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 February 28, 2010

o 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 incorporation or organization)	(I.R.S. Employer I.D. No.)

1205 – 207 West Hastings Street

Vancouver, British Columbia, Canada V6B 1H7

(Address of principal executive offices)

(604) 609 2898

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 þ  No o

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 o       Accelerated filer o    Non-accelerated filer o    Smaller reporting company þ

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

APPLICABLE ONLY TO CORPORATE ISSUERS

As of April 19, 2010, the registrant had 32,310,647 shares of common stock outstanding.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.             Financial Statements

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

Item 3.             Quantitative and Qualitative Disclosures About Market Risk

Item 4.             Controls and Procedures

PART II – OTHER INFORMATION

Item 1.             Legal Proceedings

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

Item 3.             Defaults Upon Senior Securities

Item 4.             [Removed and Reserved]

Item 5.             Other Information

Item 6.             Exhibits

SIGNATURES

1

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.

MANTRA VENTURE GROUP LTD.

(A development stage company)

Consolidated financial statements

(Expressed in U.S. dollars)

February 28, 2010

 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

2

MANTRA VENTURE GROUP LTD.

(A development stage company)

Consolidated balance sheets

(Expressed in U.S. dollars)

	February 28, 2010 $ (unaudited)			May 31, 2009 $
ASSETS
Current assets
Cash		1,047			3,320
Amounts receivable		22,002			19,253
Prepaid expenses and deposits		–			6,536
Total current assets		23,049			29,109
Property and equipment		83,455			109,801
Total assets		106,504			138,910
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities (Note 3)		603,919			224,893
Deferred revenue		12,300			–
Due to related parties (Note 3)		5,515			76,015
Convertible debentures (Note 4)		250,000			231,618
Total current liabilities		871,734			532,526
Due to related parties (Note 3)		111,519			–
Total liabilities		983,253			532,526
Commitments (Note 5)
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: 32,305,561 shares (May 31, 2009 – 23,452,661 shares)		323			301
Additional paid-in capital		3,876,317			3,431,286
Common stock subscribed		87,225			–
Deficit accumulated during the development stage		(4,840,614	)		(3,825,203	)
Total stockholders’ deficit		(876,749	)		(393,616	)
Total liabilities and stockholders’ deficit		106,504			138,910

(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)

	Three Months Ended February 28,					Nine Months Ended February 28,					Accumulated from January 22, 2007 (Date of Inception) to February 28,
		2010 $		2009 $			2010 $		2009 $			2010 $
Revenues		14,530		1,060			86,968		12,118			104,086
Expenses
Business development		(2,556	)	1,973			57,334		3,422			269,557
Consulting and advisory		3,229		8,642			26,432		43,996			431,439
Depreciation and amortization		8,782		8,782			26,346		27,088			84,180
Foreign exchange loss		4,525		–			23,108		–			19,851
General and administrative (Note 3)		17,545		58,436			47,779		136,734			358,960
Management fees (Note 3)		51,701		232,446			216,510		379,979			901,092
Professional fees (Note 3)		53,299		65,467			210,397		231,131			671,918
Public listing costs		2,824		21,501			13,767		29,001			203,110
Rent		10,733		–			37,116		–			146,706
Research and development		38,398		47,789			145,367		119,911			396,820
Shareholder communications and awareness		16,346		80,342			107,733		249,687			600,954
Travel and promotion		19,148		29,823			50,395		55,197			305,673
Wages and benefits		35,063		58,383			102,935		103,395			240,932
Website and corporate identity		–		–			–		–			195,451
Write down of intangible assets		–		–			–		–			37,815
Total expenses		259,037		613,584			1,065,219		1,379,541			4,864,458
Loss before other expenses		(244,507	)	(612,524	)		(978,251	)	(1,367,423	)		(4,760,372	)
Other expenses
Accretion of discounts on convertible debentures		–		(11,580	)		(18,382	)	(15,408	)		(45,930	)
Interest		(6,730	)	(4,777	)		(18,778	)	(10,663	)		(34,312	)
Total other expenses		(6,730	)	(16,357	)		(37,160	)	(26,071	)		(80,242	)
Net loss for the period		(251,237	)	(628,881	)		(1,015,411	)	(1,393,494	)		(4,840,614	)
Loss per share, basic and diluted		(0.01	)	(0.02	)		(0.03	)	(0.05	)
Weighted average number of shares outstanding		32,305,561		27,303,448			31,417,671		26,141,886

