---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549Form 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 February
  28, 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 000-53461MANTRA 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, 152ndStreet,
      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 [ ] NOIndicate 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 [ ] NOIndicate 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.

|Large accelerated filer [ ] |                                                     | Accelerated filer [ ]        
|--------------------------- | --------------------------------------------------- | -----------------------------
|Non-accelerated filer   [ ] | (Do not check if a smaller reporting
      company) | Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act.[ ] YES [X]
NOAPPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCYPROCEEDINGS DURING THE PRECEDING FIVE
YEARSCheck 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 [ ] NOAPPLICABLE ONLY TO CORPORATE ISSUERSIndicate
the number of shares outstanding of each of the issuers classes of common
stock, as of the latest practicable date. 40,180,756 common shares
issued and outstanding as of April 19, 2011

---

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 | 4 
|                                                                                                        |   
|Item
    3. Quantitative and Qualitative Disclosures About Market Risk                                  | 9 
|                                                                                                        |   
|Item
    4. Controls and Procedures                                                                     | 9 
|                                                                                                        |   
|PART
      II  OTHER INFORMATION                                                                       | 10
|                                                                                                        |   
|Item
    1. Legal Proceedings                                                                           | 10
|                                                                                                        |   
|Item
    2. Unregistered Sales of Equity Securities and Use of Proceeds                                 | 10
|                                                                                                        |   
|Item
    3. Defaults Upon Senior Securities                                                             | 10
|                                                                                                        |   
|Item
    4. [Removed and Reserved]                                                                      | 10
|                                                                                                        |   
|Item
    5. Other Information                                                                           | 10
|                                                                                                        |   
|Item
    6. Exhibits                                                                                    | 11
|                                                                                                        |   
|SIGNATURES                                                                                              | 13

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, 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
|(Expressed in U.S. dollars)      
|February 28, 2011                
|(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  

---

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

|                                                                                                                                                                     |  | February 28, |   |  | May 31,    |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | - |  | ---------- | -
|                                                                                                                                                                     |  | 2011         |   |  | 2010       |  
|                                                                                                                                                                     |  | $            |   |  | $          |  
|                                                                                                                                                                     |  | (unaudited)  |   |  |            |  
|ASSETS                                                                                                                                                               |  |              |   |  |            |  
|                                                                                                                                                                     |  |              |   |  |            |  
|Current assets                                                                                                                                                       |  |              |   |  |            |  
|                                                                                                                                                                     |  |              |   |  |            |  
|Cash                                                                                                                                                                 |  | 2,938        |   |  | 4,325      |  
|Amounts receivable                                                                                                                                                   |  | 18,320       |   |  | 13,744     |  
|Prepaid expenses and deposits                                                                                                                                        |  | 23,998       |   |  | 1,078      |  
|                                                                                                                                                                     |  |              |   |  |            |  
|Total current assets                                                                                                                                                 |  | 45,256       |   |  | 19,147     |  
|Property and equipment                                                                                                                                               |  | 51,699       |   |  | 74,673     |  
|Total assets                                                                                                                                                         |  | 96,955       |   |  | 93,820     |  
|                                                                                                                                                                     |  |              |   |  |            |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                                |  |              |   |  |            |  
|                                                                                                                                                                     |  |              |   |  |            |  
|Current liabilities                                                                                                                                                  |  |              |   |  |            |  
|                                                                                                                                                                     |  |              |   |  |            |  
|Accounts payable and accrued
      liabilities                                                                                                                       |  | 471,610      |   |  | 449,481    |  
|Due to related parties (Note 3)                                                                                                                                      |  | 382,030      |   |  | 294,712    |  
|Loans payable (Note 4)                                                                                                                                               |  | 80,424       |   |  | 61,078     |  
|Convertible debentures                                                                                                                                               |  | 250,000      |   |  | 250,000    |  
|Total liabilities                                                                                                                                                    |  | 1,184,064    |   |  | 1,055,271  |  
|                                                                                                                                                                     |  |              |   |  |            |  
|Going concern (Note 1)                                                                                                                                               |  |              |   |  |            |  
|Commitments (Note 8)                                                                                                                                                 |  |              |   |  |            |  
|Contingent liability (Note 9)                                                                                                                                        |  |              |   |  |            |  
|Subsequent event (Note 10)                                                                                                                                           |  |              |   |  |            |  
|                                                                                                                                                                     |  |              |   |  |            |  
|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: 39,838,774
      shares (May 31, 2010  34,034,868 shares) |  | 398          |   |  | 340        |  
|Additional paid-in capital                                                                                                                                           |  | 4,556,656    |   |  | 4,036,294  |  
|Common stock subscribed (Note 5)                                                                                                                                     |  | 194,600      |   |  | 45,885     |  
|Deficit accumulated during the development
      stage                                                                                                               |  | (5,838,763   | ) |  | (5,043,970 | )
|Total
      stockholders deficit                                                                                                                                    |  | (1,087,109   | ) |  | (961,451   | )
|Total liabilities and stockholders deficit                                                                                                                          |  | 96,955       |   |  | 93,820     |  

