---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934
  For the quarter ended June 30, 2006

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
  OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from __________ to __________

Commission File Number 000-30095

WESCORP ENERGY INC.(Exact name of registrant as specified in its charter)

|Delaware                       | 98-0447716         
|------------------------------ | -------------------
|State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization  | Identification No.)

Suite 770, 435 
4thAvenue South West, Calgary, Alberta
T2P 3A8(Address of principal executive offices) (Zip Code)

(403) 206 - 3990Registrant's telephone
number, including area code

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X]

Number of shares outstanding of the registrant's class of common
stock as of August 2, 2006 was 42,313,340.

Transitional Small Business Disclosure Format (Check one): Yes
[   ] No [X]

---



FORWARD-LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS PREDICTIONS,
PROJECTIONS AND OTHER STATEMENTS ABOUT THE FUTURE THAT ARE INTENDED TO BE
FORWARD-LOOKING STATEMENTS (COLLECTIVELY, FORWARD-LOOKING STATEMENTS).
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. A NUMBER OF
IMPORTANT FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN
THE FORWARD-LOOKING STATEMENTS. IN ASSESSING FORWARD-LOOKING STATEMENTS
CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-QSB, READERS ARE URGED TO READ
CAREFULLY ALL CAUTIONARY STATEMENTS  INCLUDING THOSE CONTAINED IN OTHER
SECTIONS OF THIS QUARTERLY REPORT, OUR REPORT FOR THE QUARTER ENDED MARCH 31,
2006 AND OF OUR ANNUAL REPORT FORM 10-KSB FOR 2005. AMONG SAID RISKS AND
UNCERTAINTIES IS THE RISK THAT OUR FLOWSTAR DCR TECHNOLOGY MAY NOT REMAIN
COMPETITIVE WITHIN OUR CURRENT MARKETS OR THAT WE MAY NOT BE ABLE TO GENERATE
SUFFICIENT REVENUE FROM THE TECHNOLOGY TO BECOME PROFITABLE WITHIN THAT
DIVISION; THE ELLYCRACK TECHNOLOGY MAY NOT BE TECHNICALLY EFFECTIVE OR COST
EFFECTIVE IN THE MARKETS TARGETED BY MANAGEMENT; THAT THE COMPANY WILL NOT
COMPLETE ANY OTHER SUITABLE ACQUISITIONS, THAT ITS MANAGEMENT IS ADEQUATE TO
CARRY OUT ITS BUSINESS PLAN AND THAT THERE WILL BE ADEQUATE CAPITAL; IN
ADDITION, IF SAID ACQUISITIONS ARE COMPLETED THEY MAY BE UNSUCCESSFUL FOR
TECHNICAL, ECONOMIC OR OTHER REASONS.

CURRENCIES

All amounts expressed herein are in U.S. dollars unless
otherwise indicated.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Index

|Consolidated
      Balance Sheets at June 30, 2006 (Unaudited) and December 31, 2005                                   
|-----------------------------------------------------------------------------------------------------------------------
|                                                                                                                       
|Consolidated
      Statements of Operations for the three and six months ended June 30, 2006
      and 2005 (Unaudited)
|                                                                                                                       
|Consolidated
      Statement of Stockholders' Equity as of June 30, 2006 (Unaudited)                                   
|                                                                                                                       
|Consolidated
      Statements of Cash Flows for the six months ended June 30, 2006 and 2005
      (Unaudited)          
|                                                                                                                       
|Notes
      to the Interim Consolidated Financial Statements                                                           

---

WESCORP ENERGY INC. 
  CONSOLIDATED BALANCE SHEETS

|                                                       |   | June 30,    |   |   | December 31, |  
|------------------------------------------------------ | - | ----------- | - | - | ------------ | -
|                                                       |   | 2006        |   |   | 2005         |  
|                                                       |   | (Unaudited) |   |   |              |  
|ASSETS                                                 |   |             |   |   |              |  
|CURRENT ASSETS                                         |   |             |   |   |              |  
|Cash                                                   | $ | 300,899     |   | $ | 580,430      |  
|Accounts receivable, net of allowance for doubtful     |   |             |   |   |              |  
|accounts of $17,822 and $20,429, respectively          |   | 942,002     |   |   | 511,610      |  
|Inventories (Note 4)                                   |   | 1,079,694   |   |   | 1,003,105    |  
|Prepaid expenses                                       |   | 133,947     |   |   | 26,446       |  
|Note receivable                                        |   | 75,280      |   |   | 71,989       |  
|TOTAL
      CURRENT ASSETS                             |   | 2,531,822   |   |   | 2,193,580    |  
|                                                       |   |             |   |   |              |  
|PROPERTY
      AND EQUIPMENT, net (Note 5)             |   | 169,347     |   |   | 209,764      |  
|                                                       |   |             |   |   |              |  
|OTHER ASSETS                                           |   |             |   |   |              |  
|Investments (Note 6)                                   |   | 3,991,699   |   |   | 2,872,771    |  
|Technology, net (Note 7)                               |   | 2,952,939   |   |   | 3,211,262    |  
|Deposits                                               |   | 31,294      |   |   | 18,318       |  
|TOTAL
      OTHER ASSETS                               |   | 6,975,932   |   |   | 6,102,351    |  
|                                                       |   |             |   |   |              |  
|TOTAL ASSETS                                           | $ | 9,677,101   |   | $ | 8,505,695    |  
|                                                       |   |             |   |   |              |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                   |   |             |   |   |              |  
|CURRENT LIABILITIES                                    |   |             |   |   |              |  
|Accounts payable and accrued liabilities               | $ | 1,794,583   |   | $ | 1,502,973    |  
|Current portion of notes payable (Note 8)              |   | 849,016     |   |   | 447,038      |  
|Due to related parties (Note 16)                       |   | 538,125     |   |   | 30,862       |  
|Related party note payable                             |   | 1,924,681   |   |   | 1,924,681    |  
|                                                       |   |             |   |   |              |  
|Convertible debentures (Note 11)                       |   | 1,475,319   |   |   | 1,552,319    |  
|TOTAL
      CURRENT LIABILITIES                        |   | 6,581,724   |   |   | 5,457,873    |  
|                                                       |   |             |   |   |              |  
|NOTES PAYABLE,
      net of current portion (Note 8)   |   | 97,222      |   |   | 510,400      |  
|                                                       |   |             |   |   |              |  
|COMMITMENTS
      AND CONTINGENCIES (Note 15)          |   |             |   |   |              |  
|                                                       |   |             |   |   |              |  
|STOCKHOLDERS'
      EQUITY                             |   |             |   |   |              |  
|Preferred stock, 50,000,000 shares authorized, $0.0001 |   |             |   |   |              |  
|par
      value; no shares issued (Note 9)             |   |             |   |   |              |  
|Common stock, 250,000,000 shares authorized, $0.0001   |   |             |   |   |              |  
|par
      value; 42,313,340 and 38,304,686 shares      |   |             |   |   |              |  
|issued and outstanding,
      respectively (Note 9)    |   | 4,231       |   |   | 3,830        |  
|Additional paid-in capital                             |   | 16,708,817  |   |   | 15,450,433   |  
|Subscription receivable                                |   | (7,500      | ) |   | (37,272      | )
|Funds received for exercise of warrants                |   | 474,006     |   |   | 852,392      |  
|Accumulated other comprehensive income                 |   | 2,644,208   |   |   | 1,596,792    |  
|Accumulated deficit                                    |   | (16,825,607 | ) |   | (15,328,753  | )
|TOTAL STOCKHOLDERS'
      EQUITY                       |   | 2,998,155   |   |   | 2,537,422    |  
|                                                       |   |             |   |   |              |  
|TOTAL LIABILITIES AND                                  |   |             |   |   |              |  
|STOCKHOLDERS'
      EQUITY                             | $ | 9,677,101   |   | $ | 8,505,695    |  

The accompanying notes are an integral part of these financial
  statements.

---

WESCORP ENERGY INC.CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                    |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |  
|--------------------------------------------------- | - | --------------------------- | - | - | ------------------------- | -
|                                                    |   | 2006                        |   |   | 2005                      |  
|                                                    |   | (Unaudited)                 |   |   | (Unaudited)               |  
|                                                    |   |                             |   |   |                           |  
|REVENUES                                            | $ | 981,447                     |   | $ | 431,428                   |  
|                                                    |   |                             |   |   |                           |  
|COST OF SALES                                       |   | 504,089                     |   |   | 213,466                   |  
|                                                    |   |                             |   |   |                           |  
|GROSS PROFIT                                        |   | 477,358                     |   |   | 217,962                   |  
|                                                    |   |                             |   |   |                           |  
|EXPENSES                                            |   |                             |   |   |                           |  
|Wages and benefits                                  |   | 374,330                     |   |   | 200,575                   |  
|Amortization
      of technology                    |   | 129,161                     |   |   | 128,451                   |  
|Engineering
      expenses for pilot plant          |   | 65,522                      |   |   | -                         |  
|Consulting                                          |   | 129,461                     |   |   | 111,018                   |  
|Office                                              |   | 100,852                     |   |   | 50,401                    |  
|Interest
      on debentures                        |   | 56,979                      |   |   | 77,140                    |  
|Legal and accounting                                |   | 81,437                      |   |   | 40,149                    |  
|Advertising
      and investor relations            |   | 85,727                      |   |   | 64,772                    |  
|Travel                                              |   | 73,670                      |   |   | 61,270                    |  
|Insurance                                           |   | 36,580                      |   |   | 35,845                    |  
|Depreciation
      and amortization                 |   | 25,955                      |   |   | 10,590                    |  
|Stock-based
      compensation (Note 13)            |   | 20,556                      |   |   | -                         |  
|Interest, finance
      and bank charges            |   | 51,792                      |   |   | 7,507                     |  
|Research
      and development                      |   | 25,690                      |   |   | 16,502                    |  
|Directors'
      fees                               |   | 17,605                      |   |   | -                         |  
|Beneficial
      conversion interest                |   | -                           |   |   | 207,000                   |  
|TOTAL OPERATING EXPENSES                            |   | 1,275,317                   |   |   | 1,011,220                 |  
|                                                    |   |                             |   |   |                           |  
|LOSS FROM OPERATIONS                                |   | (797,959                    | ) |   | (793,258                  | )
|                                                    |   |                             |   |   |                           |  
|OTHER INCOME (EXPENSES)                             |   |                             |   |   |                           |  
|Penalty
      for late delivery of shares (Note 10) |   | (120,000                    | ) |   | -                         |  
|Foreign currency
      translation gain             |   | 2,751                       |   |   | -                         |  
|Gain
      on disposition of assets                 |   | 1,361                       |   |   | -                         |  
|Interest income                                     |   | -                           |   |   | 3,209                     |  
|TOTAL OTHER EXPENSE                                 |   | (115,888                    | ) |   | 3,209                     |  
|                                                    |   |                             |   |   |                           |  
|NET LOSS                                            | $ | (913,847                    | ) | $ | (790,049                  | )
|                                                    |   |                             |   |   |                           |  
|BASIC AND DILUTED NET LOSS PER SHARE                | $ | (0.02                       | ) | $ | (0.02                     | )
|                                                    |   |                             |   |   |                           |  
|WEIGHTED AVERAGE NUMBER COMMON SHARES               |   |                             |   |   |                           |  
|OUTSTANDING
      - BASIC AND DILUTED               |   | 41,128,176                  |   |   | 36,500,395                |  

The accompanying notes are an integral part of these financial
  statements.

