UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2011

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)

Suite 400, 435 – 4th Avenue South West, Calgary, Alberta T2P 3A8
(Address of principal executive offices) (Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 May 19, 2011 was 127,362,558.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q 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-Q, READERS ARE URGED TO READ CAREFULLY ALL CAUTIONARY STATEMENTS – INCLUDING THOSE CONTAINED IN OTHER SECTIONS OF THIS QUARTERLY REPORT AND OF OUR ANNUAL REPORT ON FORM 10-K FOR 2010. AMONG THOSE RISKS AND UNCERTAINTIES ARE THE FOLLOWING RISKS:

• there may not be adequate capital to fund our business;
• our water remediation technologies may not receive sufficient market demand or be commercially successful;
• our water remediation technology may be replaced in the market by a more technically advanced process;
• we may not be able to adequately protect our intellectual property, which may affect the realizable value of our investment;
• sales of Raider Chemical product, and the resulting revenues, have ceased;
• our primary customers are in energy-related industries, which tend to be cyclical and therefore any downturns in these cyclical industries could adversely affect our operations;
• the energy-related industry that we service is heavily regulated (including CO₂ related issues), and the costs associated with such regulated industries increase the costs of doing business;
• management may not be able to integrate any technologies acquired;
• management may not be able to carry out its business plan and to manage its growth effectively and efficiently;
• management may not be able to effectively deal with current and future competitive forces in the market;
• we may not be able to manage any foreign exchange risk adequately;
• we could face significant liabilities in connection with our technology and operations, which if incurred beyond any insurance limits, could adversely affect our business and financial condition;
• the current American and world financial markets and credit situation may make it difficult or impossible to adequately finance the ongoing capital and operating requirements for the Company;
• our need for additional capital may harm our financial condition or limit our ability to fund acquisitions; and
• if acquisitions are completed, they may be unsuccessful for technical, economic or other reasons.

Any of the factors listed above and other factors contained in this Quarterly Report could cause our actual results to differ materially from the results implied by these or any other forward-looking statements made by us or on our behalf. We cannot assure you that our future results will meet our expectations. Additional statements concerning important factors that could cause actual results to differ materially from our expectations are disclosed in the “Risk Factors” section and elsewhere in our 2011 Annual Report on Form 10-K. In addition, the words “believe,” “may”, “will”, “when”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and similar expressions, as they relate to the Company, our business or our management, are intended to identify forward-looking statements. All written and oral forward-looking statements attributable to us or persons acting on our behalf subsequent to the date of this Quarterly Report are expressly qualified in their entirety by all risks and uncertainties disclosed in our filings with the Securities and Exchange Commission (the “SEC”), all of which are accessible on the SEC’s website at http://www.sec.gov.

Our forward-looking statements speak only as of the date made.

CURRENCIES

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

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Wescorp Energy Inc.

REPORT ON FORM 10-Q

FOR THE PERIOD ENDED MARCH 31, 2011

Table of Contents

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PART I - FINANCIAL INFORMATION

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

4

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

5

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

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NOTE 1 – BASIS OF PRESENTATION

These unaudited interim consolidated financial statements do not include all information and footnotes required by US GAAP for complete financial statement disclosure. However, except as disclosed herein, there have been no material changes in the information contained in the notes to the audited consolidated financial statements for the year ended December 31, 2010, included in the Company’s Form 10-K, which was filed with the Securities and Exchange Commission. These unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation and consisting solely of normal recurring adjustments have been made. Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

Recent Accounting Pronouncements

The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. It does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows.

NOTE 2 – AGREEMENT PAYABLE

In connection with the acquisition of Flowstar, the Company concluded the acquisition of 100% of the outstanding shares of Vasjar Trading Ltd. (“Vasjar”), a British Virgin Islands company. The acquisition required the Company to issue 2,400,000 free-trading common shares, and an additional minimum 2,080,000 common shares issued over three years (480,000 on or before April 1, 2005, 800,000 on or before April 1, 2006, and 800,000 on or before April 1, 2007).

