10-Q

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

FORM 10-Q

[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2010

[     ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File Number: 000-53461

Mantra Venture Group Ltd.
(Name of Small Business Issuer in its charter)

British Columbia	26-0592672
(state or other jurisdiction of	(I.R.S. Employer I.D. No.)
incorporation or organization)

#4 2119 152^nd Street
Surrey, British Columbia, Canada V4A 4N7
(Address of principal executive offices)

(604) 535 4145
Issuer’s telephone number

Indicate by check mark whether the registrant (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 require 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 large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ x ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ x ] 

APPLICABLE ONLY TO CORPORATE ISSUERS

As of October 14, 2010, the registrant had 35,927,185 shares of common stock outstanding.

Table of Contents

PART I - FINANCIAL INFORMATION			3
	Item 1.	Financial Statements	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	8
	Item 4.	Controls and Procedures	8
PART II – OTHER INFORMATION			9
	Item 1.	Legal Proceedings.	9
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	9
	Item 3.	Defaults Upon Senior Securities.	9
	Item 4.	[Removed and Reserved]	9
	Item 5.	Other Information.	9
	Item 6.	Exhibits	9
SIGNATURES			10

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited interim consolidated financial statements of Mantra Venture Group Ltd. (the “Company”, “Mantra”, “we”, “our”, “us”) follow. All currency references in this report are in US dollars unless otherwise noted.

3

MANTRA VENTURE GROUP LTD.

(A development stage company)

Consolidated financial statements

(Expressed in U.S. dollars)

August 31, 2010

(unaudited)

	Index
Consolidated balance sheets	F–1
Consolidated statements of operations	F–2
Consolidated statements of cash flows	F–3
Notes to the consolidated financial statements	F–4

4

MANTRA VENTURE GROUP LTD.

(A development stage company)

Consolidated balance sheets

(Expressed in U.S. dollars)

	August 31,		May 31,
	2010		2010
	$		$
	(unaudited)
ASSETS
Current assets
Cash	10,226		4,325
Amounts receivable	9,511		13,744
Prepaid expenses and deposits	317		1,078
Total current assets	20,054		19,147
Property and equipment	65,891		74,673
Total assets	85,945		93,820
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities	462,253		449,481
Due to related parties (Note 3)	341,858		294,712
Loans payable (Note 4)	65,361		61,708
Convertible debentures	250,000		250,000
Total liabilities	1,119,472		1,055,271
Going Concern (Note 1)
Commitment (Note 8)
Subsequent events (Note 9)
Stockholders’ deficit
Preferred stock    Authorized: 20,000,000 shares, par value $0.00001    Issued and outstanding: Nil shares	–		–
Common stock     Authorized: 100,000,000 shares, par value $0.00001    Issued and outstanding: 35,127,185 shares (May 31, 2010 –    34,034,868 shares)	351		340
Additional paid-in capital	4,123,668		4,036,294
Common stock subscribed (Note 6)	41,700		45,885
Deficit accumulated during the development stage	(5,199,246	)	(5,043,970	)
Total stockholders’ deficit	(1,033,527	)	(961,451	)
Total liabilities and stockholders’ deficit	85,945		93,820

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

F-1

MANTRA VENTURE GROUP LTD.

(A development stage company)

Consolidated statements of operations

(Expressed in U.S. dollars)

(unaudited)

					Accumulated
					from
	Three months		Three months		January 22, 2007
	ended		ended		(Inception) to
	August 31,		August 31,		August 31,
	2010		2009		2010
	$		$		$
Revenues	–		13,798		19,898
Expenses
Business development	–		52,759		251,093
Consulting and advisory	18,792		28,041		451,904
Depreciation and amortization	8,782		8,782		101,744
Foreign exchange loss (gain)	(4,425	)	5,073		21,246
General and administrative (Note 3)	11,520		22,644		335,617
License fees	–		–		28,438
Management fees (Note 3)	48,564		52,621		819,451
Professional fees	8,845		48,659		665,703
Public listing costs	593		4,078		204,424
Rent	10,946		13,466		167,120
Research and development	–		62,244		418,206
Shareholder communications and awareness	470		83,821		580,244
Travel and promotion	13,729		11,771		334,279
Wages and benefits	31,295		14,587		632,025
Website and corporate identity	–		–		195,451
Write down of intangible assets	–		–		37,815
Total expenses	149,111		408,546		5,244,760
Loss before other income (expense)	(149,111	)	(394,748	)	(5,224,862	)
Other income (expense)
Accretion of discounts on convertible debentures	–		(10,727	)	(45,930	)
Government grant income	–		–		118,324
Interest	(6,165	)	(6,301	)	(46,778	)
Total other income (expense)	(6,165	)	(17,028	)	25,616
Net loss for the period	(155,276	)	(411,776	)	(5,199,246	)
Loss per share, basic and diluted	–		(0.02	)
Weighted average number of shares outstanding	34,721,241		30,504,665

