    
    
    3,136,137
    
    
    2.55
    
    $
    0.36


13
 *Table of Contents*




A summary
of the Company’s warrants as of March 31, 2005 and December 31, 2004 and warrant
activity for the quarter ended March 31, 2005 is as follows:
 
 ****Number
      of**Shares**
    
    **Exercisable**
    
    ****Exercise**Price**
    
    ********Weighted**Average**Exercise**Price**Warrants
      outstanding atDecember
      31, 2004
    
    
    8,864,346
    
    
    8,864,346
    
    $
    0.01-$6.00
    
    $
    0.75Warrants
      issued
    
    
    600,000
    
    
    600,000
    
    $
    0.10-$0.17
    
    $
    0.14Warrants
      exercised
    
    
    (200,000
    )
    
    (200,000
    )
    $
    0.25
    
    $
    0.25Warrants
      expired/forfeited
    
    
    (378,334
    )
    
    (378,334
    )
    $
    0.10-$5.10
    
    $
    1.11Warrants
      outstanding atMarch
      31, 2005
    
    
    8,886,012
    
    
    8,886,012
    
    $
    0.01-$6.00
    
    $
    0.81
 
 The
following table summarizes information about stock warrants outstanding and
exercisable at March 31, 2005:
 **Weighted****Outstanding**
    
    **Average**
    
    **Weighted****Range
      of**
    
    **as
      of**
    
    **Remaining**
    
    **Average****Exercise**
    
    **March
      31,**
    
    **Contractual**
    
    **Exercise****Prices**
    
    **2005**
    
    **Life
      (In Years)**
    
    **Price**$0.01-$0.25
    
    
    7,105,459
    
    
    2.37
    
    $
    0.10$0.50-$1.00
    
    
    550,000
    
    
    2.97
    
    $
    0.91$3.00-$6.00
    
    
    1,230,553
    
    
    2.75
    
    $
    4.898,886,012
    
    
    2.46
    
    $
    0.81
 
 The fair
value of each option and warrant grant was estimated on the date of grant using
the Black-Scholes option pricing model. The following weighted average
assumptions were used for the grants in the periods ended March 31, 2005 and
2004:
 
 **March
      31,****2005**
    
    **2004**Dividend
      yield
    
    
    -0-
    %
    
    -0-
    %Expected
      volatility
    
    
    200
    %
    
    200
    %Risk
      free interest
    
    
    5
    %
    
    5
    %Expected
      lives
    
    
    Actual
    
    
    Actual
  The
Black-Scholes option pricing model and other existing models were developed for
use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option valuation models
require the input of, and are highly sensitive to, subjective assumptions
including the expected stock price volatility. The Company's stock options have
characteristics significantly different from those of traded options, and
changes in the subjective input assumptions can materially affect the fair value
estimate.
 
 During
the three months ended Mach 31, 2005, the Company recorded approximately
$106,482 at the fair value of the warrants granted in compensation and finance
costs for warrants issued in the first quarter of 2005.




**ITEM 2.**
    **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS**





The
following discussion should be read in conjunction with our audited and
unaudited consolidated financial statements and related notes thereto included
in this Form 10-QSB and our 10-KSB filed with the Securities and Exchange
Commission on April 15, 2005.





**FORWARD
LOOKING STATEMENTS AND INFORMATION**





We
include the following cautionary statement in this Form10-QSB to make applicable
and take advantage of the safe harbor provision of the Private Securities
Litigation Reform Act of 1995 for any forward-looking statements made by, or on
our behalf. Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance and underlying
assumptions and other statements, which are other than statements of historical
facts. Certain statements in this Form10-QSB are forward-looking statements.
Words such as "plans", "believes", "expects", "anticipates" and "estimates" and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Our expectations, beliefs and
projections are expressed in good faith and we believe they have a reasonable
basis, including without limitation, management's examination of historical
operating trends, data contained in our records and other data available from
third parties, but there can be no assurance that our expectations, beliefs or
projections will result, be achieved, or be accomplished.





