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

FORM 10-Q

(Mark One)

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

For the quarterly period ended August 31, 2011

or

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

For the transition period from ________________________ to ________________________

Commission File Number 000-53461

MANTRA VENTURE GROUP LTD.
(Exact name of registrant as specified in its charter)

British Columbia	26-0592672
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
#4 – 2119, 152nd Street, Surrey, British Columbia, Canada	V4A 4N7
(Address of principal executive offices)	(Zip Code)

(604) 535 4145
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] YES     [   ] NO

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

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
[   ] YES     [   ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
44,003,256 common shares issued and outstanding as of October 24, 2011.

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Table of Contents

PART I - FINANCIAL INFORMATION		3
	Item 1. Financial Statements	3
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	12
	Item 4. Controls and Procedures	12
PART II – OTHER INFORMATION		13
	Item 1. Legal Proceedings	13
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	13
	Item 3. Defaults Upon Senior Securities	13
	Item 4. [Removed and Reserved]	14
	Item 5. Other Information	14
	Item 6. Exhibits	14
SIGNATURES		16

2

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

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

3

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Consolidated financial statements
August 31, 2011
(Expressed in U.S. dollars)
(unaudited)

 

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

4

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Consolidated balance sheets
(Expressed in U.S. dollars)

		August 31,			May 31,
		2011			2011
		$			$
		(unaudited)
ASSETS
Current assets
Cash		21,908			39,101
Amounts receivable		33,608			25,549
Inventory		16,069			15,979
Prepaid expenses and deposits		18,395			21,349
Total current assets		89,980			101,978
Property and equipment (Note 3)		56,461			63,656
Total assets		146,441			165,634
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities		677,767			676,675
Due to related parties (Note 4)		236,558			205,695
Deferred revenue		3,100			–
Loans payable (Note 5)		147,759			112,903
Convertible debentures (Note 6)		250,000			250,000
Total liabilities		1,315,184			1,245,273
Nature of operations and continuance of business (Note 1)
Commitments (Note 10)
Stockholders’ deficit
Mantra Venture Group Ltd. 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: 44,003,256 shares (May 31, 2011 – 40,540,756 shares)		440			405
Additional paid-in capital		5,091,654			4,827,439
Common stock subscribed (Note 7)		55,528			163,000
Deficit accumulated during the development stage		(6,308,130	)		(6,080,808	)
Total Mantra Venture Group Ltd. stockholders’ deficit		(1,160,508	)		(1,089,964	)
Non-controlling interest		(8,235	)		10,325
Total stockholders’ deficit		(1,168,743	)		(1,079,639	)
Total liabilities and stockholders’ deficit		146,441			165,634

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

F-1

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Consolidated statements of operations
(Expressed in U.S. dollars)
(unaudited)

								Accumulated from
		Three Months			Three Months			January 22, 2007
		Ended			Ended			(date of inception) to
		August 31,			August 31,			August 31,
		2011			2010			2011
		$			$			$
Revenue		550			–			23,054
Cost of goods sold		490			–			2,725
Gross profit		60			–			20,329
Operating expenses
Business development		1,243			–			315,197
Consulting and advisory		128,760			18,792			807,582
Depreciation and amortization		7,195			8,782			131,336
Foreign exchange loss (gain)		(1,949	)		(4,425	)		58,323
General and administrative		6,070			11,520			378,417
License fees		–			–			33,438
Management fees (Note 4)		48,000			48,564			1,006,459
Professional fees		39,130			8,845			775,092
Public listing costs		1,881			593			212,793
Rent		8,671			10,946			196,736
Research and development		–			–			418,206
Shareholder communications and awareness		–			470			638,685
Travel and promotion		3,739			13,729			394,625
Wages and benefits		–			31,295			739,509
Website development/corporate branding		–			–			195,451
Write down of intangible assets		–			–			37,815
Total operating expenses		242,740			149,111			6,339,664
Loss before other income (expense)		(242,680	)		(149,111	)		(6,319,335	)
Other income (expense)
Accretion of discounts on convertible debentures		–			–			(45,930	)
Government grant income		–			–			118,324
Interest expense		(6,452	)		(6,165	)		(76,386	)
Gain (loss) on settlement of debt		3,250			–			(56,378	)
Total other income (expense)		(3,202	)		(6,165	)		(60,370	)
Net loss for the period		(245,882	)		(155,276	)		(6,379,705	)
Less: net loss attributable to the non-controlling interest		18,560			–			71,575
Net loss attributable to Mantra Venture Group Ltd.		(227,322	)		(155,276	)		(6,308,130	)
Net loss per share attributable to Mantra Venture Group Ltd. common shareholders, basic and diluted		(0.01	)		–
Weighted average number of shares outstanding used in the calculation of net loss attributable to Mantra Venture Group Ltd. per common share		40,900,539			34,721,241