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

F-2

MANTRA VENTURE GROUP LTD.

(A development stage company)

Consolidated statements of cash flows

(Expressed in U.S. dollars)

(unaudited)

					Accumulated
					from
	Three months		Three months		January 22, 2007
	ended		ended		(Inception) to
	August 31,		August 31,		August 31,
	2010		2009		2010
	$		$		$
Operating activities
Net loss for the period	(155,276	)	(411,776	)	(5,199,246	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discounts on convertible debentures	–		10,727		45,930
Depreciation and amortization	8,782		8,782		101,744
Foreign exchange	(717	)	–		(717	)
Shares issued for services	–		37,250		–
Stock-based compensation	–		9,121		1,218,510
Write-down of intangible assets	–		–		37,815
Changes in operating assets and liabilities
Amounts receivable	4,233		4,564		(9,511	)
Prepaid expenses and deposits	761		4,036		(317	)
Other assets	–		–		(12,000	)
Accounts payable and accrued liabilities	12,772		112,258		738,733
Due to related parties	47,146		28,174		341,858
Net cash used in operating activities	(82,299	)	(196,864	)	(2,737,201	)
Investing activities
Purchase of property and equipment	–		–		(155,635	)
Net cash used in investing activities	–		–		(155,635	)
Financing activities
Proceeds from loans payable	5,000				66,078
Bank indebtedness	–		6,544		–
Proceeds from issuance of convertible debentures	–		–		250,000
Proceeds from issuance of common stock	83,200		187,000		2,586,984
Net cash provided by financing activities	88,200		193,544		2,903,062
Change in cash	5,901		(3,320	)	10,226
Cash, beginning of period	4,325		3,320		–
Cash, end of period	10,226		–		10,226
Non-cash investing and financing activities:
Common stock issued to settle debt	–		15,000		276,480
Common stock issued and stock options grated for acquisition of intangible assets	–		–		37,815
Supplemental disclosures:
Interest paid	–		–		–
Income taxes paid	–		–		–

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

F-3

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

August 31, 2010

(unaudited)

1.	Basis of Presentation
	The accompanying consolidated financial statements of Mantra Venture Group Ltd. (the “Company”) should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2010. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.
	The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.
	These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and is unlikely generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at August 31, 2010, the Company has a working capital deficit of $1,099,418 and has accumulated losses of $5,199,246 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.	Recent Accounting Pronouncements
	In January 2010, the FASB issued an amendment to ASC 820, “Fair Value Measurements and Disclosures”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The adoption of the applicable standard on June 1, 2010 did not have a material effect on the Company’s financial statements.
	The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3.	Related Party Transactions
	a)	During the three months ended August 31, 2010, the Company incurred management fees of $15,564 (2009 - $ 22,000) to the President of the Company.
	b)	During the three months ended August 31, 2010, the Company incurred administration fees of $10,414 (2009 - $9,357) to the spouse of the President of the Company.
	c)	During the three months ended August 31, 2010, the Company incurred management fees of $15,000 (2009 - $nil) to a director of the Company.