In
addition to other factors and matters discussed elsewhere herein, the following
are important factors that, in our view, could cause material adverse effects on
our financial condition and results of operations: the ability of our existing
cash reserves and cash flows from operations to cover our ongoing cash
requirements and our ability to secure short-term cash funds to the extent our
cash reserves are unable to meet our cash requirements, uncertainties relating
to our product development and marketing, competitive factors, and our
dependence on key personnel. We have no obligation to update or revise these
forward-looking statements to reflect the occurrence of future events or
circumstances.





**OPERATIONS**







Sharp
Holding Corporation, a Delaware corporation, (the "Company," "Sharp" or "we")
seeks opportunities to develop and grow early-stage technology companies that
have the potential to increase shareholder value.




Sharp has
three wholly-owned subsidiaries: SCAN USA Corporation ("SCAN"), Reserve Energy
Corporation ("Reserve" or "REC"), and Sharp Technology, Inc. ("Sharp
Technology").





SCAN has
partnered with the California Organization of Police and Sheriffs (COPS) and the
National Coalition of Public Safety Officers (NCPSO) to deliver the SCAN
service. This service is designed to be the first of its kind that broadcasts
alerts from public safety agencies, law enforcement, emergency management,
schools and hospitals to local community and neighborhood residents. Alerts such
as Neighborhood Crime, Sexual Predators, Public Safety Announcements, Weather,
Traffic and Amber alerts are sent directly to the computers, mobile phones and
PDAs of U.S. citizens who register for the program, which was launched in
California during December, 2004 and planned for nationwide expansion throughout
2005.





In June
2004, SCAN entered into a professional services contract with SBC Communications
calling for SBC to actively market the SCAN service to their 35 million
telephone customers in their thirteen-state area along with participating in a
marketing and public relations press tours to promote the service. The SCAN
service provides revenue generation opportunities via corporate sponsorships,
distribution of co-branded credit cards, pre-paid calling cards, security
software and other security-related products to a massive security-conscious
consumer database.





14
 *Table of Contents*





REC plans
to deploy a proprietary and patented filtering technology that will convert
non-pipeline quality natural gas located in contaminated shut-in wells, into
saleable pipeline quality gas. One out of every three natural gas wells contains
contaminants that make the gas un-marketable. If a well produces less than ten
million cubic feet per day it is generally considered too expensive to purchase
standard filtering equipment. These low producing wells are capped and listed as
"shut-in wells." There are currently more than 200,000 shut-in wells in the
U.S., containing an estimated 60 trillion cubic feet of natural gas valued at
over $240 billion. Reserve plans to capture a share of that market.





Sharp
Technology is a developer of software products that provide marketing and
e-finance solutions to companies. We target large corporations for use of our
technology and distribute our software products as premium components in their
strategic marketing and e-finance campaigns.





**RESULTS
OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2005 AND
2004**





During
the three-month periods ended March 31, 2005 and 2004, we had total revenues of
$5,000 and $22,000, respectively. Revenue in both periods was entirely
attributable to Hyper CD technology, and the decrease of $17,000 in 2005 from
2004 was due to lower number of customer jobs processed in 2005.





Costs of
sales totaled $53,000 and $47,000 for the three-month periods ended March 31,
2005 and 2004, respectively. Costs of sales remained virtually flat in 2005 over
2004 due to Fixed Hyper CD license fees of the technology.





Selling,
general and administrative expenses totaled $615,000 and $308,000 for the
three-month periods ended March 31, 2005 and 2004, respectively. The $307,000
increase can be attributed to higher levels of payroll, consulting expense,
travel and professional fees associated with the start-up of two new subsidiary
companies during the second quarter 2004.





Interest
expense totaled $537,000 and $23,000 for the three-month periods ended March 31,
2005 and 2004, respectively. The $514,000 increase is attributed to the
convertible promissory notes signed in the fourth quarter of 2004 and first
quarter of 2005. The cost of the beneficial conversion feature as well as costs
attributed to warrants issued with such debt are amortized over the life of the
notes to interest expense ($481,000 in first quarter 2005). The remaining
increase over 2004 is strictly a function of increase in borrowings over 2004.