On April 1, 2007, the Company was not able to deliver 800,000 free-trading shares required under the purchase agreement to acquire Vasjar, and thus the Company is obligated to issue the former Vasjar shareholders an additional 10% penalty common shares of the Company, compounded monthly, for each month that the free-trading common shares are not delivered resulting in a charge to operations for the fair value of these penalty common shares. The Company and the former Vasjar shareholders disagree as to whether the number of shares that can be issued is limited by another provision of the agreement. To date, no shares have been issued. The Company has been able to reach a mutually acceptable settlement with one of the former Vasjar shareholder on April 12, 2011 (See Note 4); however, the Company was not yet been able to reach an agreement with the other former Vasjar shareholder.

The penalty common shares resulted in a charge to operations of $198,891 for the three months ended March 31, 2010 (2009 other income - $130,906). As at March 31, 2011, the Company has recorded an estimated aggregate of 38,806,894 in common shares valued at $4,268,758 in relation to the penalty shares owing to the shareholder the Company has not reached a settlement with. The cumulative amount accrued for the obligation has been recorded based on the quoted market price at March 31, 2011 multiplied by the aggregate share amount.

There is a measurement uncertainty as to the actual value of this obligation as it is impacted by the market price of the common shares. Accordingly, the actual loss from the Vasjar purchase agreement is contingent upon future events which cannot be reasonably measured at this time.

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On April 12, 2011, the Company entered into a liability release agreement with one of the former Vasjar shareholders. Under the terms of the agreement, the Company agreed to issue 980,000 free trading common shares and 4,020,000 restricted common shares to settle the claim made by the former Vasjar shareholder as described above in Note 5. In return the former Vasjar shareholder has released all claims against the Company. The estimated fair value of the shares to be issued under the agreement is $595,000 and is included in the balance of obligation to issue shares. The Company is to have all restrictions removed from the restricted shares within 14 months of this agreement. If such restrictions are not removed the Company is to pay a late penalty of $1,000 per day until such restrictions are removed up to a maximum of $20,000

.NOTE 3 – DISCONTINUED OPERATIONS

During fiscal 2009, the Company determined to leave the electronic metering business. On January 5, 2010, the Company sold a substantial portion of its assets related to the electronic metering business. The Company had operated its electronic metering systems business through its subsidiary Flowstar.

The Company also discontinued operations in its subsidiary Raider, as a result the Company has left the drilling related products and services business.

The following table summarizes the operating results of the discontinued operations for the quarters ended March 31, 2011 and 2010 (unaudited):

The following table sets forth the assets and liabilities of the discontinued operations.

NOTE 4 – SUBSEQUENT EVENT

On April 6, 2011, the Company entered into an agreement with Allied Holdings Group, Inc. (“Allied”) to pursue certification of the Company's H₂Omaxx clean water technology for international maritime vessel operations. The Company will provide the H₂Omaxx technology and technical support and Allied will focus on international and US certification for H₂Omaxx as well as market development and funding. The joint venture, known as Wescorp Marine, Inc. will be a Delaware corporation owned 65% by the Company and 35% by Allied. Wescorp Marine Inc. will have the exclusive rights to develop the H₂Omaxx technology.

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The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements reflecting our current expectations and estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the “Cautionary Note Regarding Forward-Looking Statements” set forth above.

Unless the context warrants otherwise, Wescorp Energy Inc., including it subsidiaries, is referred to herein as “we”, “us”, “our”, “Wescorp”, “the Company” or “our Company”.

Overview

Wescorp Energy Inc. is a clean water technology company. Wescorp holds three technologies: the H₂Omaxx oil-water separation technology, the HCXT oil-solids technology, and a desalinization technology. During the first three months of 2011 Wescorp focused on commercializing its key technology, the H₂Omaxx, which significantly reduces hydrocarbon-contaminated  water-treatment and disposal costs for oil and gas producers. The H₂Omaxx also has applications to the marine (shipping) and other industries which use hydrocarbons.

During the first three months of 2011, we operated primarily through one Strategic Business Unit, or SBU; Total Fluid Solutions Inc. (“Total Fluid”), which holds non-exclusive rights to utilize, with respect to hydrocarbons, H₂Omaxx and HCXT.

Our corporate offices are located at Suite 400, 435 – 4^th Avenue S.W., Calgary, Alberta, Canada T2P 3A8, and our telephone number there is (403) 206-3990. Our website is http://www.wescorpenergy.com.

