10QSB/A 1 form10qsba.htm AMENDMENT NO. 1 TO THE QUARTERLY REPORT Filed by Automated Filing Services Inc. (604) 609-0244 - Mantra Venture Group Ltd. - Form 8-K/A

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

FORM 10-QSB/A

Amendment No. 1

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

For the quarterly period ended November 30, 2007

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

For the transition period from _________to _________

Commission File Number: 333-146802

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

Nevada None
(state or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)  

1205 – 207 West Hastings Street
Vancouver, British Columbia, Canada V6B 1H7
(Address of principal executive offices)

(604) 609 2898
Issuer’s telephone number

________________________________________________________________
Former name, former address, and former fiscal year, if changed since last report

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS

As of January 17, 2008, the registrant had 20,369,328 shares of common stock outstanding.

Transitional Small Business Disclosure Format (Check one): YES [ ] NO [X]

Table of Contents

PART I - FINANCIAL INFORMATION 2
       
  Item 1. Financial Statements F-1
       
  Item 2. Management’s Discussion and Analysis or Plan of Operation 20
       
  Item 3A(T).   Controls and Procedures. 25
   
PART II – OTHER INFORMATION 26
       
  Item 1. Legal Proceedings 26
       
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
       
  Item 3. Defaults Upon Senior Securities. 28
       
  Item 4. Submission of Matters to a Vote of Security Holders. 28
       
  Item 5. Other Information 28

PART I - FINANCIAL INFORMATION

Safe Harbor Statement

When we refer to Mantra, we, our or us, we are referring to Mantra Venture Group Ltd.

This report on Form 10-QSB contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

Unless otherwise noted, all dollar references herein are in US dollars.

Explanation of Amendment

We are filing this amendment No. 1 to our Form 10-QSB, filed with the SEC on January 22, 2008, for the purposes of:

  1.

presenting a functional statement of operations as opposed to presenting an income statement based on expense classification;

  2.

presenting consolidated statements of operations and cash flows for the six months ended November 30, 2007;

  3.

correcting notes of the consolidated financial statements; and

  4.

revising the presentation of loss per share to the nearest cent.

There was no material difference in financial numbers, between the consolidated financial statements included in this amendment of Form 10-QSB and that which was previously filed.

2

Item 1. Financial Statements

Mantra Venture Group Ltd.
(A Development Stage Company)
Interim Consolidated Financial Statements, November 30, 2007
(Unaudited)

Financial Statement Index

Consolidated Balance Sheets F-2
   
Consolidated Statements of Operations F-3
   
Consolidated Statements of Cash Flows F-4
   
Consolidated Statement of Stockholders’ Equity F-5
   
Notes to the Consolidated Financial Statements F-6

F-1


Mantra Venture Group Ltd.
(A Development Stage Company)
Consolidated Balance Sheets
As of May 31, 2007 and November 30, 2007
(Expressed in US Dollars)

          Unaudited  
Assets   May 31,     Nov. 30,  
    2007     2007  
             
Cash, operating account   13,982     185,883  
Taxes receivable   357     15,199  
Security deposit   932     1,010  
    15,271     202,092  
             
Intangible assets   -     37,095  
Property and equipment, net (Note 3)   11,875     51,595  
    11,875     88,690  
             
Total Assets $  27,146   $  290,782  
             
Liabilities            
             
Accounts payable and accrued liabilities   8,794     18,796  
Liability for subscriptions received   -     210,500  
Due to related parties (Note 4)   13,446     11,266  
Total liabilities   22,240     240,562  
             
Commitments and contingencies (Notes 1 and 6)            
             
Stockholders’ Equity            
             
Preferred Stock:            
Authorized: 20,000,000 shares, $0.00001 par value            
Issued and outstanding: no shares            
             
Common Stock:            
Authorized: 100,000,000 shares, $0.00001 par value            
Issued and outstanding:            
(16,760,000 shares as at May 31, 2007   168        
(19,675,578 shares as of November 30, 2007)         197  
Additional Paid In Capital   35,332     606,724  
Deferred Compensation   -     79,286  
Deficit Accumulated in the Development Stage   (30,594 )   (635,987 )
Total Stockholders’ Equity   4,906     50,220  
             
Total Liabilities and Stockholders’ Equity $  27,146   $  290,782  

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

F-2


Mantra Venture Group Ltd.
(A Development Stage Company)
Consolidated Statement of Operations
As of May 31, 2007 and November 30, 2007
(Expressed in US Dollars)

          Unaudited     Unaudited     Unaudited  
    Jan. 22,     June 01,     Sept. 01     Jan. 22,  
    2007     2007     2007     2007  
    (Inception)                 (Inception)  
    to May 31,     to Nov. 30     to Nov. 30     to Nov. 30  
    2007     2007     2007     2007  
                         
Revenues $  -   $  -   $  -        
                         
Expenses                        
                             Development costs   -     22,762     17,132     22,762  
                             General and administrative   30,594     582,631     339,989     631,225  
                         