---

WESCORPENERGYINC.CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERS'EQUITY

Funds
      
      
      
      
      
      AccumulatedCommon
        Stock
      
      
      
      
      
      
      
      
      Received
      
      
      
      
      
      Other
      
      
      TotalNumber
      
      
      
      
      
      Additional
      
      
      Subscription
      
      
      for Exercise
      
      
      Accumulated
      
      
      Comprehensive
      
      
      Stockholders'of
        Shares
      
      
      Amount
      
      
      Paid-in Capital
      
      
      Receivable
      
      
      of Warrants
      
      
      Deficit
      
      
      Income (Loss)
      
      
      EquityBalance, December 31, 2005
      
      38,304,686
      
      $
      3,830
      
      $
      15,450,433
      
      $
      (37,272
      )
      $
      852,392
      
      $
      (15,328,753
      )
      $
      1,596,792
      
      $
      2,537,422Warrants exercised at $0.35 per share
      
      2,208,654
      
      
      221
      
      
      772,808
      
      
      -
      
      
      (656,362
      )
      
      -
      
      
      -
      
      
      116,667Warrants exercised at $0.15 per share
      
      1,500,000
      
      
      150
      
      
      224,850
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      225,000Common stock issued for consulting fees at $0.54
        per share
      
      200,000
      
      
      20
      
      
      107,980
      
      
      
      
      
      (33,613
      )
      
      
      
      
      
      
      
      74,387Common stock issued for director's
        fees at $0.678 per share
      
      50,000
      
      
      5
      
      
      33,895
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      33,900Common stock issued for director's fees at $0.60
        per share
      
      50,000
      
      
      5
      
      
      29,995
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      30,000Cash received for share subscriptions
        receivable
      
      -
      
      
      -
      
      
      -
      
      
      29,772
      
      
      -
      
      
      -
      
      
      -
      
      
      29,772Foreign currency translation gain
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      241,874
      
      
      241,874Unrealized gain on available-for-sale
        securities
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      805,542
      
      
      805,542Stock-based compensation
      
      -
      
      
      -
      
      
      42,856
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      42,856Warrants issued for investor relations
        services
      
      -
      
      
      -
      
      
      46,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      46,000Proceeds received from exercise of warrants prior
        to issuance
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      311,589
      
      
      -
      
      
      -
      
      
      311,589Net loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (1,496,854
      )
      
      -
      
      
      (1,496,854
      )Balance, June 30, 2006(Unaudited)
      
      42,313,340
      
      $
      4,231
      
      $
      16,708,817
      
      $
      (7,500
      )
      $
      474,006
      
      $
      (16,825,607
      )
      $
      2,644,208
      
      $
      2,998,155


The accompanying notes are an integral part of these financial
  statements.

---

WESCORP ENERGY INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                          |   | Six Months Ended June 30, |  
|------------------------------------------------------------------------- | - | ------------------------- | -
|                                                                          |   | 2006                      |  
|                                                                          |   | (Unaudited)               |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                     |   |                           |  
|Net loss                                                                  | $ | (1,496,854                | )
|Adjustments to reconcile net loss                                         |   |                           |  
|to net cash used in operating activities:                                 |   |                           |  
|Depreciation
      and amortization                                       |   | 51,998                    |  
|Amortization
      of technology                                          |   | 258,323                   |  
|Stock-based
      compensation                                            |   | 42,856                    |  
|Gain on disposition
      of assets                                       |   | (1,361                    | )
|Beneficial
      conversion interest                                      |   | -                         |  
|Warrants issued
      for investor relations services                     |   | 46,000                    |  
|Changes
      in operating assets and liabilities:                        |   |                           |  
|Accounts
      receivable                                                 |   | (430,392                  | )
|Inventories                                                               |   | (76,589                   | )
|Prepaid
      expenses                                                    |   | (107,501                  | )
|Deposits                                                                  |   | (12,976                   | )
|Accounts
      payable and accrued liabilities                            |   | 291,610                   |  
|Net cash used
      in operating activities                               |   | (1,434,886                | )
|CASH FLOWS FROM INVESTING ACTIVITIES:                                     |   |                           |  
|Purchase of
      property and equipment                                  |   | (12,628                   | )
|Proceeds on
      disposition of assets                                   |   | 2,687                     |  
|Net cash invested
      in note receivable                                |   | (3,291                    | )
|Increase in
      investments                                             |   | (150,000                  | )
|Net cash used
      in investing activities                               |   | (163,232                  | )
|CASH FLOWS FROM FINANCING ACTIVITIES:                                     |   |                           |  
|Repayments
      on notes payable                                         |   | (11,200                   | )
|Repayment on
      amounts due to shareholders                            |   | -                         |  
|Proceeds from
      convertible debentures                                |   | -                         |  
|Repayments
      on convertible debentures                                |   | (77,000                   | )
|Proceeds received
      from exercise of warrants prior to issuing shares |   | 311,589                   |  
|Proceeds from
      subscriptioon receivable                              |   | 29,772                    |  
|Proceeds from
      issuance of common stock                              |   | 479,954                   |  
|Increase
      in amounts due to related parties                          |   | 507,263                   |  
|Net
      cash provided by financing activities                           |   | 1,240,378                 |  
|Effect of exchange rates                                                  |   | 78,209                    |  
|Net increase (decrease) in cash                                           |   | (279,531                  | )
|Cash, beginning of period                                                 |   | 580,430                   |  
|Cash, end of period                                                       | $ | 300,899                   |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                       |   |                           |  
|Cash paid for:                                                            |   |                           |  
|Interest                                                                  | $ | 165,824                   |  
|Income taxes                                                              | $ | -                         |  

The accompanying notes are an integral part of these financial
  statements.

---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

NOTE 1  BASIS OF PRESENTATION

The foregoing unaudited interim financial statements have been
  prepared in accordance with generally accepted accounting principles for interim
  financial information and with the instructions to Form 10-QSB and Regulation
  S-B as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly,
  these financial statements do not include all of the disclosures required by
  generally accepted accounting principles for complete financial statements.
  The accompanying unaudited financial statements and related notes should be
  read in conjunction with the audited financial statements and the Form 10-KSB
  of the Company for the year ended December 31, 2005. In the opinion of management,
  the unaudited interim financial statements furnished herein include all adjustments,
  all of which are of a normal recurring nature, necessary for a fair statement
  of the results for the interim period presented.

The preparation of financial statements in accordance with generally
  accepted accounting principles requires the use of estimates and assumptions
  that affect the reported amounts of assets and liabilities, disclosure of contingent
  assets and liabilities known to exist as of the date the financial statements
  are published, and the reported amounts of revenues and expenses during the
  reporting period. Uncertainties with respect to such estimates and assumptions
  are inherent in the preparation of the Company's financial statements; accordingly,
  it is possible that the actual results could differ from these estimates and
  assumptions that could have a material effect on the reported amounts of the
  Company's financial position and results of operations.

Operating results for the six month period ended June 30, 2006
  are not necessarily indicative of the results that may be expected for the year
  ending December 31, 2006.

NOTE 2 ORGANIZATION AND DESCRIPTION OF BUSINESS

Wescorp Energy Inc. (Wescorp or the Company)
  was incorporated in Delaware on August 11, 1998. The Company acquires, develops,
  and commercializes technologies that are designed to improve the management,
  environmental and economic performance of field operations for energy producers.
  The Companys business model is to acquire, fund and develop new systems
  and technologies in this field through investments in companies or products
  where early stage product development has been completed.

During the year ended December 31, 2004, the Company completed
  the purchase of two companies, Flowstar Technologies Inc. and Flowray Inc. (collectively
  called Flowstar) involved in the development of products for the
  petroleum industry. The original purchase agreement of the two companies was
  amended in 2004 to increase the interest to be acquired by Wescorp from 51%
  to 100%. The target companies were in the start-up phase of operations in 2003.
  In 2004, Flowstar completed the development and testing of its products and
  reported sales. In August 2004, the Company acquired 100% of the outstanding
  shares of Vasjar Trading Ltd. (Vasjar) in order to obtain the rights
  to the Digital Chart Recording (DCR) technology.

The DCR system consists of a turbine based flow measurement signal
  generating device, temperature and pressure probes and a flow computer, which
  performs all of the corrected flow calculations. The primary source of revenue
  for the Company is from the sale of DCR systems, related accessories and service
  of the systems.

The Companys year end is December 31. The Company is headquartered
  in Calgary, Alberta, Canada.

NOTE 3  RECLASSIFICATIONS

Certain amounts from prior periods have been reclassified to
  conform to the current period presentation.

NOTE 4  INVENTORIES

The components of inventory were as follows at:

| |                |   | June 30,    |  |   | December 31, | 
| | -------------- | - | ----------- |  | - | ------------ | 
| |                |   | 2006        |  |   | 2005         | 
| |                |   | (Unaudited) |  |   |              | 
| | Finished goods | $ | 1,048,119   |  | $ | 966,170      | 
| | Raw materials  |   | 31,575      |  |   | 36,935       | 
| |                | $ | 1,079,694   |  | $ | 1,003,105    | 

---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

NOTE 5  PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at:

| |                                |   | June 30,    |  |   | December 31, | 
| | ------------------------------ | - | ----------- |  | - | ------------ | 
| |                                |   | 2006        |  |   | 2005         | 
| |                                |   | (Unaudited) |  |   |              | 
| | Automotive equipment           |   | 166,275     |  |   | 166,275      | 
| | Computer hardware              |   | 38,112      |  |   | 36,969       | 
| | Computer software              |   | 13,968      |  |   | 11,666       | 
| | Furniture and fixtures         |   | 13,466      |  |   | 12,910       | 
| | Leasehold improvements         |   | 37,217      |  |   | 33,109       | 
| | Office equipment               |   | 45,216      |  |   | 41,262       | 
| | Tools and equipment            |   | 16,246      |  |   | 16,799       | 
| |                                |   | 330,500     |  |   | 318,990      | 
| | Less: accumulated depreciation |   | 161,153     |  |   | 109,226      | 
| |                                | $ | 169,347     |  | $ | 209,764      | 

Depreciation and amortization expense for the six months ended
  June 30, 2006 and 2005 was $51,998 and $24,009, respectively.

NOTE 6  INVESTMENTS

Investments consisted of the following at:

|                    |   | June 30,    |  |   | December 31, | 
|------------------- | - | ----------- |  | - | ------------ | 
|                    |   | 2006        |  |   | 2005         | 
|                    |   | (Unaudited) |  |   |              | 
|Synenco Energy Inc. | $ | 3,453,513   |  | $ | 2,484,585    | 
|Ellycrack AS        |   | 538,186     |  |   | 388,186      | 
|                    | $ | 3,991,699   |  | $ | 2,872,771    | 

Synenco Energy Inc. 
  On June 9, 2003, the Company signed an option agreement allowing the Company
  to purchase up to 1,000,000 common stock shares of Synenco Energy Inc. (Synenco),
  a company involved in the potential development of an oil sands lease in the
  Athabasca Oil Sands area of northern Alberta, Canada. Under the terms of the
  option, the Company could acquire the maximum number of Synenco shares upon
  payment of $3,700,000 as follows: $2,815,000 in cash and $885,000 ($0.30 per
  share) in Company stock. To date, the Company purchased 170,000 Synenco shares
  and paid $530,462, which was recorded as an investment using the cost basis.
  On April 23, 2004, the Company set aside 600,000 shares of common stock for
  delivery to the vendor as partial consideration of the proposed acquisition.
  On May 6, 2004, Wescorp delivered these shares to the vendor's legal counsel
  with an undertaking not to release the Wescorp shares until 170,000 Synenco
  shares have been transferred to Wescorp. The number of Synenco shares to be
  transferred to Wescorp corresponds to the amount of cash paid and shares issued
  by Wescorp in proportion to the total purchase price for the 1,000,000 Synenco
  shares. The balance of the option expired without being exercised on March 31,
  2004. In November 2005, Synenco became a publicly traded company on the TSX
  Exchange and the value of the shares increased substantially. As such, the Company
  reclassified this investment to available-for-sale securities and recorded the
  investment at its fair value. During the six months ended June 30, 2006, the
  Company recognized an unrealized gain of $968,928 in comprehensive income, which
  includes a $163,387 translation adjustment. No income tax effect was reflected
  as the Company has available net operating loss carryforwards in excess of the
  unrealized gain.

Agreement with Ellycrack AS 
  Wescorp has purchased an aggregate 752,000 shares of common stock of Ellycrack
  AS (Ellycrack), a privately held company in Norway. Wescorp acquired
  255,000 shares in consideration of $119,000 that was paid in three installments,
  $50,000 each in December 2003 and February 2004, and $19,000 in May 2004. On
  September 15, 2004, the Company issued 300,000 of its common shares to Ellycrack
  in exchange for 400,000 common shares of Ellycrack. The value ascribed to the
  Ellycrack shares of $150,000 was calculated based on the median trading price
  of Wescorp shares on that day (being $0.50) . In the first quarter of 2006,
  Wescorp paid $150,000 for 65,000 additional common shares of Ellycrack at fifteen
  Kroners per share, increasing the Company’s equity interest to approximately
  13.5%

---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

NOTE 7  TECHNOLOGY

The Company acquired DCR technology rights through its acquisitions
  of Flowstar and Vasjar which are included in intangible assets. These items
  represent the acquisition cost of the assets purchased from Flowstar and Vasjar
  in 2004. The Companys intangible assets are summarized as follows:

| |                                       |   | June 30,    |  |   | December 31, | 
| | ------------------------------------- | - | ----------- |  | - | ------------ | 
| |                                       |   | 2006        |  |   | 2005         | 
| |                                       |   | (Unaudited) |  |   |              | 
| | DCR technology acquired from Vasjar   | $ | 3,503,824   |  | $ | 3,503,824    | 
| | DCR technology acquired from Flowstar |   | 414,073     |  |   | 414,073      | 
| |                                       |   | 3,917,897   |  |   | 3,917,897    | 
| | Accumulated amortization              |   | 964,958     |  |   | 706,635      | 
| |                                       | $ | 2,952,939   |  | $ | 3,211,262    | 

The technology acquired from Flowstar relates to the right to
  use the DCR technology in markets in Canada and the technology acquired from
  Vasjar relates to markets outside of Canada. Amortization of the technology
  is recorded on a straight-line basis over its useful life of approximately 8
  years which is estimated to expire in March 2012. The Company periodically reviews
  its DCR technology rights to assess recoverability based on projected undiscounted
  cash flows from operations. Impairments are recognized in operating results
  when a permanent diminution in value occurs. To date, the Companys management
  has not determined its DCR technology to be impaired.