(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)

	Nine Months Ended February 28, 2010 $			Nine Months Ended February 28, 2009 $			Accumulated from January 22, 2007 (Date of Inception) to February 28, 2010 $
Operating activities
Net loss for the period		(1,015,411	)		(1,393,494	)		(4,840,614	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discounts on convertible debentures		18,382			15,408			45,930
Depreciation and amortization		26,346			27,088			84,180
Stock-based compensation		161,187			422,342			1,275,917
Write-down of intangible assets		–			–			37,815
Changes in operating assets and liabilities
Subscriptions receivable		–			–			–
Amounts receivable		(2,749	)		3,281			(22,002	)
Accrued interest payable		–			9,233			–
Prepaid expenses and deposits		6,536			(18,378	)		–
Other assets		–			–			(12,000	)
Accounts payable and accrued liabilities		444,886			197,453			827,396
Deferred revenue		12,300			–			12,300
Due to related parties		41,019			(48,617	)		117,034
Net cash used in operating activities		(307,504	)		(785,684	)		(2,474,044	)
Investing activities
Purchase of property and equipment		–			(84,990	)		(155,635	)
Net cash used in investing activities		–			(84,990	)		(155,635	)
Financing activities
Borrowings on related party debt		–			83,263			–
Repayments of related party debt		–			(77,344	)		–
Proceeds from issuance of convertible debentures		–			250,000			250,000
Proceeds from issuance of common stock		305,231			595,000			2,380,726
Net cash provided by financing activities		305,231			850,919			2,630,726
Change in cash		(2,273	)		19,755			1,047
Cash, beginning of period		3,320			26,201			–
Cash, end of period		1,047			6,446			1,047
Non-cash investing and financing activities:
Common stock issued to settle accounts payable		65,862			15,000			223,479
Common stock issued and stock options granted for acquisition of intangible assets		–			–			37,815
Promissory note issued to settle accounts payable		–			58,000			58,000
Fair value of share purchase warrants issued for convertible debentures		–			45,930			–
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)

February 28, 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, 2009. 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.

2.   Recent Accounting Pronouncements

In June 2009, the FASB issued guidance now codified as FASB ASC Topic 105, Generally Accepted Accounting Principles as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP, aside from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 did not have a material impact on the Company’s financial statements, but did eliminate all references to pre-codification standards

In May 2009, FASB issued ASC 855, Subsequent Events, which establishes general standards of for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of ASC 855 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 nine months ended February 28, 2010, the Company incurred management fees of $64,000 (2009 - $58,500) to the President of the Company.

b)   During the nine months ended February 28, 2010, the Company incurred administration fees of $36,173 (2009 - $27,367) to the spouse of the President of the Company.

c)   During the nine months ended February 28, 2010, the Company incurred professional fees of $39,000 (2009 - $nil) to a company controlled by the Chief Financial Officer of the Company.

d)   During the nine months ended February 28, 2010, the Company incurred management fees of $5,000 (2009 - $33,000) to a company controlled by the former Chief Financial Officer of the Company.