Company Background

In 2004 and 2005, the Company recorded its first operating revenue from the acquired operating businesses of Flowstar Technologies Inc. (“Flowstar”), Flowray and their affiliated companies. Flowstar produced advanced natural gas and gas liquids measurement devices based on electronic flow meters and advanced turbine measurement technology. We divested ourselves of Flowstar on January 5, 2010.

On December 18, 2007, Wescorp Technologies Ltd, our wholly-owned subsidiary, executed and closed an Asset Purchase Agreement with FEP Services, Inc. (“FEP”), pursuant to which Wescorp Technologies acquired certain non-exclusive rights to three different water remediation technologies and assets that we used to create two new business units - Total Fluid Solutions Inc. (“Total Fluid”) and Raider Chemical Corporation (“Raider”). The three technologies address, respectively, remediating three separate contaminates in oilfield water as the result of the exploration for, and production of, oil and gas, in particular, solids and hydrocarbon:

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The Company has yet to reach profitability. During the first quarter ended March 31, 2011, we experienced negative cash flows. If we continue to experience negative cash flows, then we will have to continue to fund our operations by the issuance of new equity and/or the assumption of debt. There can be no assurance that we will be successful in these regards, which would significantly affect our ability to execute our business plan. Management is seeking new capital, as discussed below.

Additional cash will be required: (i) to fund the purchase of sufficient inventory; (ii) to finance the build-up of trade accounts receivable; and (iii) to fund the ramp-up of our water remediation technologies. 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.

In the near future, we intend to raise additional capital by selling new equity, or incurring debt, to finance the following:

• The business development and expansion of water and soil remediation technologies (Total Fluid); and
• Payables and any negative cash flow resulting from operations.

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. As we continue to grow, the demands and skill sets of our senior management will change. We intend to hire, as needed, new executives with the skill sets and experience required to enhance those areas which require specialized expertise. There is no assurance that we will be able to hire new executives with the appropriate skill sets and experience at a reasonable price, or at all.

Past Acquisitions

Acquisition of Flowstar and Flowray

On March 31, 2004, we, through our Alberta subsidiary 1049265 Alberta Ltd., acquired 100% of the outstanding shares of Flowstar and Flowray for cash payments to the selling shareholders totaling approximately $414,074 (CAD $550,000) pursuant to the share purchase and subscription agreement dated June 9, 2003, as amended effective January 14, 2004.

Related Agreements to Acquire 100% of Vasjar Trading Ltd.

We also entered into share purchase agreements dated effective January 14, 2004 pursuant to which we acquired 100% of the outstanding shares of Vasjar Trading Ltd. (“Vasjar”). Vasjar in turn owns 100% of the outstanding shares of Quadra, a Barbados corporation. Pursuant to an agreement dated effective as of August 30, 2003, Flowray had transferred to Quadra all of its intellectual property rights, including rights to the technology related to the DCR 900 system, in consideration of a promissory note in the principal amount of CAD $604,500 without interest. Flowstar and Flowray were legally amalgamated on December 31, 2004 into one company that continued under the name Flowstar Technologies Inc.

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In consideration of the purchase of all the outstanding shares of Vasjar from its two shareholder entities - Abuelo Trust and Epitihia Trust - (that each owned 50% of Vasjar’s outstanding shares), Wescorp issued shares (and will issue additional shares), all of which are required to be registered for resale upon delivery, to each of the two shareholders of Vasjar in equal amounts as follows:

• Tranche 1: an aggregate of 2,400,000 shares of common stock of the Company (1,200,000 shares to each of the two shareholders) on April 28, 2004; and
• Tranche 2: an aggregate of up to 2,080,000 additional shares of common stock of the Company (up to 1,040,000 additional shares to each of the two shareholders) 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 (240,000 shares to each shareholder).

Stage Two. On or before April 1, 2006, the Company was required to issue 800,000 additional shares based on sales achieved in the 2005 calendar year (400,000 shares to each shareholder).

Stage Three. On or before April 1, 2007, Wescorp was required to issue 800,000 additional shares based on sales achieved in the 2006 calendar year (400,000 shares to each shareholder).