NOTE 8  NOTES PAYABLE

The following comprise the Companys notes payable at June
  30, 2006 and December 31, 2005:

|                                                                                                                                                                                  |  |   | June 30,    |  |   | December 31, | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----------- |  | - | ------------ | 
|                                                                                                                                                                                  |  |   | 2006        |  |   | 2005         | 
|                                                                                                                                                                                  |  |   | (Unaudited) |  |   |              | 
|Note payable  Interest at 0.0%, and secured
      by automotive assets of Flowstar, payable $569 per month, principal only,
      due July 2008                                  |  | $ | 14,871      |  | $ | 17,634       | 
|Note payable  Interest at 7.75%, compounded monthly and
      secured by automotive assets of Flowstar, payable $677 per month, principal
      and interest, due September 2009 |  |   | 24,328      |  |   | 26,358       | 
|Note payable  Interest at 9.45%, compounded
      monthly and secured by automotive assets of Flowstar, payable $387 per month,
      principal and interest, due July 2010      |  |   | 16,377      |  |   | 17,200       | 
|Note payable  Interest at 0.90%, compounded monthly and
      secured by automotive assets of Flowstar, payable $627 per month, principal
      and interest, due September 2010 |  |   | 32,818      |  |   | 34,998       | 
|Note payable  Interest at 0.0%, and secured
      by automotive assets of Flowstar, payable $825 permonth, principal only,
      due November 2009                               |  |   | 35,369      |  |   | 38,773       | 
|Notes payable  Interest at 0.0%, unsecured,
      due April 2007                                                                                                                 |  |   | 822,475     |  |   | 822,475      | 
|Total
      notes payable                                                                                                                                                         |  |   | 946,238     |  |   | 957,438      | 
|Amounts due within
      one year                                                                                                                                                 |  |   | 849,016     |  |   | 447,038      | 
|                                                                                                                                                                                  |  | $ | 97,222      |  | $ | 510,400      | 

Annual future aggregate principal payments on notes payable are
  as follows:

Periods ending June 30,2007
      $
      849,0162008
      
      36,3562009
      
      30,8552010
      
      18,7952011
      
      11,216$
      946,238


NOTE 9  COMMON STOCK AND WARRANTS

The Company is authorized to issue 250,000,000 shares of $0.0001
  par value common stock and 50,000,000 shares of $0.0001 par value preferred
  stock. All common shares have equal voting rights, are non-assessable and have
  one vote per share. Voting rights are not cumulative and, therefore, the holders
  of more than 50% of the common stock could, if they choose to do so, elect all
  of the directors of the Company. The preferred shares may be issued in series,
  with the powers, rights and limitations of the preferred shares to be determined
  by the Companys board of directors. As of March 31, 2006, no preferred
  shares had been issued.

---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

2006 Stock Transactions 
  In January 2006, the Company issued 2,208,654 shares of common stock for total
  proceeds of $773,029. These shares were issued on the exercise of warrants at
  exercise price of $0.35 per share.

In May and June 2006, the Company issued 1,500,000 shares of
  common stock for total proceeds of $225,000. These shares were issued to directors
  of the Company on the exercise of warrants at exercise price of $0.15 per share.

Additional equity transactions in the six months ended June 30,
  2006 included the issuance of 200,000 shares of common stock to a consultant
  for services related to developing a marketing strategy for products being sold
  by the Company, and the issuance of 100,000 shares of common stock to compensate
  two directors of the company.

Common Stock Warrants 
  In May 2006, the Company issued 100,000 common stock warrants with an exercise
  price of $0.74 per share and an expiration date of May 2009 in exchange for
  investor relations services. The fair market value of the warrants was recorded
  at $46,000 and is included in advertising and investor relations.

During March and April 2004, the Company completed a private
  placement of 3,231,000 units with 926,000 whole share purchase warrants exercisable
  to purchase one additional common share at a price of $0.50 until March 15,
  2006, 1,740,000 one-half of one share purchase warrants where one whole warrant
  is exercisable to purchase one additional common share at a price of $1.00 until
  the close of business on March 15, 2005, and 565,000 one-half of one share purchase
  warrants, with each whole warrant exercisable to purchase one additional common
  share at a price of $1.00 until the close of business on April 16, 2005. In
  March 2006, the Company received funds from the holders of 190,000 of these
  warrants who indicated that they wished them to be exercised. Subsequent to
  March 2006, these investors decided to forego their right to exercise these
  warrants and instead decided to have their investment redirected to units comprised
  of shares of common stock and share purchase warrants. Management expects to
  complete this redirection transaction by the end of August 2006 (See Note 19).
  These warrants have now expired.

In March 2003, the Company issued 500,000 common stock warrants
  with an exercise price of $0.15 per share and an expiration date of March 2006
  to a director for services. The fair market value of the warrants was recorded
  at $45,000. These warrants were exercised in March 2006.

In March 2003, the Company issued 1,000,000 common stock warrants
  with an exercise price of $0.15 per share and an expiration date of March 2006,
  to AHC Holdings Inc. (AHC) as a financing fee for providing the
  Company with working capital. The estimated fair value of the warrants issued
  in conjunction with the promissory note due to AHC has been recognized as a
  discount on long-term debt, and was amortized as interest over the term of the
  loan. These warrants were exercised in March 2006.

As of June 30, 2006, the Company had the following common stock
  purchase warrants outstanding:

Number of shares
      
      Exercise
      
      Expirationunder warrants
      
      price
      
      date1,400,000
      
      $0.25
      
      December 20061,000,000
      
      $0.15
      
      June 2008100,000
      
      $0.74
      
      May 20092,500,000


NOTE 10 AGREEMENT WITH VASJAR TRADING LTD.

In connection with the acquisition of Flowstar, the Company concluded
  the acquisition of 100% of the outstanding shares of Vasjar, a British Virgin
  Islands company on August 19, 2004. Vasjar in turn owns five Barbadian subsidiaries
  including 100% of the outstanding shares of Quadra Products International Inc.
  (Quadra) and Flowstar International, Inc. (Flowstar International).
  Vasjars wholly-owned subsidiary Quadra owns the rights to the technology
  related to the DCR 900 system.

The purchase called for the payment of 2,400,000 common stock
  shares of Wescorp initially, with an additional minimum 2,080,000 common stock
  shares issued over three years (480,000 before April 1, 2005, 800,000 before
  April 1, 2006, and 800,000 before April 1, 2007). An additional 520,000 shares
  are payable over this three year period if certain sales targets are achieved.
  If Wescorp fails to deliver any of the shares due before April 1, 2006, then
  the Company will be subject to a penalty of 10% additional shares for each month
  of delay, with a cumulative provision. If any of the Wescorp shares to be issued
  have not been delivered for a period of 182 days after the applicable due date
  the Vasjar shareholders may, at their option, terminate the share purchase agreements
  without notice or opportunity to cure. Wescorp has pledged to the Vasjar shareholders
  all of the Vasjar shares it holds as security to guarantee Wescorps performance
  under the share purchase agreements.

In consideration of the purchase of all the outstanding shares
  of Vasjar from two shareholder entities, Wescorp issued shares to the shareholders
  of Vasjar each as to 50% as follows:

---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

(a) an aggregate 2,400,000 shares of common stock of the Company
  effective April 30, 2004 (issued and delivered on April 29, 2004); and

(b) up to an aggregate 2,600,000 additional shares of common
  stock of the Company to be issued in stages as follows:

Stage One. On or before April 1, 2005, Wescorp was required
  to issue 480,000 additional shares based on sales achieved in the 2004 calendar
  year; which were less than $3,000,000. Shares were required to be registered
  at delivery. Wescorp was not able to deliver free-trading shares on April 1,
  2005, and as a result the Company was obligated to pay the Vasjar shareholders
  an additional 48,000 Wescorp shares for each of the months April through September
  2005 totaling 288,000 shares. These shares were delivered and accepted by the
  Vasjar shareholder on September 28, 2005. Wescorp may be required to issue an
  additional 120,000 shares related to this stage should sales targets be met
  for Stages Two or Three.

Stage Two. On or before April 1, 2006, Wescorp will issue
  from 800,000 to 1,000,000 additional shares based on sales achieved in the 2005
  calendar year; the lower figure being if sales are less than $4,500,000 and
  the upper figure being if sales are more than $7,500,000. Shares are required
  to be registered at delivery.

Stage Three. On or before April 1, 2007, Wescorp will
  issue from 800,000 to 1,000,000 additional shares based on sales achieved in
  the 2006 calendar year; the lower figure being if sales are less than $6,000,000
  and the upper figure being if sales are more than $11,250,000. Shares are required
  to be registered at delivery.

Any Wescorp shares not earned in a particular calendar year because
  the sales did not achieve the upper sales target will be carried over and added
  to the shares to be issued in the next calendar year, subject to achievement
  of the next years escalating sales volumes.

The balance of the fair market value of the shares due to the
  Vasjar shareholders has been recorded in short and long-term notes payable.

As a condition on the acquisition of Vasjar the Company was required
  to issue on or before April 1, 2006 between 800,000 and 1,000,000 additional
  shares based on sales achieved in the 2005 calendar year. The lower figure was
  based on sales of less than $4,500,000, and the upper figure was based on sales
  in excess of $7,500,000. The shares were required to be registered at delivery.

Wescorp was not able to deliver free-trading shares on April
  1, 2006 and so the Company will be required to pay the former owners of Vasjar
  an additional 80,000 Wescorp shares for each month that the shares are not delivered,
  starting with the month of April 2006. As a result, these financial statements
  reflect an estimated cost of $120,000 to settle this commitment to deliver 240,000
  free trading common shares for the months of April through June 2006. This balance
  is included in accrued liabilities. As of August 1, 2006, the Company had accrued
  an additional 160,000 common shares, or approximately $80,000, as the free-trading
  shares have not been issued to the former owners of Vasjar.

NOTE 11  CONVERTIBLE DEBENTURES

During the year ended December 31, 2005 the Company issued debentures
  in the amount of $1,552,319 which bear interest at the rate of 14% per annum
  payable quarterly that originally matured on December 31, 2005. On December
  30, 2005, holders of debentures totaling $1,475,319 agreed to extend the original
  terms of the debenture by six months to June 30, 2006. The remaining balance
  for debentures totaling $77,000 was repaid in January 2006. The debentures are
  secured by way of a security interest over the inventories and accounts receivable
  of Flowstar.

Subsequent to the date of these financial statements, the holders
  of debentures totaling $505,764 have indicated that they wish to extend the
  terms of the debenture agreement by another six months. The debentures may,
  at the option of the holder, be converted into units of the Company at a price
  of US$0.90 per unit at any time prior to the maturity date. Each unit shall
  be comprised of one common share of the Company and one common share purchase
  warrant each of which may be exercised at any time up to December 31, 2007 as
  follows:

| | a) | if exercised on or before December 31, 2006 the holder
        of a warrant shall be entitled to purchase one common share for each warrant
        held for US$1.00 per common share; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                           
| | b) | thereafter until the maturity date the holder of each
        warrant shall be entitled to purchase one (1) common share for each warrant
        held for US$2.00 per share common share.

The Company shall be entitled to prepay the debenture in whole
  or in part, at any time prior to the maturity date subject to the following:

| | a) | the Company provides the holder
        with at least one months prior written notice of the Companys intention
        to repay the debenture; and                                                                                  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                       
| | b) | at the date the notice is issued
        the weighted average trading price of the Company's common shares as traded
        on the NASD OTC Bulletin Board for the ten previous trading days was at
        least US $1.35 per share.

In addition to the investors who wish to extend the terms of
  the debenture, there are holders of debentures totaling $930,250 who wish to
  have their investment redirected to units comprised of shares of common stock
  and share purchase warrants. Management

---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

expects to complete this redirection transaction by the end of
  August 2006 (See Note 19). The remaining holders of $39,300 in debentures have
  indicated that they will not extend their debentures and have requested repayment
  of this debt.