Total expenses   30,594     605,393     357,121     635,987  
                         
Net Loss $ (30,594 ) $ (605,393 ) $ (357,121 ) $ (635,987 )
                         
Net Loss per Share – Basic and Diluted $ (0.00 ) $ (0.03 ) $ (0.02 )      
                         
                                  Weighted Average Shares Outstanding     16,760,000     19,675,578     19,675,578  

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

F-3


Mantra Venture Group Ltd.
(A Development Stage Company)
Consolidated Statement of Cash Flows
As of May 31, 2007 and November 30, 2007
(Expressed in US Dollars)

          Unaudited     Unaudited  
    Jan. 22,     June 01,     Jan. 22,  
    2007     2007     2007  
    (Inception)           (Inception)  
    to May 31,     to Nov. 30,     to Nov. 30,  
    2007     2007     2007  
Operating Activities                  
Net Loss   (30,594 )   (605,393 )   (635,987 )
Adjustments to reconcile net loss to cash                  
used in operating activities:                  
                             Amortization   1,323     5,275     6,598  
                             Services for shares   200     25,000     25,200  
                             Deferred compensation   -     64,191     64,191  
Change in operating assets and liabilities:                  
                             Accounts receivable   (357 )   (14,842 )   (15,199 )
                             Prepaid expenses   (932 )   (78 )   (1,010 )
                             Accounts payable and                  
                             Accrued liabilities   8,794     10,002     18,796  
                             Due to related parties   13,446     (2,179 )   11,267  
Net Cash Used In Operating Activities   (8,120 )   (518,024 )   (526,144 )
                   
Investing Activities                  
                   
Purchase of intangible assets   -     (12,000 )   (12,000 )
Purchase of property and equipment   (13,198 )   (44,995 )   (58,193 )
Net Cash Used In Investing Activities   (13,198 )   (56,995 )   (70,193 )
                   
Financing Activities                  
                   
Proceeds from the issuance of common stock   35,300     536,420     571,720  
Subscriptions received   -     210,500     210,500  
Net Cash provided by Financing Activities   35,300     746,920     782,220  
                   
Increase in cash   13,982     171,901     185,883  
Cash – Beginning of Period   -     13,982     -  
                   
Cash – End of Period $ 13,982   $ 185,883   $ 185,883  
                   
Supplemental Disclosures                  
Interest paid   none     none     none  
Income taxes paid   none     none     none  

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

F-4


Mantra Venture Group Ltd.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity
(Expressed in US Dollars, Unaudited)
Capital Stock

                      Deficit        
                      Accumulated        
                Additional     in the        
  Common Stock     Paid –In     Development        
                                                                                            Shares      Amount      Capital     Stage     Total  
    #     $      $      $      $   
Balance, January 22, 2007   -     -     -     -     -  
Common stock issued for cash at                              
$0.00001 per share   15,000,000     150     150     -     300  
Common stock issued for cash at                              
$0.02 per share   1,750,000     18     34,982     -     35,000  
Common stock issued for services at                              
$0.02 per share   10,000     -     200     -     200  
Net loss for the year ending                              
May 31, 2007   -     -     -     (30,594 )   (30,594 )
Balance, May 31, 2007   16,760,000     168     35,332     (30,594 )   (30,594 )
                               
Common stock issued for cash at                              
$0.10 per share   1,246,000     12     124,588     -     124,600  
Common stock issued for cash at                              
$0.25 per share   1,081,760     11     270,429     -     270,440  
Net loss for the quarter ending                              
August 31, 2007   -     -     1     (248,272 )   (248,271 )
Balance, Aug. 31, 2007 (unaudited)   19,087,760     191     430,350     (278,866 )   151,675  
                               
Common stock issued for cash at                              
$0.10 per share   500     -     50     -     50  
Common stock cancelled   (25,000 )   -     -     -     -  
Common stock issued for cash at                              
$0.25 per share   317,318     3     79,327     -     79,330  
Common stock issued for services at                              
$0.25 per share   100,000     1     24,999     -     25,000  
Common stock issued for acquisition at                              
$0.25 per share   40,000     -     10,000     -     10,000  
Common stock issued for cash at                              
$0.40 per share   155,000                          
           Allocation to shares   -     2     31,206     -     31,208  
           Allocation to warrants   -     -     30,792     -     30,792  
Stock based compensation   -     -     79,286     -     79,286  
Net loss for the quarter ending                              
November 30, 2007   -     -     -     (357,121 )   (357,121 )
Balance, Nov. 30, 2007 (unaudited)   19,675,578     197     686,010     (635,987 )   50,220  

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

F-5


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

1.

Nature of Operations and Continuance of Business

     

The Company was incorporated in the state of Nevada on January 22, 2007 to acquire and commercially exploit various new energy related technologies through licenses and purchases. The Company is a development stage company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “Accounting and Reporting by Development Stage Enterprises,” in the business of developing and providing energy alternatives.

