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UNITED STATES



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 20-F

AMENDMENT 2



(Mark
One)

| | REGISTRATION
    STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --------------------------------------------------------------------------------------------------

OR



|X | ANNUAL REPORT
    PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2008

OR



| | TRANSITION REPORT
    PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | --------------------------------------------------------------------------------------------

For the transition period from 
to .

OR



| | SHELL COMPANY
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | -----------------------------------------------------------------------------------------------

Date of event requiring this shell company report



Commission file number: 001-34399

SHARPE RESOURCES CORPORATION

(Exact name of Registrant as specified in its charter)

(Translation of Registrant's name into English)

CANADA(Jurisdiction of incorporation or organization)

3258 MOB NECK ROAD HEATHSVILLE, VIRGINIA 22473
(Address of principal executive offices)

Roland M. Larsen, Phone 804-580-8107, rolandlarsen@hughes.net, 3258
Mob Neck Road, Heathsville, VA, 22473
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

|Securities
    registered or to be registered pursuant to Section 12(b) of the Act.                       
|----------------------------------------------------------------------------------------------------------
|                                                                                                          
|Title of each class
    ____________________________________
    
    ____________________________________
|                                                                                                          
|Securities
    registered or to be registered pursuant to Section 12(g) of the Act.                       
|COMMON SHARES                                                                                             
|(Title of Class)                                                                                          
|                                                                                                          
|(Title of Class)                                                                                          

|SEC 1852 (05-06) | Persons who respond to the
    collection of information contained in this form are not required to respond unless the
    form displays a currently valid OMB control number
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.



(Title of Class)

Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the annual
report.

46-619-863 Common Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.

______Yes __X___No

If this report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934.

__X__Yes ____No Note - Checking the box above will not relieve any registrant required
to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
from their obligations under those sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.

______Yes __X___No

Indicate by check mark whether the registrant has submitted electronically and posted
on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files)

______Yes _____No

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated filer
and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check Below)

Large accelerated filer _____ Accelerated filer _____ Non-accelerated filer __X___

Indicate by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:

U.S. GAAP ________ International Financial Reporting Standards as Issued Other ____X___
By the International Accounting Standards Board ________

If "Other" has been checked in response to the previous questions, indicate
by check mark which financial statement item the registrant has elected to follow.

___X___ Item 17 ________Item 18

If this is an annual report, indicated by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).

______Yes __X___No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)

Indicate by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.

______Yes _____No

## Index

|PART 1  |                                                                |   
|------- | -------------------------------------------------------------- | --
|ITEM 1  | IDENTITY OF DIRECTORS, SENIOR
    MANAGEMENT AND ADVISERS      | 5 
|ITEM 2  | OFFER STATISTICS AND EXPECTED
    TIMETABLE                    | 5 
|ITEM 3  | KEY INFORMATION                                                | 5 
|A.      | Selected financial data                                        | 5 
|B.      | Capitalization and
    indebtedness                            | 6 
|C.      | Reasons for the offer and use
    of proceeds                  | 6 
|D.      | Risk factors                                                   | 6 
|ITEM 4  | INFORMATION ON THE COMPANY                                     | 10
|A.      | History and development of the
    company                     | 10
|B.      | Business overview                                              | 11
|C.      | Organizational structure                                       | 11
|D.      | Property, plants and equipment                                 | 11
|ITEM 5  | OPERATING AND FINANCIAL REVIEW
    AND PROSPECTS               | 11
|A.      | Operating results                                              | 11
|B.      | Liquidity and capital
    resources                            | 13
|C.      | Research and development,
    patents and licenses, etc.       | 14
|D.      | Trend information                                              | 14
|E.      | Off balance sheet arrangements                                 | 14
|F.      | Tabular disclosures of
    contractual obligations             | 15
|G.      | Safe harbor                                                    | 15
|ITEM 6  | DIRECTORS, SENIOR MANAGEMENT AND
    EMPLOYEES                 | 15
|A.      | Directors and senior
    management                            | 15
|B.      | Compensation                                                   | 16
|C.      | Board practices                                                | 21
|D.      | Employees                                                      | 27
|E.      | Share ownership                                                | 27
|ITEM 7  | MAJOR SHAREHOLDERS AND RELATED
    PARTY TRANSACTIONS          | 27
|A.      | Major shareholders                                             | 27
|B.      | Related party transactions                                     | 28
|C.      | Interests of experts and
    counsel                           | 29
|ITEM 8  | FINANCIAL INFORMATION                                          | 29
|A.      | Consolidated statements and
    other financial information    | 29
|B.      | Significant changes                                            | 29
|ITEM 9  | THE OFFER AND LISTING                                          | 30
|A.      | Offer and listing details                                      | 30
|B.      | Plan of distribution                                           | 32
|C.      | Markets                                                        | 32
|D.      | Selling shareholders                                           | 32
|E.      | Dilution                                                       | 32
|F.      | Expense of the issue                                           | 32
|ITEM 10 | ADDITIONAL INFORMATION                                         | 32
|A.      | Share capital                                                  | 32
|B.      | Memorandum and articles of
    association                     | 32
|C.      | Material contracts                                             | 32
|D.      | Exchange controls                                              | 32
|E.      | Taxation                                                       | 34
|F.      | Dividends and paying agents                                    | 35
|G.      | Statements by experts                                          | 35
|H.      | Documents on display                                           | 35
|I.      | Subsidiary information                                         | 35
|       
|ITEM 11 | QUANTITATIVE AND QUALITATIVE
    DISCLOSURES ABOUT MARKET RISK | 35
|ITEM 12 | DESCRIPTION OF SECURITIES OTHER
    THAN EQUITY SECURITIES     | 37
|        |                                                                |   

|PART II  |                                                                                  |   
|-------- | -------------------------------------------------------------------------------- | --
|ITEM 13  | DEFAULTS, DIVIDENT ARREARAGES AND
    DELINQUENCIES                              | 38
|ITEM 14  | MATERIAL MODIFICATIONS TO THE RIGHTS
    OF SECURITY HOLDERS AND USE OF PROCEEDS | 38
|ITEM 15  | CONTROLS AND PROCEDURES                                                          | 38
|A        | DISCLOSURE CONTROLS AND
    PROCEDURES                                           | 38
|B        | MANAGEMENT'S ANNUAL REPORT ON
    INTERNAL CONTROLS OVER FINANCIAL REPORTING     | 38
|C        | ATESTATION REPORT OF THE
    REGISTERED PUBLIC ACCOUNTING FIRM                   | 38
|D        | CHANGES IN CONTROL OVER FINANCIAL
    REPORTING                                  | 39
|ITEM 16  | [RESERVED]                                                                       | 39
|A        | AUDIT COMMITTEE FINANCIAL REPORT                                                 | 39
|B        | CODE OF ETHICS                                                                   | 39
|C        | PRINCIPAL ACCOUNTANT FEES AND
    SERVICES                                       | 39
|D        | EXEMPTIONS FROM THE LISTING
    STANDARDS FOR AUDIT COMMITTEES                   | 40
|E        | PURCHASES OF EQUITY SECURITIES BY
    THE ISSUER AND AFFILIATED PURCHASERS       | 40
|F        | CHANGES IN REGISTRANT'S
    CERTIFYING ACCOUNTANT                                | 41
|G        | CORPORATE GOVERNANCE                                                             | 41
|         |                                                                                  |   
|PART III |                                                                                  |   
|ITEM 17  | FINANCIAL STATEMENTS                                                             | 42
|         | MANAGEMENTS DISCUSSION AND
    ANALYSIS                                          | 67
|ITEM 18  | FINANCIAL STATEMENTS                                                             | 73
|ITEM 19  | EXHIBITS                                                                         | 73
|         |                                                                                  |   
|         | SIGNATURES                                                                       | 73



---

### PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable

Item 2. Offer Statistics and Expected Timetable

Not Applicable

Item 3. Key Information

#### A. Selected financial data.

The table below presents selected statement of operations and
balance sheet data for Sharpe Resources Corporation as at and for the fiscal years ended
December 31, 2008, 2007, 2006, 2005, and 2004. The selected financial data presented
herein is prepared in accordance with accounting principles generally accepted in Canada
("Canadian GAAP") and include the accounts of the Company and its wholly-owned
subsidiary Sharpe Energy Company.

A summary of the differences between accounting principles generally
accepted in Canada ("Canadian GAAP") and those generally accepted in the United
States ("US GAAP") which affect the Company is contained in Note 12 of the 2008
Consolidated Financial Statements included with this report.

Sharpe Resources Corporation Consolidated Financial Statement Data
For the Years Ended December 31 (Expressed in US Currency)

|          | 2008     
|--------- | ---------
|          |          
|$43,039   | $10,808  
|(1,824)   | (26,210) 
|(362,710) | (240,425)
|0         | 0        
|          |          
|0         | 0        
|(321,495) | (255,827)
|($0.01)   | ($0.01)  
|($0.01)   | ($0.01)  



|                            | 2008         | 2007         | 2006         | 2005          | 2004         
|--------------------------- | ------------ | ------------ | ------------ | ------------- | -------------
|Selected Balance Sheet Data |              |              |              |               |              
|Cash and cash equivalents   | $239,155     | $292,434     | $204,866     | $339,570      | $75,724      
|Total assets                | 493,260      | 554,548      | 454,866      | $417,695      | $159,609     
|Loan claims                 | 563,818      | 563,818      | 563,818      | $587,369      | ($664,533)   
|Share capital               | (11,463,430) | (11,463,430) | (11,174,108) | ($10,999,986) | ($10,999,986)
|Deficit                     | (12,342,356) | (12,020,861) | (11,765,034) | ($11,420,282) | ($11,709,520 

**5**

---

Currency Exchange Rates

Except where otherwise indicated, all dollar figures in this annual report on
Form 20-F, including the financial statements, refer to United States currency. The
following table sets forth, for the periods indicated, certain exchange rates based on the
exchange rates reported by the Federal Reserve Bank of New York as the noon buying rates
in New York City for cable transfers in foreign currencies as certified for customs
purposes (the "Noon Buying Rate"). Such rates quoted are the number of U.S.
dollars per Cdn $1.00 and are the inverse of rates quoted by the Federal Reserve Bank of
New York for the number of Canadian dollars per U.S. $1.00.

|Year Ended December 31, | 2004 
|----------------------- | -----
|                        |      
|.8493                   | .8689
|.7196                   | .7871
|.8253                   | .8821
|.8308                   | .8577

(1) Based on the average exchange rates on the last day of each month during
the applicable period.

#### B. Capitalization and indebtedness.

Not Applicable

#### C. Reasons for the offer and use of proceeds.

Not Applicable

D. Risk factors.The operations of the Company involve a number of
substantial risks and an investment in the securities of the Company is highly
speculative in nature. The following risk factors should be considered:

History of Losses; No Assurance of Profitability

The net loss for the year ending December 31, 2008 was $321,495 as compared to $255,827
for the year ending December 31, 2007 an increase of $65,668.

The net loss for the year ending December 31, 2007 was $ 255,827as compared to the net
loss of $344,752 for the year ending December 31, 2006 a decrease of $88,925.

The net loss for the year ending December 31, 2006 was $344,752 as compared to net
income of $289,238 for 2005. The difference of $633,990 is the result of the gain on the
sale of the West Thrifty Unit in 2005 of $416,320 and a one time management fee of
$154,000 paid to a current director and officer for the Corporation in 2006. This
transaction was in the normal course of operations and was measured at the exchange value
which represented the amount of consideration established and agreed to by the related
parties.

6

---

Although the company reported income of $289,238 for the year ended December 31, 2005,
it was the direct result of the sale of its West Thrifty Unit. The gain on the sale was
$416,320.

The net loss for the year ended December 31, 2004 was $194,909 which is an increase of
$181,261 a result of decreased production at the West Thrifty Unit.

In 2003, the Company had a loss of $13,648. The decrease from 2002 of
$98,351 is primarily due to the sale of 32% of the Company's interest in the West Thrifty
Unit.

The Company has accumulated losses of US $12,342,356 since inception.

Extreme Volatility of Coal and Gas Prices

Sharpe's revenues have been dependent upon prevailing prices for coal
and gas. Coal and gas prices can be extremely volatile and are affected by the action of
foreign governments and international cartels.

In addition, the marketability and profitability of coal and natural
gas acquired or discovered is affected by numerous factors beyond the control of Sharpe.
Any material decline in prices could result in a reduction of Sharpe's net production
revenue. These factors include reservoir characteristics, market fluctuations, the
proximity and capacity of oil and natural gas pipelines and processing equipment and
government regulation.