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

F-2

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Consolidated statements of cash flows
(Expressed in U.S. dollars)
(unaudited)

								Accumulated from
		Three Months			Three Months			January 22, 2007
		Ended			Ended			(date of inception) to
		August 31,			August 31,			August 31,
		2011			2010			2011
		$			$			$
Operating activities
Net loss for the period		(245,882	)		(155,276	)		(6,379,705	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discounts on convertible debentures		–			–			45,930
Depreciation and amortization		7,195			8,782			131,336
Foreign exchange loss		166			(717	)		4,633
Loss on settlement of debt		(3,250	)		–			56,378
Stock-based compensation		78,500			–			1,547,583
Write-down of intangible assets		–			–			37,815
Changes in operating assets and liabilities:
Amounts receivable		(8,059	)		4,233			(33,608	)
Inventory		(90	)		–			(16,069	)
Prepaid expenses and deposits		2,954			761			(18,395	)
Other assets		–			–			(12,000	)
Accounts payable and accrued liabilities		27,092			12,772			1,030,761
Deferred revenue		3,100			–			3,100
Due to related parties		30,863			47,146			236,558
								-
Net cash used in operating activities		(107,411	)		(82,299	)		(3,365,683	)
								-
Investing activities
Purchase of property and equipment		–			–			(175,797	)
Net cash used in investing activities		–			–			(175,797	)
Financing activities
Proceeds from loans payable		34,690			5,000			143,126
Proceeds from issuance of convertible debentures		–			–			250,000
Proceeds from issuance of common stock and subscriptions received		55,528			83,200			3,170,262
Net cash provided by financing activities		90,218			88,200			3,563,388
Change in cash		(17,193	)		5,901			21,908
Cash, beginning of period		39,101			4,325			–
								-
Cash, end of period		21,908			10,226			21,908
Non-cash investing and financing activities:
Shares issued to settle debt		22,750			–			409,372
Shares issued and stock options granted for acquisition of intangible assets		–			–			37,815
Supplemental disclosures:
Interest paid		–			–			–
Income taxes paid		–			–			–

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

F-3

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Notes to the consolidated financial statements
Three months ended August 31, 2011
(Expressed in U.S. dollars)
(unaudited)

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. On December 8, 2008, the Company continued its corporate jurisdiction out of the State of Nevada and into the province of British Columbia, Canada. The Company is a development stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities,” in the business of developing and providing energy alternatives. The Company also provides marketing and graphic design services to help companies optimize their environmental awareness presence through the eyes of government, industry and the general public.
	These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has yet to acquire commercially exploitable energy related technology, has not generated significant revenues since inception, and unlikely to 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 August 31, 2011, the Company has a working capital deficit of $1,225,204 has not generated significant revenues, and has accumulated losses of $6,308,130 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated 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.
	Management requires additional funds over the next twelve months to fully implement its business plan. Management is currently seeking additional financing through the sale of equity and from borrowings from private lenders to cover its operating expenditures. There can be no certainty that these sources will provide the additional funds required for the next twelve months.
2.	Recent Accounting Pronouncements
	In January 2010, the FASB issued an amendment to ASC 820, “Fair Value Measurements and Disclosure”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The adoption of the applicable standard on June 1, 2011 did not have a material effect on the Company’s consolidated 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.