We were not able to deliver free-trading shares on April 1, 2005, and under the Vasjar purchase agreements we were required to pay an additional 48,000 Wescorp shares for each month that the shares were not delivered, covering the months April through September 2005. In September 2005, a third party acquired the interests of the former Vasjar shareholders in connection with the share delivery requirements of Tranche 2, Stage One. As a result, we owed shares under Tranche 2, Stage One to the third party.

On November 22, 2006, we entered into a letter agreement with the third party (the “Third Party Letter Agreement”), pursuant to which we agreed to deliver to the third party 1,000,000 restricted shares of our common stock to fulfill the Tranche 2, Stage One debt requirements that the third party acquired from the former Vasjar shareholders. These shares were delivered to, and accepted by, the third party on November 22, 2006.

On April 1, 2006, we were not able to deliver free-trading shares called for under Tranche 2, Stage Two, and thus we were required to pay the former Vasjar shareholders additional Wescorp common shares for each month that the shares were not delivered. In February 2007, the third party acquired the interests of the former Vasjar shareholders in connection with the share delivery requirements of Tranche 2, Stage Two. As a result, the Company owed the shares under Tranche 2, Stage Two to a third party. By December 18, 2007, Wescorp had issued 3,654,750 restricted common shares to the third party in fulfillment of Tranche 2, Stage Two.

Under the agreement, if any of the Wescorp shares to be issued to the former Vasjar shareholders have not been delivered for a period of 182 days after the applicable due date, the former Vasjar shareholders may at their option terminate the share purchase agreements, without notice or prior opportunity to cure. The former Vasjar shareholders did not exercise these rights, and they sold to a third party their rights, including their rights to receive shares and/or penalty shares from the Company under both Stage One and Stage Two. We have also received a written waiver from the third party waiving and canceling any termination rights that the third party may have as a result of his purchase of certain rights under the Vasjar purchase agreements. In addition, we pledged to the former Vasjar shareholders all the Vasjar shares as security to guarantee Wescorp’s performance under the share purchase agreements.

Although the Registration Statement covering the shares to be delivered to the Vasjar shareholders became effective in January 2008, as of May 17, 2010, we had not delivered the Vasjar shares under Tranche 2, Stage Three because we were involved in discussions with the former Vasjar shareholders concerning the possibility of reaching a mutually acceptable agreement regarding the number of free-trading shares to be delivered. Without taking into account the Company’s position that the number of shares should be smaller and that the agreement limits the total number of shares issuable in connection with Tranche 2, the former Vasjar shareholders believe they are entitled to the 800,000 shares issuable under Stage Three plus penalty shares for the delayed delivery. Because we did not deliver any shares under Tranche 2, Stage Three by October 1, 2007, the former Vasjar shareholders currently have the right to terminate their respective share purchase agreements with us. If they do so, we would no longer own Vasjar or its subsidiary, Quadra, including the intellectual property rights owned by Quadra. With the completion of the acquisition of Vasjar, Wescorp owns, subject to Vasjar’s right to terminate the acquisition agreement, all the proprietary technology originally owned by Flowray (which was subsequently amalgamated with Flowstar) related to the DCR 900 system and other products.

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As of April 12, 2011, Wescorp has settled totally with the Abuelo Trust with the payment of five million Wescorp common shares.

Acquisition of Intellectual Property and Other Assets from FEP Services Inc.; Business of Total Fluid Solutions and Raider Chemical Corporation

On December 18, 2007, the Company effectively completed an agreement to purchase intellectual property and other assets from FEP. Different portions of this intellectual property and these other assets were transferred to our newly formed wholly-owned subsidiaries, Total Fluid Solutions and Raider Chemical Corporation, respectively, as described below. Under the terms of the purchase agreement, our wholly-owned subsidiary, Wescorp Technologies, assumed liabilities of approximately CAD $240,000 and delivered to FEP: (i) a two-year promissory note in the face amount of CAD $2,665,000; (ii) 13,900,000 restricted shares of common stock of Wescorp Energy; and (iii) 470,143 shares of common stock of Oilsands at an agreed value of $2,192,277. Also in connection with the Asset Purchase Agreement, Wescorp Technologies entered into a license agreement with a third party and a consulting agreement with each of Messrs. Bowhay and McCaw to provide various consulting services.