     

These 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 yet to acquire commercially exploitable energy related technology, has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or 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 management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations.

     

As at November 30, 2007, the Company has accumulated losses of $635,987 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.

Summary of Significant Accounting Policies

     
a)

Basis of Presentation

     

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Mantra Energy Alternatives Ltd., incorporated in the state of Nevada on May 22, 2007. All significant intercompany balances and transactions have been eliminated. The Company’s fiscal year-end is May 31.

     
b)

Use of Estimates

     

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to deferred income tax asset valuations. The Company bases its 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 the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

     
c)

Basic and Diluted Net Earnings (Loss) Per Share

     
 

The Company computes net earnings (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. . At November 30, 2007, the Company had 1,560,000 dilutive potential shares outstanding.

F–6


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

2.

Summary of Significant Accounting Policies (continued)

     
d)

Comprehensive Loss

     

SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at May 31, 2007, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

     
e)

Cash and Cash Equivalents

     

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

     
f)

Financial Instruments

     

The fair values of financial instruments, which include cash, accounts receivable, prepaid expenses, accounts payable and accrued liabilities, and due to related parties were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

     
g)

Income Taxes

     

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “Accounting for Income Taxes” as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

     
h)

Foreign Currency Translation

     

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “Foreign Currency Translation”, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

F–7


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

2.

Summary of Significant Accounting Policies (continued)

     
i)

Stock-based Compensation

     

The Company has adopted the fair value recognition provisions of SFAS No. 123R “Share Based Payments”, using the modified retrospective transition method. The Company has not issued any stock options since its inception. Accordingly, there was no effect on the Company’s reported loss from operations, cash flows or loss per share as a result of SFAS No. 123R.

     
j)

Property and Equipment

     

Property & equipment is recorded at cost and is depreciated on a straight-line basis over the estimated useful lives of the related asset. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized.

     
k)

Long-Lived Assets

     

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company tests 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.

     
l)

Recent Accounting Pronouncements

     

In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

     

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.

F–8


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

3.

Property and Equipment


                  May 31, 2007  
            Accumulated     Net carrying  
      Cost     depreciation     value  
                     
  Automobile   11,938     1,323     10,615  
  Office furniture and equipment   1,260     –     1,260  
    $ 13,198   $ 1,323   $ 11,875  

The Company’s automobile is depreciated on a straight line basis over its 3 year estimated economic life after deducting an estimated $4,000 salvage value. Office furniture and equipment were acquired at or near the end of the Company’s fiscal year end and no depreciation was recorded for fiscal 2007.

4.

Related Party Balances/Transactions
     

As at May 31, 2007, the Company is indebted to the President of the Company for $13,446, representing expenses paid on behalf of the Company. This amount is unsecured, non-interest bearing and has no repayment terms.
     
5.

Common Stock and Preferred Stock
     
 
On July 12, 2007, 15,000,000 shares of common stock of 30,000,000 shares originally issued to the Company’s founder, CEO and sole Director were returned to treasury for no consideration and cancelled. The number of shares outstanding at May 31, 2007 reflects this event, reducing the number of shares for the Company’s initial capitalization to 15,000,000 shares of common stock.

Subsequent to May 31, 2007, the Company granted 165,000 shares of its common stock and options to purchase 1,350,000 shares of the Company’s common stock, to various employees and consultants. Each option gives the holder the right to purchase one share of common stock and is exercisable at $0.25, for two years from the date of the grant or vesting. A further 100,000 options to purchase shares of the Company’s common stock, to various employees and consultants, have been granted and is exercisable at $0.40, for two years from the date of the grant. In aggregate 1,450,000 options have been granted.

Subsequent to May 31, 2007, the Company organized several wholly owned subsidiary entities to conduct various aspects of its proposed business subsequent.

Subsequent to May 31, 2007, the Company sold 3,308,150 shares of its common stock in private placement offerings, raising approximately $742,325.
     
6.

Commitments
     

On May 1, 2007, the Company entered into a lease for premises in Vancouver, Canada. Under the terms of the lease, the Company is required to make monthly payments of $773 ($830CDN), plus applicable taxes until September 30, 2007. Thereafter, the monthly payment will increase by approximately 10% annually until September 30, 2009.

  Future lease payments for the next five years are as follows:
  2008 $  9,878  
  2009   10,847  
  2010   3,728  
  2011   –  
  2012   –  
         
    $  24,453  

F–9


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

7.

Income Taxes

   

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income Taxes." Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Income tax expense differs from the amount that would result from applying the U.S federal and state income tax rates to earnings before income taxes. The Company has a net operating loss carryforward estimated to be approximately $29,500 available to offset taxable income in future years which expires beginning in fiscal 2026. Pursuant to SFAS 109, the potential benefit of the net operating loss carryforward has not been recognized in the financial statements since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years.

