Forward Looking Statements

This quarterly report on Form 10-Q of Mantra Venture Group Ltd., (the "Company", "Mantra", "we", "our", "us") 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. All currency references in this report are in US dollars unless otherwise noted.

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.

This management's discussion and analysis or plan of operation should be read in conjunction with the financial statements and notes thereto of the Company for the three and six months ended November 30, 2008. The reported results may not necessarily reflect the future.

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. We carry on our business through our five wholly owned subsidiaries and one majority owned subsidiary as follows:

� Mantra Energy Alternatives Ltd., through which we identify, acquire, develop and market technologies related to alternative energy production, greenhouse gas emissions reduction and resource consumption reduction;

� Mantra Media Corp., through which we offer promotional and marketing services to companies in the sustainability sector or those seeking to adopt sustainable practices;

� Carbon Commodity Corp., through which we intend to license or develop carbon footprint assessment software and develop an online carbon reduction marketplace;

� Climate ESCO Ltd., through which we plan obtain the distribution or licensing rights to commercialized technologies and broker them to residential and industrial consumers seeking sustainability solutions;

� Mantra Next Gen Power Inc., through which we anticipate developing technologies in the alternative energy sector; and

� Mantra China Limited, through which we, together with our joint venture partners, plan to develop our business in Hong Kong and mainland China.

Results of Operations for the Period from January 22, 2007 (Inception) to November 30, 2008 and for the Six Months Ended November 30, 2008 compared to the Six Months Ended November 30, 2007.

Lack of Revenues

We have had limited operational history since our inception on January 22, 2007. From our inception on January 22, 2007 to May 31, 2008 we did not generate any revenues; however, for the six months ended November 30, 2008 we generated $11,058 in website development revenue. Since our inception to November 30, 2008, we have an accumulated deficit of $2,811,225. We anticipate that we will incur substantial losses over the next year and our ability to generate additional revenues in the next 12 months remains uncertain.

Expenses

We accumulated total expenses of $2,822,283 from the date of our inception to
November 30, 2008, $864,085 of which were paid by way of common shares, stock
options or convertible debentures of the Company.

Description                                            Expense        Stock based/other         Total
Amortization                                         $    39,525                       -     $    39,525
Interest expense                                           9,714                       -           9,714
Business development                                      34,698                 167,404         202,102
Consulting and advisory                                        -                 378,497         378,497
Management fees                                          334,700                  72,800         407,500
Research and development                                 143,275                  11,275         154,550
Shareholder communication, awareness and financing
costs                                                    285,350                  67,907         353,257
Professional fees                                        266,419                  91,500         357,919
Public listing and related                               114,547                  40,000         154,547
Website and corporate identity                           134,293                  26,975         161,268
General, Administrative and salaries                     595,677                   7,727         603,404
                                                     $ 1,958,198     $           864,085     $ 2,822,283

For the six months ended November 30, 2008, we incurred total expenses of $775,671, $192,320 of which were paid by way of common shares, stock options or convertible debentures of the Company.

Description                                           Expense       Stock based/other        Total
Amortization                                         $  18,306                       -     $  18,306
Interest expense                                         9,714                       -         9,714
Business development                                     1,449                       -         1,449
Consulting and advisory                                      -                  35,354        35,354
Management fees                                         96,000                  51,533       147,533
Research and development                                72,122                       -        72,122
Shareholder communication, awareness and financing
costs                                                  113,912                  55,433       169,345
Professional fees                                      115,664                  50,000       165,664
Public listing and related                               7,500                       -         7,500
General, Administrative and salaries                   148,684                       -       148,684
                                                     $ 583,351     $           192,320     $ 775,671

Overall expenses for the six months ended November 30, 2008 were $170,278 higher than the same period last year due primarily to increased shareholder communication, investor awareness and financing costs, and from increased professional fees and research and development expenses. Financing costs relate mainly to legal and SEC filing expenses incurred for private placements. The increases were offset by a $22,701 decrease in general and administrative expenses, a decrease of $20,040 in public listing expenses, and a decrease in consulting and advisory expenses of $24,203 as management continues its cost reduction efforts.

Overall expenses for the three months ended November 30, 2008 were higher by $7,918 compared to the same period last year. Business development expenses, consulting and advisory fees, as well as management fees for the three months ended November 30, 2008 were collectively $136,116 lower than the same period last year due to cost management initiatives and a more focused approach to managing the business. This was offset by a collective increase of $130,232 in professional fees, shareholder communication, financing and salary expense due primarily to legal fees and regulatory filing expenses incurred for private placements and other fund raising efforts as well as awareness campaigns. Travel, meals, entertainment and promotion were lower by $24,643 offset by $24,294 in increased expenses for research and development related to the ERC project. Public listing expenses were lower by $21,857 offset by a $21,742 increase in non-cash expenses, interest and amortization.