Total Fluid Solutions

Our wholly owned subsidiary, Total Fluid Solutions Inc., holds non-exclusive proprietary rights to the H₂Omaxx oil-water separation technology with respect to hydrocarbons. The original aerator patents used in the H₂Omaxx technology have expired; however, Process Patents covering the H₂Omaxx have been applied for in the United States and Canada. We also hold non-exclusive proprietary rights to the HCXT solids-oil separation technology that is not patented, but is held as a trade secret. With these technologies, we hope to be able to remediate two of the main contaminates (solids, hydrocarbon) in oilfield water that result from the exploration for, and production of, oil and gas.

The H₂Omaxx uses an aeration process that is expected to reduce the hydrocarbon content from the conventional 5,000 to 30,000 parts per million range to less than 10 parts per million. The H₂Omaxx can remove hydrocarbon contaminants and ultra small solids from industrial water, often without the need for chemicals, filters, heat, or long-term gravity storage. The H2Omaxx technology has a wide potential for various oil and gas water uses, both onshore and offshore.

The HCXT technology for the removal of solids from oilfield water uses a proprietary, environmentally friendly, chemical process to separate drilling solids from the water and hydrocarbon mixtures, which are found in the water as a result of drilling oil or gas wells. The solids are cleaned to a standard that allows them to be used in construction.

The third technology, to remove salt from the oilfield water, uses a low-energy process of flash distillation to separate the salts from the water. However, Management has determined not to pursue this technology development until the H₂Omaxx and HCXT technologies achieve commercial success, of which there is no assurance.

We intend to use these technologies independently or in conjunction with each other or other water remediation technologies in order to address the critical water issues facing the oil and gas industry today.

Raider Chemical Corporation

Our wholly owned subsidiary, Raider Chemical Corporation, designed and manufactured specialized chemicals used in the cementing and stimulation services area, within the oil and gas industry.

In October, 2010, we closed the operations of this business unit in order to focus on the H₂Omaxx technology.

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Results from Operations – 2011 Compared to 2010 - Adjusted for Discontinued Operations

Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

Revenues

The Company had no sales, and no revenues, for the quarter ended March 31, 2011. The revenues for the prior-year first quarter were attributable to the Company’s wholly-owned subsidiary, Raider Chemical Corporation, which closed operations in October 2010 and accordingly have been reclassified to discontinued operatons. The Company continues to market its H₂Omaxx operating units for sale and/or lease.

Expenses

Operating expenses for the quarter ended March 31, 2011 were $1,095,477 versus $636,983 for the quarter ended March 31, 2010, an increase of $458,494. The largest increases in operating expenses were in equipment repairs and maintenance; wages and benefits; consulting; bad debts; and interest, finance and bank charges as explained below.

During the quarter ended March 31, 2011, expenses in the amount of $271,059 were incurred for repairs and maintenance compared to $22,918 for the quarter ended March 31, 2010, an increase of $248,141. This increase can be attributed to the purchase of ten new aerators in the amount of approximately $253,685 (CAD $250,000) which will be used in the construction of new H₂Omaxx units. As no existing contracts exist for the sale of new H₂Omaxx units the costs for the aerators have beenexpensed in the period they were acquired.

Wages and benefits increased to $339,760 during the quarter ended March 31, 2011 versus $171,101 during the quarter ended March 31, 2010, an increase of $168,659. Most of increase can be attributed to the employment contract of our executive chairman, Mr. Robert Power (“Power”), which was entered into on September 24, 2010, to be effective as of January 1, 2010. Under the terms of the contract, the annual base compensation is approximately $308,700 (CAD $300,000), which Power elected to be paid in cash for the year 2011. Also as part of the compensation, Power will receive a one-time incentive payment of approximately $154,350 (CAD $150,000) which Power has elected to be paid in cash and which has been accrued in the financial statements for the quarter ended March 31, 2011. The average exchange rate for the Canadian dollar compared to the US dollar increased by approximately 5.5% .for the quarter ended March 31, 2011 compared to the same quarter in 2010. As all employees are paid in Canadian dollars instead of US dollars, some additional costs were also incurred due to the strengthening of the Canadian dollar when compared to the US dollar. These increases were partially offset by savings that can be attributed to not replacing employees who left the Company and the Company’s decision to lay off certain employees.