   

The Company is subject to United States federal and state income taxes at an approximate rate of 35%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:


      May 31,2007  
  Net loss before income taxes per financial statements $ 30,594  
  Income tax rate   35%  
  Income tax recovery   (10,708 )
  Permanent differences   –  
  Temporary differences   383  
  Valuation allowance change   10,325  
  Provision for income taxes $  –  

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and liabilities at May 31, 2007, are as follows:

      May 31, 2007  
  Net operating loss carry forward $ 29,500  
  Valuation allowance   (29,500 )
  Net deferred income tax asset $  –  

The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

F–10


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

8.

Interim Financial Statements Presentation
   
 

The consolidated November 30, 2007 unaudited interim financial statements and the related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include the accounts of the Company and its wholly owned subsidies (Mantra Energy Alternatives Ltd., Mantra Media Corp., Carbon Commodity Corporation, Climate ESCO Ltd. and Mantra Wind Inc.). All significant intercompany balances and transactions have been eliminated. The Company’s fiscal year-end is May 31.

The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP") for interim financial information. They may not include all information and footnotes required by US GAAP for complete financial statements. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made.

Subsequent to November 30, 2007 the Company issued units consisting of one share of common stock and one non- transferable warrant for $0.40 per unit. Each holder of the non-transferable warrant has the right to acquire one share of the Company’s common stock for 0.50.

On December 24, 2007 the Company received clearance from the regulatory authorities to commence public trading of its common stock on the OTC BB. The trading symbol allocated to the Company is MVTG.

The Company has received subscriptions for its stock in cash and as of the quarter end of November 30, 2007 had not issued the stock associated with these subscriptions. The subscriptions in the amount of $210,500 have been recorded as cash and an offset of an equal amount recorded as a current liability; this liability will be extinguished by the issuance of common stock in the Company, at a price of $0.40 per share with one transferable warrant at $0.50 for each share issued, in accordance with the subscription agreements.

F–11


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

9. Intangible assets

Intangible assets consists of costs incurred related to technology patent applications. On October 1, 2007, the Company entered into an agreement and paid $12,000 to acquire the exclusive right, for a period of twelve months commencing October 1, 2007, to negotiate and obtain and exclusive worldwide license to exploit an invention known as “A Novel System for Detection and Extraction of Useful Signals in Three-Phase Power Systems” (the “TPS Processor”). The inventors of the TPS Processor (who are represented by the University of Toronto) filed patent applications for the TPS Processor in the United States and Canada in 2005. Those patent applications are pending and no patent has yet been granted in respect of the TPS Processor. There is no guarantee that any such patent will be granted in whole or in part.

On November 2, 2007, the Company entered into a technology assignment agreement whereby the Company acquired all right and title in and to a certain invention for the electro-reduction of carbon dioxide subject to a patent cooperation treaty application in consideration for 40,000 shares of the Company’s common stock with a fair value of $0.25 per share and options to purchase 250,000 shares of the Company’s common stock with a fair value of $15,095.

The costs of the Company’s intangible assets have been capitalized pursuant to FAS 141 “Business Combinations” and FAS 142 “Goodwill and Other Intangible Assets” as they have been developed to the point where technological feasibility has been proven. The Company will record amortization on its intangible assets upon receipt patent approval. If the Company fails to obtain the patents the costs will be expensed.

10. Non-Cash Transactions

During the six months ended November 30, 2007, the Company issued 40,000 common shares and 250,000 stock options pursuant to the acquisition of technology totalling $10,000. The technology acquired is for the Electro Reduction of Carbon Dioxide that has a patent application filed. The shares have a fair market value of $10,000 and options are valued at $15,095.

The Company issued 125,000 common shares and 1,200,000 stock options for services.

F–12


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

11. Financing Arrangements and Changes in Common Stock

On July 6, 2007, the Company issued 1,221,500 shares of our common stock to fifteen non US investors and eight US investors at $0.10 per share for cash proceeds of $122,150 and 25,000 shares of our common stock to a non US individual with a fair market value of $2,500 for consulting services. On September 7, 2007, the Company cancelled 25,000 shares of common stock that were issued for consulting services under a consulting agreement which was cancelled. In August 2007, the Company issued 1,102,000 shares of common stock to twenty-one non US investors, and to six US investors at $0.25 per share for cash proceeds of $275,500. All the above described shares were issued without a prospectus pursuant to Regulation S and Section 4(2) of the Securities Act.

On September 1, 2007 the Company issued options to purchase up to 550,000 common shares to seven consultants pursuant to consulting agreements for management or administrative services. Of the 550,000 options, 300,000 options vested on September 1, 2007 and will be exercisable at $0.25 per share until August 30, 2009 or upon the termination of consulting agreements, whichever occurs earlier. The remaining 250,000 options vested on January 1, 2008 and will be exercisable at $0.25 per share until December 31, 2009 or upon the termination of the applicable consulting agreements, whichever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

Also, in September 2007, the Company issued 37,878 shares of its common stock to one non US investor at $0.25 per share for cash proceeds of $9,470 and issued four consultants a total of 100,000 common shares with a fair market value of $0.25 per share for their consulting services. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