F-4

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Notes to the consolidated financial statements
Three months ended August 31, 2011
(Expressed in U.S. dollars)
(unaudited)

3.	Property and Equipment

									August 31,			May 31,
									2011			2011
						Accumulated			Net carrying			Net carrying
			Cost			depreciation			value			value
			$			$			$			$
	Automobile		11,938			10,851			1,087			1,684
	Leasehold improvements		25,144			7,061			18,083			19,340
	Office furniture and equipment		53,777			37,793			15,984			18,673
	Research equipment		53,793			32,486			21,307			23,959
			144,652			88,191			56,461			63,656

4.	Related Party Transactions
	(a)	During the three months ended August 31, 2011, the Company incurred management fees of $18,000 (2010 - $15,564) to the President of the Company.
	(b)	During the three months ended August 31, 2011, the Company incurred management fees of $15,000 (2010 - $10,414) to the spouse of the President of the Company.
	(c)	During the three months ended August 31, 2011, the Company incurred management fees of $15,000 (2010 - $15,000) to a director of the Company.
	(d)	During the three months ended August 31, 2011, the Company incurred management fees of $nil (2010 - $18,000) to an accounting firm where the former Chief Financial Officer of the Company is a partner.
	(e)	During the three months ended August 31, 2011, the Company incurred management fees of $nil (2010 - $17,360) to the former Vice President of the Company.
	(f)	As at August 31, 2011, the Company owes $33,552 (May 31, 2011 - $25,184) to the spouse of the President of the Company which is non-interest bearing, unsecured, and due on demand.
	(g)	As at August 31, 2011, the Company owes $28,588 (May 31, 2011 - $13,207) to a director of the company, which is non-interest bearing, unsecured, and due on demand.
	(h)	As at August 31, 2011, the Company owes a total of $174,418 (May 31, 2011 - $167,304) to the President of the Company and a company controlled by the President of the Company which is non-interest bearing, unsecured, and due on demand.
5.	Loans Payable
	(a)	As at August 31, 2011, the amount of $79,935 (Cdn$78,250) (May 31, 2011 - $70,403 (Cdn$68,250) is owed to non-related parties which is non-interest bearing, unsecured, and due on demand.
	(b)	As at August 31, 2011, the amount of $30,834 (Cdn$30,000) (May 31, 2011 – $nil) is owed to a non-related party, which bears a one-time interest charge of $204 (Cdn$200), is unsecured, and due on demand.
	(c)	As at August 31, 2011, the amount of $36,990 (May 31, 2011 - $42,500) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.

F-5

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Notes to the consolidated financial statements
Three months ended August 31, 2011
(Expressed in U.S. dollars)
(unaudited)

6.	Convertible Debentures
	In October 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 issuance at an exercise price of $0.50 per share.
	In accordance with ASC 470-20, “Debt with Conversion and Other Options”, 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 ASC 470-20, “Debt with Conversion and Other Options”, 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 fair value of the share purchase warrants of $45,930 as additional paid-in capital and an equivalent discount against the convertible debentures. The Company has recorded accretion expense of $45,930, increasing the carrying value of the convertible debentures to $250,000.
7.	Common Stock
	(a)	On June 23, 2011, the Company’s subsidiary, Climate ESCO Ltd., received subscriptions for 20,000 shares of common stock at $0.10 per share for proceeds of $2,000. As at August 31, 2011, the shares had not been issued.
	(b)	On July 27, 2011, the Company issued 150,000 shares with a fair value of $12,000 to a consultant for financial public relations services.
	(c)	On July 27, 2011, the Company issued 250,000 shares of common stock with a fair value of $17,500 pursuant to an investor relations agreement.
	(d)	On August 8, 2011, the Company issued 700,000 shares of common stock with a fair value of $49,000 to a consultant for services.
	(e)	On August 10, 2011, the Company issued 300,000 shares of common stock and 25,000 units with an aggregate fair value of $22,750 to the former Vice President of corporate development for $26,000 to settle amounts owing. The Company recorded a gain on settlement of debt of $3,250. 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 $0.20 per share expiring on the earlier of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.
	(f)	On August 31, 2011, the Company issued 2,037,500 units at $0.08 per unit for proceeds $163,000, which was recorded as common stock subscribed as at May 31, 2011. 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 $0.20 per share expiring on the earlier of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.