**LIQUIDITY
AND CAPITAL RESOURCES**





Through
March 31, 2005 we have an accumulated deficit of $14.4 million. We have a
working capital deficit of $5.0 million at March 31, 2005. Operating losses have
continued during 2005, which have been funded through proceeds of $375,000 from
new debt in the three months ended March 31, 2005. As a result of shortfalls in
anticipated funding, we are delinquent on certain payroll tax deposits due the
IRS. We are also delinquent on payments under certain notes payable agreements.
We expect cash flow deficits to continue, which will necessitate additional
financing. However, there can be no assurances that future debt or equity
funding will be available or have terms we find acceptable. These events raise a
substantial doubt as to our ability to continue as a going concern. As a result,
the report of our independent public accountants, which accompanied our
consolidated financial statements for the year ended December 31, 2004, was
qualified with respect to that risk.





At March
31, 2005 we have no material outstanding purchase commitments and during fiscal
years 2005 and 2004 there are no significant elements of income or loss that do
not arise from our continuing operations, other than a one-time gain on a
lawsuit settlement. Further, we do not expect material changes in our results of
operations from period to period based upon the seasonality of our
business.





15
 *Table of Contents*





**New
Accounting Pronouncements**





Please
refer to the Annual Report Form 10-KSB for the year ended December 31, 2004 for
disclosures regarding the Company's treatment of new accounting
pronouncements.





**CRITICAL
ACCOUNTING POLICIES**





We
believe the following critical accounting policies affect our more significant
judgments and estimates used in preparation of our consolidated financial
statements:





**Revenue
Recognition**





We
generate revenues from licensing software and providing post contract customer
support (PCS) and other professional services. We use written contracts to
document the elements and obligations of arrangements with our customers. At
times, arrangements that include the licensing of software also include PCS,
such as the right to technical support. When we sell several elements to a
customer through a single contract, the revenues from such multiple-element
arrangements are allocated to each element based upon vendor-specific objective
evidence of fair value, if available. We have not established sufficient
vendor-specific objective evidence of fair value for PCS since this element is
not sold separately from software licenses. Accordingly, we recognize revenue
from software licenses that include PCS ratably over the term of technical
support.





**Accounting
for Stock-Based Compensation**





In
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," We
have elected to account for stock-based compensation plans under Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," and to provide the pro forma disclosures required by SFAS
No. 123.








**ITEM 3.**
    **CONTROLS
      AND PROCEDURES**





As of
March 31, 2005, the Company carried out an evaluation, under the supervision and
with the participation of the Company's management, including the Company's
Chief Executive Officer and Principal Financial Officer, of the effectiveness of
the design and operation of the Company's disclosure controls and procedures (as
defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e)) as of the end of the
period covered by this report. Based upon that evaluation, the Company's Chief
Executive Officer and Principal Financial Officer concluded that the Company's
disclosure controls and procedures are effective at a reasonable level in timely
alerting them to material information relating to the Company that is required
to be included in the Company's periodic filings with the Securities and
Exchange Commission. There has been no change in the Company's internal control
over financial reporting that occurred during the Company's most recent fiscal
quarter that has materially affected or is reasonably likely to materially
affect, the Company's internal control over financial reporting.





The
Company's management, including the Chief Executive Officer and Principal
Financial Officer, do not expect that the Company's disclosure controls or
internal controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met due to
numerous factors, ranging from errors to conscious acts of an individual, or
individuals acting together. In addition, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in a cost-effective control system, misstatements due to error
and/or fraud may occur and not be detected.