In October 2007, the Company issued 259,200 shares of its common stock to seven non US investors at $0.25 per share for cash proceeds of $64,800. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

On October 5, 2007, the Company issued to six consultants options to purchase up to 400,000 common shares pursuant to consulting agreements for advisory services in relation to our corporate and scientific advisory boards. The 400,000 options are exercisable at $0.25 per share until October 4, 2009 or upon the termination of the applicable consulting agreements, whichever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

On November 1, 2007 the Company issued to 0798465 BC Ltd., a company owned by our consultant and scientific advisory board member, Colin Oloman, 40,000 common shares and options to purchase up to 250,000 according to a technology assignment agreement. The options will be exercisable at $0.25 per share until October 31, 2012 or upon the rescission of the technology assignment agreement, whichever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

In November 2007, the Company issued to four consultants options to purchase up to 250,000 common shares pursuant to consulting agreements for technology, business and multi-media development services. The 250,000 options are exercisable at $0.25 or $0.40 per share within two years after the date of issuance of the options or upon the termination of the applicable consulting agreements, whichever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

In November 2007, the Company issued eight non US investors and one US investor an aggregate of 155,000 units at $0.40 per unit for cash proceeds of $62,000. Each unit consists of one common share and one warrant to purchase one common share at $0.50 per share for two years from the date of issuance of the warrants. Of the 155,000 warrants, 103,750 were issued November 20, 2007, 6,250 were issued on November 21, 2007 and 45,000 were issued on December 1, 2007. These securities were issued without a prospectus pursuant to Regulation S and Section 4(2) of the Securities Act.

F–13


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

12.

Interim financial statements (unaudited, as of November 30, 2007)

   

Stock Options

   

Options have been granted with an exercise price equal to the fair market value of our stock on the date of grant and expire either two years after grant or vesting or five years after grant, depending on the terms of the grant.

   

During the second fiscal quarter of our current fiscal year we granted 1,450,000 options with an exercise price equal to the fair market value of our stock on the date of the grant. The stock options vest over a period of 4 months from grant. The following table summarizes the activity of the issued stock options.


     Shares in thousands   Shares     Weighted     Weighted     Aggregate  
          Average     Average     Intrinsic Value  
          Exercise     Remaining        
          Price     Contractual        
                Life (months)        
Number of shares under option:                        
Outstanding at beginning of year   0     -              
    Granted   1,450   $ 0.26     29     -  
    Exercised   -     -              
    Forfeited   -     -              
    Expired   -     -              
    Outstanding at end of period   1,450   $ 0.26     29     -  
Exercisable at end of the quarter                        
(November 30, 2007)   1,100   $ 0.26     29     -  

The total fair value of the options vested during the quarter ended November 30, 2007 was $79,286. At November 30, 2007, the Company had no unrecognized compensation expense relating to unvested options. The compensation charge associated with stock options in the amount of $64,191 is included in the Statement of Operations for the six months ended November 30, 2007. The fair value of options associated with asset acquisition of $15,095 has been allocated to the asset.

F–14


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

12.

Interim financial statements (unaudited, as of November 30, 2007) (continued)

   

The fair value of stock-based compensation awards granted during the period under review was estimated using the Black – Scholes option-pricing model with the following assumptions:


  Grant   Grant     Expected     Expected     Dividend     Risk     Weighted-  
  Year   Date     Life     Volatility     Yield     Free     Average  
                              Interest     Grant Date  
                              Rate     Fair Value  
  2007   Sept. 01     24 months     16%     0%     3.92%   $ 22,877  
  2007   Oct. 05     24 months     16%     0%     4.01%   $ 14,770  
  2007   Nov. 01     24 months     16%     0%     3.69%   $ 1,608  
  2007   Nov. 01     60 months     17%     0%     3.93%   $ 15,095  
  2007   Nov. 05     24 months     16%     0%     3.58%   $ 16,652  
  2007   Nov. 15     24 months     17%     0%     3.20%   $ 8,284  
                                       
  $79,286                                    

As the Company has limited trading history, the S&P Small Cap Index was used to calculate volatility. The risk free interest rate is the rate currently available on zero-coupon U.S. government issues with a term equal to the expected life of the option. The dividend rate was 0% as the Company has not paid, and does not intend to pay any dividends. The expected life of the award is assumed to be equal to the full term of the award as the Company had not previously granted options. The fair value of the Company’s common stock was $0.25 at the measurement date. The Company determined that the fair value of their common stock was equal to the value of the Company’s most recent issuance of common stock for cash.

Additional information regarding stock options as at November 30, 2007 is as follows:

Number of    
Common Shares Exercise Prices Expiry Date
     
300,000 $0.25 August 30, 2009
400,000 $0.25 October 04, 2009
50,000 $0.25 October 31, 2009
50,000 $0.40 November 04, 2009
50,000 $0.40 November 14, 2009
350,000 $0.25 December 31, 2009
250,000 $0.25 October 31, 2012
1,450,000    

No stock options have expired as of November 30, 2007.