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

F-1

---

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

|                                                       |  |              |   |  |              |   |  |                  |   |  |            |   |  | Accumulated from |  
|------------------------------------------------------ |  | ------------ | - |  | ------------ | - |  | ---------------- | - |  | ---------- | - |  | ---------------- | -
|                                                       |  | Three months |   |  | Nine months  |   |  | January 22, 2007 |  
|                                                       |  | ended        |   |  | ended        |   |  | (Inception) to   |  
|                                                       |  | February 28, |   |  | February 28, |   |  | February 28,     |  
|                                                       |  | 2011         |   |  | 2010         |   |  | 2011             |   |  | 2010       |   |  | 2011             |  
|                                                       |  | $            |   |  | $            |   |  | $                |   |  | $          |   |  | $                |  
|                                                       |  |              |   |  |              |   |  |                  |   |  |            |   |  |                  |  
|Revenues                                               |  | 288          |   |  | 14,530       |   |  | 2,258            |   |  | 86,968     |   |  | 22,156           |  
|                                                       |  |              |   |  |              |   |  |                  |   |  |            |   |  |                  |  
|Expenses                                               |  |              |   |  |              |   |  |                  |   |  |            |   |  |                  |  
|Business development                                   |  |             |   |  | (2,556       | ) |  | 24,843           |   |  | 57,334     |   |  | 275,936          |  
|Consulting and advisory                                |  | 88,290       |   |  | 3,229        |   |  | 196,438          |   |  | 26,432     |   |  | 629,550          |  
|Depreciation and amortization                          |  | 6,191        |   |  | 8,782        |   |  | 22,974           |   |  | 26,346     |   |  | 115,936          |  
|Foreign exchange loss                                  |  | 26,233       |   |  | 4,525        |   |  | 31,123           |   |  | 23,108     |   |  | 56,794           |  
|General and administrative (Note 3)                    |  | 22,619       |   |  | 17,545       |   |  | 87,038           |   |  | 47,779     |   |  | 411,135          |  
|License fees                                           |  |             |   |  |             |   |  |                 |   |  |           |   |  | 28,438           |  
|Management fees (Note 3)                               |  | 34,458       |   |  | 51,701       |   |  | 109,481          |   |  | 216,510    |   |  | 880,368          |  
|Professional fees                                      |  | 12,033       |   |  | 53,299       |   |  | 49,275           |   |  | 210,397    |   |  | 706,133          |  
|Public listing costs                                   |  | 2,425        |   |  | 2,824        |   |  | 5,655            |   |  | 13,767     |   |  | 209,486          |  
|Rent                                                   |  | 2,656        |   |  | 10,733       |   |  | 19,336           |   |  | 37,116     |   |  | 175,510          |  
|Research and development                               |  |             |   |  | 38,398       |   |  |                 |   |  | 145,367    |   |  | 418,206          |  
|Shareholder
      communications and awareness         |  | (6,722       | ) |  | 16,346       |   |  | 22,487           |   |  | 107,733    |   |  | 602,261          |  
|Travel and promotion                                   |  | 16,918       |   |  | 19,148       |   |  | 57,701           |   |  | 50,395     |   |  | 378,251          |  
|Wages and benefits                                     |  | 37,822       |   |  | 35,063       |   |  | 90,380           |   |  | 102,935    |   |  | 691,110          |  
|Website and corporate identity                         |  |             |   |  |             |   |  |                 |   |  |           |   |  | 195,451          |  
|Write down of intangible assets                        |  |             |   |  |             |   |  |                 |   |  |           |   |  | 37,815           |  
|Total expenses                                         |  | 242,923      |   |  | 259,037      |   |  | 716,731          |   |  | 1,065,219  |   |  | 5,812,380        |  
|                                                       |  |              |   |  |              |   |  |                  |   |  |            |   |  |                  |  
|Loss before other
      income (expense)               |  | (242,635     | ) |  | (244,507     | ) |  | (714,473         | ) |  | (978,251   | ) |  | (5,790,224       | )
|Other income (expense)                                 |  |              |   |  |              |   |  |                  |   |  |            |   |  |                  |  
|Accretion of discounts on convertible
      debentures |  |             |   |  |             |   |  |                 |   |  | (18,382    | ) |  | (45,930          | )
|Loss on settlement of debt                             |  |             |   |  |             |   |  | (61,895          | ) |  |           |   |  | (61,895          | )
|Government grant income                                |  |             |   |  |             |   |  |                 |   |  |           |   |  | 118,324          |  
|Interest expense                                       |  | (6,096       | ) |  | (6,730       | ) |  | (18,425          | ) |  | (18,778    | ) |  | (59,038          | )
|Total other income
      (expense)                     |  | (6,096       | ) |  | (6,730       | ) |  | (80,320          | ) |  | (37,160    | ) |  | (48,539          | )
|Net loss for the period                                |  | (248,731     | ) |  | (251,237     | ) |  | (794,793         | ) |  | (1,015,411 | ) |  | (5,838,763       | )
|                                                       |  |              |   |  |              |   |  |                  |   |  |            |   |  |                  |  
|Loss per share, basic and diluted                      |  | (0.01        | ) |  | (0.01        | ) |  | (0.02            | ) |  | (0.03      | ) |  |                  |  
|                                                       |  |              |   |  |              |   |  |                  |   |  |            |   |  |                  |  
|Weighted average number of shares outstanding          |  | 37,615,649   |   |  | 32,305,561   |   |  | 34,991,373       |   |  | 31,417,671 |   |  |                  |  