16
 *Table of Contents*





**PART
II**








**ITEM 1.**
    **LEGAL
      PROCEEDINGS**





In
November 1999, the Company entered into a development and distribution
partnership agreement with Qwest Communications ("Qwest", then US West).
Pursuant to the provisions of this agreement, the Company completed the
development of a certain Internet software application which Qwest agreed to
advertise and actively market for a period of three years to its current and
future Internet access customers. Qwest did not perform under this agreement.
The Company pursued its right to binding arbitration with Qwest for specific
performance under this agreement or compensation for a loss of
revenue.





In
connection with that same development and distribution partnership agreement
with Qwest, the Company engaged the software development services of the
Navi-Gates Corporation, a company controlled by our former chief financial
officer. As part of its compensation, Navi-Gates was to receive a royalty on
each unit of software sold by Qwest and the Company under this agreement. On May
15, 2002 Cause Number 2002-24598, "Navi-Gates Corporation vs. Sharp Technology,
Inc. and Qwest Communications, Inc., et al..." was filed against our subsidiary,
Sharp Technology, Inc. in the District Court of Harris County, Texas,
269 th Judicial
District. In the petition, Navi-Gates Corporation attempted to secure
reimbursement of its damages arising from the failure of Qwest to fulfill its
marketing commitments.





In June
2004 the above legal matters between Sharp Technology and Qwest and Navi-Gates
were scheduled for an arbitration hearing to be held at the Houston, Texas
offices of the American Arbitration Association in February 2005. On January 26,
2005 the matters were resolved to all parties' satisfaction with no additional
expense to the Company.








**ITEM 2.**
    **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS**





During
the quarter ended March 31, 2005, we made the following transactions in reliance
upon exemptions from registration under Section 4(2) of the Securities Act of
1933 as amended (the "Act").





Unless
stated otherwise, we believe that:


(1)
    Each
      of the persons who received these unregistered securities had knowledge
      and experience in financial and business matters which allowed them to
      evaluate the merits and risk of the receipt of these securities, and that
      they were knowledgeable about our operations and financial
      condition.


(2)
    No
      underwriter participated in, nor did we pay any commissions or fees to any
      underwriter in connection with the
transactions.


(3)
    No
      transaction involved a public offering.


(4)
    Each
      certificate issued for these unregistered securities contained a legend
      stating that the securities have not been registered under the Act and
      setting forth the restrictions on the transferability and the sale of the
      securities.





In
January 2005, we issued 310,731 shares of common stock to two individuals upon
the exercise of outstanding warrants with proceeds of $51,107 recognized by the
Company.





In
January 2005, we issued warrants to purchase 300,000 shares of common stock to
four companies as a financing cost related to notes payable agreements with
such companies. The warrants have an exercise price of $.17 and are exercisable
over a five year period. We valued this transaction at a total of
$95,082.





In
January 2005 we issued 1,313,210 shares of common stock to four companies
pursuant to the conversion provisions of notes payable owed to the companies. We
valued this transaction at a total of $304,402.





17
 *Table of Contents*





In
February 2005, we issued 750,000 shares of common stock to one company and one
individual as payment-in-kind for consulting services rendered to us. We valued
these transactions at $85,000.





In
February 2005 we issued 1,313,210 shares of common stock to four companies
pursuant to the conversion provisions of notes payable owed to the companies. We
valued this transaction at a total of $91,793.





In March
2005 we issued 2,750,000 shares of common stock to four companies pursuant to
the conversion provisions of notes payable owed to the companies. We valued this
transaction at a total of $95,715.





In March
2005 we issued warrants to purchase 300,000 shares of common stock to three
individuals as compensation for consulting services rendered to us. The warrants
have an exercise price of $0.10 and expire in May 2007. We valued this
transaction at $11,400.








**ITEM 6.**
    **EXHIBITS**





Exhibit
      No.
    Identification
      of Exhibit31.1
    Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200231.2
    Certification
      of Principal Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
    Certification
      of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 200232.2
    Certification
      of Principal Financial Officer Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002




18
 *Table of Contents*





**SIGNATURES**





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





Sharp
Holding Corporation










By:
      /s/ George Sharp
    May 20, 2005George Sharp, Director, Chief Executive
      Officer,Principal Financial Officer and
      President





19