F-4

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

August 31, 2010

(unaudited)

3.	Related Party Transactions (continued)
	d)	During the three months ended August 31, 2010, the Company incurred management fees of $18,000 (2009 - $nil) to the Chief Financial Officer of the Company.
	e)	During the three months ended August 31, 2010, the Company incurred management fees of $17,360 (2009 - $nil) to a Vice President of the Company.
	f)	As at August 31, 2010, the Company owes a total of $171,325 (May 31, 2010 - $173,738) to the President of the Company and a company controlled by the President of the Company which is non-interest bearing, unsecured, and due on demand.
	g)	As at August 31, 2010, the Company owes $29,458 (May 31, 2010 - $21,045) to the spouse of the President of the Company which is non-interest bearing, unsecured and due on demand.
	h)	As at August 31, 2010, the Company owes $31,739 (May 31, 2010 - $17,608) to a director of the Company which is non-interest bearing, unsecured, and due on demand.
	i)	As at August 31, 2010, the Company owes $9,179 (May 31, 2010 - $9,179) to the former Chief Financial Officer of the Company which is non-interest bearing, unsecured, and due on demand.
	j)	As at August 31, 2010, the Company owes $53,290 (May 31, 2010 - $38,550) to an accounting firm where the Chief Financial Officer of the Company is a partner which is non-interest bearing, unsecured, and due on demand.
	k)	As at August 31, 2010, the Company owes $46,867 (May 31, 2010 - $34,592) to a Vice President of the Company which is non-interest bearing, unsecured, and due on demand.
4.	Loans Payable
	a)	As at August 31, 2010, the amount of $50,615 (May 31, 2010 - $51,078) (Cdn$53,300) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.
	b)	As at August 31, 2010, the amount of $10,000 (May 31, 2010 - $10,000) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.
	c)	As at August 31, 2010, the amount of $4,746 (May 31, 2010 – $nil) (Cdn$5,000) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.
5.	Common Stock
	a)	On June 3, 2010, the Company issued 573,567 units at $0.08 per unit for proceeds of $45,885 which was recorded as common stock subscribed as at May 31, 2010. Each unit consisted of one share of common stock and one non-transferable share purchase warrant exercisable at $0.20 per share expiring on the earlier of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.
	b)	On August 9, 2010, the Company issued 518,750 units at $0.08 per unit for proceeds of $41,500. Each unit consisted of one common share and one non-transferrable share warrant to purchase one additional share of common stock at an exercise price of $0.20 per share expiring on the earlier of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.

F-5

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

August 31, 2010

(unaudited)

5.	Common Stock (continued)
	c)	The Company’s subsidiary, Climate ESCO Ltd., received share subscriptions for 417,000 units at $0.10 per unit for proceeds of $41,700 which is included in common stock subscribed as at May 31, 2010. Each unit will consist of one common share and non-transferrable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.20 per share expiring on the earlier of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.
6.	Stock Options
	The following table summarizes the continuity of the Company’s stock options:

				Weighted
			Weighted	average	Aggregate
			average	remaining	intrinsic
	Number		exercise price	contractual life	value
	of options		$	(years)	$
Outstanding, May 31, 2010	1,608,333		0.25
Cancelled	(100,000	)	0.25
Outstanding and exercisable,
August 31, 2010	1,508,333		0.25	0.5	–

Additional information regarding stock options as of August 31, 2010, is as follows:

	Exercise
Number of	Price
Options	$	Expiry Date
75,000	0.15	June 1, 2011
400,000	0.20	October 1, 2010
233,333	0.24	September 21, 2010
250,000	0.25	November 1, 2012
75,000	0.27	February 10, 2011
100,000	0.30	October 6, 2010
375,000	0.30	January 1, 2011
1,508,333

The fair values for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends and the following weighted average assumptions:

	Three months	Three months
	ended	ended
	August 31,	August 31,
	2010	2009
Risk-free Interest rate	–	0.48%
Expected life (in years)	–	1.0
Expected volatility	–	90%

The weighted average fair value of the stock options granted during 2010 was $nil (2009 - $0.12) per option.