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

F-2

---

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

|                                                                                         |  |              |   |  |              |   |  | Accumulated from |  
|---------------------------------------------------------------------------------------- |  | ------------ | - |  | ------------ | - |  | ---------------- | -
|                                                                                         |  | Nine months  |   |  | Nine months  |   |  | January 22, 2007 |  
|                                                                                         |  | ended        |   |  | ended        |   |  | (Inception) to   |  
|                                                                                         |  | February 28, |   |  | February 28, |   |  | February 28,     |  
|                                                                                         |  | 2011         |   |  | 2010         |   |  | 2011             |  
|                                                                                         |  | $            |   |  | $            |   |  | $                |  
|                                                                                         |  |              |   |  |              |   |  |                  |  
|Operating activities                                                                     |  |              |   |  |              |   |  |                  |  
|Net loss for the period                                                                  |  | (794,793     | ) |  | (1,015,411   | ) |  | (5,838,763       | )
|Adjustments to reconcile
      net loss to net cash used in operating activities:        |  |              |   |  |              |   |  |                  |  
|Accretion of discounts on
      convertible debentures                                   |  |             |   |  | 18,382       |   |  | 45,930           |  
|Depreciation and
      amortization                                                      |  | 22,974       |   |  | 26,346       |   |  | 115,936          |  
|Foreign exchange loss                                                                    |  | 4,181        |   |  |             |   |  | 4,181            |  
|Loss on
      settlement of debt                                                         |  | 61,895       |   |  |             |   |  | 61,895           |  
|Stock-based compensation                                                                 |  | 130,790      |   |  | 161,187      |   |  | 1,349,300        |  
|Write-down of
      intangible assets                                                    |  |             |   |  |             |   |  | 37,815           |  
|Changes in operating assets and liabilities                                              |  |              |   |  |              |   |  |                  |  
|Amounts
      receivable                                                                 |  | (4,576       | ) |  | (2,749       | ) |  | (18,320          | )
|Prepaid expenses and deposits                                                            |  | (22,920      | ) |  | 6,536        |   |  | (23,998          | )
|Other assets                                                                             |  |             |   |  |             |   |  | (12,000          | )
|Deferred revenue                                                                         |  |             |   |  | 12,300       |   |  |                 |  
|Accounts payable
      and accrued liabilities                                           |  | 51,129       |   |  | 444,886      |   |  | 777,090          |  
|Due to related parties                                                                   |  | 87,318       |   |  | 41,019       |   |  | 382,030          |  
|Net cash used in operating activities                                                    |  | (464,002     | ) |  | (307,504     | ) |  | (3,118,904       | )
|                                                                                         |  |              |   |  |              |   |  |                  |  
|Investing activities                                                                     |  |              |   |  |              |   |  |                  |  
|Purchase of property and equipment                                                       |  |             |   |  |             |   |  | (155,635         | )
|Net cash used in investing activities                                                    |  |             |   |  |             |   |  | (155,635         | )
|Financing activities                                                                     |  |              |   |  |              |   |  |                  |  
|Proceeds from loans payable                                                              |  | 15,165       |   |  |             |   |  | 76,243           |  
|Proceeds from issuance of convertible
      debentures                                   |  |             |   |  |             |   |  | 250,000          |  
|Proceeds from issuance of common stock/
      subscriptions received                     |  | 447,450      |   |  | 305,231      |   |  | 2,951,234        |  
|Net cash provided
      by financing activities                                          |  | 462,615      |   |  | 305,231      |   |  | 3,277,477        |  
|                                                                                         |  |              |   |  |              |   |  |                  |  
|Change in cash                                                                           |  | (1,387       | ) |  | (2,273       | ) |  | 2,938            |  
|Cash, beginning of period                                                                |  | 4,325        |   |  | 3,320        |   |  |                 |  
|Cash, end of
      period                                                                |  | 2,938        |   |  | 1,047        |   |  | 2,938            |  
|Non-cash investing and financing
      activities:                                       |  |              |   |  |              |   |  |                  |  
|Common stock issued to settle debt                                                       |  | 90,895       |   |  | 65,862       |   |  | 367,375          |  
|Common stock 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
|(Expressed in U.S. dollars)                   
|February 28, 2011                             
|(unaudited)                                   