F-15


Mantra Venture Group Ltd.
(A Development Stage Company)
Notes to the November 30, 2007 Interim Consolidated Financial Statements (Unaudited)
(Expressed in US Dollars)

12. Interim financial statements (unaudited, as of November 30, 2007) (continued)

A summary of the status of the Company’s non-vested shares as of November 30, 2007, and changes during the six month period ended November 30 2007, is presented below:

  Shares in Thousands         Weighted-Average  
            Grant-Date  
      Number     Fair Value  
      of Shares   $  
  Non-vested at May 31, 2007   –     –  
  Granted   1,450     0.05  
  Vested   (1,100 )   0.08  
  Non-vested at November 30, 2007   350     0.05  

Share Purchase Warrants

During the six month period ending November 30, 2007, 110,000 share purchase warrants were outstanding as follows:

Number of Warrants Exercise Price Expiry Date
103,750 $0.50                    November 19, 2009
    6,250 $0.50                    November 20, 2009
110,000    

          The fair value of the share purchase warrants issued during the period ending November 30, 2007, was in the amount of $30,792, which was determined using the Black – Scholes option value model with the following assumptions:

Grant
Year

Grant
Date

Expected
Life

Expected
Volatility

Dividend
Yield

Risk
Free
Interest
Rate 		Weighted-
Average
Grant Date
Fair Value
2007 Nov. 20 24 months 17% 0% 3.1% $0.26
2007 Nov. 21 24 months 17% 0%    2.99% $0.26

F-16

Item 2. Management’s Discussion and Analysis or Plan of Operation

We have never generated any revenues and we have incurred significant operating losses from operations since our inception. We will need additional financing to sustain operations. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months. We anticipate that we will continue to incur losses for the next 24 months. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company.

Overview

We were incorporated as a Nevada company on January 22, 2007. Our principal office is located at 1205 – 207 West Hastings Street, Vancouver, British Columbia, Canada, V6B 1H7. Our telephone number is (604) 609 2898. Our fiscal year end is May 31. Our website is www.mantraenergy.com. Our common stock is quoted on the OTC Bulletin Board under the symbol “MVTG.OB.”

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. We have not yet acquired or developed a commercially exploitable technology. Our mission is to develop and commercialize alternative energy technologies and services to enable sustainable consumption, production and management of resources on residential, commercial and industrial scales.

We have five wholly owned subsidiaries, all of which were incorporated in the State of Nevada: Mantra Energy Alternatives Ltd., Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Media Corp., and Mantra Wind Inc.

Results of Operations for the Period From January 22, 2007 (Date of Inception) to November 30, 2007 and for the Three Months Ended November 30, 2007.

Lack of Revenues

We had limited operational history. Since our inception on January 22, 2007 to November 30, 2007, we have never generated any revenues. As of November 30, 2007, we had total assets of $290,782 and total liabilities of $240,562. We anticipate that we will incur substantial losses over the next year and our ability to generate any revenues in the next 12 months continues to be uncertain.

Expenses

We accumulated total expenses of $635,987 from January 22, 2007 (date of inception) to November 30, 2007, including $6,598 in amortization, $119,987 in consulting fees, $47,607 in professional fees, $19,840 in rent and $441,955 in general and administrative expenses.

20

For the three months ended November 30, 2007, we incurred total expenses of $357,121, including $3,675 in amortization, $80,532 in consulting fees, $18,053 in professional fees, $11,984 in rent and $242,877 in general and administrative expenses.

Our general and administrative expenses consist of bank charges, travel, meals and entertainment, foreign exchange, office maintenance, communication expenses (cellular, internet, fax, and telephone), courier, postage costs and office supplies. Our professional fees include legal, accounting and auditing fees.

Net Loss

Since our inception on January 22, 2007 to November 30, 2007, we have incurred a net loss of ($635,987). For the three months ended November 30, 2007, we incurred net loss of ($357,121).

Plan of Operation

Our corporate strategy for the next 12 months includes the following:

  • Acquire alternative energy supply and production technologies and develop and market these technologies;
  • Hire consultants to identify and contact companies with carbon dioxide waste streams who may serve as our potential clients and customers;
  • Enter into development, licensing or sales agreements with third party manufacturers, distributors and consultants;
  • Install our products and use them to create valuable chemicals produced with our technologies;
  • Sell our technologies to other companies within exclusive geographic territories;
  • Develop our promotional and marketing services through our wholly owned subsidiary Mantra Media;
  • Develop our carbon emissions reduction commodity business through our wholly owned subsidiary, Carbon Commodity Corp; and
  • Through our wholly-owned subsidiary, Climate ESCO, develop and market services to assist in the identification and integration of sustainable technology solutions.

There is limited historical financial information about us upon which to base an evaluation of our performance. We are in the start-up stage phase and have generated no revenues. We cannot guarantee that we will be successful in our business operations. Our business is subject to the usual risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products. We intend to acquire technologies, products and services by payment of cash or our equity securities or by purchasing a company. Also, we plan to enter into joint ventures, partnerships or strategic acquisition for the development and commercialization of our technologies.