Consulting fees incurred in the three-month period ended March 31, 2011, in the amount of $162,772, were $113,720 higher than the $49,052 incurred in the same period for 2010. There were four additional contracts with consultants in the quarter ended March 31, 2011 when compared to the same period in 2010 which resulted in additional consulting fees of approximately $101,800. In addition, in the quarter ended March 31, 2010, consultants were used in developing a safety program and to assist with obtaining a Canadian stock exchange listing. As most of the consultants are paid in Canadian dollars instead of US dollars, some additional costs were also incurred due to the strengthening of the Canadian dollar when compared to the US dollar as explained above.

During the quarter ended March 31, 2011, it was determined that the receivable for the sublet of office space was questionable as to its collectability and was fully allowed for as bad debt. In the same period for 2010, no adjustments to receivable balances were required for uncollectable accounts. Thus, the Company had an increase of $4,492 in bad debts during the quarter ended March 31, 2011 when compared to the quarter ended March 31, 2010.

We incurred interest, finance and bank charges of $76,591 for the quarter ended March 31, 2011 compared to $72,968 incurred during the quarter ended March 31, 2010. The increase in this expense can be attributed to the increase in interest-bearing debt from $2,507,633 at March 31, 2010, to $2,777,348 at March 31, 2011.

The above increases were partially offset by decreases in legal and accounting; advertising and investor relations; travel; insurance; directors fees; and office expenses.

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Legal and accounting costs for the three months ended March 31, 2011, were $19,986, which was a decrease of $44,440 compared to the corresponding period of 2010. The decrease in the quarter ended March 31, 2011, is directly related to the over-accrual of estimated audit fees at December 31, 2010, which was reversed in the current period. In addition there was a reduction in legal fees as the fees for patents and receivable collections incurred in the quarter ended March 31, 2011 were lower than the fees incurred in the corresponding period of 2010 regarding new contracts.

Advertising and investor relations expenses decreased by $13,397 to $81,260 for the quarter ended March 31, 2011 versus $94,657 reported for the quarter ended March 31, 2010. This decrease is because certain costs were incurred in the first quarter of 2010 for presentations to potential investors and for website development that were not incurred in the first quarter of 2011.

Travel expenses during the quarter ended March 31, 2011 decreased to $45,788 versus the $52,990 incurred in the quarter ended March 31, 2010. This decrease is a direct result of doing presentations to potential investors in the US in the quarter ended March 31, 2010 which did not occur in the corresponding period in 2011. In addition, the costs associated with vehicle lease contracts were at lower amounts in the three months ended March 31, 2011 than similar contracts in the three months ended March 31, 2010. Offsetting these savings were travel costs for Total Fluid which increased to $24,341 in the quarter ended March 31, 2011 versus the $15,219 incurred in the same period for 2010.

Insurance expense for the quarter ended March 31, 2011, was $19,963 compared to $26,788 for the quarter ended March 31, 2010. The decrease is due to a decrease in our comprehensive insurance premiums.

During the quarter ended March 31, 2011, the Company incurred $5,918 in directors’ fees compared to $10,243 for the same period in 2010. During the year ended December 31, 2010, the Company disposed of its interest in Vasjar. As a result no compensation was incurred for directors involved with Vasjar for the quarter ended March 31, 2011, when compared to the same period in 2010. In addition, lower costs for directors’ fees were incurred as a direct result of a decrease in the market price of Wescorp shares.

Office expenses for the quarter ended March 31, 2011 were $67,550 compared to $71,281 for the quarter ended March 31, 2010. The decrease of $3,731 is primarily a result of the disposition of the Company’s interest in Vasjar as described above and the resulting reduction in expenses required to operate the related subsidiaries.

Other Income and Expenses

For the quarter ended March 31, 2011, other expenses have increased by $337,079 from the same period in 2010. This increase is the net result of the matters described below.