Highly Competitive Industry

The coal and natural gas industry is competitive in all its phases.
Sharpe competes with numerous other participants in the search for, and the acquisition
of, coal and natural gas properties and in the marketing of coal and natural gas. Sharpe's
competitors include coal companies, which have far greater financial and other resources,
staff and facilities than those of Sharpe. Competitive factors in the distribution and
marketing of coal and natural gas include price, methods of delivery and reliability of
delivery.

No Assurance of Discoveries or Acquisitions

Coal and natural gas acquisition, exploration and development involve
many risks, which even a combination of experience, knowledge and careful evaluation may
not be able to overcome. There is no assurance that commercial quantities of coal or
natural gas will be discovered or acquired by Sharpe.

Uncertainty of Warrant Exercises; Need for Additional Capital

There is no assurance that any of the outstanding share purchase
warrants or options will be exercised. Even if all of the outstanding share purchase
warrants and options are exercised, Sharpe may still require additional capital to conduct
its acquisition, exploration and development activities.

Effect of Outstanding Warrants and Options; Negative Effect of
Substantial Sales

As of December 31, 2008, the Company had outstanding options to
purchase an aggregate of 3,780,000 Common Shares. The exercise prices of the outstanding
options are Cdn. $0.10. The expiration dates of the outstanding options range from May 8,
2008 to May 8, 2013. At December 31, 2008 the Company had no warrants outstanding. All of
the foregoing securities represent the right to acquire Common Shares of the Company
during various periods of time and at various prices. Holders of these securities are
given the opportunity to profit from a rise in the market price of the Common Shares and
are likely to exercise

7

---

its securities at a time when the Company would be able to obtain
additional equity capital on more favorable terms. Substantial sales of Common Shares
pursuant to the exercise of such options and warrants could have a negative effect on the
market price for the Common Shares.

No Dividends

The Company has not paid any dividends since its inception and does not
anticipate paying dividends in the foreseeable future.

Regulation

The Company's coal and gas exploration, production and related
operations are subject to extensive rules and regulations promulgated by federal, state
and local agencies. Failure to comply with such rules and regulations can result in
substantial penalties. The regulatory burden on the oil and gas industry increases the
Company's cost of doing business and affects its profitability. Because such rules and
regulations are frequently amended or reinterpreted, the Company is unable to predict the
future cost or impact of complying with such laws.

The State of Texas and many other states require permits for drilling
operations, drilling bonds and reports concerning operations and impose other requirements
relating to the exploration and production of oil and gas. Such states also have statutes
or regulations addressing conservation matters, including provisions for the unitization
or pooling of oil and gas properties, the establishment of maximum rates of production
from oil and gas wells and the regulation of spacing, plugging and abandonment of such
wells. The statutes and regulations of certain states limit the rate at which oil and gas
can be produced from the Company's properties.

The Federal Energy Regulatory Commission ("FERC") regulates
interstate natural gas transportation rates and service conditions, which affect the
marketing of gas produced by the Company, as well as the revenues received by the Company
for sales of such production. Since the mid-1980s, the FERC has issued a series of orders,
culminating in Order Nos. 636, 636-A and 636B ("Order 636"), that have
significantly altered the marketing and transportation of gas. Order 636 mandates a
fundamental restructuring of interstate pipelines sales and transportation service,
including the unbundling by interstate pipelines of the sales, transportation, storage and
other components of the city-gate sales services such pipelines previously performed. One
of the FERC's purposes in issuing the orders is to increase competition within all phases
of the gas industry. Order 636 and subsequent FERC orders on rehearing have been appealed
and are pending judicial review. Because these orders may be modified as a result of the
appeals, it is difficult to predict the ultimate impact of the orders on the Company and
its gas marketing efforts. Generally, Order 636 has eliminated or substantially reduced
the interstate pipelines' traditional role as wholesalers of natural gas, and has
substantially increased competition and volatility in natural gas markets. While
significant uncertainty remains, Order 636 may ultimately enhance the Company's ability to
market and transport its gas, although it may also subject the Company to greater
competition and the more restrictive pipeline imbalance tolerances and greater associated
penalties for violation of such tolerances.

Industry Conditions

Sales of oil and natural gas liquids by the Company are not regulated
and are made at market prices. The price the Company receives from the sale of these
products is affected by the cost of transporting the

8

---

products to market. Effective as of January 1, 1995, the FERC
implemented regulations establishing an indexing system for transpiration rates for oil
pipelines, which, generally would index such rates to inflation, subject to certain
condition and limitations. These regulations could increase the cost of transporting oil
and natural gas liquids by pipeline, although the most recent adjustment generally
decreased rates. These regulations are subject to pending petitions for judicial review.
The Company is not able to predict with certainty what effect, if any, these regulations
will have on it, but, other factors being equal, the regulations may, over time, tend to
increase transportation costs or reduce wellhead prices for oil and natural gas liquids.

Environmental Regulation

The oil and natural gas industry is subject to environmental regulation
pursuant to local, state and federal legislation. Environmental legislation provides for
restrictions and prohibitions on releases or emissions of various substances produced in
association with certain oil and natural gas industry operations. In addition, legislation
requires that well and facility sites be abandoned and reclaimed to the satisfaction of
state authorities and the landowner. A breach of such regulations and legislation may
result in the imposition of fines, penalties, clean-up orders and can affect the location
of wells and facilities and the extent to which oil and gas exploration and development is
permitted. Non-compliance with these regulations and legislation can be sufficient cause
for governmental authorities to withhold approval of drilling and/or operating permits.
Sharpe is in material compliance with current environmental laws and regulations.

The Comprehensive Environmental Response, Compensation, and Liability
Act ("CERCLA"), also known as the "Superfund" law, imposes liability,
without regard to fault or the legality of the original conduct, on certain classes of
persons that are considered to have contributed to the release of a "hazardous
substance" into the environment. These persons include the owner or operator of the
disposal site or the site where the release occurred and companies that disposed or
arranged for the disposal of the hazardous substances found at the site. Persons who are
responsible for releases of hazardous substances found at the site and persons who are or
were responsible for releases of hazardous substances under CERCLA may be subject to joint
and several liability for the costs of cleaning up the hazardous substances that have been
released into the environment and for damages to natural resources, and it is not uncommon
for neighboring landowners and other third parties to file claims for personal injury and
property damage allegedly caused by the hazardous substances released into the
environment. The Company is able to control directly the operation of only those wells
with respect to which it acts as operator. Notwithstanding the Company's lack of control
over wells operated by others, the failure of the operator to comply with applicable
environmental regulations may, in certain circumstances, be attributed to the Company. The
Company has no material commitments for capital expenditures to comply with existing
environmental requirements.

Risk Inherent to Sharpe's Proposed Mining Activities

1. Sharpe is engaged in the business of acquiring and exploring coal and
    other mineral properties in the hope of locating an economic deposit or deposits of
    minerals. The property interests of the Company are in the exploration stage only and are
    without a known body of commercial ore. There can be no assurance that the Company will
    generate any revenues or be profitable or that the Company will be successful in locating
    an economic deposit of minerals.
2. There are a number of uncertainties inherent in any exploration and
    development program, including the location of economic coal deposits, the development of
    appropriate metallurgical processes, the receipt of necessary governmental permits, and
    the construction of mining and processing

9

---

> facilities. Substantial expenditures will be required to pursue such exploration and
>   development activities. Assuming discovery of an economic ore body, and depending on the
>   type of mining operation involved, several years may elapse from the initial stages of
>   development until commercial production is commenced. New mining operations frequently
>   experience unexpected problems during the exploration and development stages and during
>   the initial production phase. In addition, preliminary reserve estimates may prove
>   inaccurate. Accordingly, there can be no assurance that the Company's current exploration
>   and development programs will result in any commercial mining operations.

1. The Company may become subject to liability for cave-ins and other
    hazards of mineral exploration against which it cannot insure or against which it may
    elect not to insure because of high premium costs or other reasons. Payment of such
    liabilities would reduce funds available for acquisition of mineral prospects or
    exploration and development and would have a material adverse effect on the financial
    position of the Company.

Title to Properties

The validity of unpatented mining claims on public lands, mineral
leases and purchased mineral rights is often uncertain and may be contested and subject to
title defects.

Conflict of Interest

Certain directors and officers of the Company are also directors and
officers of other natural resource and base metal exploration and development companies.
As a result, conflicts may arise between the obligations of these directors to the Company
and to such other companies.

Dependence on Key Personnel

The Company's success will be dependent upon the services of its
President and Chief Executive Officer, Mr. Roland Larsen.

Item 4. Information on the Company

A. History and development of the company

Sharpe Resources Corporation (the "Company" or
"Sharpe") was incorporated under the Business Corporations Act (Ontario) on
April 10, 1980 under the name "Sharpe Energy & Resources Limited". By
Articles of Amendment dated November 2, 1984, the Company amended its authorized capital
to consist of an unlimited number of common shares and removed restrictions on the issue,
transfer or ownership of such shares. By Articles of Amendment dated July 29, 1996, the
Company changed its name to Sharpe Resources Corporation.

Sharpe entered the oil and gas business in the United States in early
1994. In 1995, it acquired working and net revenue interests in over 400 oil and gas wells
on 250 properties in 11 states and the West Thrifty waterflood project in Texas. These
assets were acquired from the oil and gas division of Figgie International Inc. and were
located primarily in the Rocky Mountain and Southwestern United States regions. In 1996,
Sharpe sold almost all of its Rocky Mountain interests. In early 1997, Sharpe acquired
interests in the Matagorda offshore project.

10

---

In 2001, the Company sold all of its offshore, Gulf of Mexico natural
gas production and several non-operated onshore petroleum and natural gas properties. In
2002 the Company focused its efforts on its remaining properties in Texas. In 2003, the
Company sold 32% of its interest in the West Thrifty Unit Texas properties. The purchaser
also took over operations on the properties.

In June, 2005, the company sold its remaining 62% revenue and working
interests in the West Thrifty Unit located in Brown County, Texas.

As of May 15, 2006, the Corporation changed its focus away from the Texas oil and gas
business to exploration and development for mineral resources and oil and gas in the
western US and a focus on coal, coal bed methane and shale gas projects in the
northeastern US.

B. Business overview.

In May 2006, the Corporation changed its focus away from Texas
based oil and gas business to mineral exploration and development in the western US and
coal bed methane and shale gas projects in the northeastern US. The Company had been a
resource company engaged in oil and gas exploration, and production in the United States
since the early 1990's. This effort included the acquisition, exploration and development
of oil and gas properties in the United States. However, in 2005, the Company sold its
remaining oil and gas properties.

#### C. Organizational structure.

The Company has one wholly owned subsidiary, Sharpe Energy Company,
which is incorporated pursuant to the laws of the State of Virginia. The Company's
operations in Canada consist of general and administrative expenses necessary to the
maintaining of the Company's public company status.

The terms "Sharpe" or the "Company", as used in
this annual report on Form 20-F, refers to Sharpe or the Company and it's wholly owned
subsidiaries collectively.

#### D. Property, plants and equipment.

The registered office of Sharpe Resources Corporation is located at
56 Temperance Street, Fourth Floor, Toronto, Ontario M5G 2V5. The principal office is
located at 3258 Mob Neck Road, Heathsville, Virginia 22473.

West Thrifty - Brown County, Texas

The remaining producing property owned by the Company was its West
Thrifty project. The Company had a 100% working interest in this property however, in
2003, the Company sold 32% of its interest and the purchaser took over operation of the
property. In June, 2005, the Company sold its remaining revenue and working interests in
this property.

Item 5. Operating and Financial Review and Prospects

A. Operating results.

Year Ended December 31, 2008 Compared to the Year Ended
December 31, 2007

The net loss for the year ending December 31, 2008 was $321,495 as
compared to the net loss of $255,827 for the year ending December 31, 2007 an increase of
$65,668. Operating expenses decreased by $24,386 however General and Administrative
expenses increased by $38,705. There was an increase

11

---

of $98,641 in Stock-option compensation from $90,232 for the year
ending December 31, 2007 to $188,873 for the year ending December 31, 2008. On May 8,
2008, the Corporation granted options to purchase a total of 1,700,000 common shares to
directors and officers of the Corporation. The options are exercisable at $0.10 (Canadian)
and expire on May 8, 2013. For the purposes of the 1,700,000 options, the fair value of
each option was estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: expected dividend yield of 0%; expected volatility
of 161.3%; risk-free interest rate of 3.04% and an expected average life of 5 years. The
estimated value of $188,873 was recorded as a debit to stock-option compensation and a
credit to contributed surplus.

Revenue increased from $8,606 for the year ending December 31, 2007 to
$39,604 for the year ending December 31, 2008 and represents interest income and various
small override interests in petroleum and natural gas properties.