F-6

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

August 31, 2010

(unaudited)

7.	Share Purchase Warrants
	The following table summarizes the continuity of share purchase warrants:

		Weighted
		Average
		Exercise
	Number of	Price
	Warrants	$
Balance, May 31, 2010	6,726,163	0.31
Issued	1,092,317	0.20
Balance, August 31, 2010	7,818,480	0.29

As at August 31, 2010, the following share purchase warrants were outstanding:

	Exercise
Number of	Price
Warrants	$	Expiry Date
50,000	0.50	October 16, 2010
50,000	0.50	October 17, 2010
150,000	0.50	October 28, 2010
610,000	0.50	November 30, 2010
199,998	0.40	March 10, 2011
859,625	0.30	April 1, 2011
71,152	0.30	April 3, 2011
292,500	0.30	April 6, 2011
860,000	0.30	April 16, 2011
88,000	0.30	May 20, 2011
321,333	0.30	May 28, 2011
466,334	0.30	July 16, 2011
118,000	0.30	July 24, 2011
594,333	0.30	August 24, 2011
68,000	0.30	October 15, 2011
555,999	0.30	November 27, 2011
33,333	0.30	December 5, 2011
1,337,556	0.20	April 5, 2012
573,567	0.20	June 3, 2012
518,750	0.20	August 9, 2012
7,818,480

8.	Commitments
	a)	On October 1, 2009, the Company entered into an agreement with an individual to become the Chief Financial Officer of the Company for $6,000 per month expiring on September 30, 2010.

F-7

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

August 31, 2010

(unaudited)

8.	Commitments (continued)
	b)	On September 2, 2009, the Company entered into an agreement with a company to acquire a worldwide, exclusive license for the Mixed Reactant Flow-By Fuel Cell technology. The term of the agreement is for twenty years or the expiry of the last patent licensed under the agreement, whichever is later. The Company agreed to pay the licensor the following license fees:
			an initial license fee of Cdn$10,000 payable in two installments: Cdn$5,000 upon execution of the agreement (paid) and Cdn$5,000 within thirty days of September 2, 2009 (accrued);
			a further license fee of Cdn$15,000 to be paid within ninety days of September 2, 2009; and
			an annual license fee, payable annually on the anniversary of the date of the agreement as follows:

September 1, 2010	Cdn$10,000
September 1, 2011	Cdn$20,000
September 1, 2012	Cdn$30,000
September 1, 2013	Cdn$40,000
September 1, 2014 and each successive anniversary	Cdn$50,000

The Company is to pay the licensor a royalty calculated as 2% of the gross revenue and 15% of any and all consideration directly or indirectly received by the Company from the grant of any sublicense rights. The Company will pay interest at a rate of 1% per month on any amounts past due. In addition, the Company is responsible for the timely payment of all future costs relating to patent expenses and any new or useful art, process, machine, manufacture or composition of matter arising out of any licensor improvements or joint improvements licensed under this agreement and identified by the licensor as potentially patentable. The Company must also invest a minimum of Cdn$250,000 in research and development directly associated with the technology.

9.	Subsequent Events
	a)	On September 14, 2010, the Company entered into a management agreement with an unrelated company for a period of five years. The Company has agreed to issue 4,000,000 share purchase warrants. Each share purchase warrant is exercisable into one common share for a period of three years from the date of issuance at an exercise price as follows:
		i.	$0.30 per share for 800,000 warrants to be issued on September 1, 2010;
		ii.	$0.40 per share for 800,000 warrants to be issued on September 1, 2011;
		iii.	$0.50 per share for 800,000 warrants to be issued on September 1, 2012;
		iv.	$0.60 per share for 800,000 warrants to be issued on September 1, 2013; and
		v.	$0.70 per share for 800,000 warrants to be issued on September 1, 2014.
	b)	On September 23, 2010, the Company entered into an agreement whereby it will receive consulting services in exchange for the issuance of 400,000 shares of common stock.

F-8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.

Business Overview

We are building a portfolio of companies and technologies that mitigate negative environmental and health consequences that arise from the production of energy and the consumption of resources. On November 2, 2007, through our wholly owned subsidiary, Mantra Energy Alternatives Ltd., we entered into a technology assignment agreement with 0798465 BC Ltd. whereby we acquired 100% ownership of an invention for the electro-reduction of carbon dioxide.