The convertible debentures contained a beneficial conversion
  feature computed at its intrinsic value, which was the difference between the
  conversion price and the fair value on the debenture issuance date of the units
  into which the debt was convertible, multiplied by the number of shares into
  which the debt was convertible at the commitment date. Since the beneficial
  conversion feature was to be settled by issuing equity, the amount attributed
  to the beneficial conversion feature, or $207,000, was recorded as an interest
  expense and a component of equity on the issuance date.

NOTE 12  STOCK OPTIONS

During the six months ended June 30, 2006, the Company granted
  a combined total of 105,978 options to purchase common shares to an officer.
  Changes in the number of options outstanding are summarized as follows:

|                                 |  | June 30, 2006 |  |   | December 31, 2005 | 
|-------------------------------- |  | ------------- |  | - | ----------------- | 
|                                 |  | (Unaudited)   |  |   |                   | 
|                                 |  |               |  |   | Weighted          | 
|                                 |  |               |  |   | Average           | 
|                                 |  |               |  |   | Exercise          | 
|                                 |  | Options       |  |   | Price             | 
|Outstanding, beginning of period |  | 2,326,881     |  | $ | 0.56              | 
|Granted                          |  | 105,978       |  |   | 0.57              | 
|Outstanding, end of period       |  | 2,432,859     |  | $ | 0.56              | 

The weighted average remaining contractual life of the options
  is 43 months.

NOTE 13  STOCK-BASED COMPENSATION

The fair value of the stock options granted in the six months
  ended June 30, 2006 was calculated using the Black-Scholes option pricing model
  incorporating the following weighted average assumptions:

Risk free interest rate
      4.0%Expected dividend yield
      NilExpected stock price volatility
      111%Expected average option life
      4 yearsWeighted average grant date fair value per
        option
      $ 0.57


NOTE 14  WARRANTS

The fair value of the warrants issued for the six months ended
  June 30, 2006 was calculated using the Black-Scholes option pricing model incorporating
  the following weighted average assumptions:

Risk free interest rate
      .4.0%Expected dividend yield
      NilExpected stock price volatility
      111%Expected average option life
      3 yearsWeighted average grant date fair value per
        option
      $ 0.46


---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

NOTE 15  MEASUREMENT UNCERTAINTY

The Black-Scholes option pricing model was developed for use
  in estimating the fair value of traded options that have no vesting restrictions
  and are fully transferable. Stock options and the warrants attached to the units
  issued by the Company are non-transferable. Option pricing models require the
  input of subjective assumptions including expected share price volatility. The
  fair value estimate can vary materially as a result of changes in the assumptions.

NOTE 16  COMMITMENTS AND CONTINGENCIES

In September 2003, the Company approved a transaction with a
  legal service provider in recognition of a previous credit accommodation. The
  transaction provided for a direct grant of 100,000 common shares and an additional
  100,000 common stock warrants exercisable at $0.50 for five years with a cashless
  exercise feature. As part of the transaction, the party agreed to cap legal
  service costs at an agreed upon maximum rate from September 2003 to December
  2004, amounting to a reduction of $100 per hour. As of June 30, 2006, the Company
  had issued 100,000 shares but no warrants to the legal service provider. The
  Company no longer has engaged this legal service provider.

Agreement with Ellycrack AS

In March 2004, Ellycrack granted the Company an option exercisable
  until June 1, 2005 to acquire exclusive rights to use Ellycracks high
  intensive catalytic cracking technology and intellectual property. This would
  also include the exclusive rights to manufacture, and sell products or systems
  derived from or utilizing Ellycracks technology in North America.

Later in 2004, the Company entered into a Memorandum of Understanding
  to form a joint venture (JV) with Ellycrack (superseding prior agreements)
  that gives Wescorp a 50% interest in the rights to use and benefit from Ellycracks
  high intensive catalytic cracking technology and intellectual property worldwide.
  In exchange, the Company must pay for the construction and design modifications
  of a full scale prototype in Canada to the point that such a prototype is commercially
  saleable. After this point, all future costs will be shared equally between
  the Company and Ellycrack.

Operating Leases

The Company leases office and manufacturing space in Edmonton,
  Alberta, Canada for $6,480 per month under a month-to-month operating lease
  agreement. The Company also leases office space in Calgary, Alberta, Canada
  for approximately $5,450 per month which expires in June 2011.

In addition, the Company has entered into lease agreements with
  respect to a vehicle which has minimum lease payments of approximately $670
  per month until March 2009 and a photocopier which has minimum lease payments
  of approximately $520 per month until December 2008.

Annual future aggregate minimum payments under operating leases
  are as follows:

|Periods ending June 30, |   |         |  |  |  | 
|----------------------- | - | ------- |  |  |  | 
|2007                    | $ | 79,680  |  |  |  | 
|2008                    |   | 79,680  |  |  |  | 
|2009                    |   | 78,120  |  |  |  | 
|2010                    |   | 71,940  |  |  |  | 
|2011                    |   | 71,940  |  |  |  | 
|                        | $ | 381,360 |  |  |  | 

---

|                                                  
|--------------------------------------------------
|WESCORP ENERGY INC.                               
|NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|(Unaudited)                                       
|                                                  
|June 30, 2006                                     

NOTE 17 - RELATED PARTY TRANSACTIONS

Related Party Transactions

Summary of related party transactions as follows for the six
  months ended June 30, 2006 and 2005:

June 30,
      
      
      June 30,2006
      
      
      2005(Unaudited)
      
      
      (Unaudited)Stock-based compensation paid or accrued
        to directors of the Company
      $
      42,856
      
      $
      -


Executive Compensation

During the year ended December 31, 2005 the Company incurred
  a liability for compensation to its chief executive officer in the amount of
  $30,862. An additional $7,263 was incurred in the six months ended June 30,
  2006. The outstanding balance of $38,125 is reflected in due to related parties.

Note Payable

On June 20, 2006 the Company entered entered into an agreement
  with AHC, under which AHC would lend the Company $500,000. AHC is a private
  company beneficially owned and controlled by a director of the Company. The
  loan was structured as a promissory note that was unsecured, bears interest
  at the rate of 12% per annum and is due on demand. The outstanding balance of
  $500,000 is reflected in due to related parties.

NOTE 18  INCOME TAXES

At June 30, 2006, the Company had net deferred tax assets calculated
  at an expected combined rate of 41.5%, 34% for federal purposes and an effective
  rate of 7.5% for state purposes, of approximately $5,478,000 principally arising
  from net operating loss (NOL) carryforwards for income tax purposes.
  As management of the Company cannot determine that it is more likely than not
  that the Company will realize the benefit of the net deferred tax asset, a valuation
  allowance equal to the net deferred tax asset has been established. The significant
  components of the deferred tax asset at June 30, 2006 and December 31, 2005
  were as follows:

| |                                        |   | June 30,    |   |   | December 31, |  
| | -------------------------------------- | - | ----------- | - | - | ------------ | -
| |                                        |   | 2006        |   |   | 2005         |  
| |                                        |   | (Unaudited) |   |   |              |  
| | NOL carryforwards                      | $ | 13,200,000  |   | $ | 12,600,000   |  
| | Deferred tax asset                     | $ | 5,478,000   |   | $ | 5,229,000    |  
| | Deferred tax asset valuation allowance | $ | (5,478,000  | ) | $ | (5,229,000   | )

At June 30, 2006, the Company has NOL carryforwards of approximately
  $16,000,000, which expire in the years 2015 through 2025. The Company recognized
  approximately $2,800,000 of NOL carryforwards to offset potential taxes related
  to the unrealized gain in availablefor-sale securities. The increase in
  the allowance account from December 31, 2005 to June 30, 2006 was $249,000.

NOTE 19  SUBSEQUENT EVENT

The Company is presently engaged in discussions with existing
  investors in its debentures and holders of its exercised warrants (for which
  shares have not yet been delivered) who wish to have their investments redirected
  to units comprised of shares of common stock and share purchase warrants. Management
  expects to complete this redirection transaction by the end of August 2006.

---

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Wescorp Energy Inc. is referred to herein as we, us, our,
Wescorp, the Company or our Company.

The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our
consolidated financial statements and related notes appearing elsewhere in this
Form 10-QSB.

Overview

Prior to 2004, we had not generated any revenues from products,
services or operations since the inception of our company. In 2004 and 2005, the
Company recorded revenue from the acquired operating businesses of Flowstar,
Flowray and their affiliated companies. As such, we are including herein a
discussion of our updated plan of operation for the next 12 months. In addition,
we are also including summary analysis and information regarding our financial
condition, liquidity and capital resources.

Currently our sole source of revenue is from our subsidiary,
Flowstar Technologies Inc., which produces advanced natural gas and gas liquids
measurement devices based on a proprietary Digital Chart Recorder (DCR) and
advanced turbine measurement technology. Flowstar DCR-based devices are
self-contained, energy-efficient flow computers with turndown ratios of 40:1 or
more for more precise flow measurements and volume calculations that are
installed directly to the well-head. Currently, these products carry a one-year
warranty and have no right of return. There is no price protection plan in
place. During the quarter ended June 30, 2006, Flowstar sold approximately 123%
more DCR units than the quarter ended June 30, 2005, while the average selling
price decreased by about 11% versus the same quarter in 2005.

Revenues for the quarter ended June 30, 2006 totaled $981,447
compared to $431,428 for the quarter ended June 30, 2005. Although our Flowstar
division has enjoyed encouraging sales growth through 2005 and the first half of
2006, the Company as a whole has yet to reach profitability. During the six
months ended June 30, 2006, we experienced negative cash flows and we have
funded our operations by the issuance of new equity and the assumption of
short-term debt.

While we expect that sales will continue to increase over the
remaining two quarters of 2006 and that we will hopefully generate operating
profits in the Flowstar division within that period, cash will be required to
fund the manufacture of sufficient inventory and to finance the accumulating
trade accounts receivables that will increase alongside sales. Consequently,
forecasting our total cash requirement is difficult at this time due to the
contingent nature of the timing and volume of sales we expect over that same
period. As such, we intend to raise additional capital by selling new equity,
incurring short-term debt, or selling part or all of our Synenco Energy Inc.
shareholdings in 2006 to finance:

- The continued expansion of Flowstar operations within our current markets
  and into the United States;
- The continuing development, pilot plant fabrication and field-testing of
  our Ellycrack technology (see below); and
- The potential acquisition of new technologies and related businesses which
  management hopes would add value to our overall business almost immediately
  upon closing.

In addition to improved Flowstar sales realized in the first
two quarters of 2006, the market value of our Synenco Energy Inc. shares at June
30, 2006 have appreciated 39% from our December 31, 2005 year end reporting to a
market value of $3,453,513. As of August 8, 2006 the market value of this
investment had decreased to $2,776,100 from the June 30, 2006 market value of
$3,453,513.

The rapid growth we are experiencing can place considerable
operational, managerial and financial strain on our Company. To ensure we
succeed with our new business plan, we must proactively adhere to the
following:

| | 1. | Continue to improve, upgrade and expand business
      infrastructure supporting operations  Our Flowstar division is finalizing
      implementation of a comprehensive customer relationship management system,
      enhanced training program and reporting matrix to allow our sales
      professionals to become more consultative and strategically aligned with
      our customers. We expect these initiatives will allow Flowstar to realize
      even higher customer satisfaction, more efficient product development
      cycles and higher capture rates within our current and expanding
      markets.                                                                                                       
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 2. | Continue to hire, train and retain key management within
      Wescorp, our subsidiaries and any target company we may acquire  In 2006
      we hired a new sales professional for Flowstar and plan to continue to
      expand our sales force. In the first half of 2006 we continue to actively
      recruit personnel for key executive positions within Flowstar and Wescorp.
      In the second quarter we engaged two consultants to assist in planning our
      expansion of Flowstar operations into the U.S. market. In the third
      quarter we expect to appoint an executive to oversee the implementation
      and execution of that plan from a base of operations to be formed in the
      U.S. as well.