|1. | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The accompanying consolidated financial statements of
      Mantra Venture Group Ltd. (the Company) should be read in conjunction
      with the consolidated financial statements and accompanying notes filed
      with the U.S. Securities and Exchange Commission in the Companys Annual
      Report on Form 10-K for the fiscal year ended May 31, 2010. In the opinion
      of management, the accompanying financial statements reflect all
      adjustments of a recurring nature considered necessary to present fairly
      the Companys financial position and the results of its operations and its
      cash flows for the periods shown.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The preparation of financial statements in accordance
      with accounting principles generally accepted in the United States
      requires management to make estimates and assumptions that affect the
      amounts reported. Actual results could differ materially from those
      estimates. The results of operations and cash flows for the periods shown
      are not necessarily indicative of the results to be expected for the full
      year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | These consolidated financial statements have been
      prepared on a going concern basis, which implies the Company will continue
      to realize its assets and discharge its liabilities in the normal course
      of business. The Company has not generated significant revenues since
      inception and is unlikely generate earnings in the immediate or
      foreseeable future. The continuation of the Company as a going concern is
      dependent upon the continued financial support from its shareholders, the
      ability of the Company to obtain necessary equity financing to continue
      operations, and the attainment of profitable operations. As at February
      28, 2011, the Company has a working capital deficit of $1,138,808 and has
      accumulated losses of $5,838,763 since inception. These factors raise
      substantial doubt regarding the Companys ability to continue as a going
      concern. These financial statements do not include any adjustments to the
      recoverability and classification of recorded asset amounts and
      classification of liabilities that might be necessary should the Company
      be unable to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In January 2010, the FASB issued an amendment to ASC 820,
      Fair Value Measurements and Disclosures, to require reporting entities
      to separately disclose the amounts and business rationale for significant
      transfers in and out of Level 1 and Level 2 fair value measurements and
      separately present information regarding purchase, sale, issuance, and
      settlement of Level 3 fair value measures on a gross basis. This standard
      is effective for interim and annual reporting periods beginning after
      December 15, 2009 with the exception of disclosures regarding the
      purchase, sale, issuance, and settlement of Level 3 fair value measures
      which are effective for fiscal years beginning after December 15, 2010.
      The adoption of the applicable standard on June 1, 2010 did not have a
      material effect on the Companys financial statements.                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company has implemented all new accounting
      pronouncements that are in effect and that may impact its financial
      statements and does not believe that there are any other new accounting
      pronouncements that have been issued that might have a material impact on
      its financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-1

---

|MANTRA VENTURE GROUP LTD.                     
|----------------------------------------------
|(A development stage company)                 
|Notes to the consolidated financial statements
|(Expressed in U.S. dollars)                   
|February 28, 2011                             
|(unaudited)                                   

|3. | Related Party Transactions (continued)
|-- | --------------------------------------
|   |                                       
|   | d)                                    
|   |                                       
|   | e)                                    
|   |                                       
|   | f)                                    
|   |                                       
|   | g)                                    
|   |                                       
|   | h)                                    
|   |                                       
|   | i)                                    
|   |                                       
|   | j)                                    
|   |                                       
|   | k)                                    
|   |                                       
|   | l)                                    
|   |                                       
|4. | Loans Payable                         
|   |                                       
|   | a)                                    
|   |                                       
|   | b)                                    
|   |                                       
|   | c)                                    
|   |                                       
|5. | Common Stock                          
|   |                                       
|   | a)                                    

F-2

---

|MANTRA VENTURE GROUP LTD.                     
|----------------------------------------------
|(A development stage company)                 
|Notes to the consolidated financial statements
|(Expressed in U.S. dollars)                   
|February 28, 2011                             
|(unaudited)                                   

|5. | Common Stock (continued)
|-- | ------------------------
|   |                         
|   | b)                      
|   |                         
|   | c)                      
|   |                         
|   | d)                      
|   |                         
|   | e)                      
|   |                         
|   | f)                      
|   |                         
|   | g)                      
|   |                         
|   | h)                      
|   |                         
|   | i)                      
|   |                         
|   | j)                      
|   |                         
|   | k)                      

F-3

---

|MANTRA VENTURE GROUP LTD.                     
|----------------------------------------------
|(A development stage company)                 
|Notes to the consolidated financial statements
|(Expressed in U.S. dollars)                   
|February 28, 2011                             
|(unaudited)                                   

|6. | Common Stock (continued)                                                           
|-- | -----------------------------------------------------------------------------------
|   |                                                                                    
|   | l)                                                                                 
|   |                                                                                    
|   | m)                                                                                 
|   |                                                                                    
|6. | Stock Options                                                                      
|   |                                                                                    
|   | The following table summarizes the continuity of the
      Companys stock options:

| |                                                      |  |            |   |  |                |  |  | Weighted         |  |  |           | 
| | ---------------------------------------------------- |  | ---------- | - |  | -------------- |  |  | ---------------- |  |  | --------- | 
| |                                                      |  |            |   |  | Weighted       |  |  | average          |  |  | Aggregate | 
| |                                                      |  |            |   |  | average        |  |  | remaining        |  |  | intrinsic | 
| |                                                      |  | Number     |   |  | exercise price |  |  | contractual life |  |  | value     | 
| |                                                      |  | of options |   |  | $              |  |  | (years)          |  |  | $         | 
| | Outstanding, May 31, 2010                            |  | 1,608,333  |   |  | 0.25           |  |  |                  |  |  |           | 
| | Granted                                              |  | 250,000    |   |  | 0.15           |  |  |                  |  |  |           | 
| | Cancelled/expired                                    |  | (1,283,333 | ) |  | 0.25           |  |  |                  |  |  |           | 
| | Outstanding and
      exercisable, February 28, 2011 |  | 575,000    |   |  | 0.19           |  |  | 1.1              |  |  |          | 