F-6

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Notes to the consolidated financial statements
Three months ended August 31, 2011
(Expressed in U.S. dollars)
(unaudited)

7.	Common Stock (continued)
	(g)	During the three months ended August 31, 2011, the Company received share subscriptions for 1,070,550 units at $0.05 per unit for proceeds of $53,528. Each unit will consist of one common share and one-half non-transferrable warrant to purchase one additional share of common stock at an exercise price of $0.20 per share expiring on the earlier of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.
8.	Share Purchase Warrants
	The following table summarizes the continuity of share purchase warrants:

						Weighted
						average
						exercise
			Number of			price
			warrants			$
	Balance, May 31, 2011		7,736,497			0.22
	Issued		2,062,500			0.20
	Expired		(1,178,667	)		0.30
	Balance, August 31, 2011		8,620,330			0.21

As at August 31, 2011, the following share purchase warrants were outstanding:

F-7

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Notes to the consolidated financial statements
Three months ended August 31, 2011
(Expressed in U.S. dollars)
(unaudited)

9.	Stock Options
	The following table summarizes the continuity of the Company’s stock options:

Weighted

Weighted

average

average

Aggregate

exercise

remaining

intrinsic

Number

price

contractual life

value

of options

$

(years)

$

Outstanding, May 31, 2011

1,575,000

0.17

Expired

(75,000

)

0.15

Outstanding and exercisable, August 31, 2011

1,500,000

0.17

1.7

Additional information regarding stock options as of August 31, 2011, is as follows:

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

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.

F-8

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MANTRA VENTURE GROUP LTD.
(A development stage company)
Notes to the consolidated financial statements
Three months ended August 31, 2011
(Expressed in U.S. dollars)
(unaudited)

10.	Commitments (continued)
	(b)	On August 6, 2010, the Company entered into a premises agreement for a period of eighteen months where it is obligated to pay a base rent of Cdn$1,894 per month for the first year and Cdn$2,030 per month thereafter.
	(c)	On July 27, 2011, the Company entered into an agreement where it is obligated to pay the investor relations consultant 250,000 shares of common stock per month for a period of six months.

F-9

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

Forward Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "US$" refer to United States dollars and all references to "common stock" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our" and "our company" mean Mantra Venture Group Ltd. and our wholly owned subsidiaries Carbon Commodity Corporation, Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc., as well as our majority owned subsidiary Climate ESCO Ltd., unless otherwise indicated.

Business Overview

We were incorporated in Nevada on January 22, 2007. On December 8, 2008 we continued our corporate jurisdiction out of the state of Nevada and into the Province of British Columbia, Canada. Our principal offices are located at # 4 2119 152^nd Street Surrey BC V4A 4N7. Our telephone number is (604) 535 4145. Our fiscal year end is May 31.

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.

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.

5

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We are a development stage company that has only recently begun operations. We have generated only nominal revenues from our intended business activities, and we do not expect to generate significant revenues in the next 12 months. Other than our invention for the electro-reduction of carbon dioxide, we have not yet developed or acquired any commercially exploitable technology. Since our inception, we have incurred operational losses and we have completed several rounds of financing to fund our operations.

We carry on our business through our subsidiaries as follows:

• Mantra Energy Alternatives Ltd., through which we identify, acquire, develop and market technologies related to alternative energy production, greenhouse gas emissions reduction and resource consumption reduction;
• Mantra Media Corp., through which we offer promotional and marketing services to companies in the sustainability sector or those seeking to adopt sustainable practices; and
• Climate ESCO Ltd, majority owned, through which we distribute and install LED lighting solutions.

We also have a number of inactive subsidiaries which we plan to engage in various business activities in the future.

On August 16, 2011, we entered into a technology development cooperation agreement with KC Cottrell Co., Ltd. and Korea Southern Power Co., Ltd. pursuant to which KC will provide our company with the basic framework and support for the successful execution of tasks for our company’s electrochemical reduction of carbon dioxide technology development as planned at Ha-dong Power Plant in the Republic of Korea. KC has also agreed to equally share the cost of the project, which is not to exceed US $1,000,000 with our company. The Technology Agreement will expire by the completion of the demonstration project or by July 30, 2011.