F-4

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

February 28, 2010

(unaudited)

3.    Related Party Transactions (continued)

e)   During the nine months ended February 28, 2010, the Company incurred consulting fees of $67,164 (2008 - $nil) to directors of the Company.

f)   As at February 28, 2010, the Company owes a total of $109,922 (May 31, 2009 - $72,825) to the President of the Company and a company controlled by the President of the Company. The amounts due are non-interest bearing and unsecured. As at May 31, 2009, the amounts owed were due on demand. On November 29, 2009, the repayment terms were amended and the amounts owed are now due on November 29, 2012. As at February 28, 2010, included in accounts payable and accrued liabilities is $62,559 owed to the President of the Company.

g)   As at February 28, 2010, the Company owes a total of $5,515 (May 31, 2009 - $nil) to directors of the Company. The amounts due are non-interest bearing, unsecured and due on demand.

h)   As at February 28, 2010, included in accounts payable and accrued liabilities is $24,650 (May 31, 2009 - $Nil) owed to a professional firm where the Chief Financial Officer of the Company is a partner.

i)   As at February 28, 2010, included in accounts payable and accrued liabilities is $26,097 (May 31, 2009 - $Nil) owed to directors of the Company.

4.   Convertible Debentures

On October 16, 17 and 28, 2008, the Company 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 the Company’s common stock at a price of $0.40 per share. The Company also issued 250,000 detachable, non-transferable share purchase warrants. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock for a period of two years from the date of the issue at an exercise price of $0.50 per share.

In accordance with EITF 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios”, the Company determined that the convertible debentures contained no embedded beneficial conversion feature as the convertible debentures were issued with a conversion price higher than the fair market value of the Company’s common shares at the time of issuance.

In accordance with EITF 00-27, “Application of issue No. 98-5 to Certain Convertible Instruments”, the Company allocated the proceeds of issuance between the convertible debt and the detachable share purchase warrants based on their relative fair values. Accordingly, the Company recognized the relative fair value of the share purchase warrants of $45,930 as additional paid-in capital and an equivalent discount against the convertible debentures. During the period ended February 28, 2010, the Company has recorded accretion expense of $18,382, increasing the carrying value of the convertible debentures to $250,000.

F-5

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

February 28, 2010

(unaudited)

5.   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.

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 instalments: 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.

6.   Common Stock

a)   On June 1, 2009, the Company issued 100,000 shares of common stock with a fair value of $24,000 for services rendered.

b)   On July 3, 2009, the Company issued 25,000 shares of common stock with a fair value of $6,000 for services rendered.

c)   On July 16, 2009, the Company issued 466,334 units at $0.15 per unit for proceeds of $69,950. Each unit consisted of one share of common stock and one non-transferable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days.

d)   On July 24, 2009, the Company issued 18,000 units at $0.15 per unit for proceeds of $2,700. Each unit consisted of one share of common stock and one non-transferable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days

F-6

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

February 28, 2010

(unaudited)

6.  Common Stock (continued)

e)   On July 24, 2009, the Company issued 100,000 units with a fair value of $15,000 to settle accounts payable. Each unit consisted of one common share and one-half non-transferrable warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days.

f)   On August 17, 2009, the Company issued 25,000 shares of common stock with a fair value of $7,250 for services rendered.

g)   On August 24, 2009, the Company issued 594,333 units at $0.15 per unit for proceeds of $89,150. Each unit consisted of one share of common stock and one non-transferable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days.

h)   On September 15, 2009, the Company issued 68,000 units at $0.15 per unit for proceeds of $10,200. Each unit consisted of one share of common stock and one non-transferable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days.

i)   On November 27, 2009, the Company issued 556,000 units at $0.15 per unit for proceeds of $83,400. Each unit consisted of one share of common stock and one non-transferable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days

j)   On December 5, 2009, the Company issued 33,334 units at $0.15 per unit for proceeds of $5,000. Each unit consisted of one share of common stock and one non-transferable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days.

k)   On December 11, 2009, the Company issued 299,192 shares of common stock to settle $50,862 of accounts payable owing to directors and consultants.