On April 12, 2011, the Company entered into a liability release agreement with one of the former Vasjar shareholders. Under the terms of the agreement, the Company agreed to issue 980,000 free trading common shares and 4,020,000 restricted common shares to settle the claim made by the former Vasjar shareholder. In return the former Vasjar shareholder has released all claims against the Company. This transaction was accounted for in the year ended December 31, 2010 financial statements and therefore has no impact on the March 31, 2011 financial statements. We did not deliver free-trading shares called for under Tranche 2, Stage Three of the agreement to acquire the outstanding shares of Vasjar, and we have accounted for certain penalty shares that may be due to the other former Vasjar shareholder for each month that the shares are not delivered. This accounting resulted in other expense of $198,891 being recorded for the quarter ended March 31, 2011, (March 31, 2010 – other income of $130,906) which reflects the increase in shares potentially needed to be delivered and the closing trading price of Wescorp shares as at March 31, 2011. We do not agree with this other former Vasjar shareholder that it is entitled to all these shares, but we intend to account for the shares in this manner until the matter is resolved. Wescorp continues to attempt to reach a settlement with the other former shareholder. Other income arose in the three months ended March 31, 2010 as the closing price of Wescorp common shares at March 31, 2010 was $0.21, a drop of $0.08 per share from the closing price of Wescorp common shares at December 31, 2009. This large decrease in the share price reduced the estimated value of the liability with respect to Tranche 2, Stage Three from the amount that was estimated at December 31, 2009, and accordingly, other income was recorded in the three months ended March 31, 2010.

The foreign currency loss of $19,743 for the quarter ended March 31, 2011 is a direct result of the Canadian dollar being stronger than the U.S. dollar at March 31, 2011 when compared to December 31, 2010. Many payables are denominated in Canadian dollars, and as that currency strengthens, exchange losses result when payables are settled. The foreign currency loss of $21,709 for the quarter ended March 31, 2010 was a direct result of the Canadian dollar being stronger than the U.S. dollar at March 31, 2010 when compared to December 31, 2009.

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The $9,248 loss on the settlement of debt incurred in the year ended December 31, 2010, is the result of the Company settling trade payables in the amount of $87,434 in exchange for 863,999 common shares of the Company valued at $96,682.

Income (Loss) from Discontinued Operations

During the year ended December 31, 2009, the Company decided to exit the natural gas flow measurement business to focus on developing its water remediation technology. In January 2010, the Company sold a substantial portion of its assets related to the natural gas flow measurement business to a non-related full service engineering firm based in Calgary, Alberta, Canada. The Company had sold its natural gas flow measurement systems through its subsidiary Flowstar.

In October 2010, the major customer of the Company’s subsidiary Raider Chemical Corporation (“Raider”) gave notice that it was no longer going to be purchasing any more product from Raider. As a result the Company has determined that it will leave the drilling related products and related services business.

After taxes, the Company had a loss from discontinued operations of $5,912 in the quarter ended March 31, 2011 compared to income of $108,290 for the quarter ended March 31, 2010. The Company has reclassified the operating results of these business units as discontinued operations as they are material to the Company’s consolidated financial statements.

Net Loss

The net loss for the quarter ended March 31, 2011 of $1,329,271 compared to a net loss of $419,496 for 2010 is due to the net effect in the 2011 first quarter of the increase in operating expenses of $458,494, in other expenses of $337,079, and in the loss from discontinued operations of $114,202 as set forth above.

Liquidity and Capital Resources

Three Months Ended March 31, 2011

From inception, we have been dependent on investment capital and debt financing as our primary sources of liquidity. Prior to our acquisition of Flowstar in 2004, we had not generated any revenue or income from our operations. We had an accumulated deficit at March 31, 2011 of $60,034,587.

As at March 31 2011, we had current assets totaling $64,785 compared to $478,375 at the end of December 31, 2010. This decrease is a direct result of decrease in cash. Our cash position at March 31, 2011 decreased to $18,497 from the $430,549 balance we had at December 31, 2010. We used cash in operations of $649,697 in 2011 compared to $471,301 during 2010. Most of this amount relates to the operating loss adjusted for non-cash items totaling $1,108,964 for the three months ended March 31, 2011 (2010 -$648,590). Changes in operating assets and liabilities are explained below.

The net cash used in operating activities was funded with $255,773 from financing activities for the three months ended March 31, 2011 (March 31, 2010 – $202,578). The cash flow from financing activities for the three months ended March 31, 2011 was primarily a result of: proceeds received from a private placement prior to issuing shares in the amount of $240,080, as compared to $Nil proceeds for 2010. In the year ended December 31, 2010, we incurred debt of $25,395 from new notes payable, as compared to $210,401 received in 2010. During the period ended March 31, 2011 we repaid notes payable in the amount of $9,702 compared to $Nil repaid in the same period in 2010. In the three months ended March 31, 2010 we also incurred $7,823 in costs related to the issuance of private placements.