---

| | 3. | Continue to advance commercialization development
      programs to generate positive cash flow and earnings as soon as is
      practically possible  We are actively assessing value-added acquisition
      candidates at or near revenue generation that extend our reach into large
      high-growth and focused market segments. We are also accelerating
      commercialization of our Ellycrack joint-venture and technology by
      negotiating an agreement with Ellycrack A/S to transfer their Viscositor
      test-rig from Norway to Canada. That transfer will allow Wescorp to modify
      the test-plant and install all necessary instrumentation to undertake a
      continuous test program in an accredited facility as a substitute to
      fabricating a pre-commercial pilot-plant for final development purposes.
      We are currently undertaking to ensure that the test-plant meets all
      requisite safety and environmental standards to affect its transfer from
      Norway to Canada.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 4. | Maintain adequate financial resources  As noted above,
      we intend to raise additional capital in 2006 to fund planned expansion,
      technology development and acquisition initiatives being considered, We
      are currently qualifying value- added investors and other sources of
      capital available to Wescorp to provide that funding as
  needed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Our current and future opportunities for success depend to a
great extent on the continued employment of and performance by senior management
and key personnel at potential target companies. As we continue to grow the
demands and skill sets of our senior management will change. New executives will
be hired with the skill sets and experience required to enhance those areas
which require specialized expertise. In addition, we will be seeking to add new
Directors to our Board that bring significant industry knowledge and expertise
in the fields we are expanding into, including the U.S. market for Flowstar, and
the heavy oil upgrading market for Ellycrack. We also recognize that the
increased need for corporate compliance within new regulatory reporting
requirements compels us to look for new potential Board Members.

On May 1, 2006 we appointed Mr. Robert M. Nicolay to our Board
of Directors. Mr. Nicolay is President of Aurora Borealis Management, an Alberta
firm that provides corporate governance, energy investment, operations analysis,
strategic development and execution advisory services for public, private and
government energy corporations. Prior to joining Aurora Borealis Management, Mr.
Nicolay was President and CEO of ENMAX Corporation. ENMAX is an electric utility
owned by the City of Calgary, Alberta.

Acquisitions

In connection with the 2004 acquisition of Flowstar, the
Company concluded the acquisition of 100% of the outstanding shares of Vasjar on
August 19, 2004. Vasjar in turn owns five Barbadian subsidiaries including 100%
of the outstanding shares of Quadra Products International Inc. (Quadra) and
Flowstar International, Inc. (Flowstar International). Vasjars wholly-owned
subsidiary Quadra owns the rights to the technology related to the DCR system.
With the completion of the acquisition of Vasjar, the Company now owns all the
proprietary technology originally owned by Flowray related to the DCR 900 system
and other products. Quadra is planning to grant Flowstar International a license
to use the technology and to manufacture, market and sell products derived from
the technology, including the DCR 900 system, in all jurisdictions worldwide
except Canada.

In consideration of the purchase of all the outstanding shares
of Vasjar from two shareholder entities, Wescorp issued shares (and will issue
additional shares) to the shareholders of Vasjar each at 50% as follows:

|(a) | an aggregate 2,400,000 shares of common stock of the
      Company on April 28, 2004; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(b) | up to an aggregate 2,600,000 additional shares of common
      stock of the Company to be issued in stages as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Stage One. On or before April 1, 2005, the Company
      was required to issue 480,000 additional shares based on sales achieved in
      the 2004 calendar year; which were less than $3,000,000. Shares were
      required to be registered at delivery. Wescorp was not able to deliver
      free-trading shares on April 1, 2005, and as a result the Company was
      obligated to pay the Vasjar shareholders an additional 48,000 Wescorp
      shares for each of the months from April through September 2005 totaling
      288,000 shares. These shares were delivered and accepted by the Vasjar
      shareholders on September 28, 2005. We may be required to issue an
      additional 120,000 shares related to this stage should sales targets be
      met for Stage Two or if Stage Three sales are more than $3,750,000. Shares
      are required to be registered at delivery.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Stage Two. On or before April 1, 2006, the Company
      was required to issue from 800,000 to 1,000,000 additional shares based on
      sales achieved in the 2005 calendar year; the lower figure being if sales
      are less than $4,500,000 and the upper figure being if sales are more than
      $7,500,000. Shares are required to be registered at delivery;
and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Stage Three. On or before April 1, 2007, Wescorp
      will issue from 800,000 to 1,000,000 additional shares based on sales
      achieved in the 2006 calendar year; the lower figure being if sales are
      less than $6,000,000 and the upper figure being if sales are more than
      $11,250,000. Shares are required to be registered at
  delivery.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

Any Wescorp shares not earned in a
particular calendar year because sales did not achieve the upper sales target
will be carried over and added to the shares to be issued in the next calendar
year, subject to achievement of the next years escalating sales volumes.

If we fail to deliver any of the Stage 2 or 3 shares, the
Company will be subject to a penalty of 10% in additional shares to be issued to
the Vasjar shareholders each month of delay, with a cumulative provision. On
April 1, 2006, we were not able to deliver free-trading shares called for under
Stage 2, and thus we are required to pay the Vasjar shareholders an additional
80,000 Wescorp common shares for each month that the shares are not delivered.
As of August 1, 2006, Wescorp was required to pay an additional 400,000 common
shares.

If any of the Wescorp common shares to be issued to the Vasjar
shareholders have not been delivered for a period of 182 days after the
applicable due date, the Vasjar shareholders may at their option terminate the
share purchase agreements, without notice or prior opportunity to cure. We have
pledged to the Vasjar shareholders all the Vasjar shares as security to
guarantee Wescorps performance under the share purchase agreements.

The delay in delivering free-trading shares which would
eliminate further additional share penalties is largely attributed to setbacks
we are experiencing in filing an effective registration statement with the SEC.
We were unable to file a registration statement until we filed an amended Form
10-KSB for 2004. In addition, amended Form 10-QSBs for each of the quarters in
2005 must also be filed before we submit the registration statement. As of
August 9, 2006, we have filed amended Form 10-KSB for 2004 as well as Form
10-QSBs for the first and second quarters of 2005. We expect to file our final
amended 10-QSB for the third quarter of 2005 in the third quarter of 2006.

Memorandum of Understanding to Form a Joint Venture with and
Shares of Ellycrack AS

Pursuant to a letter of intent dated February 10, 2004,
Ellycrack had granted the Company or its subsidiary options to acquire three
separate exclusive territorial licenses in Canada, the United States and Mexico
to make, use, copy, develop and exploit Ellycracks technology and intellectual
property and to design, manufacture, market and sell products or systems derived
from or utilizing Ellycracks technology or sublicense others to do the same in
each territory.

However, on September 28, 2004, Ellycrack and the Company
signed the MOU to form a 50% / 50% joint venture to make, use, copy, develop and
exploit Ellycrack's technology and intellectual property and to design,
manufacture, market and sell products or systems derived from or utilizing
Ellycrack's technology or sublicense others to do the same on a world-wide
basis.

The principle features of the MOU is to cancel the options to
purchase licenses in Canada, the United States and Mexico and to replace it with
an obligation to build and operate a pilot plant in Canada to determine the
overall economics of the technology and subject to the viability of these
economics, to market the technology on a world-wide basis.

As of December 31, 2005, the Company had purchased an aggregate
659,000 common shares of Ellycrack, representing 12.90% of Ellycrack's
outstanding shares (259,000 shares in consideration of $123,129 and 400,000
shares in exchange for 300,000 shares of our common stock issued to Ellycrack).
In January 2006, we purchased an additional 65,000 common shares of Ellycrack
bringing our current equity interest to 13.45% . Additionally, the MOU provides
an option for the Company to increase its equity interest up to 20% of
Ellycrack's outstanding shares via a combination of purchase and share swap

Ellycrack has developed what is believed to be a cost effective
technology in which heavy oil can be upgraded to lighter more commercially
saleable oil via a low-energy mechanical cracking process which can be located
directly in a field environment. By upgrading heavy oil in the field, oil
companies can eliminate on-site storage tanks as well as the cost associated
with transporting heavy oil great distances to centralized upgraders. As such
heavy oil can be transported directly to a refinery.

We have since made various improvements to core technology
within the Ellycrack process in the third quarter of 2005 in order to optimize
it for the pilot plant and subsequent commercial applications. As a result of
those improvements, we scheduled tests for several major energy producers who
have requested a demonstration of the Ellycrack process for possible
consideration within their field operations as a commercial application. Those
improvements and tests were very successful resulting in a significant increase
in the process upper limit of API upgrading. To date, we have hired an
engineering firm to prepare the design for a 50 to 200 barrel a day pilot plant
utilizing the Ellycrack technology which was completed in the first quarter of
2006. The complete costing and fabrication of the pilot plant is in process,
with the estimated completion to be later in 2006. In addition, we have also
hired an engineer to act as project manager for pilot plant fabrication and to
oversee Ellycrack related operations.

At the time of this filing we are in the process of converting
the above mentioned MOU into a formal joint venture agreement.

---

Plan of Operation for the Next Twelve Months

The increase we realized in Flowstar sales during the first
half of 2006 over the same period in 2005 is an indication that we are starting
to generate stronger growth that management hopes will result in operating
profits for the Flowstar division in the 2006 fiscal year. However, our future
operations and expansion are dependent on identifying and securing additional
long-term or permanent equity financing; identifying potential sources of short
and/or long-term debt financing; enjoying the continued support of creditors and
shareholders; and ultimately achieving profitability in all facets of our
operations. There can be no assurances that we will be successful in these
regards, which would significantly affect our ability to execute our business
plan. We will continue to evaluate projected expenditures relative to available
cash and seek additional means to finance operations to meet our internal and
external growth as new capital is required.

During the year ended December 31, 2004, we integrated the
operations of Flowstar and Flowray into our corporate structure and prepared a
comprehensive updated plan to capitalize on the competitive advantages of the
DCR technology in Canada. In 2005, we successfully implemented this plan by
setting up an experienced sales team and establishing a sales office in Calgary,
Alberta, which hosts the largest single concentration of oil/gas company head
offices in North America. This allowed the Company to achieve higher sales for
the year and sales increases from prior quarterly reporting periods. This trend
has continued with Flowstar having significantly higher sales in the first half
of 2006 as compared to the first half of 2005.

Over the next several months, Management will finalize a plan
of action to manufacture and distribute the DCR product line throughout North
America. In the second quarter we engaged two consultants to assist in planning
our expansion of Flowstar operations into the U.S. market. The first element of
that plan will be to appoint an appropriately qualified executive in the third
quarter to oversee expansion of the division into the U.S. market. The executive
will be responsible for establishing a sales and technical support
infrastructure within each state or region being targeted for DCR sales. That
infrastructure is expected to be based on contracting qualifying third-parties
to manufacture and/or distribute DRC technology within defined territories
wherein that party has established capacity and market reach.

As part of our business development efforts, Flowstar continues
to be deeply involved with industry organizations and in particular those
focused on the upstream measurement market. Our Flowstar Technologies Inc.
division is an active member of the Industry Measurement Group (IMG); a
non-profit organization comprised of corporations with a common interest in
issues affecting measurement within the petroleum industry. Included within IMG
are measurement specialists, operating companies, service providers, regulators,
production accountants and consultants among others. In March 2006, Flowstar
participated in a trade event hosted by the Canadian School of Hydrocarbon
Measurement (CSHM), which focused on hydrocarbon measurement accounting
compliance. We also participated in the Instrumentation, Systems, and Automation
Society (ISA) technical conference held in Edmonton in April 2006. ISA is a
United States based organization setting global standards for and certifying
professionals involved in the industrial automation industry.

In May 2006, we exhibited at the Gas City Petroleum Show in
Medicine Hat, Alberta. In June 2006, we participated in the Global Petroleum
Show in Calgary, Alberta where our Flowstar DCR was showcased as part of a new
separator package being marketed for wet-gas applications. That package is
currently being implemented as an exclusive metering/separation solution by a
major coal-bed methane producer in Canada.

In addition to participating in focused industry events, we
also commissioned Colorado Engineering Experiment Station Inc. (CEESI) to test,
quantify, and provide reference data on the performance of our DCR technology in
a variety of wet-gas field conditions. Test results were positive and we expect
sales of DCR technology for wet-gas applications to increase considerably as
supported by the reference data produced by CEESI.

In 2005, we made significant advancements in the design and
engineering of our Ellycrack technology with contributions from an engineering
firm we retained to provide related services to our joint-venture. Based on
these advancements, we planned to build a pilot plant facility to test the
technology in a controlled field testing setting to more accurately define
critical operating parameters for commercial applications. In June 2006, we
entered into an agreement with Ellycrack AS allowing the joint-venture to borrow
the Viscositor test-plant residing at the SINTEF facilities in Norway, and ship
it to Canada. With the test-plant at our facilities in Canada, we will make all
necessary modifications to it to undertake a continuous test program to define
those operating parameters as a substitute to fabricating a pre-commercial
pilot-plant for such a purpose. Once those parameters are established it will
allow us to modify the original engineering and design plans as necessary to
produce a fully commercial package for the technology. We are currently
undertaking to ensure that the test-plant meets all requisite safety and
environmental standards to affect its transfer from Norway to Canada.