7.   Stock Options

The following table summarizes the continuity of the Company’s stock options:

	Number of options	Weighted average exercise price $	Weighted average remaining contractual life (years)	Aggregate intrinsic value $
Outstanding, May 31, 2009	2,800,000	0.32
Granted	708,333	0.21
Cancelled	(1,625,000)	0.25
Outstanding and exercisable, February 28, 2010	1,883,333	0.31	0.8	–

F-7

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

February 28, 2010

(unaudited)

Additional information regarding stock options as of February 28, 2010, is as follows:

Number of Options	Exercise Price $	Expiry Date
200,000	0.75	March 5, 2010
75,000	0.45	April 25, 2010
100,000	0.25	July 16, 2010
375,000	0.30	January 1, 2011
75,000	0.27	February 10, 2011
100,000	0.30	October 6, 2010
250,000	0.25	November 1, 2012
75,000	0.15	June 1, 2011
233,333	0.24	September 21, 2010
400,000	0.20	October 1, 2010
1,883,333

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:

	Nine months ended February 28, 2010			Nine months ended February 28, 2009
Risk-free Interest rate		0.39	%		0.80	%
Expected life (in years)		1.0			0.9
Expected volatility		92	%		111	%

The weighted average fair value of the stock options granted during fiscal 2010 was $0.10 (2009 - $0.17) per option.

As of February 28, 2010, the Company has no unrecognized compensation expense relating to unvested options.

F-8

MANTRA VENTURE GROUP LTD.

(A development stage company)

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

February 28, 2010

(unaudited)

8.   Share Purchase Warrants

The following table summarizes the continuity of share purchase warrants:

	Number of Warrants			Weighted Average Exercise Price $
Balance, May 31, 2009		6,576,358			0.36
Issued		1,836,000			0.19
Expired		(2,948,750	)		0.26
Balance, February 28, 2010		5,463,608			0.34

As at February 28, 2010, the following share purchase warrants were outstanding:

Number of Warrants	Exercise Price $	Expiry Date
75,000	0.50	May 1, 2010
200,000	0.50	October 16, 2010
50,000	0.50	October 17, 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
556,000	0.30	November 27, 2011
33,333	0.30	December 5, 2011
5,463,608

9.   Subsequent Events

a)   Subsequent to quarter end the Company settled a claim for investor relations services which in the Company’s view were not satisfactorily rendered to the Company. The Company is to pay $9,000 over a five month period commencing April 1, 2010 and issue 53,333 shares of common stock with a fair value of $8,000 to the investor relations firm.

b)   The Company entered into a share cancellation agreement and cancelled 400,000 shares of common stock issued to a consultant who was to provide marketing services.

F-9

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 February 28, 2010 and for the Three Months Ended February 28, 2010.

We have had limited operational history since our inception on January 22, 2007. From our inception on January 22, 2007 to February 28, 2010 we have generated $104,086 in revenues.  For the three months ended February 28, 2010 we generated revenues of $14,530 compared to $1,060 during the same period in 2009.  Since our inception on January 22, 2007 to February 28, 2010, we have an accumulated deficit of $4,840,614. 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.

3

Expenses

We accumulated total expenses of $4,864,458 from the date of our inception to February 28, 2010, including $396,820 in research and development costs, $901,092 in management fees, $671,918 in professional fees, $600,954 in shareholder communications and awareness, $431,439 in consulting and advisory expenses.

For the three months ended February 28, 2010, we incurred total expenses of $259,037 including $38,398 in research and development costs, $51,701 in management fees, $53,299 in professional fees, $16,346 in shareholder communications and awareness, and $35,063 in wages and benefits.

By comparison, our total operating expenses for the three months ended February 28, 2009 were $613,584 including $47,789 in research and development costs, $232,446 in management fees, $65,467 in professional fees, $80,342 in shareholder communications and awareness, and $58,383 in wages and benefits.

Net Loss

Since our inception on January 22, 2007 to February 28, 2010, we have incurred a net loss of $4,840,614. For the three months ended February 28, 2010, we incurred a net loss of $251,237 compared to our net loss of $628,881 for the same period in 2009.  Our net loss per share for the three months ended February 28, 2010 was $0.01 and for the same period in 2009 was $0.02.

Results of Operations for the Nine Months Ended February 28, 2010 compared to February 28, 2009.

Revenues

For the nine months ended February 28, 2010 we generated revenues of $86,968 compared to $12,118 during the same period in 2009.