Additional information regarding stock
options as of February 28, 2011, is as follows:

| |           | Exercise |                 
| | --------- | -------- | ----------------
| | Number of | Price    |                 
| | Options   | $        | Expiry Date     
| |           |          |                 
| | 75,000    | 0.15     | June 1, 2011    
| | 250,000   | 0.25     | November 1, 2012
| | 250,000   | 0.15     | January 13, 2012
| |           |          |                 
| | 575,000   |          |                 

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

| |                          | Nine months  | Nine months 
| | ------------------------ | ------------ | ------------
| |                          | ended        | ended       
| |                          | February 28, | February 28,
| |                          | 2011         | 2010        
| | Risk-free Interest rate  | 0.26%        | 0.39%       
| | Expected life (in years) | 1.0          | 1.0         
| | Expected volatility      | 111%         | 92%         

F-4

---

|MANTRA VENTURE GROUP LTD.                     
|----------------------------------------------
|(A development stage company)                 
|Notes to the consolidated financial statements
|(Expressed in U.S. dollars)                   
|February 28, 2011                             
|(unaudited)                                   

|6. | Stock Options (continued)                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                             
|   | The weighted average fair value of the stock options
      granted during the nine months ended February 28, 2011 was $0.04 (2010 -
      $0.10) per option.
|   |                                                                                                                                                             
|7. | Share Purchase Warrants                                                                                                                                     
|   |                                                                                                                                                             
|   | The following table summarizes the continuity of share
      purchase warrants:                                                                             

| |                                  |           | Weighted
| | -------------------------------- | --------- | --------
| |                                  |           | Average 
| |                                  |           | Exercise
| |                                  | Number of | Price   
| |                                  | Warrants  | $       
| |                                  | (a)       | (b)     
| | Balance, May 31, 2010            | 6,726,163 | 0.31    
| | Issued                           | 2,815,442 | 0.20    
| | Expired                          | (860,000) | 0.50    
| | Balance, February
      28, 2011 | 8,681,605 | 0.25    

As at February 28, 2011, the following
share purchase warrants were outstanding:

| | Exercise                
| | ------------------------
| | Price                   
| | Number of
      Warrants
| |                         
| | 199,998                 
| | 859,625                 
| | 71,152                  
| | 292,500                 
| | 860,000                 
| | 88,000                  
| | 321,333                 
| | 466,334                 
| | 118,000                 
| | 594,333                 
| | 68,000                  
| | 555,999                 
| | 33,333                  
| | 1,337,556               
| | 573,567                 
| | 518,750                 
| | 275,000                 
| | 400,000                 
| | 1,048,125               
| |                         
| | 8,681,605               

F-5

---

|MANTRA VENTURE GROUP LTD.                     
|----------------------------------------------
|(A development stage company)                 
|Notes to the consolidated financial statements
|(Expressed in U.S. dollars)                   
|February 28, 2011                             
|(unaudited)                                   

|8. | Commitments
|-- | -----------
|   |            
|   | a)         
|   |            
|   |            
|   |            
|   |            

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

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

|b) | On September 14, 2010, the Company entered into a
      management agreement with an unrelated company for a period of five years.
      The Company has agreed to issue 4,000,000 share purchase warrants. Each
      share purchase warrant is exercisable into one common share for a period
      of three years from the date of issuance at an exercise price as
      follows:
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                      

This agreement was cancelled
subsequently.

|c) | On February 23, 2011, the Company entered into a finders
      fee agreement with an unrelated company. The fee shall be calculated as 7%
      of the transaction financed through this company in acquiring an interest,
      equity or joint venture. This 7% will be payable as 4% in cash and 3% in
      shares of the Company. The Company will also pay a consulting fee of
      $2,000 per month for a period of one year in the event a transaction is
      reached between the two parties.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-6

---

|MANTRA VENTURE GROUP LTD.                     
|----------------------------------------------
|(A development stage company)                 
|Notes to the consolidated financial statements
|(Expressed in U.S. dollars)                   
|February 28, 2011                             
|(unaudited)                                   

|9.  | Contingent Liability                                                                                                                                                                                                                                                                                                                                                                       
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                            
|    | On December 21, 2010, a lawsuit was brought against the
      Company by a convertible debt holder demanding repayment of the $150,000
      debt plus interest at 10% per annum to the date of payment and costs. The
      Company does not dispute the amount owing and has properly recorded the
      principal and interest as per the terms of the convertible debt
      agreement.
|    |                                                                                                                                                                                                                                                                                                                                                                                            
|10. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                            
|    | a)                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                            
|    | b)                                                                                                                                                                                                                                                                                                                                                                                         

F-7

---

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

Forward Looking Statements

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

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

Business Overview

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

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

Results of Operations for the Three Month Periods Ended
February 28, 2011 and February 28, 2010.