To date, our operations have been funded by a combination of
short-term debt and equity financing. In the event that we do not achieve
positive cash flow from operations by the end of fiscal 2006, we will be relying
on debt and equity financings to provide our Company sufficient capital to
continue our development and operational plans. We may also liquidate all or
part of our investment in Synenco Energy Inc. shares to raise additional
capital. There can be no assurance that the growth we have been experiencing
will

---

continue, which would have a significant affect on the
financial condition of our Company and our ability to effectively implement the
proposed business plan for Flowstar and Ellycrack.

Over the next 12 months, we plan to closely monitor and
implement solutions to manage our proposed future growth. Those monitoring
efforts will include:

| | 1. | Retaining key management and employees with an emphasis
      on providing proper training and ongoing professional development to
      ensure we are current with the latest advancements and development that
      affect our target markets and industries.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                 
| | 2. | Identifying further potential markets for our current
      products and those under development to ensure we optimize revenue that
      generates enhanced profits, positive cash flows and shareholder
    value.                                            
| |    |                                                                                                                                                                                                                                                                 
| | 3. | Identifying value-added acquisition candidates to further
      enhance revenue, profitability, cash-flow and shareholder value within
      highly-levered high growth energy-related markets.                                                                 

Currently, cash on hand and collection of trade accounts
receivable are our only sources of liquidity. We cannot provide any assurance
that we will be able to reach a level of operations within our Flowstar division
to finance our day-to-day activities. Although we do not have any lending
arrangements in place with banking or financial institutions, we intend to
secure conventional bank financing for Flowstar once we redeem or affect the
conversion of all of the outstanding convertible debentures to equity as noted
herein. We are also currently in the process of arranging financing for our 2006
operations and investment plan. As part of our overall investment objectives we
intend to acquire and develop one or more technologies in 2006. We hope that any
potential acquisitions would also contribute to our current revenue and cash
flow streams immediately after the acquisition. Our total anticipated funding
requirement through to the end of 2007 is estimated to be approximately $15
million.

We believe that with completion of our proposed financing, our
cash balances will be sufficient to carry on normal operations for the next
twelve months and meet any cash requirements that may be needed for target
investments or acquisitions. To the extent that we require additional funds to
support our operations or the expansion of our business, we may sell additional
equity or issue debt, or we may sell part or all of our Synenco Energy Inc.
shareholdings. Any sale of additional equity securities, if undertaken, will
result in dilution to our stockholders. There can be no assurance that
additional financing, when required, will be available to our company or on
acceptable terms.

We anticipate that the only major purchases of capital assets
in the next 12 months will be the building of the Ellycrack pilot plant, the
expansion of Flowstar operations into the United States, and the potential
acquisition of one or more new businesses and/or technologies. However, there
may be additional purchases of office equipment and shop equipment for Flowstar.
Also, Flowstar will be conducting research and development in its ongoing
program to maintain the competitive advantage of its products.

Wescorps current corporate employee count has increased with
the recent hiring of an additional salesman for Flowstar in the Calgary office
and now stands at twenty-three. Additionally, there may be services that Wescorp
will contract out for, given the specialized nature of the business of Flowstar.
With the change in our business plan, we anticipate that any change in capital
assets, research and development and employees would be subject to change in any
targeted operating business that we may acquire, including that of Flowstar and
Ellycrack.

Results from Operations  2006 Compared to 2005

Three Months Ended June 30, 2006 Compared to Three Months
Ended June 30, 2005

Revenues

Revenues during the quarter ended June 30, 2006 were $981,447,
compared to $431,428 for the quarter ended June 30, 2005, an increase of
$550,019, or 128%. This increase can be attributed to the growing market
acceptance of the DCR systems sold by Flowstar, increased marketing of the
Flowstar products, and strengthening of the Canadian dollar. Sales coverage for
the Flowstar DCR systems has been improved through the hiring of additional
direct sales staff and increased exposure to the upstream measurement community.
In addition, Flowstar has been focusing its sales efforts by identifying
applications and markets where the DCR system has advantages over competing
products.

Cost of Sales

As a percentage of revenues, cost of sales for the quarter
ended June 30, 2006 increased slightly to 51.4% versus 49.5% for the quarter
ended June 30, for 2005. This minor deterioration in the gross margin was
directly attributed to market conditions which have forced us reduce prices
slightly to ensure our products are priced in line with our competitors.

---

Expenses

Operating expenses for the quarter ended June 30, 2006 were
$1,275,317 versus $1,011,220 for the quarter ended June 30, 2005, an increase of
$264,097. Expansion of our Ellycrack and Flowstar operations were the principal
reasons for this increase. The largest increases in our operating expenses were
in engineering expenses for the Ellycrack pilot plant, and wages and benefits as
explained below.

Since the second quarter of 2005, additional staff have been
hired to fill the management positions of Project Manager for the Ellycrack
pilot plant and Vice President of Investor Relations., In addition, the
Companys Chief Financial Officer is now being paid as an employee as opposed to
a consultant in the first six months of 2005. To improve sales coverage, three
additional sales representatives have been hired by Flowstar that were not
employed during the first six months of 2005. As a result, wages and benefits
were $374,330 during the quarter ended June 30, 2006 versus $200,575 during the
quarter ended June 30, 2005, an increase of approximately $174,000. Also,
included in the new compensation package for the Chief Executive Officer were
stock options which did not exist during the quarter ended June 30, 2005. Thus,
the Company incurred $20,556 in stock based compensation during the quarter
ended June 30, 2006 with no corresponding cost during the quarter ended June 30,
2005.

Engineering of the Ellycrack pilot project didnt start until
the third quarter of 2005 and as a result, costs of $65,522 were incurred during
the quarter ended June 30, 2006 with no corresponding cost during the quarter
ended June 30, 2005.

Travel expenses during the quarter ended June 30, 2006
increased by $12,400 versus the quarter ended June 30, 2005, a direct result of
the increased activity in the Ellycrack project and additional marketing of both
Wescorp and Flowstar in international markets. Similarly, the increase in office
expenses of $50,451 during the quarter ended June 30, 2006 versus the quarter
ended June 30, 2005 were directly related to the expansion of the Flowstar and
Ellycrack operations.

Depreciation expense for the quarter ended June 30, 2006 was
$25,955 versus $10,590, an increase of just over $15,000. This increase was due
to assets acquired during the last six months of 2005 and the first six months
of 2006 to support the expanded Flowstar operations.

Consulting fees for the current quarter of $129,461 were
$18,443 higher than those incurred in 2005. Although many consulting contracts
which existed in 2005 were not renewed, additional consulting agreements were
entered into during the last quarter of 2005 and the first six months of 2006
which exceeded the cost of those contracts that existed in the same period of
2005. The new contracts included the hiring of a consultant to assist in
developing a marketing strategy that can be applied to current products being
sold as well as potential new products that may be marketed by existing
businesses or future business acquisitions. Additional consulting fees were also
paid to help assess the viability of potential business acquisition
candidates.

Legal and accounting costs were $81,437 which was an increase
of $41,288 compared to the corresponding period of 2005. Most of this increase
can be attributed to increased compliance costs with respect to the requirements
for the year end audit as well as the reviews of the quarterly financial
statements. Additional costs were also incurred for legal fees with respect to
potential financing and for due diligence work undertaken with respect to
potential business acquisitions.

Results for the quarter ended June 30, 2006 reflect interest,
finance and bank charges of $51,792 which is $44,285 higher than the $7,507
reflected in the same period for 2005 as a direct result of the current years
figures including the cost of a $50,000 finders fee in relation to potential
financing.

Advertising and investor relations expenses rose by $20,955 to
$85,727 for the quarter ended June 30, 2005 versus the $64,772 reported for the
quarter ended June 30, 2005. This is the direct result of issuing warrants
valued at $46,000 to various consultants to assist with investor relations.

During the quarter ended June 30, 2006 Flowstar commissioned
Colorado Engineering Experiment Station Inc. (CEESI) to undertake tests in
response to customer and regulator requests for reference data to quantify DCR
technology performance in a variety of wet-gas field conditions at a cost of
$25,690. For the same quarter of 2005 the Company incurred patent costs in the
amount of $16,502 related to the Ellycrack project. This has resulted in an
increase of $9,188 for research and development in the current year compared to
2005.

In addition, $17,605 in directors fees were incurred in the
quarter ended June 30, 2006 as compensation for outside directors to be members
of the board. These fees did not exist in the same period for 2005.

The above increases were offset by the reduction of $207,000 in
the beneficial conversion interest which was related to the debentures issued in
the quarter ended June 30, 2006. No costs related to beneficial conversion
interest were incurred in the quarter ended June 30, 2006 as no new convertible
debentures have been issued. Additionally, we incurred interest expenses of only
$56,979 on our debentures during the quarter ended June 30, 2006 compared to the
$77,140 incurred during the quarter ended June

---

30, 2005. This decrease of $20,161 is due to having repaid $77,000 of the debentures in January of 2006 and the 2005 figures including interest from the date the original investment in the debenture (which were made prior to April 1, 2005)
to the end of the quarter.

The increase in other expenses of $115,888 is directly attributable to the $120,000 penalty for the late delivery of shares to the former shareholders of Vasjar recorded on the June 30, 2006 financial statements which was not included in the
June 30, 2005 financial statements.

Net Loss

The net loss for the quarter ended June 30, 2006 of $913,847 compared to a net loss of $790,049 for 2005 is due to the net effect of the increase in gross profit of $259,396 offset by an overall increase of $264,097 in operating
expenses and $115,888 in other expenses as explained above.

Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005

Revenues

Revenues during the six months ended June 30, 2006 were $2,060,790, compared to $1,052,022 for the six months ended June 30, 2005, an increase of $1,008,768, or 96%. This increase can be attributed to the growing market acceptance of the
DCR systems sold by Flowstar, increased marketing of the Flowstar products, and strengthening of the Canadian dollar. Sales coverage for the Flowstar DCR systems has been improved through the hiring of additional direct sales staff and increased
exposure to the upstream measurement community. In addition, Flowstar has been focusing its sales efforts by identifying applications and markets where the DCR system has advantages over competing products.

Cost of Sales

As a percentage of revenues, cost of sales for the six months ended June 30, 2006 increased slightly to 52.0% versus 49.5% for the six months ended June 30, for 2005. This minor deterioration in the gross margin was directly attributed to market
conditions which have forced us reduce prices slightly to ensure our products are priced in line with our competitors.

Expenses

Operating expenses for the six months ended June 30, 2006 were $2,369,821 versus $1,999,980 for the six months ended June 30, 2005, an increase of $369,841. Expansion of our Ellycrack and Flowstar operations were the principal reasons
for this increase. The largest increases in our operating expenses were in engineering expenses for the Ellycrack pilot plant, and wages and benefits as explained below.

Additional staff have been hired to fill the management positions of Project Manager for the Ellycrack pilot plant, Vice President of Investor Relations and Communications and Corporate Controller, positions which did not exist at March 31, 2005, In
addition, the Companys Chief Financial Officer is now being paid as an employee as opposed to a consultant in the first six months of 2005. To improve sales coverage, three additional sales representatives have been hired by Flowstar that were
not employed during the first six months of 2005. As a result, wages and benefits were $725,112 during the six months ended June 30, 2006 versus $356,888 during the six months ended June 30, 2005, an increase of $368,224. Also, included
in the new compensation package for the Chief Executive Officer were stock options which did not exist during the six months ended June 30, 2005. Thus, the Company incurred $42,856 in stock based compensation during the six months ended June 30,
2006 with no corresponding cost during the six months ended June 30, 2005.

Engineering of the Ellycrack pilot project didnt start until the third quarter months of 2005 and as a result, costs of $191,076 were incurred during the six months ended June 30, 2006 with no corresponding cost during the six months ended
June 30, 2005.

Travel expenses during the six months ended June 30, 2006 increased by $33,798 versus the six months ended June 30, 2005, a direct result of the increased activity in the Ellycrack project and additional marketing of both Wescorp and Flowstar in
international markets. Similarly, the increase in office expenses of $56,029 during the six months ended June 30, 2006 versus the six months ended June 30, 2005 were directly related to the expansion of the Flowstar and Ellycrack operations.

Depreciation expense for the six months ended June 30, 2006 was $51,998 versus the $24,009 for the first six months of 2005, an increase of $27,989. This increase was due to assets acquired during the last six months of 2005 and the
first six months of 2006 to support the expanded Flowstar operations. Further, the increase in our asset base contributed to an increase in commercial insurance premiums of approximately $16,000 for the six months ended June 30, 2006 compared to
the six months ended June 30, 2005.

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Advertising and investor relations expenses rose by $20,356
  to $129,805 for the six months ended June 30, 2005 versus the $109,449
  reported for the six months ended June 30, 2005. This is the direct result of
  issuing warrants in the second quarter of 2006 valued at $46,000 to various
  consultants to assist with investor relations.