Expenses

For the nine months ended February 28, 2010, we incurred total expenses of $1,065,219 including $145,367 in research and development costs, $216,510 in management fees, $210,397 in professional fees, $107,733 in shareholder communications and awareness, and $26,432 in consulting and advisory expenses.

By comparison, our total operating expenses for the nine months ended February 28, 2009 were $1,379,541 including $119,911 in research and development costs, $379,979 in management fees, $231,131 in professional fees, $249,687 in shareholder communications and awareness, and $43,996 in consulting and advisory expenses.

Net Loss

For the nine months ended February 28, 2010, we incurred a net loss of $1,015,411 compared to our net loss of $1,393,494 for the same period in 2009.  Our net loss per share for the period ended February 28, 2010 was $0.03 and for the same period in 2009 was $0.05.

4

Liquidity and Capital Resources

As of February 28, 2010, we had $1,047 cash in our bank accounts and a working capital deficit of $848,685. As of February 28, 2010, we had total assets of $106,504 and total liabilities of $983,253.

From January 22, 2007 (date of inception) to February 28, 2010, we raised net proceeds of $2,380,726 in cash from the issuance of common stock and $250,000 for a total of $2,630,726 of cash provided by financing activities for the period.

We received net cash of $305,231 from financing activities for the nine months ended February 28, 2010 compared to $595,000 for the same period in 2009.  During the period in 2010 we raised cash from the sale of our common stock only, whereas during the period in 2009, we raised $595,000 through the sale of our common stock, $250,000 through the issuance of convertible debentures and $83,263 through borrowings on related party debt, of which 77,344 was repaid during the period ended February 28, 2009.

We used net cash of $307,504 in operating activities for the nine months ended February 28, 2010 compared to $785,684 for the same period in 2009.  We used net cash of $2,474,044 in operating activities for the period from January 22, 2007 (date of inception) to February 28, 2010.

We did not use any cash in investing activities for the nine months February 28, 2010 compared to net cash of $84,990 in investing activities for the same period in 2009 which was used for the purchase of property and equipment.

During the nine months ended February 28, 2010 we had a decrease of $2,273in our cash position compared to an increase of $19,755 for the same period in 2009.  Our monthly cash requirements for nine month period ended February 28, 2010 was approximately $34,167 compared to $87,298 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.  During the period ended February 28, 2010, we recorded accretion expense of $18,382, increasing the carrying value of the convertible debentures to $250,000.

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:

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

5

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, 2009 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.

6

Long-lived Assets

In accordance with ASC 360, “Impairment or Disposal of Long-Lived Assets”, 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 February 28, 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, 2009, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

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.

7

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.

From December 1, 2009 to February 28, 2010, we made the following previously unreported sales of unregistered securities:

On December 5, 2009, the Company issued 33,334 units at $0.15 per unit for proceeds of $5,000. Each unit consisted of one share of common stock and one non-transferable share purchase warrant to purchase one additional share of common stock at an exercise price of $0.30 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 $0.60 per share for seven consecutive trading days.

On December 11, 2009, the Company issued 299,192 shares of common stock to settle $50,862 of accounts payable owing to directors and consultants.

We completed the offerings of the common stock pursuant to Rule 903 of Regulation S of the Securities Act on the basis that the sale of the common stock was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the units. Each investor was not a US person, as defined in Regulation S, and was not acquiring the shares for the account or benefit of a US person.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. [Removed and Reserved]

Item 5. Other Information.

None

Item 6. Exhibits

Exhibit No.	Description
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

8

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: April 19, 2010	Larry Kristof
	President, Chief Executive Officer, Director
	/s/ Con Buckley
Date: April 19, 2010	Con Buckley
	Chief Financial Officer, Principal Accounting Officer

10

EX-31.1

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, 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.

6.   The registrant's other certifying officer(s) and I have indicated in this report whether or not there were significant changes in internal controls or on other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  April 19, 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.

6.   The registrant's other certifying officer(s) and I have indicated in this report whether or not there were significant changes in internal controls or on other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  April 19, 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 February 28, 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: April 19, 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 February 28, 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: April 19, 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.