Between October 10 and October 16, 2008 Mantra Venture Group Ltd. (the "Company") issued convertible debentures in the aggregate of $250,000 to three investors. The investors have invested an aggregate of $250,000 through the purchase of convertible debentures (the "Debentures") and warrants for the purchase of 250,000 shares of the Company's common stock at an exercise price of $0.50 per share for 2 years (the "Warrants"). The Debentures and Warrants are exempt from registration pursuant to Regulation S to the Securities Act.

The other material terms of the Debentures are:

� Interest on the Debentures accrues monthly at a rate of 10% per annum

� The principal of the Debentures, and any accrued interest, is convertible at the option of the holders at a price of $0.40 per share at any time beginning 30 days after execution of the agreements for the purchase of the Debentures until the full amount owed under each of the Debentures is repaid.

� The balance of the money owing under the Debentures is due 1 year after the execution of the agreements for the purchase of the Debentures.

� The Debentures provide rights of registration with the SEC on a Form S-1 within 30 days of the closing of the financing.

On October 15, 2008 the Company also entered into a revolving line of credit agreement with Larry Kristof, our Director, President and Chief Executive Officer (the "Lender") to make available to the Company a loan of up to $250,000 from October 15, 2008 until October 14, 2010 (the "Credit Agreement"). The Company may borrow a maximum of $25,000 each month by providing written notice of the amount it wishes to loan to the Lender. The line of credit bears no interest and the outstanding balance must be repaid in full on October 14, 2010. The Company will pay a one-time fee of $100 to the Lender as consideration for entering into the Credit Agreement.

The Company's reliance upon the exemption under of Regulation S of the Securities Act was based on the fact that the sale of the securities was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. The Company did not engage in any directed selling efforts, as defined in Regulation S, in the US in connection with the sale of the securities. Each investor was not a US person, as defined in Regulation S, and was not acquiring the securities for the account or benefit of a US person.