On August 25, 2011, we entered into a consulting agreement with Richard Malcolm Smith, whereby Mr. Smith has agreed to provide certain management consulting services to our company for a period of six months regarding our ongoing corporate development and acquisitions. In consideration for the services, we have agreed to issue to Mr. Smith 700,000 shares of our common stock, previously registered on a Form S-8 registration statement.

Electro Reduction of Carbon Dioxide (“ERC”)

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 in and to a certain chemical process for the electro-reduction of carbon dioxide as embodied by and described in the following patent cooperation treaty application:

The reactor at the core of the chemical process, referred to as the electrochemical reduction of carbon dioxide, or ERC, has been proven functional through small scale prototype trials. ERC offers a possible solution to reduce the impact of carbon dioxide (CO2) on Earth’s environment by converting CO2 into chemicals with a broad range of commercial applications, including a fuel for a next generation of fuel cells. Powered by electricity, the ERC process combines captured carbon dioxide with water to produce materials, such as formic acid, formate salts, oxalic acid and methanol, that are conventionally obtained from the thermo-chemical processing of fossil fuels. However, while thermo-chemical reactions must be driven at relatively high temperatures that are normally obtained by burning fossil fuels, ERC operates at near ambient conditions and is driven by electric energy that can be taken from an electric power grid supplied by hydro, wind, solar or nuclear energy.

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In fuel cells liquid fuels are indirectly burned with air to form carbon dioxide and water, while generating electricity. This process is known as electrochemical combustion or electrooxidation. The complementary nature of ERC and electrooxidation makes it possible to use ERC in a regenerative fuel cell cycle, where carbon dioxide is converted to a fuel that is consumed in a fuel cell to regenerate carbon dioxide. As shown in the figure, the net energy input required in this cycle could be supplied from a renewable or non-fossil fuel source.

ERC has been shown to produce a range of compounds, including formic acid, formate salts, oxalic acid, and methanol. The efficiency for generation of each compound depends on the experimental conditions, most importantly the material of the cathode, which catalyses the electrochemical reactions.

Until appropriate cathodes are found some products of CO2 reduction (methanol, for instance) are obtained at efficiencies too low for practical use. Other products can be generated on known cathodes with high current yields that could support valuable practical processes. For example, formic acid has been obtained on tin cathodes with current yields above 80%. Formate salts and sodium bicarbonate are obtained at similarly high yields.

ERC Development to Date

We have retained one of the creators of the technology, Professor Colin Oloman, as a member of our scientific advisory board, to further develop the carbon dioxide reduction process to achieve optimal results on a consistent basis. On June 1, 2008, we entered into a technology development and support agreement with Kemetco Research Inc., an integrated science, technology and innovation company. Pursuant to that agreement, we have established a research and development facility for the ERC in Vancouver, British Columbia, staffed by a dedicated research team provided by Kemetco.

In October of 2008, we completed our first ERC prototype reactor capable of processing 1 kilogram of CO2 per day. In order to facilitate the testing and development of this reactor, we entered into an agreement with Kemetco on January 29, 2010. The agreement was intended to govern the development and testing of our prototype reactor for a period of 10 months and contemplated costs of approximately $250,000 including labor and materials purchases. On March 18, 2010 we entered into another agreement with Kemetco which amended and replaced the January 29, 2010 agreement. Under the terms of the latest agreement, we have agreed to proceed with the testing and development of our ERC prototype reactor for a period of 5 months at an estimated cost of approximately $125,000.

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Pictured Above, Design for Bench Scale ERC Reactor

We anticipate that commercialization of ERC will require us to develop reactors capable of processing not less than 100 tons of CO2 per day; however, there is no guarantee that we will successfully produce reactors of that size. Production of commercially viable ERC reactors will depend on continued research and development, successful testing of small scale ERC reactors, and securing of additional financing. At the conclusion of our current agreement and development program with Kemetco, an assessment will be made of the project’s progress and the next phase to be conducted.

Established and Emerging Market for ERC and By-Products:

The technology behind ERC can be applied to any scale commercial venture which outputs CO2 into the atmosphere. We anticipate that, once fully commercialized, we will be able to offer ERC as a CO2 management system to various industry including steel, power generation and lumber.