On January 7, 2008, the Corporation entered into an agreement to
acquire a 100% interest in Standard Energy Corporation ("Standard"). Standard's
primary asset includes 100% ownership interest in all of the coal seams on more than
17,000 acres in Preston County, West Virginia. Details of the proposed acquisition are
included in Note 10(a) of the Consolidated Financial Statements for the Years Ended
December 31, 2008, 2007, 2006. The purchase price consists of the forgiveness of the
repayment of US $250,000 demand promissory note owing from Standard to the Corporation and
the issuance of 2 million shares of the Corporation's common stock.

On June 12, 2008, the Corporation announced that RSM has reached an
agreement in principle with the Corporation to jointly develop and operate a number of
coal projects. To enter into the transaction RSM has agreed in principle to advance to the
project up to $2 million to facilitate the startup.

Roland M. Larsen is the Chief Executive Officer of both RSM and the
Corporation. In order to conduct the negotiations and settlement of definitive agreements
in this connection, the board of RSM has appointed an independent committee of directors
to evaluate finalize and recommend the transaction to the Board of Directors of RSM if
warranted. It is anticipated that the business will operate as a joint venture between the
companies at least at the outset. A joint venture agreement was completed and executed by
both Boards' of Directors on November 12, 2008.

In an effort to achieve diversity within its natural resource portfolio
RSM has entered into the joint venture program mentioned above focused initially on the
eastern Kentucky coal fields with the Corporation. The joint venture will involve the
opportunity for RSM to earn a 50% interest in coal projects that Standard has acquired or
holds under option agreements. RSM can earn its 50% interest by advancing four projects to
production over the next 12 months. The agreement is subject to regulatory approvals and
as of December 31, 2008, the joint venture has not been so approved.

Year Ended December 31, 2007 Compared to the Year Ended December
31, 2006

The net loss for the year ending December 31, 2007 was $ 255,827as
compared to the net loss of $344,752 for the year ending December 31, 2006 a decrease of
$88,925. Revenue decreased from $20,885 for the year ending December 31, 2006 to $10,808
in 2007. Revenue consists of $2,202 in interest income and $8,606 in various small
override interests in petroleum and natural gas properties.

12

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Operating and Administrative expenses for the year ending December 31,
2007 were $266,635 compared to $287,512 for the year ending December 31, 2006. General and
Administrative expenses increased from $74,178 for the year ending December 31, 2006 to
$110,547 for the year ending December 31, 2007. Management fees decreased from $154,000
the year ending December 31, 2006 to $15,000 the year ending December 31, 2007. Stock
option compensation increased from zero in 2006 to $90,232 in 2007 as a result of
1,600,000 options granted to purchase common shares of the Company on May 15, 2007. The
options are exercisable at CDN $0.10 and expire on May 15, 2012. The fair value of these
stock options was estimated at $90,232 (CDN $102,400) using the Black-Scholes option
pricing model using the following assumptions: Dividend yield, 0%, risk-free interest
rate, 4.21%, expected volatility, 153.8% and an expected life of 5 years. These options
were fully vested and expensed upon granting.

Year Ended December 31, 2006 Compared to the Year Ended December
31, 2005

The net loss for the year ending December 31, 2006 was $344,752 as
compared to net income of $289,238 for 2005. The difference of $633,990 is the result of
the gain on the sale of the West Thrifty Unit in 2005 of $416,320 and a one time
management fee of $154,000 paid to a current director and officer for the Corporation in
2006. This transaction was in the normal course of operations and was measured at the
exchange value which represented the amount of consideration established and agreed to by
the related parties. Revenue increased from $17,644 in 2005 to $20,885 in 2006 of which
$13,370 was from remaining small override interests in petroleum and natural gas
properties.

Operating and Administrative expenses for the year ending December 31,
2006 were $106,722 compared to $101,135 for the year 2005. The Corporation decided to pull
out from the Lyon County, Nevada project and accordingly the option price paid of US
$78,125 was written-off during the year. The Corporation purchased this option from Royal
Standard Minerals Inc. ("RSM") to acquire a 60% interest in RSM's gold project
located in Lyon County Nevada on September 15, 2004 in consideration for which the
Corporation issued 2,000,000 common shares to RSM at a deemed value of CDN $100,000 (US
$78,125).

#### B. Liquidity and capital resources.

Year Ended December 31, 2008 Compared to the Year Ended
December 31, 2007

The Corporation's cash balance at December 31, 2008 was $239,155
compared to $292,434 at December 31, 2007. Total assets at December 31, 2008 were $493,260
compared to $554,548 at December 31, 2007 a decrease of $61,288.

Total Current Liabilities decreased from $845,517 at December 31, 2007
to $830,853 at December 31, 2008. Accounts payable and accrued liabilities increased from
$147,486 at December 31, 2007 to $192,327 at December 31, 2008 an increase of $44,841.

13

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Year Ended December 31, 2007 Compared to the Year Ended December
31, 2006

The Corporation's cash balance at December 31, 2007 was $304,548
compared to $204,866 at December 31, 2006. Total assets at December 31, 2007 were $554,548
compared to $454,866 at December 31, 2006.

There was little change in current liabilities at December 31, 2007
which were $845,517 compared to $808,240 at December 31, 2006 a difference of $37,277.
Accounts payable increased from $110,209 at December 31, 2006 to $147,486 at December 31,
2007.

Year Ended December 31, 2006 Compared to the Year Ended December
31, 2005

The Corporation's cash balance at December 31, 2006 was $204,866
compared to $339,570 at December 31, 2005. Total assets at December 31, 2006 were $454,866
compared to $417,695 at December 31, 2005. On January 24, 2006 the Corporation completed a
private placement of 8,796,200 units of the Corporation at CDN $0.05 per unit for gross
proceeds of CDN $439,810 (US $378,530). Each unit consists of one common share of the
Corporation and one common share purchase warrant. Each warrant is exercisable for one
year from closing at CDN $0.10 per share. The subscribers under the private placement are
directors of the Corporation. The warrants were valued using the Black-Scholes option
pricing model where the value was determined to be CDN $237,497 (US $204,408). The
following assumptions were used: dividend yield 0%, risk-free interest rate 3.83%,
expected volatility 190% and an expected life of 1 year. The units are subject to a hold
period which expires May 25, 2006.

There was little change in current liabilities at December 31, 2006
which were $808,240 compared to $804,847 at December 31, 2005.

The Corporation is authorized to issue an unlimited number of Common
Shares of which 35,184,803 are outstanding as at December 31, 2004. As at December 31,
2004 the Corporation had outstanding options to purchase 3,250,000 common shares with
exercise prices from C$0.10-0.12 per share and expiration dates ranging from May 2005 to
May 2008.

#### C. Research and development, patents and licenses, etc.

See Item 4. D. above.

#### D. Trend information.

See Items 3. D. and 4. D. above.

#### E. Off-balance sheet arrangements.

There are no off-balance sheet arrangements.

14

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F. Tabular disclosure of contractual obligations.

|Contractual Obligations | Total    | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years
|----------------------- | -------- | ---------------- | --------- | --------- | -----------------
|                        |          |                  |           |           |                  
|Unsecured Debt*         | $563,818 | $563,818         |           |           |                  
|                        |          |                  |           |           |                  

Not applicable

Item 6. Directors, Senior Management and Employees

A. Directors and senior management.

The following table sets out the names of and related information
concerning each of the officers and directors of Sharpe Resources.

|NAME                                       | OFFICE HELD                                         | SINCE
|------------------------------------------ | --------------------------------------------------- | -----
|                                           |                                                     |      
|Roland
    M. Larsen
    Richmond,Virginia | President,
    Chief Executive Officer and Director | 1993 
|                                           |                                                     |      
|Kimberley Koerner1
    Brambleton,Virginia | Treasurer
    and Director                          | 2002 
|                                           |                                                     |      
|Troy
    Koerner
    Brambleton, Virginia  | Director                                            | 2002 

1.Kimberly Koerner is the daughter of Roland Larsen and the
wife of Troy Koerner.

The following discussion provides information on the principal occupations of the
above-named directors and executive officers of the Company within the preceding five
years.

Roland M. LarsenMr. Roland M. Larsen, President,has more than 30
years of experience in the natural resources, both in exploration and management roles.
Earlier in his career, he worked with BHP Minerals International, Inc. for a period of ten
years, where he was the Exploration Manager for the Eastern United States and the North
Atlantic Region. Prior to that he was the Senior Geologist for NL Industries, Inc. and NL
Baroid Petroleum Services. In addition, he has several years of experience working with
consulting engineering firms including Derry, Michner and Booth, and Watts Griffis &
McOuat Limited. He is a member of the Society of Economic Geologists, the American
Institute of Professional Geologists, and the American Institute of Mining, Metallurgy,
and Exploration, Inc. Mr. Larsen holds a B.Sc. and M.Sc. degrees in geology.

15

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Kimberly Koerner

Ms. Koerner is a consulting financial analyst from northern Virginia. Since graduating
with a B.

A. in Business Administration from the University of South Carolina - Columbia in 1991,
she has been employed with NPES of Reston, Virginia and Sharpe Energy Company of Houston,
Texas

Troy Koerner

Mr. Koerner has been an analyst with E-Trade Advisory Services Inc. since August, 2002.
From November 2000 to April 2002, Mr. Koerner served as an Equity Analyst with Lehman
Brothers Inc. Prior to joining Lehman Brothers, he was in the Global Credit department of
JP Morgan Company, Inc.

B. Compensation.

Compensation of Officers

The following table summarizes, for the three most recently completed financial
years of the Corporation, information concerning the compensation earned by the Chief
Executive Officer of the Corporation, the Chief Financial Officer of the Corporation, each
the Corporation's three most highly compensated executive officers of the Corporation who
was serving as an executive officer as at the end of the most recently completed financial
year or who was not serving as an officer of the Corporation at the end of the most
recently completed financial year-end, and whose aggregate compensation exceeded $150,000,
(the "Named Executive Officer").

|Name and
    Principal Position | Year                   |                         |                        |                           | Non-equity
    incentive plan compensation ($) |                            |                        |        
|------------------------------- | ---------------------- | ----------------------- | ---------------------- | ------------------------- | ---------------------------------------------- | -------------------------- | ---------------------- | -------
|Salary ($)                      | Share-based awards ($) | Option-based awards ($) | Annual Incentive Plans | Long-term incentive plans | Pension value ($)                              | All other compensation ($) | Total Compensation ($)
|2008                            | Nil                    | Nil                     | $55,5481               | Nil                       | Nil                                            | Nil                        | Nil                    | $55,548
|2007                            | Nil                    | Nil                     | $56,3952               | Nil                       | Nil                                            | Nil                        | Nil                    | $56,395
|2006                            | Nil                    | Nil                     | Nil                    | Nil                       | Nil                                            | Nil                        | Nil                    | Nil    

Notes:

following assumptions: expected dividend yield of 0%; expected volatility of 161.3%;
    risk-free interest rate of 3.04% and an expected average life of 5 years.

No options were exercised by the Named Executive Officer during the twelve months ended
December 31, 2008.

16

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Long-Term Incentive Plan

The Company does not have a Long-Term Incentive Plan for the Named Executive Officers,
other than stock options granted from time to time by the board of directors under
provisions of the stock option plan.

Stock Option PlanThe purpose of this plan (the "Plan") is to develop
the interest of bona fide Officers, Directors, Employees, Management Corporation
Employees, and Consultants of Sharpe Resources Corporation and its subsidiaries
(collectively, the "Company") in the growth and development of the Company by
providing them with the opportunity through stock options to acquire an increased
proprietary interest in the Company.

The Plan is administered by the Board of Directors of the Company, or if appointed, by
a special committee of Directors appointed from time to time by the Board of Directors of
the Company (such committee, or if no such committee is appointed, the Board of Directors
of the Company, is hereinafter referred to as the "Committee") pursuant to rules
of procedure fixed by the Board of Directors.

The Committee may from time to time designate bona fide Directors, Officers, Employees,
Management Corporation Employees and Consultants of the Company (or in each case their
personal holding companies) (collectively, the "Optionees"), to whom options
("Options") to purchase common shares ("Common Shares") of the Company
may be granted, and the number of Common Shares to be optioned to each, provided that:

In the case of Options granted to Employees, Consultants, or Management
Corporation Employees, the Company represents that the Optionee is a bona fide Employee,
Consultant or Management Corporation Employee, as the case may be.