Our mission is to develop and commercialize alternative energy technologies and services to enable the sustainable consumption, production and management of resources on residential, commercial and industrial scales. We plan to develop or acquire technologies and services which include electrical power system monitoring technology, wind farm electricity generation, online retail of environmental sustainability solutions through a carbon reduction marketplace, and media solutions to promote awareness of corporate actions that support the environment. To carry out our business strategy we intend to acquire or license from third parties technologies that require further development before they can be brought to market. We also intend to develop such technologies ourselves, and we anticipate that to complete commercialization of some technologies we will enter into joint ventures, partnerships, or other strategic relationships with third parties who have expertise that we may require. We also plan to enter into formal relationships with consultants, contractors, retailers and manufacturers who specialize in the areas of environmental sustainability in order to carry out our online retail strategy.

Results of Operations for the Period From January 22, 2007 (Date of Inception) to August 31, 2010 and for the Three Months Ended August 31, 2010.

We have had limited operational history since our inception on January 22, 2007. From our inception on January 22, 2007 to August 31, 2010 we have generated $19,898 in revenues. For the three months ended August 31, 2010 we did not generate revenues compared to revenues generated of $13,798 during the same period in 2009. Since our inception on January 22, 2007 to August 31, 2010, we have an accumulated deficit of $5,199,246. We anticipate that we will incur substantial losses over the next year and our ability to generate additional revenues in the next 12 months remains uncertain.

Expenses

We accumulated total expenses of $5,244,760 from the date of our inception to August 31, 2010, including $418,206 in research and development costs, $819,451 in management fees, $665,703 in professional fees, $580,244 in shareholder communications and awareness and $451,904 in consulting and advisory expenses.

For the three months ended August 31, 2010, we incurred total expenses of $149,111 including $48,564 in management fees, $18,792 in consulting and advisory, $8,845 in professional fees, $470 in shareholder communications and awareness, and $31,295 in wages and benefits.

5

By comparison, our total operating expenses for the three months ended August 31, 2009 were $408,546 including $62,244 in research and development costs, $52,621 in management fees, $48,659 in professional fees, $83,821 in shareholder communications and awareness, and $28,041 in consulting and advisory expenses.

Net Loss

Since our inception on January 22, 2007 to August 31, 2010, we have incurred a net loss of $5,199,246. For the three months ended August 31, 2010, we incurred a net loss of $155,276 compared to our net loss of $411,776 for the same period in 2009. Our net loss per share for the three months ended August 31, 2010 was $Nil and for the same period in 2009 was $0.02.

Liquidity and Capital Resources

As of August 31, 2010, we had $10,226 cash in our bank accounts and a working capital deficit of $1,099,418. As of August 31, 2010, we had total assets of $85,945 and total liabilities of $1,119,472.

From January 22, 2007 (date of inception) to August 31, 2010, we raised net proceeds of $2,586,984 in cash from the issuance of common stock, $66,078 from loans payable and $250,000 from proceeds from the issuance of convertible debentures for a total of $2,903,062 of cash provided by financing activities for the period.

We received net cash of $88,200 from financing activities for the three months ended August 31, 2010 compared to $193,544 for the same period in 2009.

We used net cash of $82,299 in operating activities for the three months ended August 31, 2010 compared to $196,864 for the same period in 2009. We used net cash of $2,737,201 in operating activities for the period from January 22, 2007 (date of inception) to August 31, 2010.

We did not use any cash in investing activities for the three months August 31, 2010 and for the three months August 31, 2009.

During the three months ended August 31, 2010 we had an increase of $5,901 in our cash position compared to a decrease of $3,320 for the same period in 2009. Our monthly cash requirements for three month period ended August 31, 2010 was approximately $27,433 compared to $65,621 for the same period in 2009. At our current cash position and if this cash requirement continues, we do not have sufficient cash to cover our expenses for one month.

On October 16, 17 and 28, 2008, we issued three convertible debentures for total proceeds of $250,000 which bear interest at 10% per annum, are unsecured and due one year from date of issuance. The unpaid amount of principal and accrued interest can be converted at any time at the holder’s option into 625,000 shares of our common stock at a price of $0.40 per share. We also issued 250,000 detachable, non-transferable share purchase warrants. Each share purchase warrant entitles the holder to purchase one additional share of our common stock for a period of two years from the date of the issue at an exercise price of $0.50 per share.