The Company had $10,141,961 in current liabilities as at March 31, 2011 compared to $9,682,294 as at the December 31, 2010. The cumulative agreement payable at March 31, 2011, is estimated at $4,268,758 and represents a non-financial obligation of the Company. Additional penalties related to the penalty shares issuable pursuant to the Vasjar agreement in the amount of $198,891 were incurred during the period and are included in the balance for the agreement payable. The fair value of the 400,000 shares still owed pursuant to the agreement payable has been determined to be $44,000, a reduction of $12,000 from the amount included in the balance at December 31, 2010. Accounts payable and accrued liabilities decreased in the amount of $251,421. Most of this decrease relates to the issuance of common shares of the Company valued at $192,000 to settle a liability release agreement. In addition, the Company issued common shares valued at $96,682 to settle trade accounts payable. Also, an additional $15,693 in new notes payable net of note repayments was incurred during the period.

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Continued Liquidity and Financing of Business Plan

To date, our operations have been funded by a combination of short-term debt and equity financing. Currently, cash on hand, short-term investments and collection of trade accounts receivable are our only existing sources of liquidity. In the event that we do not achieve positive cash flow from operations in 2010, we will be relying on debt and equity financings to provide our Company with sufficient capital to continue our development and operational plans. There can be no assurance that we can continue to grow, which would have a significant effect on the financial condition of our Company and our ability to effectively implement our proposed business plans.

Although we do not have any lending arrangements in place with banking or financial institutions, we intend to seek conventional bank financing for the Company once we redeem or effect the conversion of the outstanding short-term convertible debenture to equity as noted herein.

We are also currently in the process of arranging financing for our 2011 operations and investment plan. Our total anticipated funding requirement through the end of 2011 is estimated to be approximately $3,500,000. We believe that if we are able to obtain this financing, of which there is no assurance, our cash balances will be sufficient to carry on normal operations for the next nine months plus meet any cash requirements that may be needed ^{for the building of new H}2^{Omaxx units.} 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 us or on acceptable terms.

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.

(a) Disclosure Controls and Procedures. An evaluation was carried out under the supervision and with the participation of our management, including our Principal Financial Officer and Principal Executive Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our Principal Financial Officer and Principal Executive Officer concluded that, as of March 31, 2011, our disclosure controls and procedures are effective to satisfy the objectives for which they are intended.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

On February 1, 2011, in connection with a Unilateral Liability Release entered into on December 15, 2010 pursuant to which the claimant agreed to release the Company jointly and severally from any claims relating to a claim made by a former director for unpaid amounts, the Company issued 1,000,000 shares of common stock with a fair value of $119,200 in full settlement of the claim. The shares were issued to the claimant in a private transaction under Section 4(2) of the Securities Act. This issuance qualified for this exemption from registration because (i) the claimant was an accredited investor; (ii) the Company did not engage in any general solicitation or advertising to market the securities; (iii) the claimant was provided the opportunity to ask questions and receive answers from the Company regarding the Company and the issuance; (iv) the claimant had knowledge and experience in financial and business matters so that they are capable of evaluating the merits and risks of an investment in the Company; and (v) the claimant received “restricted securities”.

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In March 2011, in connection with three settlement agreements, the Company issued 863,999 shares of common stock in full settlement of $87,434 owed with respect to outstanding accounts payables. The shares were issued to vendors in private transactions under Section 4(2) of the Securities Act. These issuances qualified for this exemption from registration because (i) the vendors were accredited investors; (ii) the Company did not engage in any general solicitation or advertising to market the securities; (iii) the vendors were provided the opportunity to ask questions and receive answers from the Company regarding the Company and the issuance; (iv) the vendors had knowledge and experience in financial and business matters so that they are capable of evaluating the merits and risks of an investment in the Company; and (v) the vendors received “restricted securities”.

The information set forth in Item 4 of Part II of this Quarterly Report on Form 10-Q is incorporated herein by reference to the extent applicable.

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* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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EXHIBIT INDEX

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