Revenues

The following summary of our results of operations should be
read in conjunction with our financial statements for the quarter ended February
28, 2011 which are included herein.

Our operating results for three month periods ended February
28, 2011 and February 28, 2010 are summarized as follows:

4

---

|                   |  |              |   |  |              |   |  | Change       |  
|------------------ |  | ------------ | - |  | ------------ | - |  | ------------ | -
|                   |  |              |   |  |              |   |  | Between      |  
|                   |  |              |   |  |              |   |  | Three Month  |  
|                   |  |              |   |  |              |   |  | Period       |  
|                   |  |              |   |  |              |   |  | Ended        |  
|                   |  | Three Months |   |  | Three Months |   |  | February 28, |  
|                   |  | Ended        |   |  | Ended        |   |  | 2011 and     |  
|                   |  | February 28, |   |  | February 28, |   |  | February 28, |  
|                   |  | 2011         |   |  | 2010         |   |  | 2010         |  
|                   |  | ($)          |   |  | ($)          |   |  | ($)          |  
|Revenue            |  | 288          |   |  | 14,530       |   |  | (14,242      | )
|Operating expenses |  | 242,923      |   |  | 259,037      |   |  | (16,114      | )
|Net Income (Loss)  |  | (248,731     | ) |  | (251,237     | ) |  | 2,506        |  

We have had limited operational history since our inception on
January 22, 2007. From our inception on January 22, 2007 to February 28, 2011 we
have generated $22,156 in revenues. For the three months ended February 28, 2011
we generated $288 in revenues compared to revenues of $14,530 generated during
the same period in 2010. Since our inception on January 22, 2007 to February 28,
2011, we have an accumulated deficit of $5,838,763. 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
February 28, 2011 and February 28, 2010 are summarized as follows:

| |                                          |  | Three Months Ended |  
| | ---------------------------------------- |  | ------------------ | -
| |                                          |  | February 28,       |  
| |                                          |  | 2011               |  
| |                                          |  | ($)                |  
| | Business development                     |  | Nil                |  
| | Consulting and advisory                  |  | 88,290             |  
| | Depreciation and amortization            |  | 6,191              |  
| | Foreign exchange loss                    |  | 26,233             |  
| | General and administrative               |  | 22,619             |  
| | Management fees                          |  | 34,458             |  
| | Professional fees                        |  | 12,033             |  
| | Public listing costs                     |  | 2,425              |  
| | Rent                                     |  | 2,656              |  
| | Research and development                 |  | Nil                |  
| | Shareholder communications and awareness |  | (6,722             | )
| | Travel and promotion                     |  | 16,918             |  
| | Wages and benefits                       |  | 37,822             |  

For the three months ended February 28, 2011, we incurred total expenses of $242,923 compared to total operating expenses for the three months ended February 28, 2010 of $259,037. The $16,114 decrease is primarily due to a decrease in  management fees, professional fees, rent, shareholder communications and awareness, and research and development offset by an increase in foreign exchange loss, general and administrative, and consulting and advisory.

Net Loss

Since our inception on January 22, 2007 to February 28, 2011,
we have incurred a net loss of $5,838,763. For the three months ended February
28, 2011 we have incurred a net loss of $248,731 compared to a net loss of
$251,237 for the same period in 2010. Our net loss per share for the three
months ended February 28, 2011 was $0.01, the same as for the same period in
2010.

5

---

Results of Operations for the Nine Month Periods Ended
February 28, 2011 and February 28, 2010.

Revenues

Our operating results for the nine month periods ended February
28, 2011 and February 28, 2010 are summarized as follows:

|                   |  |              |   |  |              |   |  | Change       |  
|------------------ |  | ------------ | - |  | ------------ | - |  | ------------ | -
|                   |  |              |   |  |              |   |  | Between Nine |  
|                   |  |              |   |  |              |   |  | Month Period |  
|                   |  |              |   |  |              |   |  | Ended        |  
|                   |  | Nine Months  |   |  | Nine Months  |   |  | February 28, |  
|                   |  | Ended        |   |  | Ended        |   |  | 2011 and     |  
|                   |  | February 28, |   |  | February 28, |   |  | February 28, |  
|                   |  | 2011         |   |  | 2010         |   |  | 2010         |  
|                   |  | ($)          |   |  | ($)          |   |  | ($)          |  
|Revenue            |  | 2,258        |   |  | 86,968       |   |  | (84,710      | )
|Operating expenses |  | 716,731      |   |  | 1,065,219    |   |  | (348,488     | )
|Net Income (Loss)  |  | (794,793     | ) |  | (1,015,411   | ) |  | 220,618      |  