Even though we plan to raise capital by equity or debt financing, we believe that debt financing may not be a viable alternative as we do not have tangible assets upon which to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any

21

financing arranged as yet and we cannot provide investors with any assurance that we will be able to raise sufficient funds from the sale of our common stock to fund our operation and exploration activities. In the absence of such financing, we will not be able to purchase technologies, or to carry out a carbon reduction marketplace business. Even if we are successful in obtaining equity financing to fund our operation and exploration, there is no assurance that we will obtain the funding necessary to pursue any advanced expansion of our proposed business plan. If we do not continue to obtain additional financing, we will be forced to abandon our properties, our plan of operation and the expansion of our business.

We may consider entering into joint venture, partnership or other strategic alliances to provide the required funding to fully carry out our business plan. If we enter into a joint venture, partnership, or other strategic alliances, we would likely have to assign a percentage of our interest in the business to the partner. The assignment of the interest would be conditional upon contribution by the partner of sufficient capital to enable us to proceed fully with our business plans and any future expansion of the business. We currently do not have any commitments or agreements regarding partnership, joint ventures or other strategic alliances. Our management is also unable to predict whether or when any strategic transactions will occur or the likelihood of any particular transaction being completed on favorable terms and conditions. Partnership, joint ventures or other strategic transactions may present financial, managerial and operational challenges. Any failure to integrate new businesses or manage any new alliances successfully could adversely affect our business and financial performance.

Liquidity and Capital Resources

At November 30, 2007 we had cash of $185,883 in our bank accounts. At November 30, 2007, we had a working capital deficit of ($38,470). Our accumulated deficit was ($635,987) as at November 30, 2007. We are solely dependent on the funds raised through our equity or debt financing. Our net loss of ($635,987) from January 22, 2007 (date of inception) to November 30, 2007 was funded by our equity financing. Since January 22, 2007 (date of inception) to November 30, 2007, we raised $782,220 in cash from the sale of our securities.

We expect to require approximately $3,578,000 in financing to acquire and develop technologies and launch the online carbon reduction marketplace over the next 12 months (beginning January 2008), as follows:

22


  Estimated
Description expenses
  ($)

Completion, full launch and development of an online carbon reduction marketplace

1,135,000

Development and marketing of TPS Processor

560,000

Development and marketing of ERC Technology

513,000

Development of the end-to-end energy services business

525,000
Development of the promotional and marketing service business 225,000
Preliminary development of Wind Farms 620,000
Total 3,578,000

Our other planned operational expenses for the next twelve months (beginning January 2008) are summarized as follows:


Description
Target completion date or
period 		Estimated
expenses
($)
Attendance at Carbon Forum February 28, 2008 6,000
Attendance at Fuel Cell Forum March 31, 2008 7,000
Completion of road shows January 31, 2008 26,000
Management and consulting fees (including expenses of the proposed Scientific Advisory Board) 12 months 430,000
Raise additional private or public equity (legal, accounting and marketing fees) September 30, 2008 176,000
General and Administrative Expenses 12 months 115,000
Total   760,000

At present, our cash requirements for the next twelve months outweigh the funds available to maintain or develop our operations. Of the $4,338,000 that we need for the next 12 months, we had $185,883 in cash as of November 30, 2007. In order to fully carry out our business plan, we need additional financing of approximately $4,152,000 for the next 12 months. In order to improve our liquidity, we intend to pursue additional equity financing from private investors or possibly a registered public offering. We intend to negotiate with our management and consultants to pay parts of salaries and fees with

23

stock and stock options instead of cash. There can be no assurance we will be successful in our efforts to secure additional equity financing. If we are unable to raise equity or obtain alternative financing, we may not be able to continue operations with respect to the continued development and marketing of our company and our subsidiaries and we may not be able to continue our operations and our business plan may fail. You may lose your entire investment.

If operations and cash flow improve through these efforts, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or an improvement in our liquidity situation. The threat of our ability to continue as a going concern will be removed only when revenues have reached a level that sustains our business operations.

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.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. 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. Actual results could differ from those estimates. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. Note 2 to the financial statements, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements. The following is a brief discussion of the critical accounting policies and methods used by us.

Foreign Currency Translation

Our functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “Foreign Currency Translation”, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. We have not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

24

Stock-based Compensation

We have adopted the fair value recognition provisions of SFAS No. 123R “Share Based Payments”, using the modified retrospective transition method. We did not issue any stock options since our inception to May 31, 2007. Accordingly, there was no effect on our reported loss from operations, cash flows or loss per share as a result of SFAS No. 123R. As of January 7, 2008, we issued 1,150,000 stock purchase options to our consultants for their consulting services.