Net Loss

Since our inception on January 22, 2007 to November 30, 2008, we have incurred net losses of $2,811,225. For the six months ended November 30, 2008 we incurred a net loss of $764,613 compared to our net loss of $605,393 for the same period in 2007. The loss for the three months ended November 30, 2008 was $361,981, $4,860 higher than the same period last year.

Liquidity and Capital Resources

As of November 30, 2008, we had total assets of $405,354 and total liabilities of $468,050. We had cash of $93,536 in our bank accounts and we received an additional $95,000 in December from subscriptions receivable which were outstanding as of November 30, 2008. As of November 30, 2008 we had a working capital deficit of $169,877. This compares to our cash of $26,201 and working capital deficit of $192,990 as of May 31, 2008. To date we have been solely dependent on the funds raised through our equity or debt financings. Going forward we will remain dependent on raising funds through our equity and debt financings but we also expect to receive additional funding from government grant and incentive programs.

During the six months ended November 30, 2008, we raised gross proceeds, satisfied debt and paid for services totaling $923,750 from the issuance of our securities as described in the following table.

Date of issuance     Type of security issued       Number of    Price per      Value
                                                   securities    security       ($)
                                                     issued        ($)
   June 2008        Common Shares for services       37,500        0.19        7,125
   July 2008         Units (common shares and      2,400,000      0.125       300,000
                        warrants) for cash
   July 2008        Common Shares for services       50,000        0.40        20,000
   July 2008        Common Shares for services       62,500        0.45        26,250
 September 2008     Common Shares for services       37,500        0.41        15,375
  October 2008        Convertible Debentures          N/A          N/A        250,000
                     Units (common shares and
 November 2008     warrants) for cash - $10,000    1,220,000       0.25       305,000
                   applied to accounts payable

During the six months ended November 30, 2008, we used net cash of $84,990 in investing activities and net cash of $717,064 in operating activities. This compares to our net cash used in investing activities of $44,995 and net cash used in operating activities of $530,024 for the same period in 2007. During the six months ended November 30, 2008 we received net cash of $869,389 from financing activities compared to $746,920 for the same period in 2007.

We expect to require approximately $1,478,930 in a combination of financing and grants for further development of our electro reduction of carbon technology and for our other planned operational expenses for the next twelve months (beginning January 1, 2009) are summarized as follows:

                                                      Target      Estimated expenses
Description                                      completion date          ($)
                                                    or period
Development of the ERC reactor to demonstration    December 31,        554,232
pre-commercial scale                                   2009
TSX Venture listing costs including legal fees,   March 31, 2009       230,000
sponsorship fees and financing costs
Management and consulting fees (including           12 months          240,000
expenses of our Scientific Advisory Board)
Corporate communication, investor awareness and     12 months          126,000
financing costs
Professional fees, legal and audit                  12 months          122,000
General, administrative and salary expenses         12 months          158,698
Travel, advertising and promotional expenses        12 months           48,000
Total                                                                 $1,478,930

At present, our cash requirements for the next twelve months outweigh the funds available to maintain or develop our operations. We expect that the bulk of the $1,479,000 that we need for the next 12 months will be covered by the funds raised by M Partners Inc, our sponsors for our potential TSX Venture listing. The potential financing by M Partners is contingent on our successful listing with the TSX Venture Exchange and is to be carried out on a best efforts basis. Consequently, there can be no guarantee how much money will be raised or that this financing will be completed at all. In addition, we intend to pursue additional equity financing from private investors and will continue to negotiate with contractors and vendors to pay for the services with stock and stock options instead of cash.

We also continue to implement cost reduction measures which may include reducing our reliance on outside contractors and tailoring our investor awareness programs and initiatives to a scale that is appropriate to our level of activity and the nature of our business. Finally, we have begun to seek out alternative sources of funding, such as research and development grants, to offset the cost of our technology development.

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

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

Off-Balance Sheet Arrangements

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

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

Foreign Currency Translation

Our functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 "Foreign Currency Translation", using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. We have not, to November 30, 2008 entered into derivative instruments to offset the impact of foreign currency fluctuations. We have determined that any potential foreign currency translation gain or loss is not material and as a result other comprehensive income presentation is not presented.

Stock-based Compensation

We record stock based compensation in accordance with SFAS 123(R), "Share-Based Payments," which requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards, made to employees and directors, including stock options.

SFAS 123(R) requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. We use the Black-Scholes option-pricing model as its method of determining fair value. 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 in our financial statements as an expense in the Consolidated Statement of Operations over the requisite service period.

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 in accordance with the provisions of EITF 96-18.

Property and Equipment

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