We expect that our total expenses will increase over the next year as we increase our business operations. We have not been able to reach the break-even point since our inception and have had to rely on outside capital resources. We do not anticipate making significant revenues for the next year. Over the next 12 months, we plan to primarily concentrate on commercializing our ERC technology and associated projects. Below is a summary of our anticipated expenditures over the next 12 months:

6

Description	Estimated expenses
	($)
Research and Development	275,000
Consulting Fees	100,000
Acquisition of new technologies	500,000
Commercialization of ERC	1,200,000
Shareholder communication and awareness	250,000
Professional Fees	200,000
Wages and Benefits	150,000
Management Fees	400,000
Total	3,075,000

In order to fully carry out our business plan, we need additional financing of approximately $3,075,000 for the next 12 months. In order to improve our liquidity, we intend to pursue additional equity financing from private placement sales of our equity securities or shareholders’ loans. We do not presently have sufficient financing to undertake our planned business activities. Issuances of additional shares will result in dilution to our existing shareholders.

We currently do not have any arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources that are available to us.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in note 2 of the notes to our consolidated financial statements for the year ended May 31, 2010 filed in an Annual Report on Form 10-K. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We regularly evaluate estimates and assumptions related to allowance for doubtful accounts, the recoverability of intangible and long lived assets, valuation of convertible debt, stock-based compensation and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

7

Long-lived Assets

In accordance with ASC 360, “Property, Plant and Equipment”, we test long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Stock-based Compensation

We record stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

We use the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by our stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of August 31, 2010. Based on the evaluation of these disclosure controls and procedures, and in light of the weaknesses identified in our internal controls over financial reporting which were enumerated in our Annual Report on Form 10-K for the period ended May 31, 2010, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

8

Changes in Internal Controls

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are not aware of any material legal proceedings which involve Mantra or any of its properties or subsidiaries.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On June 3, 2010, we issued 573,567 units at $0.08 per unit for proceeds of $45,885 which was recorded as common stock subscribed as at May 31, 2010. Each unit consists of one share of common stock and one non-transferable share purchase warrant exercisable at $0.20 per share expiring on the earlier of two years or five business days after our company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.

On August 9, 2010, we issued 518,750 units at $0.08 per unit for proceeds of $41,500. Each unit consists of one common share and one non-transferrable share warrant to purchase one additional share of common stock at an exercise price of $0.20 per share expiring on the earlier of two years or five business days after our company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.

We have issued all of the securities to non-US persons (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. [Removed and Reserved]

Item 5. Other Information.

None

Item 6. Exhibits

Exhibit	Description
No.
10.1	Development Agreement with 3M dated October 28, 2009 (1)
10.2	Management Agreement with Con Buckley October 1, 2009 (2)
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Attached as an exhibit to our current report on Form 8-K filed on November 6, 2009.
(2)	Attached as an exhibit to our current report on Form 8-K filed on October 7, 2009

9

SIGNATURES

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

	Mantra Venture Group Ltd.
	(Registrant)
	/s/ Larry Kristof
Date: October 15, 2010	Larry Kristof
	President, Chief Executive Officer, Director
	/s/ Con Buckley
Date: October 15, 2010	Con Buckley
	Chief Financial Officer, Principal Accounting Officer

10

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Larry Kristof, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Mantra Venture Group Ltd.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 15, 2010

/s/ Larry Kristof

Larry Kristof

President, Chief Executive Officer and Director

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Con Buckley, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Mantra Venture Group Ltd.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 15, 2010

/s/ Con Buckley

Con Buckley

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Larry Kristof, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Quarterly Report on Form 10-Q of Mantra Venture Group Ltd. for the period ended August 31, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Mantra Venture Group Ltd.

Dated: October 15, 2010

/s/ Larry Kristof

Larry Kristof

President, Chief Executive Officer and Director

(Principal Executive Officer)

Mantra Venture Group Ltd.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Mantra Venture Group Ltd. and will be retained by Mantra Venture Group Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Con Buckley, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Quarterly Report on Form 10-Q of Mantra Venture Group Ltd. for the period ended August 31, 2010 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Mantra Venture Group Ltd.

Dated: October 15, 2010

/s/ Con Buckley

Con Buckley

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Mantra Venture Group Ltd.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Mantra Venture Group Ltd. and will be retained by Mantra Venture Group Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.