The existing applications of ERC by-products include use as feedstock preservatives, de-icing solutions, and baking soda, among others. Sodium Formate and Formic Acid, two of the main by-products of ERC, currently have an average market value of $1,200/ton, with more than 600,000 tons of formic acid produced annually (Li, 2006). Their applications are diverse, including feedstock preservatives, de-icing solutions, cleaning solutions and baking soda to name a few. The market for formic acid has experienced continual growth and demand over the past several years, mainly attributed to the following: European and developing country demand for formic acid in silage, rising raw materials, energy and logistics costs; and animal feed preservative and Asian demand for formic acid in leather, rubber, food and pharmaceutical industries. The average market price of formic acid is expected to increase by as much as 20% in 2010. (Dunia Frontier Consultants, 2008).

However, if the ERC process reaches market acceptance as a way to deal with CO2 emissions from industry facilities, it will likely lead to supply of formic acid in excess of current market demand. We have identified several potential future applications for formic acid, which may lead to an expansion in current market demand. The application we have identified and are currently focusing on is steel pickling.

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Steel Pickling

Steel Pickling is part of the finishing process in the production of certain steel products in which oxide and scale are removed from the surface of strip steel, steel wire, and other forms of steel, by dissolution in acid. A solution of either Hydrochloric Acid (HCl) or Sulfuric Acid is generally used to treat carbon steel products, while a combination of Hydrofluoric and Nitric Acids is often used for stainless steel. Approximately ¼ of the HCI produced in the U.S. is used for pickling steel (American Chemistry, 2003), consuming an estimated 5Mt/year. As an organic acid, Formic Acid would be a very attractive replacement for Hydrochloric Acid (HCI) in the steel pickling process. Formic Acid has many potential advantages over HCI in this application, including: less iron lost from the steel surface, improvement in final surface quality, and the elimination of corrosion inhibiting and neutralizing rinse processes to prevent rust development. In addition, Formic Acid is both bio-degradable and reusable which would allow water used in the picking process to be recycled more easily.

Results of Operations for the Three Month Periods Ended August 31, 2011 and August 31, 2010.

Revenues

The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended August 31, 2011 which are included herein.

Our operating results for three month periods ended August 31, 2011 and August 31, 2010 are summarized as follows:

								Change Between
								Three Month Period
								Ended
		Three Months			Three Months			August 31, 2011
		Ended			Ended			and
		August 31, 2011			August 31, 2010			August 31, 2010
		($)			($)			($)
Revenue		550			Nil			550
Operating expenses		242,740			149,111			93,629
Net Loss		(245,882	)		(155,276	)		90,606

We have had limited operational history since our inception on January 22, 2007. From our inception on January 22, 2007 to August 31, 2011 we have generated $23,054 in revenues. For the three months ended August 31, 2011 we generated $550 in revenues compared to revenues of $Nil generated during the same period in 2010. Since our inception on January 22, 2007 to August 31, 2011, we have an accumulated deficit of $6,308,130. We anticipate that we will incur substantial losses over the next year and our ability to generate additional revenues in the next 12 months remains uncertain.

Expenses

Our operating expenses for the three month periods ended August 31, 2011 and August 31, 2010 are summarized as follows:

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		Three Months Ended
		August 31,
		2011			2010
		($)			($)
Business development		1,243			Nil
Consulting and advisory		128,760			18,792
Depreciation and amortization		7,195			8,782
Foreign exchange loss (gain)		(1,949	)		(4,425	)
General and administrative		6,070			11,520
Management fees		48,000			48,564
Professional fees		39,130			8,845
Public listing costs		1,881			593
Rent		8,671			10,946
Shareholder communications and awareness		Nil			470
Travel and promotion		3,739			13,729
Wages and benefits		Nil			31,295

For the three months ended August 31, 2011, we incurred total expenses of $242,740 compared to total operating expenses for the three months ended August 31, 2010 of $149,111. The $93,629 increase is primarily due to consulting and advisory fees and professional fees.