Outstanding Share-based awards and option based awards

The following table sets out information concerning all awards
outstanding at the end of the most recently completed financial year. This includes
unexercised options held by the Named Executive Officers during 2008 and the value of
unexercised options held by the Named Executive Officers as at December 31, 2008. The
Company does not have a share-based plan.

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|                 |                                                             | Option-based
    Awards   |                                            | Share-based Awards                               
|---------------- | ----------------------------------------------------------- | ------------------------- | ------------------------------------------ | -------------------------------------------------
|Name             | Number of securities
    underlying unexercised options (#) | Option exercise price ($) | Option expiration date                     | Value of unexercised
    in-the-money options ($)
|Roland M. Larsen | 500,000 1,000,000 300,000                                   | $0.10 $0.10 $0.10         | May 08, 2013 May 15, 2012 May 16,
    2010 | Nil
    Nil
    Nil                              

Incentive plan awards - value vested or earned during the year

The following table provides information regarding value vested or
earned through incentive plan awards by the Named Executive Officer's during the year
ended December 31, 2008.

|Name          | Option-based awards- Value
    vested during the year ($) | Share-based awards - Value
    vested during the year ($) | Non-equity incentive plan
    compensation - Value earned during the year ($)
|------------- | --------------------------------------------------------- | --------------------------------------------------------- | -----------------------------------------------------------------------------
|Roland Larsen | Nil                                                       | Nil                                                       | Nil                                                                          

The Company has no pension plan.

Termination and change of control benefits

There are no employment contracts between either the Company or its
subsidiaries and the above-named executive officers other than disclosed herein or in the
financial statements attached hereto. Neither the Company or any of its subsidiaries has
any plan or arrangement with respect to compensation to its executive officers which would
result from the resignation, retirement or any other termination of employment of the
executive officers' employment with the Company and its subsidiaries or from a change of
control of the Company or any subsidiary of the Company or a change in the executive
officers' responsibilities following a change in control, where in respect of an Executive
Officer the value of such compensation exceeds $150,000.

Compensation of Directors

The Directors have no standard compensation arrangements, or any
other arrangements, with the Company, except as herein disclosed. The Directors had no
other arrangements with the Company where they were compensated for services as
consultants or experts by the Company or its subsidiaries during the financial year ended
December 31, 2008. Executive Officers of the Company who also act as

18

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Directors of the Company do not receive any additional compensation for
services rendered in such capacity, other than as paid by the Company to such Executive
Officers in their capacity as Executive Officers. See "Summary of Compensation"
above.

The following table provides details with respect to compensation paid
to, or earned by the Directors of the Company who were not Named Executive Officers as at
December 31, 2008:

|                   |      |      | Share- | Option-  | Annual          |         |              |             
|------------------ | ---- | ---- | ------ | -------- | --------------- | ------- | ------------ | ------------
|                   |      |      | based  | based    | Incentive Plans | Pension | All other    | Total       
|Name and Principal |      | Fees | awards | awards   | Long-term       | value   | compensation | Compensation
|Position           | Year | ($)  | ($)    | ($)      | incentive plans | ($)     | ($)          | ($)         
|Kimberly Koerner   | 2008 | Nil  | Nil    | $55,5481 | Nil             | Nil     | Nil          | $55,548     
|Director/Treasurer | 2007 | Nil  | Nil    | $33,3872 | Nil             | Nil     | Nil          | $33,387     
|                   | 2006 | Nil  | Nil    | Nil      | Nil             | Nil     | Nil          | Nil         
|Troy Koerner       | 2008 | Nil  | Nil    | $56,3952 | Nil             | Nil     | Nil          | $56,395     
|Director           | 2007 | Nil  | Nil    | Nil      | Nil             | Nil     | Nil          | Nil         
|                   | 2006 | Nil  | Nil    | Nil      | Nil             | Nil     | Nil          | Nil         

Notes:

Outstanding Option-Based Awards - Directors

The following table sets out information concerning all awards
outstanding at the end of the most recently completed financial year. This includes
unexercised options held by the Directors during 2008 and the value of unexercised options
held by the Directors who were not Named Executive Officers as at December 31, 2008. The
Company does not have a share-based plan.

|                 |                                                             | Option-based
    Awards   |                                            | Share -based Awards                              
|---------------- | ----------------------------------------------------------- | ------------------------- | ------------------------------------------ | -------------------------------------------------
|Name             | Number of securities underlying
    unexercised options (#) | Option exercise price ($) | Option expiration date                     | Value of unexercised
    in-the-money options ($)
|Kimberly Koerner | 500,000 600,000 180,000                                     | $0.10 $0.10 $0.10         | May 08, 2013 May 15, 2012 May 16,
    2010 | Nil
    Nil
    Nil                              
|Troy Koerner     | 500,000                                                     | $0.10                     | May 08, 2013                               | Nil                                              

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Incentive plan awards - value vested or earned during the year

The following table provides information regarding value vested or
earned through incentive plan awards by the Named Executive Officer's during the year
ended December 31, 2008.

|Name             | Option-based awards- Value
    vested during the year ($) | Share-based awards - Value
    vested during the year ($) | Non-equity incentive plan
    compensation - Value earned during the year ($)
|---------------- | --------------------------------------------------------- | --------------------------------------------------------- | -----------------------------------------------------------------------------
|Kimberly Koerner | Nil                                                       | Nil                                                       | Nil                                                                          
|Troy Koerner     | Nil                                                       | Nil                                                       | Nil                                                                          

Other Compensation

Other than as set forth herein, the Company did not pay any other
compensation to the Executive Officers or directors (including personal benefits and
securities or properties paid or distributed which compensation was not offered on the
same terms to all full time employees) during the financial year ended December 31, 2008.

Equity Compensation Plan Information

|Plan Category                                                  | Number of securities to be
    issued upon exercise of outstanding options, warrants and rights (#) | Weighted-average exercise
    price of outstanding options, warrants and rights ($) | Number of securities remaining
    available for future issuance under equity compensation plans (excluding securities
    reflected in column (a)
|-------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans
    approved by security holders     | 3,780,000                                                                                           | $0.10                                                                               | 1,081,986                                                                                                                                         
|Equity compensation plans not
    approved by security holders | Nil                                                                                                 | Nil                                                                                 | Nil                                                                                                                                               
|Total                                                          | 3,780,000                                                                                           | $0.10                                                                               | 1,081,986                                                                                                                                         

The only compensation plan under which equity securities of the Company
are authorized for issuance is the Stock Option Plan.

Compensation Policy

The executive compensation policy of the Company is determined with a
view to securing the best possible talent to run the Company. Executives expect to reap
additional income from the appreciation in the value of the Common Shares they hold in the
Company, including stock options.

20

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Salaries are commensurate with those in the industry with additional
options awarded to executive officers in lieu of higher salaries. Bonuses may be paid in
the future for significant and specific achievements, which have a strategic impact on the
fortunes of the Company. Salaries and bonuses are determined on a judgmental basis after
review by the board of directors of the contribution of each individual, including the
executive officers of the Company. Although they may be members of the board of directors,
the executive officers do not individually make any decisions with respect to their
respective salary or bonus. In certain cases, bonuses of certain individuals, other than
the executive officers, may be tied to specific criteria put in place at the time of
engagement.

The grant of stock options under the Company's Stock Option Plan is
designed to give each option holder an interest in preserving and maximizing shareholder
value in the longer term and to reward employees for both past and future performance.
Individual grants are determined by an assessment of an individual's current and expected
future performance, level of responsibilities and the importance of his/her position with
and contribution to the Company.

C. Board practices.

Responsibilities of the Board of Directors

The Board recognizes it is responsible for the stewardship of the
business and affairs of the Company and has adopted a set of principles and practices
setting out its stewardship responsibilities. Under its mandate, the Board seeks to
discharge such responsibility by reviewing, discussing and approving the Company's
strategic planning and organizational structure, and supervising management to ensure that
the foregoing enhance and preserve the underlying value of the Company for the benefit of
all shareholders. As part of the strategic planning process, the Board contributes to the
development of a strategic direction for the Company by reviewing, on an annual basis, the
Company's principal opportunities, the processes that are in place to identify such
opportunities and the full range of business risks facing the Company, including
strategic, financial, operational, leadership, partnership and reputation risks. On an
ongoing basis, the Board also reviews with management how the strategic environment is
changing, what key business risks and opportunities are appearing and how they are
managed, including the implementation of appropriate systems to manage these risks and
opportunities. The performance of management, including the Company's Chief Executive
Officer, is also supervised to ensure that the affairs of the Company are conducted in an
ethical manner. The Board, directly and through its committees, ensures that the Company
puts in place, and reviews at least on an annual basis, comprehensive communication
policies to address how the Company

(i) interacts with analysts, investors, other key stakeholders and the
public, and (ii) complies with its continuous and timely disclosure obligations. Finally,
the Board monitors the integrity of corporate internal control procedures and management
information systems to manage such risks and ensure that the value of the underlying asset
base is not eroded.

The Board from time to time delegates to senior executives the
authority to enter into certain types of transactions, including financial transactions,
subject to specified limits. According to the Company's policy, investments and other
similar expenditures above the specified limits, including major capital projects as well
as material transactions outside the ordinary course of business, whether on or off
balance sheet, are reviewed by, and subject to, the prior approval of the Board.

21

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CORPORATE GOVERNANCE

Following are the principles of the Company's corporate governance
arrangements:

- Subject to the relatively small size of the Company and to business
    needs, the size of the Board must be kept to a sufficiently low number to facilitate open
    and effective dialogue and full participation and contribution of each Director.
- The Board must function as a cohesive team, with shared responsibilities
    and accountabilities that are clearly defined, understood and respected.
- The Board must have the ability to exercise all its supervisory
    responsibilities independent of any influence by management.
- The Board must have access to all the information needed to carry out
    its full responsibilities. Information must be available in a timely manner and in a
    format conducive to effective decision making.
- The Board must develop, implement, and measure effective corporate
    governance practices, processes and procedures.

Election of Directors and Officers

The Company's articles provide for a minimum of three and a maximum
of seven directors, to be elected yearly and to hold office until the next annual meeting
of shareholders of the Company or until their successors are duly elected or appointed.
The whole board is elected at each annual meeting, and all directors then in office must
retire, but, if qualified, are eligible for re-election. If an election of directors is
not held at the proper time, the directors continue in office until their successors are
elected or appointed. Each officer continues to hold office until the appointment of
officers at the first meeting of the board of directors after the election of directors
and, in default of the appointment of officers at such meeting, continues to hold office
after such meeting. In the absence of written agreements to the contrary, the board may
remove at its pleasure any officer of the Company.

Committees of the Board

There are currently two committees of the board of directors. The
board does not have, nor does it currently intend to form, a nominating committee. It is
the view of the board of directors that its current size (three) is small enough to make
such additional committees counter productive. In addition to regularly scheduled meetings
of the board, its members are in continuous contact with one another and with the members
of senior management. If the size of the board were to be enlarged or if the Company were
to undergo a substantial change in its business and operations, consideration would at
that point be given to the formation of additional committees, including a nominating
committee.

AUDIT COMMITTEE

The charter of the Corporation's audit committee charter is as follows:

1. Establishment of Audit Committee: The board of directors of the
Corporation hereby establishes a committee to be called the Audit Committee. The Audit
Committee is appointed by the Board of Directors to assist the Board in fulfilling its
oversight responsibilities. The Audit Committee's primary duties and responsibilities are
to:

22

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a) Identify and monitor the management of the principal risks that could impact
the financial reporting of the Corporation; 
b) Monitor the integrity of the Corporation's financial reporting process and system of
internal controls regarding financial reporting and accounting compliance; 
c) Monitor the independence and performance of the Corporation's external auditors; 
d) Provide an avenue of communication among the external auditors, management and the
Board of Directors.

The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the external
auditors as well as anyone in the organization. The Audit Committee has the ability to
retain, at the Corporation's expense, special legal, accounting, or other consultants or
experts it deems necessary in the performance of its duties.

2. Membership: The Audit Committee will be comprised of three or more
directors as determined by the Board and the make-up of which shall satisfy applicable
independence requirements of applicable securities regulatory authorities. Members shall
be appointed annually from among the members of the Board of Directors. The Chair of the
Audit Committee shall be appointed by the board of directors. All members of the Audit
Committee shall be financially literate. An Audit Committee member who is not financially
literate may be appointed to the Audit Committee provided that the member becomes
financially literate within a reasonable period of time. The following board members have
been appointed to serve on the Audit Committee as follows:

|Kimberly L. Koerner (Chair)
|---------------------------
|
|

3. The role of the Audit Committee is to provide oversight, and, in such a role, it has
the powers set forth in this Charter. While being financially literate, the members of the
Committee are generally not accountants or auditors by profession or experts in the fields
of accounting or auditing and, in any event, do not serve in such capacity. Consequently,
it is not the duty of the Audit Committee to plan or conduct audits or to determine that
the Company's financial statements are complete and accurate or are prepared in accordance
with generally accepted accounting principles. Nor is it the duty of the Audit Committee
to conduct investigations and to assure compliance with any laws and regulations and the
Company's business conduct guidelines. These matters are the responsibility of management
and, in certain cases, the external auditor.