We incurred interest expenses of $111,705 on the convertible debentures during the six months ended June 30, 2006 compared to the $77,140 incurred during the six months ended June 30, 2005. This increase of $34,565 is a direct result of
the debentures being outstanding since January 1, 2006 whereas the 2005 figures including interest only from the date the original investment in the debentures. Even though $77,000 in debentures were repaid in January of 2006 the fact that the
remaining convertible debentures were outstanding for to the entire six months resulted in the net increase..

In addition, $17,605 in directors fees were incurred in the quarter ended June 30, 2006 as compensation for outside directors to be members of the board. These fees did not exist in the same period for 2005.

The above increases were offset by the reduction of $207,000 in the beneficial conversion interest which was related to the debentures issued in the six months ended June 30, 2006. No costs related to beneficial conversion interest were incurred
in the six months ended June 30, 2006 as no new convertible debentures have been issued.

Results for the six months ended June 30, 2006 reflect interest,
  finance and bank charges of $54,119 which is $146,992 lower than the
  $201,111 reflected in the same period for 2005. This is a direct result
  of the 2005 figures including a finders fee in relation to the debenture
  financing secured during the first quarter of 2005 of approximately $191,000
  whereas the current years figures include the cost of a $50,000 finders
  fee in relation to potential financing.

Consulting fees incurred in the current six month period of $254,215 were $56,030 lower than the $310,245 incurred in 2005. Although most of the consulting contracts which existed in 2005 were not renewed, additional consulting
agreements were entered into during the last six months of 2005 and the first six months of 2006. Many of the new contracts commenced during the second quarter of 2006 and as a result the net affect has been a reduction in consulting costs for the
six month period ending June 30, 2005 when compared to the same period of 2005. New contracts which did not exist at June 30, 2005 include the hiring of a consultant to assist in developing a marketing strategy that can be applied to current
products being sold as well as potential new products that may be marketed by existing businesses or future business acquisitions. Additional consulting fees were also paid to help assess the viability of potential business acquisition
candidates.

Legal and accounting costs were $135,601 which was a decrease of $11,220 compared to the corresponding period of 2005. Last years figures for legal and accounting were adversely affected by legal fees incurred to defend the Baum
litigation, as well as legal and other professional fees related to the private placement of the debentures incurred in the first quarter of 2005. The reductions of not having these same costs in 2006 were offset by increased compliance costs with
respect to the requirements for the year end audit as well as the reviews of the quarterly financial statements. Additional costs were also incurred for legal fees with respect to potential financing and for due diligence work undertaken with
respect to potential business acquisitions.

During the six months ended June 30, 2006 Flowstar commissioned Colorado Engineering Experiment Station Inc. (CEESI) to undertake tests in response to customer and regulator requests for reference data to quantify DCR technology performance in a
variety of wet-gas field conditions at a cost of $25,690. For the same six months of 2005 the Company incurred patent costs in the amount of $44,851 related to the Ellycrack project. This has resulted in a decrease of $19,161 for
research and development in the current year compared to 2005.

The increase in other expenses of $120,076 is directly attributable to the $120,000 penalty for the late delivery of shares to the former shareholders of Vasjar recorded on the June 30, 2006 financial statements which was not included in the
June 30, 2005 financial statements.

Net Loss

The net loss for the six months ended June 30, 2006 of $1,496,854
  compared to a net loss of $1,465,442 for 2005 is due to the net effect of
  the increase in gross profit of $458,505 offset by an overall increase of
  $369,841 in operating expenses and $120,076 in other expenses as explained
  above.

Liquidity and Capital Resources  June 30, 2006 Compared to June 30, 2005

From inception, we have been dependent on investment capital and debt financing from our shareholders as our primary source of liquidity. Prior to our acquisition of Flowstar in 2004 we had not generated any revenue or income from our operations. To
June 30, 2006, we have generated revenues from operations of $5,612,910 (comprised of $2,060,790 for the six months ended June 30, 2006 and $2,323,589 and $1,228,531 for the years ended December 31, 2005 and 2004, respectively). We
had an accumulated deficit at June 30, 2006 of $16,825,607.

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Our cash position at June 30, 2006 decreased to $300,899 from the $1,003,443 balance we had at June 30, 2005.

We used cash in operations of $1,434,886 in the first six months of 2006 compared to cash used in operations of $796,842 during the same period in 2005. Approximately $507,000 of this amount was used to fund the increased accounts
receivable and inventory levels that are necessary to support the higher level of activity in the Flowstar operations.

We also had a net outflow of cash of $163,232 from investing activities for the six months ended June 30, 2006, which consisted of the purchase of plant and equipment of $12,628 (June 30, 2005 - $17,010), and we used $150,000 in cash
for the purchase of shares in Ellycrack (June 30, 2005 - $75,000). The net change in the note receivable for the first six months of 2006 was only $3,291 versus the $272,456 reported for the same period in 2005 as this note was issued in
the six months ended June 30, 2005.

The net cash used in operating and investing activities was supported with $1,240,378 from financing activities for the six months ended June 30, 2006. The cash flow from financing activities was primarily a result of the issuance of stock net
of shares issued for services in the amount of $479,954 (June 30, 2005  $600,728), cash received on the exercise of warrants for which shares were not yet issued in the amount of $311,589 (June 30, 2005  nil) and the funding
of $29,772 for a share subscription receivable (June 30, 2005  nil). During the six months ended June 30, 2006 we incurred debt of $500,000 in the form of a short-term note payable issued to the Company by a director and $7,263
relating to unpaid remuneration for our Chief Executive Officer (2005  nil). Results for the first six months of 2005 also reflected a positive cash flow of $ 1,552,319 related to proceeds from convertible debentures. During the six months
ended June 30, 2006 we had to repay convertible debentures in the amount of $77,000 (2005 - $nil) and debt in the amount of $11,200 (2005 - $6,964). In the first six months of 2005 we made payments of $44,836 on the amounts due
to a shareholder in order to extinguish that debt.

At June 30, 2006, we had current assets totaling $2,531,822 compared to $2,484,905 at June 30, 2005. This increase is a direct result of managements decision to increase inventory levels and increased trade receivable levels indicative
of the increased business activities of Flowstar. These increases were offset by the decrease in cash was utilized to fund these increases in inventory and trade receivables as well as the collection of approximately $197,000 of the note
receivable.

Our investment in property and equipment at June 30, 2006 increased to $169,347 from the $98,839 reported at June 30, 2005, reflecting the expansion of our Flowstar business. The increase in investments to approximately $3,991,699 at
June 30, 2006 from the June 30, 2005 balance of $993,648 was a direct result of being able to reflect the investment in Synenco at June 30, 2006 market values now that Synenco became publicly traded. The reduction in our technology is due to the
amortization of this asset over its estimated useful life of approximately eight years.

The Company had $6,581,724 in current liabilities at June 30, 2006 compared to $4,874,321 at June 30, 2005. Part of the increase can be attributed to additional trade payables and financing required to sustain the higher level of activity in
the operations of Flowstar and Ellycrack, resulting in an increase of approximately $663,000 when compared to the June 30, 2005 figures. To support current operations net funding of $1,475,319 in the form of short-term convertible debentures
was still on the books at June 30, 2006 compared to the $1,552,319 balance of that financing as at June 30, 2005. As described above, the Company also incurred a debt owed to related parties in the amount of $538,125 which did not exist at
June 30, 2005. In addition, the current portion of debt increased by $583,137 at June 30, 2006 versus June 30, 2005 as now the entire amount owed to the former Vasjar shareholders is due within the next twelve months.

We had long-term liabilities of $97,222 at June 30, 2006 compared to $844,515 at June 30, 2005. Most of this change is a direct result of the entire amount owed to the former Vasjar shareholders now being due within the next twelve months.

Off-Balance Sheet Arrangements

We have never entered into any off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Business Risks and Uncertainty

Wescorp is exposed to a number of risks in the normal course of business that have the potential to adversely affect our business, financial condition and results of operations. We seek to avoid unnecessary risk and initiate policies and processes
to limit any significant risk as much as practical. Many of the risks that may affect our performance are outlined within other sections of this Quarterly Report and in our Annual Report Form 10-KSB for 2005, and include those outlined below.

Financing

Our operations to date have been funded by debt and equity financing. In the event that we do not achieve positive cash flow we will be relying on debt and equity financings as sources of funding in order to provide our Company with sufficient
capital to

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continue our development and operational plans. There can be no assurance that we will be able to obtain adequate financing in the future which would significantly affect the financial condition of our Company and our ability to effectively
implement the proposed business plans.

Fair Values

The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the relatively short periods to maturity of the instruments.

Credit Risk

At June 30, 2006, no customer represented a significant percentage of total accounts receivable. The Company does not obtain collateral or other security to support financial instruments subject to credit risk but mitigates this risk by dealing with
financially sound counterparties and, accordingly, does not anticipate significant loss for non-performance.

Foreign Exchange Risk

The Companys reporting currency is the United States dollar. The Companys functional currency for its subsidiary Flowstar is the Canadian dollar. The Company does not use derivative instruments to mitigate the effects of foreign exchange
changes between the recording date of accounts receivable and accounts payable denominated in Canadian dollars and the settlement date of those transactions. These transactions are short-term in nature and therefore the effect of the foreign
exchange changes has not been significant. Foreign exchange gains and losses related to the activities of Flowstar are included in other comprehensive income as they occur.

Regulatory Risks

We are subject to various laws, regulations, regulatory actions and court decisions that may have negative effects on our Company. Related changes in the regulatory environment imposed upon us could adversely affect our ability to operate in certain
jurisdictions or to meet certain corporate objectives. There can be no assurance that regulatory bodies within foreign jurisdictions will not adopt laws or regulatory requirements that could adversely affect our Company.

Competition

The market for flow metering devices and heavy-oil upgrading technology is expected to remain highly competitive. While we believe our products are unique and have adequate patent protection for the underlying technologies, there can be no assurance
that competitors will not emerge in the near to medium term with comparable products or technologies. There are several large companies involved in gas flow metering and heavy oil upgrading technology with larger more established sales and marketing
organizations, technical staff and financial resources. It is our intention to establish marketing and distribution partnerships or alliances with several of these companies but there can be no assurance that such alliances will be formed.

Dependence On A Market That Has Historic Volatility

Our products are sold into the oil and gas industry which historically has realized significant shifts in activity and spending due to fluctuations in commodity prices. Our revenues are primarily dependant upon spending by oil and gas producers,
therefore a reduction in spending by producers can have a materially adverse effect on our business, financial conditions and results of operations.

Liability Risks

We are subject to a variety of potential liabilities connected to our technology development and business operations. Although we have obtained insurance against certain of these risks, no assurance can be given that such insurance will be adequate
to cover related liabilities or will be available in the future or, if available, that premiums will be commercially justifiable. If we were to incur any substantial liability and related damages were not covered by our insurance or exceeded policy
limits, or if we were to incur such liability at a time when we are not able to obtain liability insurance, our business, financial conditions and results of operations could be materially adversely affected.

Dependence On Key Personnel

The success of our Company is dependent on the performance of executive management and key personnel in the areas of finance, product development, sales and marketing. There is intense competition for qualified personnel and there can be no
assurance that

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we will be able to attract and retain qualified personnel to execute our revised business plan. The failure to attract or loss of any such personnel could adversely affect the success of our business for the period of time required to recruit any
replacement.

Management Of Growth

Rapid growth places a significant strain on our financial, operational and managerial resources. While we engage in strategic and operational planning to adequately manage anticipated growth, there can be no assurance that our Company will be able
to implement and subsequently improve operations and financial systems successfully and in a timely manner to fully manage our growth. There can be no assurance that our Company will be able to manage its growth and any inability to successfully
manage growth successfully could materially adversely affect our business, financial condition and results of operation.

Recent Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 155, Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140,
to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to permit fair value remeasurement for any hybrid
financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, Accounting for the Impairment or Disposal
of Long-Lived Assets, to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial
instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. We do not expect the adoption of this statement will have a significant effect on our future
reported financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement
requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in
earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks
inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an
entity's first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on our future reported financial position or results of operations.

ITEM 3. CONTROLS AND PROCEDURES

The management of Wescorp Energy Inc. (the Company), under the supervision and with the participation of the Companys Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the Companys
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Companys disclosure controls and procedures were effective as of the end of the period covered by this report.