Net Loss

Since our inception on January 22, 2007 to August 31, 2011, we have incurred a net loss of $6,308,130. For the three months ended August 31, 2011 we have incurred a net loss of $245,882 compared to a net loss of $155,276 for the same period in 2010. Our net loss per share for the three months ended August 31, 2011 was $0.01, compared to $Nil for the same period in 2010.

Liquidity and Capital Resources

Cash Flows		Three Months			Three Months			January 22,
								2007
		Ended			Ended			(Inception) to
		August 31,			August 31,			August 31,
		2011			2010			2011
Net Cash Used in Operating Activities	$	(107,411	)	$	(82,299	)	$	(3,365,683	)
Net Cash Used In Investing Activities	$	Nil		$	Nil		$	(175,797	)
Net Cash Provided by Financing Activities	$	90,218		$	88,200		$	3,563,388
Change In Cash	$	(17,193	)	$	5,901		$	21,908

As of August 31, 2011, we had $21,908 cash in our bank accounts and a working capital deficit of $1,225,204. As of August 31, 2011, we had total assets of $89,980 and total liabilities of $1,315,184.

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From January 22, 2007 (date of inception) to August 31, 2011, we raised net proceeds of $3,170,262 in cash from the issuance of common stock and share subscriptions received, $143,126 from loans payable and $250,000 from proceeds from the issuance of convertible debentures for a total of $3,563,388 of cash provided by financing activities for the period.

We received net cash of $90,218 from financing activities for the three months ended August 31, 2011 compared to $88,200 for the same period in 2010. During the period in 2011 we raised cash from the issuance of our common stock and share subscriptions received and proceeds from loans payable. In the comparable period, we raised cash primarily from the issuance of our common stock.

We used net cash of $107,411 in operating activities for the three months ended August 31, 2011 compared to $82,299 for the same period in 2010. We used net cash of $3,365,683 in operating activities for the period from January 22, 2007 (date of inception) to August 31, 2011.

We did not use any cash in investing activities for the three months ended August 31, 2011 and 2010.

During the three months ended August 31, 2011 we had a net decrease of $17,193 in our cash position compared to a net increase of $5,901 for the same period in 2010. Our monthly cash requirements for the three month period ended August 31, 2011 was approximately $5,731 compared to $1,967 for the same period in 2010. At our current cash position and if this cash requirement continues, we do not have sufficient cash to cover our expenses for one month.

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.

In order to fully carry out our business plan, we need additional financing of approximately $2,575,000 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.

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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 effect of inflation on our revenue and operating results has not been significant.

Critical Accounting Policies

Our consolidated 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, 2011 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, under the Securities Exchange Act of 1934, 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 (our principal executive officer, principal financial officer and principal accounting 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 (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of August 31, 2011. 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 year ended May 31, 2011, the chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting 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.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

On December 21, 2010, one of our convertible debenture holders filed suit in the Supreme Court of British Columbia for re-payment of a $150,000 convertible debenture, including 10% annual interest from October 28, 2008, the date the loan was provided. Our company does not dispute the amount owing and has properly recorded the principal and interest as per the terms of the convertible debt agreement.

We know of no other material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

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

On July 27, 2011, we issued 150,000 shares with a fair value of $12,000 to a consultant for financial public relations services. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On July 27, 2011, we issued 250,000 shares of common stock with a fair value of $17,500 pursuant to an investor relations agreement. These shares were issued pursuant to an exemption from registration relying on Section 4(2) of the Securities Act of 1933.

On August 10, 2011, we issued 300,000 shares of common stock and 25,000 units with an aggregate fair value of $22,750 to the former vice president of corporate development for $26,000 to settle amounts owing. Our company recorded a gain on settlement of debt of $3,250. 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 $0.20 per share expiring on the earlier of two years or five business days after our company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days. These securities were issued pursuant to an exemption from registration relying on Regulation S of the Securities Act of 1933.

On August 31, 2011, we issued 2,037,500 units at $0.08 per unit for proceeds $163,000, which was recorded as common stock subscribed as at May 31, 2011. 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 $0.20 per share expiring on the earlier of two years or five business days after our company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days. These securities were issued pursuant to an exemption from registration relying on Regulation S of the Securities Act of 1933.