4. Mandate: The Audit Committee shall, in addition to any other duties and
responsibilities specifically assigned or delegated to it from time to time by the board
of directors:

a) Meet with the independent external auditors (the "auditors") and the
senior management of the Corporation to review the year-end audited financial statements
of the Corporation which require approval by the board of directors, prior to the issuance
of any press release in respect thereof; 
b) Review with senior management and, if necessary, the auditors, the interim financial
statements of the Corporation prior to the issuance of any press release in respect
thereof; 
c) Review the MD&A and press releases containing financial results of the Corporation;

d) Review all prospectuses, material change reports and annual information forms;

23

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e) Review the audit plans and the independence of the auditors; 
f) Meet with the auditors independently of management; 
g) In consultation with senior management, review annually and recommend for approval by
the board of directors:

h) review with the auditors:

i) review with the auditors and senior management the results of the annual audit, and
make appropriate recommendations to the board of directors, having regard to, among other
things:

j) Review with the auditors the adequacy of management's internal control procedures
and management information systems and inquiring of management and the auditors about
significant risks and exposures to the Corporation that may have a material adverse impact
on the Corporation's financial statements, and inquiring of the auditors as to the efforts
of management to mitigate such risks and exposures; 
k) Monitor policies and procedures for reviewing directors' and officers' expenses and
perquisites, and inquire about the results of such reviews; 
l) Review and approve written risk management policies and guidelines including the
effectiveness of the overall process for identifying the principal risks affecting
financial reporting; 
m) Review issues relating to legal, ethical and regulatory responsibilities to monitor
management's efforts to ensure compliance Including any legal matters that could have a
significant impact on the Corporation's financial statements, the Corporation's compliance
with applicable laws and regulations and inquiries received from regulators of
governmental agencies; and, 
n) Establish procedures for:

24

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4. Administrative Matters: The following general provisions shall have application to
the Audit Committee:

a) A quorum of the Audit Committee shall be the attendance of two members thereof
present in person or by telephone. No business may be transacted by the Audit Committee
except at a meeting of its members at which a quorum of the Audit Committee is present or
by a resolution in writing signed by all the members of the Audit Committee. Meetings of
the Audit Committee shall be held at least annually and more often as the Chair of the
Audit Committee may determine;

b) Any member of the Audit Committee may be removed or replaced at any time by
resolution of the directors of the Corporation. A member of the Audit Committee shall ipso
facto cease to be a member of the Audit Committee upon ceasing to be a director of the
Corporation. The board of directors, upon recommendation of the Corporate Governance
Committee, may fill vacancies on the Audit Committee by appointment from among its
members. If and whenever a vacancy shall exist on the Audit Committee, the remaining
members may exercise all its powers so long as a quorum remains. Subject to the foregoing,
each member of the Audit Committee shall hold such office until the close of the annual
general meeting of shareholders of the Corporation next following the date of appointment
as a member of the Audit Committee or until a successor is duly appointed. Any member of
the board of directors who has served as a member of the Audit Committee may be
re-appointed as a member of the Audit Committee following the expiration of his term;

c) The Audit Committee may invite such officers, directors and employees of the
Corporation as it may see fit from time to time to attend at meetings of the Audit
Committee and to assist thereat in the discussion of matters being considered by the Audit
Committee. The independent auditor of the Corporation is to appear before the Audit
Committee when requested to do so by the Audit Committee;

d) The time at which and the place where the meetings of the Audit Committee shall be
held, the calling of meetings and the procedure at such meetings shall be determined by
the Audit Committee, having regard to the by-laws of the Corporation. A meeting of the
Audit Committee may be held at any time without notice if all of the members are present
or, if any members are absent, those absent have waived notice or otherwise signified
their consent in writing to the meeting being held in their absence;

e) The Chair shall preside at all meetings of the Audit Committee and shall have a
second and deciding vote in the event of a tie, provided that, in the event of a tie vote
when only two members of the Audit Committee are present at a particular meeting, the
matter shall be resolved by a future vote of members of the Audit Committee at which more
than two members are present. In the absence of the Chair, the other members of the Audit
Committee shall appoint one of their members to act as Chair for the particular meeting;

f) Notice of meetings of the Audit Committee may be given to the auditor of the
Corporation and shall be given in respect of meetings relating to the annual audited
financial statements. The auditor has the right to appear before and to be heard at any
meeting of the Audit Committee. Upon the request of the auditor, the Chair of the Audit
Committee shall convene a meeting of the

25

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Audit Committee to consider any matters which the auditor believes should be brought to
the attention of the directors or shareholders of the Corporation;

g) The Audit Committee shall report to the directors of the Corporation on such matters
and questions relating to the financial position of the Corporation or any affiliates of
the Corporation as the directors of the Corporation may from time to time refer to the
Audit Committee;

h) The members of the Audit Committee shall, for the purpose of performing their
duties, have the right of inspecting all the books and records of the Corporation and its
affiliates and of discussing such books and records in any matter relating to the
financial position of the Corporation with the officers, employees and auditor of the
Corporation and its affiliates;

i) Minutes of the Audit Committee will be recorded and maintained and the Chair of the
Audit Committee will report to the board of directors on the activities of the Audit
Committee and/or the minutes will promptly be circulated to the directors who are not
members of the Audit Committee or otherwise made available at the next meeting of
directors;

j) The Chair of each meeting of the Audit Committee shall appoint a person to act as
recording secretary to keep the minutes of the meeting. The recording secretary need not
be a member of the Audit Committee;

k) Unless the Audit Committee has been provided with express instructions from the
board of directors, the Audit Committee shall function primarily to make assessments and
determinations with respect to the purposes mandated herein and its decisions shall serve
as recommendations for consideration by the board of directors.

l) The Audit Committee is a committee of the Board of Directors and is not and shall
not be deemed to be an agent of the Company's shareholders for any purpose whatsoever. The
Board of Directors may, from time to time, permit departures from the terms hereof, either
prospectively or retrospectively, and no provision contained herein is intended to give
rise to civil liability to shareholders of the Company or other liability whatsoever.

Corporate Governance Committee

The Corporate Governance Committee is responsible for the development,
maintenance, and disclosure of the Company's corporate governance practices. The mandate
of the committee includes:

- developing criteria governing the size and overall composition of the
    Board;
- conducting an annual review of the structure of the Board and its
    committees, as well as of the mandates of such committees;
- recommending new nominees for the Board (in consultation with the
    Chairman and the Chief Executive Officer); and
- recommending the compensation of directors
- ensuring that the Company's policy on disclosure and insider trading,
    including communication to the different stakeholders about the Company and its
    subsidiaries, documents filed with securities regulators, written statements made in
    documents pertaining to the Company's continuous disclosure obligations, information
    contained on the Company's Web site and other electronic communications, relationships
    with investors, the media and analysts is timely, factual and accurate, and broadly
    disseminated in accordance with all applicable legal and regulatory requirements.

The committee also coordinates the annual evaluation of the Board, the
committees of the Board and individual directors. All issues identified through this
evaluation process are then discussed by the

26

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Corporate Governance Committee and are reported to the Board. Finally,
it also has the responsibility for annually initiating a discussion at the Board level on
the performance evaluation and remuneration of the President and Chief Executive Officer.

Conflicts of Interest

Some of the directors and officers of the Company also serve as
directors and officers of other companies involved in the resource exploration sector.
Consequently, there exists a possibility for any such officer or director to be placed in
a position of conflict. Each such director or officer is subject to fiduciary duties and
obligations to act honestly and in good faith with a view to the best interests of the
Company.

Similar duties and obligations will apply to such other companies. Thus
any future transaction between the Company and such other companies will be for bona fide
business purposes and approved by a majority of disinterested directors of the Company.

D. Employees.

In addition to the officers and directors, the Company has one
part-time administrative assistant.

E. Share ownership.

|Name                                       | Office Held               | Number of Common Shares Beneficially
    Owned or Over Which Control is Exercised1
|------------------------------------------ | ------------------------- | ----------------------------------------------------------------------------------
|Roland M. Larsen Richmond,
    Virginia    | President, CEO & Director | 4,171,360                                                                         
|                                           |                           |                                                                                   
|Kimberley Koerner Brambleton,
    Virginia | Treasurer & Director      | 3,518,480                                                                         
|                                           |                           |                                                                                   
|Troy Koerner Brambleton, Virginia          | Director                  | 2,638,860                                                                         

1. The information as to shares beneficially owned or over which
control or direction is exercised, not being within the knowledge of the Company, has been
furnished by the respective individuals.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

The following table shows as at May 12, 2009, each person who is
known to the Company, or its directors and officers to beneficially own, directly or
indirectly, or to exercise control or direction over securities carrying more than 10% of
the voting rights attached to any class of outstanding voting securities of the Company
entitled to be voted.

27

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|Name of Shareholder                 | Securities Owned, Controlled or
    Directed | Percentage of the Class of
    Outstanding Voting Securities of the Company (1)
|----------------------------------- | -------------------------------------------- | -------------------------------------------------------------------------------
|                                    |                                              |                                                                                
|CDS & Co. (2) Toronto,
    Ontario  | 24,222,266 Common Shares                     | 51.96%                                                                         
|Roland M. Larsen Richmond, Virginia | 4,171,360                                    | 11.32%                                                                         

B. Related party transactions.

Following is a summary of the related party transactions of the
Corporation for the last three years ending December 31:

|2008          
|--------------
|$250,000      
|$25,400110,306
|25,000        

1.Standard Energy Company is a private company
related by virtue of its ownership by an officer and director of the Company. The loan
receivable is unsecured, non-interest bearing and no date is set for its repayment. The
funds are to be applied to the purchase of property in Preston County, West Virginia owned
by Standard Energy (see

8. B. Significant Changes). On January 7, 2008, the Company acquired
100% interest in the Standard Energy Company as described in Note 10 of the audited
Consolidated Financial Statements for the Years Ended December 31, 2008, 2007 and 2006.

1. This loan is payable to an officer and director of the Company. It is
    unsecured, bearing interest at 8% and has no date set for its repayment. The interest
    payable on this loan has been accrued but has not yet been paid.
2. Royal Standard Minerals Inc. is a related company by virtue of common
    management and common directors. The loan payable was unsecured, non-interest bearing and
    had no date set for its repayment.
3. On September 9, 2008, the Company entered into an agreement with RSM for
    the repayment of the loan. To this end, the Company has executed a promissory note (the
    "Note") in favor of RSM that provides for the repayment of the loan over a
    three-year period commencing on September 9, 2008. The first principle payment of $42,499
    is due on September 9, 2009, $42,499 on September 9, 2010 and $42,499 on September 9,
    2011. Pursuant to the Note, the

28

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> outstanding amount of the loan will accumulate interest at the rate of 4% per annum,
>   such interest to accrue daily and be payable monthly, in arrears on the first business day
>   of each and every month commencing on October 9, 2008 until the full amount of the loan
>   together with all interest on such amount has been repaid in full. For the year ended
>   December 31, 2008, the Company accrued interest of $1,493 (2007 - $Nil and 2006 - $Nil) on
>   this liability.

1. This loan is payable to Kentucky Standard Energy Company with which the Company has
    common management and common directors. It is unsecured, non-interest bearing, and is
    repaid in February, 2009.

Management fees of $nil (2007 - $15,000; 2006 - $154,000) were paid to
an officer and director of the Company.

These transactions are in normal course of operations and are measured
at the exchange amount (the amount of consideration established and agreed to by the
related parties which approximate the arm's length equivalent value).

C. Interests of experts and counsel.

Not Applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

Following is a list of financial statements filed as part of the
annual report under Item #17:

* Auditor's Report for Sharpe Resources Corporation for the year ended December
31, 2008, 2007, 2006 
* Consolidated Balance Sheets of Sharpe Resources Corporation as at December 31, 2008 and
2007 
* Consolidated Statements of Operations and Deficit of Sharpe Resources Corporation for
the years ended December 31, 2008, 2007, 2006 
* Consolidated Statements of Cash Flows of Sharpe Resources Corporation for the years
ended December 31, 2008, 2007, 2006 
* Notes to the Consolidated Financial Statements of Sharpe Resources Corporation 
* Management's Discussion and Analysis

The consolidated financial statements of Sharpe Resources Corporation
were prepared in accordance with generally accepted accounting principles in Canada and
are expressed in United States dollars. For a discussion of the reconciliation of such
financial statements to United States generally accepted accounting principles, see note
#12 of the notes to the consolidated financial statements of Sharpe Resources Corporation.