We have had limited operational history since our inception on
January 22, 2007. For the nine months ended February 28, 2011 we generated
$2,258 in revenue compared to $86,968 generated during the same period in 2010.
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 nine month periods ended
February 28, 2011 and February 28, 2010 are summarized as follows:

|                                         |  | Nine Months Ended | 
|---------------------------------------- |  | ----------------- | 
|                                         |  | February 28,      | 
|                                         |  | 2011              | 
|                                         |  | ($)               | 
|Business development                     |  | 24,843            | 
|Consulting and advisory                  |  | 196,438           | 
|Depreciation and amortization            |  | 22,974            | 
|Foreign exchange loss                    |  | 31,123            | 
|General and administrative               |  | 87,038            | 
|Management fees                          |  | 109,481           | 
|Professional fees                        |  | 49,275            | 
|Public listing costs                     |  | 5,655             | 
|Rent                                     |  | 19,336            | 
|Research and development                 |  | Nil               | 
|Shareholder communications and awareness |  | 22,487            | 
|Travel and promotion                     |  | 57,701            | 
|Wages and benefits                       |  | 90,380            | 

For the nine months ended February 28, 2011, we incurred total expenses of $716,731 compared to total operating expenses for the nine months ended February 28, 2010 of $1,065,219. The $348,488 decrease was primarily due to a decrease in business development, management fees, professional fees, rent, shareholder communications and awareness, public listing costs, and research and development offset by an increase in consulting and advisory, general and administrative, foreign exchange loss, and travel and promotion.

6

---

Net Loss

For the nine months ended February 28, 2011, we have incurred a
net loss of $794,793 compared to a net loss of $1,015,411 for the same period in
2010. Our net loss per share for the period ended February 28, 2011 was $0.02,
whereas our net loss per share during the same period in 2010 was $0.03.

Liquidity and Capital Resources

As of February 28, 2011, we had $2,938 cash in our bank accounts and a working capital deficit of $1,138,808. As of February 28, 2011, we had total assets of $96,955 and total liabilities of $1,184,064.

From January 22, 2007 (date of inception) to February 28, 2011, we raised net proceeds of $2,951,234 in cash from the issuance of common stock and share subscriptions received, $76,243 from loans payable and $250,000 from proceeds from the issuance of convertible debentures for a total of $3,277,477 of cash provided by financing activities for the period.

We received net cash of $447,450 from financing activities for the nine months ended February 28, 2011 compared to $305,231 for the same period in 2010. During the period in 2011 we raised cash primarily from the issuance of our common stock and share subscriptions received.

We used net cash of $464,002 in operating activities for the nine months ended February 28, 2011 compared to $307,504 for the same period in 2010. We used net cash of $3,118,904 in operating activities for the period from January 22, 2007 (date of inception) to February 28, 2011.

We did not use any cash in investing activities for the nine months ended February 28, 2011 and for the nine months ended February 28, 2011.

During he nine months ended February 28, 2011 we had a net decrease of $1,387 in our cash position compared to a net decrease of $2,273 for the same period in 2010. Our monthly cash requirements for the nine month period ended February 28, 2011 was approximately $51,556 compared to $34,167 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. Below is a summary of our anticipated expenditures over the next 12 months:

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

7

---

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

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

Off-Balance Sheet Arrangements

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

Inflation

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

Critical Accounting Policies

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

Use of Estimates

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

Long-lived Assets

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

8

---

Stock-based Compensation

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

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

Item 3. Quantitative and Qualitative Disclosures About
Market Risk

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 February 28, 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, 2010, 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.

9

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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

| | a) | On December 10, 2010, we issued 275,000 units at $0.10
      per unit for proceeds of $27,500. Each unit consisted of one common share
      and one common share purchase warrant. Each whole common share purchase
      warrant is exercisable for a period of 24 months from the date of closing
      at a price of US$0.20 per share 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 US$0.40 per share
      for seven consecutive trading days.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | b) | On December 25, 2010, we issued 400,000 units at $0.05
      per unit for proceeds of $20,000. Each unit consisted of one common share
      and one common share purchase warrant. Each whole common share purchase
      warrant is exercisable for a period of 24 months from the date of closing
      at a price of $0.20 per share 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.    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | c) | On January 13, 2011, we issued 500,000 shares of common
      stock with a fair value of $60,000 for consulting services.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | d) | On January 27, 2011, we issued 1,048,125 units at $0.08
      per unit for proceeds of $83,850. Each unit consisted of one common share
      and one common share purchase warrant. Each whole common share purchase
      warrant is exercisable for a period of 24 months from the date of closing
      at a price of $0.20 per share 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.   

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Removed and Reserved]

Item 5. Other Information

On January 18, 2011 Con Buckley resigned as our chief financial
officer and principal accounting officer. Consequently we appointed Larry
Kristof, our president, chief executive officer, secretary, treasurer and a
director of our company, as our chief financial officer and principal accounting
officer.

On February 28, 2011 John Russell resigned as a director of our
company. Consequently, we appointed Jonathan Michael Boughen as a director.