During the three months ended August 31, 2011, we received share subscriptions for 1,070,550 units at $0.05 per unit for proceeds of $53,528. Each unit will consist of one common share and one-half non-transferrable warrant to purchase one additional share of common stock at an exercise price of $0.20 per share expiring on the earlier of two years or five business days after our company’s common stock trades at least one time per day on the FINRA Over the Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days. These securities were issued pursuant to an exemption from registration relying on Regulation S of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. [Removed and Reserved]

Item 5. Other Information

On May 17, 2011, we accepted the resignation of Shawn Kim as director of our company. Mr. Kim’s resignation was not the result of any disagreement with our company regarding its operations, policies, practices or otherwise. Concurrently with Mr. Kim’s resignation, we appointed Elden Schorn as a director of our company.

Item 6. Exhibits

Exhibit
Number	Description
(2)	Plan of acquisition, reorganization, arrangement, liquidation or succession
2.1	Plan of Conversion of Mantra Venture Group Ltd. from a Nevada Corporation into a British Columbia Corporation dated October 29, 2008. (incorporated by reference to our Current Report on Form 8-K filed on November 4, 2008)
(3)	Articles of Incorporation, Bylaws
3.1	Articles of Conversion of Mantra Venture Group Ltd. dated October 28, 2008 (incorporated by reference to our Current Report on Form 8-K filed on November 4, 2008)
3.2	British Columbia Table 1 Articles adopted on December 4, 2008 (incorporated by reference to our Current Report on Form 8-K filed on December 12, 2008)
3.3	British Columbia Notice of Articles (incorporated by reference to our Current Report on Form 8-K filed on December 12, 2008)
(10)	Material Contracts
10.1	Revolving Line of Credit Agreement with Larry Kristof dated October 15, 2008 (incorporated by reference to our Quarterly Report on Form 10-Q filed on January 14, 2009)
10.2	Sponsorship and Proposed Equity Capital Raise Agreement with M Partners Inc. dated December 4, 2008. (incorporated by reference to our Current Report on Form 8-K filed on December 11, 2008)
10.3	Contractor Proposal Agreement entered into with Kemetco Research Inc. on January 29, 2009.  (incorporated by reference to our Current Report on Form 8-K filed on February 4, 2009)
10.4	Option Agreement entered into with Synergy BioMetals Recovery Systems Inc. on February 27, 2009. (incorporated by reference to our Current Report on Form 8-K filed on March 2, 2009)
10.5	Extension of Option Agreement entered into with Synergy BioMetals Recovery Systems Inc. on May 1, 2009. (incorporated by reference to our Annual Report on Form 18-K filed on September 15, 2009)
10.6	Contractor Proposal Agreement entered into with Kemetco Research Inc. on March 18, 2009. (incorporated by reference to our Current Report on Form 8-K filed on March 26, 2009)
10.10	Development Agreement with 3M dated October 28, 2009. (incorporated by reference to our Current Report on Form 8-K filed on November 6, 2009)
10.11	Technology Development Cooperation Agreement entered into on August 16, 2010. (incorporated by reference to our Current Report on Form 8-K filed on August 17, 2010)
10.12	Director Agreement between the Company and Elden Schorn dated May 17, 2011. (incorporated by reference to our Current Report on Form 8-K filed on May 24, 2011)
10.13	Consulting Agreement with Richard Malcolm Smith dated August 25, 2011. (incorporated by reference to our Current Report on Form 8-K filed on September 1, 2011)

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Exhibit
Number	Description
(21)	List of Subsidiaries
21.1	Carbon Commodity Corporation
	Climate ESCO Ltd.
	Mantra Energy Alternatives Ltd.
	Mantra China Inc.
	Mantra China Limited
	Mantra Media Corp.
	Mantra NextGen Power Inc.
	Mantra Wind Inc.
(31)	Rule 13a-14 / 15d-14 Certifications
31.1*	Certification of the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32)	Section 1350 Certifications
32.1*	Certification of the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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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)
Date: October 24, 2011	/s/ Larry Kristof
	Larry Kristof
	President, Chief Executive Officer, Chief Financial
	Officer, Secretary, Treasurer and Director
	(Principal Executive Officer, Principal Financial Officer
	and Principal Accounting Officer)

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