B. Significant Changes.

a) On December 1, 2007, the Company entered into an agreement to
acquire 100% interest in Standard. Standard is a private company related by virtue of its
ownership by an officer and director of the Company. Standard's primary asset includes
100% ownership in all of the coal seams on more than 17,000 acres in Preston County, West
Virginia.

29

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The purchase price consists of the forgiveness of the repayment of US
$250,000 demand promissory note owing from Standard to the Company and the issuance of 2
million shares of the Company's common stocks. The agreement is subject to regulatory
approvals and as of March 31, 2009, the business combination has not been so approved.

b) On June 12, 2008, the Company announced that Royal Standard Minerals
Inc. ("RSM") has reached a letter of intent agreement in principle with the
Company to jointly develop and operate a number of coal projects. To enter into the
transaction RSM has agreed in principle to advance to the projects up to $2 million to
facilitate the startup.

Roland M. Larsen is the Chief Executive Officer of both RSM and the
Company.

In an effort to achieve diversity within its natural resource portfolio
RSM has entered into the joint venture program mentioned above focused initially on the
eastern Kentucky coal fields with the Company. The joint venture will involve the
opportunity for RSM to earn a 50% interest in coal projects that Standard has acquired or
holds under option agreements. RSM can earn its 50% interest by advancing four projects to
production over the next 12 months.

The agreement was approved and executed by both Boards of Directors on
November 12, 2008. The agreement is subject to regulatory approvals and as of March 31,
2009 the joint venture has not been so approved.

Item 9. The Offer and Listing

A. Offer and listing details.

The authorized capital of the Company consists of (i) an unlimited
number of Common Shares and (ii) an unlimited number of preferred shares. The Common
Shares are the only class of securities which are the subject of this registration
statement on Form 20-F.

The Common Shares, when issued, will be fully paid and non-assessable,
carry one vote at all meetings of shareholders (except meetings at which only holders of
another class or series of shares are entitled to vote), participate ratably in any
dividend declared by the directors, subject to the rights of holders of any shares ranking
prior to the Common Shares, carry the right to receive a proportionate share of the assets
of the Company available for distribution to holders of the Common Shares in the event of
liquidation, dissolution or winding-up of the Company. The Common Shares do not carry any
pre-emptive rights or voting rights.

On May 10, 1998, the shareholders of the Company approved by the
requisite vote an amendment to the Company's articles to increase the authorized capital
of the Company by the creation of an unlimited number of preferred shares. The preferred
shares are issuable in series and authorize the directors of the Company to fix the number
of shares in, and determine the designation, rights, privileges, restrictions and
conditions attaching to the shares of each series. As of December 31, 2008, no series has
been designated by the board of directors of the Company.

There are no laws or regulations, which would impose voting
restrictions on non-resident shareholders.

30

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The following table sets forth the reported high and low sales prices
and the average daily trading volume of the outstanding Common Shares.

TSX Venture Exchange (stated in Canadian currency)

|                 | High             | Low                | Volume
|---------------- | ---------------- | ------------------ | ------
|                 |                  |                   
|$0.05            | $0.05            | 0                 
|$0.05            | $0.05            | 0                 
|$0.05            | $0.05            | 0                 
|$0.05            | $0.05            | 0                 
|                 |                  |                   
|$0.12            | $0.04            | 1,695             
|$0.07            | $0.04            | 3,186             
|$0.08            | $0.04            | 7,129             
|$0.06            | $0.03            | 9,270             
|                 |                  |                   
|$0.05            | $0.04            | 9,378             
|$0.06            | $0.03            | 27,991            
|$0.09            | $0.03            | 41,567            
|$0.17            | $0.04            | 108,903           
|                 |                  |                   
|$0.18            | $0.09            | 39,533            
|$0.18            | $0.10            | 51,333            
|$0.17            | $0.08            | 17,900            
|$0.10            | $0.05            | 19,500            
|                 |                  |                   
|$0.12            | $0.05            | 29,567            
|$0.07            | $0.06            | 19,267            
|$0.07            | $0.06            | 14,262            
|$0.08            | $0.04            | 29,696            
|$0.15 
    $0.23 | $0.05 
    $0.12 | 43,057 
    56,959

31

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Over the Counter Bulletin Board (stated in US currency).

|2008 
    Third Calendar Quarter Fourth Calendar Quarter | $0.45 
    $0.15                                  | $0.08 
    $0.05                             | 2.633 
    2,533
|-------------------------------------------------------- | ------------------------------------------------- | -------------------------------------------- | ----------------
|$0.11 
    $0.10 
    $0.10 
    $0.09 
    $0.03        | $0.06 
    $0.10 
    $0.02 
    $0.02 
    $0.01 | 400 
    0 
    1,700 
    2,200 
    14,300

B. Plan of Distribution

Not Applicable

C. Markets

The Company's shares  currently trade only on the OTC:BB under
the symbol SHGP.

D. Selling shareholders.

Not Applicable

E. Dilution.

Not Applicable

F. Expenses of the issue.

Not Applicable

Item 10. Additional Information

A. Share capital.

Not applicable

B. Memorandum and articles of association.

These documents were filed with the original registration report in
July, 1998.

C. Material contracts.

There are no material contracts.

D. Exchange controls.

There is no law, governmental decree or regulation in Canada that
restricts the export or import of capital, including foreign exchange controls, or that
affects the remittance of dividends, interest or other payments to non-resident holders of
Common Shares, other than withholding tax requirements and potential capital gain on the
disposition of the Common Shares under certain circumstances. (See Item 10. E. -
Taxation.)

32

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There is no limitation imposed by Canadian law or by the Articles or
other charter documents of the Company on the right of a non-resident to hold or vote
Common Shares, other than as provided by the Investment Canada Act (Canada) as amended,
including as amended by the World Trade Organization Implementation Act (Canada). The
following summarizes the principal features of the Investment Canada Act for non-Canadians
who propose to acquire Common Shares.

The Investment Canada Act (the "Act") enacted on June 20,
1985, as amended, including as amended by the World Trade Organization Implementation Act
(Canada), requires notification and, in certain cases, advance review and approval by the
Government of Canada of the acquisition by a "non-Canadian" of
"control" of a "Canadian business," all as defined in the Act.
"Non-Canadian" generally means an individual who is not a Canadian citizen or
permanent resident, or a Corporation, partnership, trust or joint venture that is
ultimately controlled by non-Canadians. For purposes of the Act, "control" can
be acquired through the acquisition of all or substantially all of the assets used in the
Canadian business, or the direct or indirect acquisition of voting interests or shares in
an entity that carries on a Canadian business or which controls the entity which carries
on the Canadian business whether or not the controlling entity is Canadian. Under the Act,
control of a Corporation is deemed to be acquired through the acquisition of a majority of
the voting shares of a Corporation, and is presumed to be acquired where at least
one-third, but less than a majority, of the voting shares of a Corporation or of an
equivalent undivided ownership interest in the voting shares of a Corporation are acquired
unless it can be established that the Corporation is not controlled in fact through the
ownership of voting shares. Other rules apply with respect to the acquisition of
non-corporate entities.

All investments to acquire control of a Canadian business are
notifiable, unless they are reviewable. Investments requiring review and approval include:
(i) a direct acquisition of control of a Canadian business with assets with a value of
Cdn. $5,000,000 or more; (ii) an indirect acquisition of control of a Canadian business
where the value of the assets of the Canadian business and of all other Canadian entities
the control of which is acquired directly or indirectly is Cdn. $50,000,000 or more; and
(iii) an indirect acquisition of control of a Canadian business and of all other Canadian
entities the control of which is acquired directly or indirectly is Cdn. $5,000,000 or
more and represents greater than 50% of the total value of the assets of all of the
entities, control of which is being acquired. Subject to certain exceptions, where an
investment is made by a "WTO Investor" (generally, nationals or permanent
residents of World Trade Organization member states, or entities controlled by residents
or nationals of WTO member states) or the Canadian business is controlled by a WTO
Investor, the monetary thresholds discussed above are higher. In these circumstances the
monetary threshold with regard to direct acquisitions is Cdn. $160,000,000 in constant
1995 dollars as determined in accordance with the Act. Indirect acquisitions of Canadian
businesses by or from WTO Investors are not subject to review. The United States is a WTO
member state.

Special rules apply with respect to investments by non-Canadians
(including WTO Investors) to acquire control of Canadian businesses that engage in certain
specified activities, including financial services, transportation services and activities
relating to Canada's cultural heritage or national identity.

If an investment is reviewable, an application for review in the form
prescribed by regulation is normally required to be filed with the Investment Review
Division of Industry Canada prior to the

33

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investment taking place and the investment may not be normally
implemented until the review has been completed and ministerial approval obtained.

The Investment Review Division will submit the application for review
to the Minister of Industry (Canada), together with any other information or written
undertakings given by the acquirer and any representations submitted to the division by a
province that is likely to be significantly affected by the investment. The Minister will
then determine whether the investment is likely to be of "net benefit to
Canada," taking into account the information provided and having regard to certain
factors of assessment prescribed under the Act. Among the factors considered are: (i) the
effect of the investment on the nature and level of economic activity in Canada, including
the effect on employment, on resource processing, on the utilization of parts, components
and services produced in Canada, and on exports from Canada; (ii) the degree and
significance of participation by Canadians in the Canadian business and in any industry in
Canada of which it forms a part; (iii) the effect of the investment on productivity,
industrial efficiency, technological development, product innovation and product variety
in Canada; (iv) the effect of the investment on competition within any industry or
industries in Canada; (v) the compatibility of the investment with national industrial,
economic and cultural objectives enunciated by the government or legislature of any
province likely to be significantly affected by the investment; and (vi) the contribution
of the investment to Canada's ability to compete in world markets.

Within 45 days after completed application for review has been
received, the Minister must notify the investor that (a) he is satisfied that the
investment is likely to be of "net benefit to Canada," or

(b) he is unable to complete his review in which case he shall have 30
additional days to complete his review (unless the investor agrees to a longer period) or
(c) he is not satisfied that the investment is likely to be of "net benefit to
Canada." If the Minister is unable to complete his review and no decision has been
taken within the prescribed or agreed upon time, the Minister is deemed to be satisfied
that the investment is likely to be of "net benefit to Canada."

Where the Minister has advised the investor that he is not satisfied
that the investment is likely to be of "net benefit to Canada," the acquirer has
the right to make representations and submit undertakings within 30 days of the date of
notice (or any further period that is agreed upon between the investor and the Minister).
On the expiration of the 30-day period (or an agreed extension), the Minister must notify
the investor whether or not he is satisfied that the investment is likely to be of
"net benefit to Canada." In the latter case, the investor may not proceed with
the investment, or if the investment has already been implemented, must divest itself of
control of the Canadian business.

No securities of the Company are subject to escrow or similar
restrictions.

E. Taxation

The following is a summary of certain Canadian federal income tax
provisions applicable to United States corporations, citizens and resident alien
individuals purchasing Common Shares. The discussion is only a general summary and does
not purport to deal with all aspects of Canadian federal taxation that may be relevant to
shareholders, including those subject to special treatment under the income tax laws.
Shareholders are advised to consult their own tax advisors regarding the Canadian federal
income tax consequences of holding and disposing of the Company's Common Shares, as well
as any consequences arising under U.S. federal, state or local tax laws or tax laws of
other jurisdictions outside the United States. The summary is based on the assumption
that, for Canadian tax purposes, the purchasers or

34

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shareholders (i) deal at arm's-length with the Company, (ii) are not
residents of Canada, (iii) hold the Common Shares as capital property and (iv) do not use
or hold Common Shares in, or in the course of, carrying on business in Canada (a
"Non-Resident Holder").

Dividends paid to U.S. residents by the Company on the Common Shares
generally will be subject to Canadian non-resident withholding taxes. For this purpose,
dividends will include amounts paid by the Company in excess of the paid-up capital of the
Common Shares on redemption or a purchase for cancellation of such shares by the Company
(other than purchases on the open market). For U.S. corporations owning at least 10% of
the voting stock of the Company, the dividends paid by the Company are subject to a
withholding tax rate of 6% in 1996 and 5% thereafter under the Canada-U.S. Income Tax
Convention (1980), as amended by the Protocol signed on March 17, 1995 (the
"Treaty"). For all other U.S. shareholders, the Treaty reduces the withholding
tax rate from 25% to 15% of the gross dividend. Other applicable tax treaties may reduce
the Canadian tax rate for other Non-Resident Holders.