There was no change in the Companys internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the Companys last fiscal
quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

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PART 1I  DESCRIPTION OF BUSINESS

Since 2003 Wescorp has focused on identifying and making
strategic early investments in oil and gas related businesses participating in
sectors that are beginning to grow in importance with large emerging market
opportunities that have yet to be fully exploited. We primarily acquire,
actively develop, and commercialize innovative technologies that improve the
management, environmental and economic performance of field operations for
conventional and unconventional energy producers. We prefer investments where we
can control the intellectual property of technologies that have emerged from
research and initial development and are essentially market-ready. We also
acquire companies formed by inventors with more than one technology product
being developed, and that can benefit from the financial, technical, and
business development expertise of our management to bring those products to
market in a meaningful manner after they have been fully developed. We further
intend to license or form third-party commercial partnerships based on acquired
technologies as a means to accelerate growth beyond the early-stage of
commercialization on a cost-effective basis within global markets. Our goal is
to generate enhanced capital appreciation for our shareholders by continuing to
acquire, develop, and commercialize timely effective product solutions and/or
strategic investment opportunities that generate real returns with above-average
cash flow and margins.

In early 2003, we acquired 170,000 shares of Synenco Energy
Inc., then a private tar-sands exploration company with significant undeveloped
heavy oil and bitumen reserves in the Athabasca region of Northern Alberta,
Canada. That equity interest has since become free-trading and grown
significantly in value when Synenco closed its initial public offering in
November, 2005. Synenco stock now trades on the Toronto Stock Exchange under the
symbol SYN.

In June 2003, we entered into an agreement to purchase 100% of
the outstanding shares of two companies, Flowstar Technologies Inc. (Flowstar)
and Flowray Inc. (Flowray) which was subsequently amended in January 2004. On
March 31, 2004, Wescorp, through our Alberta subsidiary 1049265 Alberta Ltd.,
completed the acquisition of 100% of the outstanding shares of Flowstar and
Flowray. Flowstar and Flowray were legally amalgamated on December 31, 2004 into
one company that continued under the name Flowstar Technologies Inc.

In connection with the acquisition of Flowstar, the Company
also concluded the acquisition of 100% of the outstanding shares of Vasjar
Trading Inc., a British Virgin Islands company (Vasjar) on August 19, 2004.
Vasjar in turn owns five Barbadian subsidiaries including 100% of the
outstanding shares of Quadra Products International Inc. (Quadra) and Flowstar
International, Inc. (Flowstar International). Vasjars wholly-owned subsidiary
Quadra owns the rights to the technology related to the DCR system. Flowstar,
Flowray, Vasjar and its subsidiaries, (collectively referred to as the Flowstar
Group) are involved in the natural gas flow measurement and service industry in
North America.

Based on preliminary and ongoing sales of Flowstars principal
product, we believe there are significant additional sales opportunities for
Flowstar products worldwide. Flowstars principal product is the Digital Chart
Recorder (DCR) gas flow measurement and well monitoring system that have proven
to be very effective in several applications, including those for;

- Coal bed methane production  low pressure well monitoring and gas
  metering
- Wet gas production  as stand-alone units without heated shelters or added
  infrastructure
- Plunger lifts  to monitor and measure highly variable gas flows
- Test separators  eliminating the need to change orifice plates
- Fuel gas  to measure gas consumption of pipeline compressors

During 2003 and 2004, we purchased 255,000 shares of Ellycrack
AS, a private technology research and development company based in Florø, Norway
(Ellycrack). In September 2004, we purchased an additional 400,000 common
shares of Ellycrack by issuing 300,000 shares of Wescorp common stock to
Ellycrack resulting in equity interest in Ellycrack of 12.90% . In January 2006,
we purchased an additional 65,000 shares of Ellycrack bringing our current
equity interest to 13.45% .

Also in 2004, we entered into a Memorandum of Understanding
(MOU) to form a 50/50 joint venture with Ellycrack. At the time of this filing
we are in the process of preparing a formal joint venture agreement that is
based on the terms and conditions outlined in the MOU. The joint venture
agreement will provide Wescorp a 50% interest in the worldwide rights to use and
benefit from the commercial application of Ellycracks VISCOSITOR technology and
intellectual property.

The VISCOSITOR is a low energy (low cost) heavy oil upgrading
process which is self sustained by fuel produced by the process itself. This
technology primarily upgrades the quality of heavy oil by producing lighter,
more valuable synthetic grades of crude oil which dramatically improves the
economics of heavy-oil production and transportation projects. It also has
various environmental benefits, is a low cost alternative for small and
mid-sized heavy oil field production and provides enhanced economies of scale
for larger heavy oil production and processing projects. All research and
development for the VISCOSITOR was carried out in cooperation with one of
Norways biggest research organizations, SINTEF ENERGY RESEARCH A/S at the
Norwegian Institute of Technology in Trondheim, Norway. Subsequent improvements
to optimize the process were contributed by Wescorp, Ellycrack and an
engineering firm engaged to provide design and engineering services to the
pending joint-venture.

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Primary features and benefits of this technology include but are not limited to:

- Converting kinetic energy to required temperatures at the molecular level to crack heavy oil  requires lower ambient temperature and atmospheric pressure to significantly reduce capital and energy costs
- Colliding atomized oil and active steam with fluidized sand at high velocity to crack oil without additional catalysts or hydrogenation  output remains stable and does not repolymerize after processing to retain the added value of
upgrading
- Generating coke by-product from cracking as the primary fuel for all unit operations  process requires very little energy input and generates significantly more energy than is required to potentially drive onsite electricity or steam co-
generating capacity
- Raising the API of processed oil from 6° to 28° in a single pass and over 30° with medium grade feedstock  raising significantly the value of processed oil and reducing heavy oil differentials of pricing relative to world
benchmarks

As part of the joint-venture agreement being prepared with Ellycrack, Wescorp must pay for the design modifications, construction and field testing of a pilot plant to be fabricated in Canada. Subsequent to that benchmark being achieved, all future
costs associated with commercial applications of VISCOSITOR technology will be shared equally by Wescorp and Ellycrack. We expect to substantially increase our investment in developing this technology for commercial launch throughout the remainder
of 2006 and 2007.

On February 16, 2006, we announced that the engineering phase of the patented Ellycrack heavy oil upgrader pilot plant had been completed and we are now moving to fabricate the plant in Canada. Final design contributions and engineering services
were provided by a major international engineering company with over 40 years of combined tar-sands, heavy oil and upgrader project experience. Pilot plant fabrication will be overseen by our newly appointed Ellycrack joint-venture project manager.
Completion of the engineering stage is the direct result of having undertaken an extended period of testing through the latter half of 2005 which resulted in design modifications that allowed us to significantly improve the upgrading capabilities of
the Ellycrack process as outlined above. The extended design and testing period allowed us to optimize the process to where it can now upgrade heavy oil to over 30 degrees API. That enhanced upgrading capacity has in turn also expanded the scope of
commercial applications being considered for the process which we demonstrated for several energy producers in that testing period, with particular attention paid to demonstrating:

- How the innovative process can upgrade heavy oil in a more cost-effective manner than most other known field upgrader or primary cracking technologies currently in use
- How the process can upgrade oil without specialized catalysts, custom infrastructure or emulsifying feedstock
- Why the process can scale with enhanced efficiencies to larger pilot-plants and commercial units
- The range, consistency and stability of output from a wide range of native feedstock
- How the technology can be configured for specific applications being considered by each producer

Subsequent to fabrication, the VISCOSITOR pilot plant will undergo a period of continuous field testing to further define performance parameters beyond API uplift including details related to material balance, energy balance and composition of
processed output to determine final capital and operating costs for commercial users.

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PART III  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There was an action brought by Mark Baum against Wescorp (Baum
v. Wescorp Energy Inc., f/k/a CTI Diversified Holdings, Inc., case number 50T
181 00033 04 - American Arbitration Association, International Centre for
Dispute Resolution). The case was commenced January 15, 2004 and the hearing
thereon was held in October 2004. The claim was for $300,000 plus attorneys
fees and costs. Principal parties were Mr. Baum and Wescorp. Mr. Baums claim
was based on a purported agreement whereby he or an affiliate were to provide
various services to Wescorp for payments of $6,000 per month in Wescorp stock
payable six months in advance. (When the purported agreement was allegedly made
in July 2003, the stock was trading at a much lower price than at this time).
The Company was successful in its arbitration hearings with Mr. Baum and was was
awarded $42,471 plus court costs. Mr. Baum appealed the judgment. The final
determination of the case at this time is not certain, nor is it certain when
the company will receive the court awarded award and costs (if any).

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

During the six months ended June 30, 2006, the Company issued
2,208,654 shares of common stock for total proceeds of $773,029. These shares
were issued on the exercise of warrants at an exercise price of $0.35 per share.
The warrants were issued as part of a private placement dated December 17, 2003
to accredited investors outside the United States in reliance upon an exemption
from registration under Regulation S of the Securities Act of 1933, as amended
(See Form 8-K filed December 18, 2003).

During the six months ended June 30, 2006, the Company issued
1,500,000 shares of common stock for total proceeds of $225,000 on the exercise
of warrants at an exercise price of $0.15 per share pursuant to a loan agreement
with a Company director dated January 28, 2003 (See Form 8-K filed April 23,
2003).

Also during the six months ended June 30, 2006, the Company
received proceeds of $269,500 from the exercise of additional warrants at an
exercise price of $0.35 per share pursuant to a private placement dated December
17, 2003 to accredited investors outside the United States in reliance upon an
exemption from registration under Regulation S of the Securities Act of 1933, as
amended (See Form 8-K filed December 18, 2003). Share certificates for the
exercise of these warrants have not been issued as of the date of this
filing,

During the six months ended June 30, 2006, the Company issued
300,000 shares of common stock for total proceeds of $171,900. These shares were
issued for directors fees at values ranging from $0.60 to $0.678 per share and
for consulting fees at $0.54 per share.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

No matters were submitted to a vote of our security holders
during the three months ended June 30, 2006.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

Pursuant to Rule 601 of Regulation SB, the following
exhibits are included herein or incorporated by reference.

|Exhibit |                                                                                                                                                                                              
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                  
|        |                                                                                                                                                                                              
|2.1.13* | Share Purchase Agreement dated as of January 14, 2004
      between the Company and the Trustee of the Epitihia Trust. (Incorporated
      by reference to Form 8-K/A filed on May 12, 2004).
|        |                                                                                                                                                                                              
|2.1.14* | Share Purchase Agreement dated as of January 14, 2004
      between the Company and the Trustee of the Abuelo Trust. (Incorporated by
      reference to Form 8-K/A filed on May 12, 2004).  

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|2.1.15* | Amending Agreement
        dated as of June 16, 2004 between the Company and the Trustee of the Epitihia
        Trust. (Incorporated by reference to Form 10QSB filed on September 26,
        2004).                      
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                             
|2.1.16* | Amending Agreement
        dated as of June 16, 2004 between the Company and the Trustee of the Abuelo
        Trust. (Incorporated by reference to Form 10QSB filed on September 26,
        2004).                        
|        |                                                                                                                                                                                                                             
|2.1.17* | Hypothecation
        Agreement dated as of July 6, 2004 between the Company, the Trustee of
        the Epitihia Trust and Yearwood & Boyce. (Incorporated by reference
        to Form 10QSB filed on September 26, 2004).
|        |                                                                                                                                                                                                                             
|2.1.18* | Hypothecation
        Agreement dated as of July 6, 2004 between the Company, the Trustee of
        the Abuelo Trust and Yearwood & Boyce. (Incorporated by reference
        to Form 10QSB filed on September 26, 2004).  
|        |                                                                                                                                                                                                                             
|3.1.5*  | Restated Articles
        of Incorporation of Wescorp Energy Inc filed February 17, 2004. (Incorporated
        by reference to Form 8-K filed on April 13, 2004).                                                          
|        |                                                                                                                                                                                                                             
|16.1*   | Letter from Williams
        & Webster, P.S. (Incorporated by reference to Form 8-K filed on February
        17, 2006).                                                                                                    
|        |                                                                                                                                                                                                                             
|21.1*   | Schedule of Subsidiaries
        of Wescorp Energy Inc. (Incorporated by reference to Form 10-KSB/A filed
        on May 13, 2004).                                                                                         
|        |                                                                                                                                                                                                                             
|31.1    | Certification
        of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                          
|        |                                                                                                                                                                                                                             
|31.2    | Certification
        of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                                                                                                          
|        |                                                                                                                                                                                                                             
|32.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to 18
        U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002                       
|        |                                                                                                                                                                                                                             
|99.1*   | Press release
        announcing appointment of Robert Martin Nicolay to Wescorp Board of Directors.
        (Incorporated by reference to Form 8-K filed on May 1, 2006).                                                  

*Previously filed

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
11thday of August, 2006.

|                      | **WESCORP ENERGY INC.**
|--------------------- | -----------------------
|                      |                        
|Date: August 11, 2006 | By:                    
|                      |                        
|                      |                        
|                      | By:                    
|                      |                        

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