10

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Item 6. Exhibits

|Exhibit | Description                                                                                                                                                                                                                                                             
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     |                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                         
|(3)     | (i) Articles (ii)
      By-laws                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                         
|3.1     | Table 1 Articles
      adopted December 4, 2008 (incorporated by reference to our Current Report
      on Form 8-K filed on December 12, 2008)                                                                                                                          
|        |                                                                                                                                                                                                                                                                         
|3.2     | 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 between our company and Larry Kristof dated October 15,
      2008 (incorporated by reference to our Quarterly Report on Form 10-Q filed
      on January 14, 2009)                                                            
|        |                                                                                                                                                                                                                                                                         
|10.2    | Management Agreement
      between our company and Q4 Financial Group Inc. dated January 7,
      2009  (incorporated by reference to our Current Report on Form
      8-K filed on January 9, 2009)                                                                    
|        |                                                                                                                                                                                                                                                                         
|10.3    | Contractor Proposal
      Agreement between our wholly owned subsidiary, Mantra Energy Alternatives
      Ltd., and Kemetco Research Inc. dated January 29, 2009 (incorporated by
      reference to our Current Report on Form 8-K filed on February 4, 2009)          
|        |                                                                                                                                                                                                                                                                         
|10.4    | Option Agreement
      with Synergy BioMetals Recovery Systems Inc. dated February 27, 2009
      (incorporated by reference to our Current Report on Form 8-K filed on
      March 2, 2009)                                                                            
|        |                                                                                                                                                                                                                                                                         
|10.5    | Contractor Proposal
      Agreement between our wholly owned subsidiary, Mantra Energy Alternatives
      Ltd., and Kemetco Research Inc. dated March 18, 2009 (incorporated by
      reference to our Current Report on Form 8-K filed on March 26, 2009)              
|        |                                                                                                                                                                                                                                                                         
|10.6    | License Agreement
      between our wholly owned subsidiary, Mantra Energy Alternatives Ltd., and
      0798465 B.C. Ltd. dated September 2, 2009 (incorporated by reference to
      our Current Report on Form 8-K filed on September 9, 2009)                        
|        |                                                                                                                                                                                                                                                                         
|10.7    | Option Extension
      Agreement between our company and BioMetals Recovery Systems Inc. dated
      May 1, 2009 (incorporated by reference to our Annual Report on Form 10-K
      filed on September 15, 2009)                                                        
|        |                                                                                                                                                                                                                                                                         
|10.8    | Amendment to
      Management Agreement between our company and Q4 Financial Group Inc. dated
      March 1, 2009 (incorporated by reference to our Annual Report on Form 10-K
      filed on September 15, 2009)                                                       
|        |                                                                                                                                                                                                                                                                         
|10.9    | Amendment to
      Management Agreement between our company and Q4 Financial Group Inc. dated
      July 1, 2009 (incorporated by reference to our Annual Report on Form 10-K
      filed on September 15, 2009)                                                        
|        |                                                                                                                                                                                                                                                                         
|10.10   | Director Agreement
      between our company and Shawn Kim dated June 8, 2009 (incorporated by
      reference to our Current Report on Form 8-K filed on September 23, 2009)                                                                                           
|        |                                                                                                                                                                                                                                                                         
|10.11   | Development
      Agreement between our company and 3M Industrial and Transportation
      Business dated October 28, 2009 (incorporated by reference to our Current
      Report on Form 8-K filed on November 6, 2009)                                                
|        |                                                                                                                                                                                                                                                                         
|10.12   | 2009 Stock
      Compensation Plan (incorporated by reference to our Registration Statement
      on Form S-8 filed on November 24, 2009)                                                                                                                               
|        |                                                                                                                                                                                                                                                                         
|10.13   | 2009 Stock Option
      Plan (incorporated by reference to our Registration Statement on Form S-8
      filed on November 24, 2009)                                                                                                                                     
|        |                                                                                                                                                                                                                                                                         
|10.14   | Technology
      Development Cooperation Agreement between our company, Korea Southern
      Power Co., Ltd. and KC Cottrell Co. Ltd. entered into on August 16, 2010
      (incorporated by reference to our Current Report on Form 8-K filed on
      August 17, 2010)

11

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|Exhibit | Description                                                                                                                                   
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|No.     |                                                                                                                                               
|        |                                                                                                                                               
|(21)    | Subsidiaries                                                                                                                                  
|        |                                                                                                                                               
|        | Mantra Energy Alternatives Ltd.                                                                                                               
|        |                                                                                                                                               
|(31)    | Rule 13a-14 / 15d-14
      Certifications                                                                                                     
|        |                                                                                                                                               
|31.1*   | Certification of the Chief
      Executive Officer and Chief Financial Officer pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002
|        |                                                                                                                                               
|(32)    | Section 1350
      Certifications                                                                                                             
|        |                                                                                                                                               
|32.1*   | Certification of the Chief
      Executive Officer and Chief Financial Officer pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002

*Filed herewith.

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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)                                                   
|                     |                                                                
|                     | /s/ Larry Kristof                                              
|Date: April 19, 2011 | Larry Kristof                                                  
|                     | President, Chief Executive Officer, Chief
      Financial      
|                     | Officer, Secretary, Treasurer and Director                     
|                     | (Principal Executive Officer, Principal
      Financial Officer
|                     | and Principal Accounting Officer)                              

13

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