A Non-Resident Holder will generally not be subject to tax in Canada on
capital gains realized from disposition of Common Shares, unless such shares are
"taxable Canadian property" within the meaning of the Income Tax Act (Canada).
Generally, the Common Shares would not be taxable Canadian property unless the
Non-Resident Holder, together with related parties, at any time during the five years
prior to the disposition of the Common Shares owned not less than 25% of the issued shares
of any class of the capital stock of the Company. Under the Treaty, a resident of the
United States will not be subject to tax under the Income Tax Act (Canada) in respect of
gains realized on the sale of Common Shares which constitute "taxable Canadian
property", provided that the value of the Common Shares at the time of disposition is
not derived principally from real property located in Canada.

F. Dividends and paying agents.

Not applicable.

G. Statement by experts

Not applicable.

H. Documents on display.

Company documents can be viewed at 3258 Mob Neck Road, Heathsville,
Virginia 22473. They can also be obtained by writing to this address.

I. Subsidiary Information

Not applicable.

Item 11. Quantitative and Qualitative Disclosures about Market Risk.

The Company's activities expose it to a variety of financial risks:
credit risk, liquidity risk, and market risk [including interest rate, foreign exchange
rate, and commodity and equity price risk].

Risk management is carried out by the Company's management team with
guidance from the Audit Committee under policies approved by the Board of Directors. The
Board of Directors also provides regular guidance for overall risk management.

35

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Credit Risk

Credit risk is the risk of loss associated with a counterpart's
inability to fulfill its payment obligations. The Company's credit risk is primarily
attributable to cash and short-term investments. Cash and short-term investments consist
of non-interest and interest bearing bank accounts with reputable financial institutions.
Management believes that the credit risk concentration with respect to financial
instruments included in cash and short-term investments is minimal.

Liquidity Risk

The Company's approach to managing liquidity risk is to ensure that it
will have sufficient liquidity to meet accounts payable and accrued liabilities when due.
As at December 31, 2008, the Company had a cash and cash equivalents balance of $239,155
(2007- $292,434) to settle accounts payable and accrued liabilities of $192,327 (2007 -
$147,486) and due to related parties of $74,708 (2007 - $134,213). Most of the Company's
accounts payable and accrued liabilities have contractual maturities of less than 30 days
and are subject to normal trade terms. Due to related parties are unsecured with no set
date of repayment.

The Company can also redeem, all or in part, at a discount price,
preferred shares shown as current liabilities on the balance sheet in the amount of
$563,818 (2007 - $563,818). As of December 31, 2008, the Company does not intend to redeem
the preferred shares due to the limited financial resources of the Company.

Market Risk

Market risk is the risk of loss that may arise from changes in market
factors such as interest rates, foreign exchange rates, and commodity prices.

Interest Rate Risk

The Company has cash balances and balances due to related parties with
fixed interest rates (refer to Note 7(ii) and (iii)). The Company's current policy is to
invest excess cash in interest bearing bank accounts. The Company periodically monitors
its interest bearing bank accounts and is satisfied with the creditworthiness of its banks.

Foreign Currency Risk

The Company's functional currency is the United States dollar and major
purchases are transacted in United States dollars. An operating account is maintained in
Canadian dollars primarily for settlement of general and corporate expenditures.
Management believes the foreign exchange risk derived from currency conversions is
negligible and therefore does not hedge its foreign exchange risk.

Commodity Price Risk

Commodity price risk could adversely affect the Company. In particular,
the Company's future profitability and viability from mineral exploration depends upon the
world market price of coal. Commodity prices have fluctuated significantly in recent
years. There is no assurance that, even

36

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as commercial quantities of coal may be produced in the future, a
profitable market will exist for them. As of December 31, 2008, the Company is not a
producer of coal. As a result, commodity price risk may affect the completion of future
equity transactions such as equity offerings and the exercise of stock options and
warrants. This may also affect the Company's liquidity and its ability to meet its ongoing
obligations. The Company closely monitors commodity prices as it relates to coal to
determine the appropriate course of action to be taken by the Company.

Sensitivity Analysis

Based on management's knowledge and experience of the financial
markets, the Company believes the following movements are "reasonably possible"
over a twelve month period:

Item 12. Description of Securities Other than Equity Securities.

Not applicable.

37

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies.

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds.

There have been none.

Item 15. Controls and Procedures

A. Disclosure Controls and Procedures

As of the end of the period covered by this report and based on their
evaluation the Company's principal executive officer and principal financial officer have
concluded that the Company's disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) were effective to ensure that the
information required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within the time
period specified in Securities and Exchange Commission rules and forms.

B. Management’s Annual Report on Internal Control over
Financial Reporting

Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f)
and 14d-14(f). Our internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles.

All internal control systems, no matter how well designed, have
inherent limitations and may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can only provide reasonable assurance with respect to
financial reporting reliability and financial statement preparation and presentation. In
addition, projections of any evaluation of effectiveness to future periods are subject to
risk that controls become inadequate because of changes in conditions and that the degree
of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2008. In making the
assessment, management used the criteria issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on its assessment, management concluded that, as of December 31, 2008, the
Company’s internal control over financial reporting was effective to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles.

C. Attestation report of the registered public accounting firm.

This annual report does not include an attestation report of the Company’s
registered public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s
registered public accounting firm pursuant to the temporary rules of the

38

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Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.

D. Changes in Internal Control over Financial Reporting

There were no changes in our internal controls or in other factors that could affect
these controls subsequent to the date of their most recent evaluation.

Item 16. [Reserved] Item 16A. Audit committee financial expert.

The board of directors has determined that Director and Audit Committee Member, Ms.
Kimberly Koerner has the necessary attributes for designation as the audit committee's
financial expert and have designated her as the financial expert.

Item 16B. Code of Ethics.

The company has adopted a Code of Ethics that applies to its Directors and
Executive Officers. The Code of Ethics can be viewed at 3258 Mob Neck Road, Heathsville,
Virginia 22473. It can also be obtained, without charge, by writing to this address.

Item 16C. Principal Accountant Fees and Services.

|2008   
|-------
|$35,000
|$0     
|$0     
|$750   

Policies and Procedures for Pre-Approval of Auditor's Services

The Audit Committee has adopted a policy and procedures regarding
the engagement of the Company's auditors, which are summarized below.

The auditors must submit for approval to the Audit Committee an
engagement letter outlining the scope of the audit services, including all statutory
engagements as required under securities and corporate laws, proposed to be performed
during the fiscal year. This letter of engagement must include a fee proposal for all
audit services proposed to be rendered during the fiscal year. This letter of engagement
must also outline the scope of the services proposed to be performed in connection with
the interim review of the quarterly consolidated financial statements for the first and
second quarters of the following fiscal year, prior to the appointment of MSCM LLP as
auditors by the shareholders at the Company's next annual meeting. In addition, the
engagement letter may include a specific list of permissible audit-related and non-audit
services that are generally expected and necessary in the normal course of the Company's
business, and that Management recommends the Audit Committee engage the auditors to
provide.

39

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At the request of Management, the Audit Committee may approve
additional audit services and permissible audit-related and non-audit services. In such
circumstances, the auditors must issue separate engagement letters for each additional
service. Such engagement letters must confirm to the Audit Committee, and Management must
also confirm, that the proposed services are permissible under all applicable securities
legislation or regulations.

To ensure the prompt handling of day-to-day tax-related matters,
Management may request the Audit Committee to pre-approve a maximum periodic amount of
tax-related services that may be rendered by the auditors on a pre-identified list of
specific tax-related matters for the next quarter.

To ensure prompt handling of unexpected matters, the Audit Committee
delegates to its Chair the authority to approve additional audit services and permissible
audit-related and non-audit services. Based on the materiality of the proposed services,
the Chair may decide that a special meeting of the Audit Committee is necessary in order
to appropriately assess the proposal. The Chair reports any action taken to the Audit
Committee at its next regular meeting.

The Audit Committee is informed quarterly as to the status and
estimated fees regarding services actually provided by the auditors pursuant to these
pre-approval procedures.

The auditors and Management must ensure that all audit, audit-related
and non-audit services provided to the Company have been approved by the Audit Committee.
The Chair of the Audit Committee is responsible for tracking all auditors' fees against
the estimates for such services and reporting to the Audit Committee every quarter.

As required by the U.S. Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act"), all audit, audit related and non-audit services rendered
by MSCM LLP pursuant to engagements entered into since March 23, 2009 and prior to that by
McCarney Greenwood, LLP pursuant to engagements entered into since May 6, 2003 were
pre-approved by the Audit Committee pursuant to these pre-approval procedures. In 2005, no
audit-related and non-audit services rendered by the auditors were required to be approved
by the Audit Committee pursuant to the de minimis exception set out in paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

Item 16D. Exemptions from the Listing Standards for Audit Committees.The
Company is relying on the exemption in section 6.1 in Multilateral Instrument 52-110 - Audit
Committees("MI 52-110"), which provides that venture issuers (as that term
is defined therein) are not required to comply with certain audit committee composition
requirements and have different reporting obligations, as specified by MI 52-110..

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. There
were no known purchases of the Company's securities by or on behalf of the Company or any
affiliated purchaser during the period covered by this Annual Report.

40

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Item 16F. Changes in Registrant's Certifying Accountant.

Not applicable.

Item 16G. Corporate Governance.

Not applicable.

41

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PART III

Item 17. Financial Statements.

Following is a list of financial statements filed as part of the annual report.

* Auditor's Report for Sharpe Resources Corporation for the year ended
December 31, 2008, 2007, 2006
* Consolidated Balance Sheets of Sharpe Resources Corporation as at December 31, 2008 and
2007 
* Consolidated Statements of Operations and Deficit of Sharpe Resources Corporation for
the years ended December 31, 2008, 2007, 2006 
* Consolidated Statements of Cash Flows of Sharpe Resources Corporation for the years
ended December 31, 2008, 2007, 2006
* Notes to the Consolidated Financial Statements of Sharpe Resources Corporation 
* Management's Discussion and Analysis

The consolidated financial statements of Sharpe Resources Corporation were prepared in
accordance with generally accepted accounting principles in Canada and are expressed in
United States dollars. For a discussion of the reconciliation of such financial statements
to United States generally accepted accounting principles, see note #12 of the notes to
the consolidated financial statements of Sharpe Resources Corporation.

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April 4, 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of Sharpe Resources Corporation

We have audited the consolidated balance sheets of Sharpe Resources
Corporation (An Exploration Stage Company) as at December 31, 2007 and 2006 and the
consolidated statements of loss and comprehensive loss, changes in shareholders' equity
and cash flows for each of the three years ended December 31, 2007. These financial
statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted
auditing standards and with the standards of the Public Company Accounting Oversight Board
(United States of America). Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company as at
December 31, 2007 and 2006 and the results of its operations and its cash flows for each
of the three years ended December 31, 2007 in accordance with Canadian generally accepted
accounting principles.

"McCarney Greenwood LLP" Toronto, Canada

McCarney Greenwood LLP

Chartered Accountants

Licensed Public Accountants

Comments by Auditors on United States of America-Canada Reporting
Difference

In the United States of America, reporting standards for auditors
require the addition of an explanatory paragraph (following the opinion paragraph) when
the financial statements are affected by conditions and events that cast doubt on the
Company's ability to continue as a going concern, such as those described in Note 1 to the
consolidated financial statements. Our report to the shareholders dated April 4, 2008 is
expressed in accordance with Canadian reporting standards which do not require a reference
to such conditions and events in the auditor's report when these are adequately disclosed
in the financial statements.

"McCarney Greenwood LLP" Toronto, Canada

McCarney Greenwood LLP

Chartered Accountants

Licensed Public Accountants

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### Management's Discussion and Analysis
of Financial Condition and Results of Operations

The following discussion (the "MD&A") of the
financial condition and results of operations of Sharpe Resources Corporation Inc. (the
"Corporation") constitutes management's review of the factors that affected the
Corporation's financial and operating performance for the year ending December 31, 2008.
The MD&A was prepared as of April 28, 2008 and should be read in conjunction with the
audited Annual Consolidated Financial Statements for the Years Ended December 31, 2008,
2007 and 2006 of the Corporation, including the notes thereto. Unless otherwise stated,
all amounts discussed herein are denominated in United States dollars.

#### Overview

The Corporation is continued under the New Brunswick Business
Corporation Act and its common shares are listed in the United Sates on the OTC:BB symbol
SHGP and in Canada under the symbol SHO.H on the NEX exchange.