As we have limited trading history, the S&P Small Cap Index was used to calculate volatility. The risk free interest rate is the rate currently available on zero-coupon U.S. government issues with a term equal to the expected life of the option. The dividend rate was 0% as we have not paid, and do not intend to pay any dividends. The expected life of the award is assumed to be equal to the full term of the award as we had not previously granted options. The fair value of our common stock was $0.25 at the measurement date. We determined that the fair value of their common stock was equal to the value of our most recent issuance of common stock for cash.

Item 3A(T). Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of November 30, 2007. Based on this evaluation, our management has concluded that our disclosure controls and procedures adequately ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. The evaluation did not identify any change in our internal control over financial reporting that occurred during the fiscal year ended November 30, 2007 that has materially affected or is reasonably likely to materially affect our internal control over such reporting.

The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's Board of Directors, management and other personnel, 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 and includes those policies and procedures that:

(1)

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

   
(2)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

25


(3)

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, or use or disposition of the registrant's assets that could have a material effect on the financial statements.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

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

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

From September 1, 2007 to November 30, 2007, we made the following sales of unregistered securities:

  • On September 1, 2007 we issued options to purchase up to 550,000 common shares to seven consultants pursuant to consulting agreements for management or administrative services. Of the 550,000 options, 300,000 options vested on September 1, 2007 and will be exercisable at $0.25 per share until August 30, 2009 or upon the termination of consulting agreements, whatever occurs earlier. The remaining 250,000 options vested on January 1, 2008 and will be exercisable at $0.25 per share until December 31, 2009 or upon the termination of the applicable consulting agreements, whichever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

  • In September 2007, we issued 37,878 shares of our common stock to one non US investor at $0.25 per share for cash proceeds of $9,470 and issued four consultants a total of 100,000 common shares with a fair market value of $0.25 per share for their consulting services. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

  • In October 2007 we issued 259,200 shares of our common stock to seven non US investors at $0.25 per share for cash proceeds of $64,800. These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.

  • On October 5, 2007, we issued six consultants options to purchase up to 400,000 common shares pursuant to consulting agreements for advisory services in relation to our corporate and scientific advisory boards. The 400,000 options are exercisable at $0.25 per share until October 4, 2009 or upon the termination of the applicable consulting agreements, whichever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

  • On November 1, 2007 we issued 0798465 BC Ltd., a company owned by our consultant and scientific advisory board member, Colin Oloman, 40,000 common shares and options to purchase up to 250,000 according to a technology assignment agreement. The options will be exercisable at $0.25

26

    per share until October 31, 2012 or upon the rescission of the technology assignment agreement, whatever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

  • In November 2007 we issued to four consultants options to purchase up to 250,000 common shares pursuant to consulting agreements for technology, business and multi-media development services. The 250,000 options are exercisable at $0.25 or $0.40 per share within two years after the date of issuance of the options or upon the termination of the applicable consulting agreements, whichever occurs earlier. These securities were issued without a prospectus pursuant to Regulation S of the Securities Act.

  • In November 2007 we issued eight non US investors and one US investor an aggregate of 155,000 units at $0.40 per unit for cash proceeds of $62,000. Each unit consists of one common share and one warrant to purchase one common share at $0.50 per share for two years from the date of issuance of the warrants. Of the 155,000 warrants, 103,750 were issued November 20, 2007, 6,250 were issued on November 21, 2007 and 45,000 were issued on December 1, 2007. These securities were issued without a prospectus pursuant to Regulation S and Section 4(2) of the Securities Act.

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.

Our reliance upon the exemption under Section 4(2) of the Securities Act of 1933 was based on the fact that the issuance of these shares did not involve a “public offering.” The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, the investors had the necessary investment intent as required by Section 4(2) since they agreed to and received a share certificate bearing a legend stating that such shares are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a "public offering." The investors negotiated the terms of the transactions directly with our executive officers. No general solicitation was used, no commission or other remuneration was paid in connection with these transactions, and no underwriter participated. Based on an analysis of the above factors, these transactions were effected in reliance on the exemption from registration provided in Section 4(2) of the Securities Act for transactions not involving any public offering.

Each investor was given adequate access to sufficient information about us to make an informed investment decision. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to any of the purchasers.

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Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

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Item 6. Exhibits

Exhibit Description
No.  
10.1 Larry Kristof Consulting Agreement dated September 1, 2007 (1)
   
10.2 David Warren Consulting Agreement dated September 1, 2007 (1)
   
10.3 Fred Mandl Consulting Agreement dated September 1, 2007 (1)
   
10.4 John Russell Consulting Agreement dated September 1, 2007 (1)
 
10.5 The Governing Council of the University of Toronto Agreement dated October 1, 2007 (1)
 
10.6 Technology Assignment Agreement with 0798465 BC Ltd. dated November 2, 2007 (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) Included as exhibits on our Form SB-2 filed October 18, 2007.
(2) Included as an exhibit on our Form 10Q filed January 22, 2008.

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 21, 2008 Larry Kristof
  President, Chief Executive Officer
  Director
   
  /s/ David Warren
Date: April 21, 2008 David Warren
  Chief Financial Officer
  Principal Accounting Officer

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