The Corporation is considered in the exploration stage as of January 1,
2002 as it started disposing of its interest in petroleum and natural gas properties that
year. The Corporation completed the disposal of these properties during the fiscal year
ended on December 31, 2005. The Corporation is currently engaged in the development of
coal projects in the central Appalachian region of the eastern United States.

The Corporation has one reportable business segment. Substantially all
of the Corporation's assets are located in the United States except for small balances
held in Canadian banks. The Corporation's operations in Canada consist of general and
administrative expenses necessary to maintain the Corporation's public Corporation status.

#### Results of Operations

The net loss for the year ending December 31, 2008 was $321,495 as
compared to the net loss of $255,827 for the year ending December 31, 2007 an increase of
$65,668. Operating expenses decreased by $24,386 however General and Administrative
expenses increased by $38,705. There was an increase of $98,641 in Stock-option
compensation from $90,232 for the year ending December 31, 2007 to $188,873 for the year
ending December 31, 2008. On May 8, 2008, the Corporation granted options to purchase a
total of 1,700,000 common shares to directors and officers of the Corporation. The options
are exercisable at $0.10 (Canadian) and expire on May 8, 2013. For the purposes of the
1,700,000 options, the fair value of each option was estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions: expected dividend
yield of 0%; expected volatility of 161.3%; risk-free interest rate of 3.04% and an
expected average life of 5 years. The estimated value of $188,873 was recorded as a debit
to stock-option compensation and a credit to contributed surplus.

Revenue increased from $8,606 for the year ending December 31, 2007 to
$39,604 for the year ending December 31, 2008 and represents interest income and various
small override interests in petroleum and natural gas properties.

On January 7, 2008, the Corporation entered into an agreement to
acquire a 100% interest in Standard Energy Corporation ("Standard"). Standard's
primary asset includes 100% ownership interest in all of the coal seams on more than
17,000 acres in Preston County, West Virginia. Details of the proposed acquisition are
included

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in Note 10(a) of the Consolidated Financial Statements for the Years
Ended December 31, 2008, 2007, 2006. The purchase price consists of the forgiveness of the
repayment of US $250,000 demand promissory note owing from Standard to the Corporation and
the issuance of 2 million shares of the Corporation's common stocks. The agreement is
subject to regulatory approvals and as of December 31, 2008, the business combination has
not been so approved.

On June 12, 2008, the Corporation announced that RSM has reached an
agreement in principle with the Corporation to jointly develop and operate a number of
coal projects. To enter into the transaction RSM has agreed in principle to advance to the
project up to $2 million to facilitate the startup.

Roland M. Larsen is the Chief Executive Officer of both RSM and the
Corporation. In order to conduct the negotiations and settlement of definitive agreements
in this connection, the board of RSM has appointed an independent committee of directors
to evaluate finalize and recommend the transaction to the Board of Directors of RSM if
warranted. It is anticipated that the business will operate as a joint venture between the
companies at least at the outset. A joint venture agreement was completed and executed by
both Boards' of Directors on November 12, 2008.

In an effort to achieve diversity within its natural resource portfolio
RSM has entered into the joint venture program mentioned above focused initially on the
eastern Kentucky coal fields with the Corporation. The joint venture will involve the
opportunity for RSM to earn a 50% interest in coal projects that Standard has acquired or
holds under option agreements. RSM can earn its 50% interest by advancing four projects to
production over the next 12 months. The agreement is subject to regulatory approvals and
as of December 31, 2008, the joint venture has not been so approved.

#### Liquidity and Capital Resources

The Corporation's cash balance at December 31, 2008 was $239,155
compared to $292,434 at December 31, 2007. Total assets at December 31, 2008 were $493,260
compared to $554,548 at December 31, 2007 a decrease of $61,288.

Total Current Liabilities decreased from $845,517 at December 31, 2007
to $830,853 at December 31, 2008. Accounts payable and accrued liabilities increased from
$147,486 at December 31, 2007 to $192,327 at December 31, 2008 an increase of $44,841.

On a forward going basis equity and debt financings will remain the
single major source of cash flow for the Corporation. As revenue from operations improve
the capital requirement of the Corporation will also improve. However, debt and equity
financings will continue to be a source of capital to expand the Corporation 's activities
in the future.

The Corporation is authorized to issue an unlimited number of Common
Shares of which 46,619,863 are outstanding at December 31, 2008 and 2007. Also at December
31, 2008 the Corporation had outstanding options to purchase 3,780,000 common shares with
exercise prices of C$0.10 per share and expiration dates ranging from May 2010 to May
2013. On May 8, 2008, the Corporation granted options to purchase a total of 1,700,000
common shares to directors and officers of the Corporation. The options are exercisable at
$0.10 (Canadian) and expire on May 8, 2013. For the purposes of the 1,700,000 options, the
fair value of each option

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was estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions: expected dividend yield of 0%; expected
volatility of 161.3%; risk-free interest rate of 3.04% and an expected average life of 5
years. The estimated value of $188,873 was recorded as a debit to stock-option
compensation and a credit to contributed surplus.

There are no warrants outstanding at December 31, 2008.

#### Selected Annual Information

The following selected financial information is derived from the
financial statements of the Corporation and should be read in conjunction with such
statements, including the notes thereto:

|2008      
|----------
|          
|$43,039   
|($1,824)  
|($362,710)
|($0)      
|          
|$0        
|($321,495)
|($0.01)   
|($0.01)   

|69           
|-------------
|2007         
|             
|$493,260     
|$0           
|($11,463,430)
|($0)         
|($12,342,356)
|             

The following is a summary of selected financial information of the
Corporation for the quarterly periods indicated:

|Revenue Expenses Net Income
    (Loss) Net Income (Loss) per Common share basic and diluted
|-------------------------------------------------------------------------------------------



|3 Mos. Ending Dec. 31 2007 $645
    ($60,752) | 3 Mos. Ending Sept 30 2007 $394
    ($16,593) | 3 Mos. Ending June 30 2007 $9,134
    ($134,547) | 3 Mos. Ending Mar 31, 2007 $635
    ($54,743)
|--------------------------------------------- | --------------------------------------------- | ------------------------------------------------ | ---------------------------------------------
|($16,199)                                     | ($125,413)                                    | ($54,108)                                       
|($0.00)                                       | ($0.00)                                       | ($0.00)                                         











|Transactions with Related
        Parties
|-----------------------------------------

Following is a summary of the related party transactions of the
    Corporation:

|December
        31, 2008                                                                                           | December 31, 2007                               
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------
|Standard Energy Corporation (i)                                                                                     | $250,000 $250,000                               
|Roland M. Larsen (ii) Royal Standard
        Minerals Inc. (iii) 
        Kentucky Standard Energy Corporation (iv) | $25,400
        $110,306$25,000
        $160,706

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(iii) Royal Standard Minerals Inc. ("RSM") is a related
    Corporation by virtue of common management and common directors. The loan payable was
    unsecured, non-interest bearing and had no date set for its repayment. On September 9,
    2008, the Corporation entered into an agreement with RSM for the repayment of the loan. To
    this end, the Corporation has executed a promissory note (the "Note") in favor
    of RSM that provides for the repayment of the loan over a three-year period commencing on
    September 9, 2008. The first principle payment of $42,499 is due on September 9, 2009,
    $42,499 on September 9, 2010 and $42,499 on September 9, 2011. Pursuant to the Note, the
    outstanding amount of the loan will accumulate interest at the rate of 4% per annum, such
    interest to accrue daily and be payable monthly, in arrears on the first business day of
    each and every month commencing on October 9, 2008 until the full amount of the loan
    together with all interest on such amount has been repaid in full.. For the year ended
    December 31, 2008, the Corporation accrued interest of $1,493 (2007 - $Nil and 2006 -
    $Nil) on this liability

These transactions are in the normal course of operations and are
    considered to be in the best interest of all shareholders to support corporate growth and
    future development and are measured at the exchange amount (the amount of consideration
    established and agreed to by the related parties which approximate the arm's length
    equivalent value).

#### Changes in Accounting Policies

Changes in accounting policies are explained in detail in Note 2 of
  the Consolidated Financial Statements for the Years Ended December 31, 2008, 2007 and
  2006.

#### Future Changes in Accounting Policies

On February 13, 2008, the Canadian Accounting Standards Board
  confirmed the transition to IFRS from Canadian GAAP will occur on January 1, 2011 for
  public entities. The impact of this transition on the Corporation's consolidated financial
  statements has not yet been determined; however, management continues to monitor these
  developments and the CFO has enrolled in education courses regarding IFRS business issues
  and implementation for the Corporation.

#### Risk and Uncertainties

At the present time, the Corporation does not have sufficient
  assets to maintain ongoing profitability. The Corporation's ability to acquire and develop
  new projects is a function of its ability to raise the necessary capital to pursue the
  efforts successfully.

The Corporation has limited financial resources and there is no
  assurance that additional capital will be available to it for further acquisitions,
  exploration and development of new or existing projects. Failure to obtain such additional
  financing could result in delay or indefinite postponement of further exploration and
  development of the property interests of the Corporation with the possible dilution or
  loss of such interests. The Corporation's Audited Financial Statements contain a note
  about the Corporation's ability to continue as a Going concern.

The Corporation's business is subject to variety of risks and
  uncertainties. These risks are explained in detail in Note 4 of the Consolidated Financial
  Statements for the Years Ended December 31, 2008, 2007 and 2006.

#### 71

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#### Environment

Operations, development and exploration projects could potentially
  be affected by environmental laws and regulations of the country in which the activities
  are undertaken. The environmental standards continue to change and the global trend is to
  a longer, more complex process. Although the Corporation continuously reviews
  environmental matters and undertakes to comply with changes as expeditiously as possible,
  there is no assurance that existing or future environmental regulation will not materially
  adversely affect the Corporation's financial condition, liquidity and results of
  operation. Certain environmental issues, such as storm events, tailings storage seepage,
  dust and noise emissions, while having been assessed and strategies based on best
  practices have been adopted, there can be no assurance an unforeseen event will not occur
  which could have a material adverse effect on the viability of the Corporation's business
  and affairs.

#### Off-Balance Sheet Arrangements

The Corporation has no off-balance sheet arrangements

#### Management's Responsibility for Financial Information

The Corporation's financial statements are the responsibility of
  the Corporation's management, and have been approved by the Board of Directors. The
  consolidated financial statements were prepared by the Corporation's management in
  accordance with Canadian and U.S. generally accepted accounting principles. The
  consolidated financial statements include certain amounts based on the use of estimates
  and assumptions. Management established these amounts in a reasonable manner, in order to
  ensure that the financial statements are presented fairly in all material respects.

#### Forward Looking Statements

This MD&A includes certain "forward-looking
  statements" within the meaning of applicable Canadian securities legislation. All
  statements, other than statements of historical facts, included in this MD&A that
  address activities, events or developments that the Corporation expects or anticipates
  will or may occur in the future, including such things as future business strategy,
  competitive strengths, goals, expansion and growth of the Corporation's businesses,
  operations, plans and other such matters are forward-looking statements. When used in this
  MD&A, the words "estimate", "plan", "anticipate",
  "expect", "intend", "believe" and similar expressions are
  intended to identify forward-looking statements. These statements involve known and
  unknown risks, uncertainties and other factors which may cause the actual results,
  performance or achievements of the Corporation to be materially different from any future
  results, performance or achievements expressed or implied by such forward-looking
  statements. Such factors include, among others, risks related to joint venture operations,
  actual results of current exploration activities, changes in project parameters as plans
  continue to be refined unavailability of financing, fluctuations in oil and gas prices and
  other factors. Although the Corporation has attempted to identify important factors that
  could cause actual results to differ materially, there may be other factors that cause
  results to be different than anticipated, estimated or intended. There can be no assurance
  that such statements will prove to be accurate as actual results and future events could
  differ materially from those anticipated in such statements. Accordingly, readers should
  not place undue reliance on forward-looking statements.

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Additional Information

Additional information relating to the Corporation, including the
  annual information form of the Corporation, can be found on SEDAR at www.sedar.com and on
  the Corporation's website at www.sharpe-resources.com.

#### \s\ Roland M. Larsen

Roland M. Larsen President

Heathsville, VA April 28, 2009

Item 18. Financial Statements.

Not applicable.

Item 19. Exhibits.

None

### SIGNATURES

The registrant hereby certifies that it meets all of the
  requirements for filing on Form 20-F and that it has duly caused and authorized the
  undersigned to sign this annual report on its behalf.

SHARPE RESOURCES CORPORATION
  (Registrant)

\s\ Roland M. Larsen

Roland M. Larsen, President & CEO

Date: February 19, 2010

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