HIGH WIRE NETWORKS, INC. - Annual Report: 2015 (Form 10-K)

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

FORM 10-K

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

For the Fiscal Year Ended May 31, 2015

Commission File Number 000-53461

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.00001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes [   ]        No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes [   ]        No [X]

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.
Yes [X]        No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 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 [X]        No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

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

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

The aggregate market value of the voting common equity held by non-affiliates as of November 30, 2014, based on the closing sales price of the Common Stock as quoted on the OTCQB was $14,416,955. For purposes of this computation, all officers, directors, and 5 percent beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed an admission that such directors, officers, or 5 percent beneficial owners are, in fact, affiliates of the registrant.

As of September 16, 2015, there were 72,383,203 shares of registrant’s common stock outstanding.

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TABLE OF CONTENTS

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PART I

ITEM 1 - BUSINESS

            This Annual Report on Form 10-K (including the section regarding Management's Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Annual Report on Form 10-K. Additionally, statements concerning future matters are forward-looking statements.

            Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our Management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risks Factors” below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission (“SEC”). You can read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

            We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

            This Annual Report on Form 10-K includes the accounts of Mantra Venture Group Ltd., a Nevada corporation (“Mantra”), together with its subsidiaries, as follows, collectively referred to as “we”, “us” or the “Company”: Mantra Energy Alternatives Ltd., a British Columbia corporation, Mantra Hong Kong Ltd., a Hong Kong corporation, Mantra NextGen Power Inc., a British Columbia corporation, Mantra Energy Alternatives UK Ltd.., a United Kingdom corporation, and Climate ESCO Ltd., A British Columbia corporation. All the subsidiaries are direct subsidiaries of Mantra and are wholly-owned with the exception of Climate ESCO Ltd., which is 65% owned and Mantra Energy Alternatives Ltd., which is 88% owned.

Description of Business

            We were incorporated in Nevada on January 22, 2007. On December 8, 2008 we continued our corporate jurisdiction out of the state of Nevada and into the Province of British Columbia, Canada. Our principal offices are located at 1562 128th Street, Surrey, British Columbia, Canada, V4A 3T7. Our telephone number is (604) 560-1503. Our fiscal year end is May 31.

            We are building a portfolio of companies and technologies that mitigate negative environmental and health consequences that arise from the production of energy and the consumption of resources.

            Our mission is to develop and commercialize alternative energy technologies and services to enable the sustainable consumption, production and management of resources on residential, commercial and industrial scales. To carry out our business strategy we have acquired or licensed from third parties technologies that require further development before they can be brought to market. We are also developing 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 have also entered into formal relationships        with consultants, contractors, retailers and manufacturers who specialize in the areas of environmental sustainability in order to carry out our business strategy.

            We have acquired and own a process for the electro-reduction of carbon dioxide (“ERC”) and have the exclusive world license for a mixed-reactant fuel cell (“MRFC”). We are developing these technologies toward commercial applications.

            In the past we have contracted out our development work to various laboratories. As of July 1, 2014, we have been carrying out research and development on these technologies in our own internal laboratory with our own staff in Vancouver, BC. These activities include: experimentation to improve the process performance; process and economic modeling to optimize the costs of a commercial system; design and simulation of pilot systems for technology demonstration and validation; business development activities such as the establishment of strategic and technology development partners; and the design and fabrication of laboratory prototypes, among others.

            We currently carry on our business through our subsidiary, Mantra Energy Alternatives Ltd. (“MEA”), through which we identify, acquire, develop and market technologies related to alternative energy production and reduction of greenhouse gas emissions and resource consumption. We also have a number of inactive subsidiaries, which we plan to engage in various businesses in the future.

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            Since our inception, we have incurred operational losses and we have completed several rounds of financing to fund our operations.

            On May 25, 2015, the company released a demonstration video of its MRFC technology. This video showcased the fuel cell powering an electric scooter, and was designed to demonstrate the capabilities of the technology to strategic partners and investors.

Collaboration with Alstom (Switzerland) Ltd.

            On June 24, 2013, we entered into an agreement with Alstom (Switzerland) Ltd. concerning the joint research and development projects relating to (1) a pilot plant for the conversion of carbon dioxide to formate at a Lafarge cement plant (the “Lafarge pilot project”); and (2) the development of processes for the conversion of carbon dioxide to other valuable chemicals.

            Pursuant to the agreement with Alstom, MEA and Alstom will co-operate in one or more research and development projects related to MEA’s ERC technology. Prospective projects will be associated with the development of technologies and processes for the conversion of CO₂ to chemical products and the investigation of the feasibility of scale-up and commercialization of these processes. Prior to undertaking any research and development project under the agreement, MEA and Alstom will mutually agree to special terms and conditions governing the purpose, aims and objectives of any such project, including technical descriptions, the designation of work phases and project managers, and the allocation of responsibilities and costs between the parties. The commencement of any work phase for any project will be at the sole discretion of Alstom.

Intellectual Property Management

            MEA and Alstom also will establish an intellectual property committee to oversee and manage all intellectual property issues and activities resulting from the agreement, including the protection of any new intellectual property. Each party will have exclusive right and discretion to prosecute all patents and patent applications resulting from its work on any project. The parties will jointly prosecute any intellectual property in jointly-owned results. Alstom will have the additional option under the agreement to acquire an exclusive license to intellectual property created by MEA under the agreement, and to a license to MEA’s ERC technology as may be reasonably required to exploit intellectual property assumed by Alstom. The agreement does not affect ownership of any underlying intellectual property of either party.

Lafarge Pilot Project and Carbon Dioxide to Alternative Products

            The agreement with Alstom will remain valid for five years or the completion of the last active project, whichever last occurs, and may be extended at any time by the written agreement of both parties. The first joint research and development project under the agreement is the Lafarge pilot project, which plans for the design, construction, and installation of a pilot plant for the conversion of 100 kg/day carbon dioxide to formate, followed by a commercialization scale-up study. Alstom’s contribution to the Lafarge pilot plant project will be approximately CDN$250,000 for in-kind services.

            A second integrated research and development project will study carbon dioxide conversion to alternative chemical products by electrochemical reduction, with a focus on catalyst materials and lifetime. Through this project, we deriveour only current source of revenue. From Phases 1 and 2, we received approximately CDN$435,563. In November 2014,the project was approved for advance to the subsequent phase (to Phase 3 from Phase 2). The budget for Phase 3, which began in January 2015, is CDN$180,375 and it was projected to last eight months. Phase 3 will be completed at the end of September 2015. The work that has been done during this phase includes further improvements to the reactor design and operating conditions, scale-up of the reactor, development of a reactor simulation model, and further development and analysis of the process economic model. Mantra and Alstom are also actively seeking external funding to support the execution of the projects.

Electro Reduction of Carbon Dioxide (“ERC”)

            We previously acquired 100% ownership in and to a certain chemical process for the electro-reduction of carbon dioxide. The reactor at the core of the chemical process, referred to as the electrochemical reduction of carbon dioxide (CO₂), or “ERC”, has been proven functional through small-scale prototype trials and limited scale-up trials. ERC offers a possible solution to reduce the impact of CO₂ emissions on Earth’s environment by converting CO₂ into chemicals with a broad range of commercial applications, including a fuel for a next generation of fuel cells. Powered by electricity, the ERC process combines captured carbon dioxide with water to produce materials, such as formic acid, formate salts, oxalic acid and methanol, that are conventionally obtained from the thermo-chemical processing of fossil fuels. However, while thermo-chemical reactions must be driven at relatively high temperatures that are normally obtained by burning fossil fuels, ERC operates at near ambient conditions and is driven by electric energy that can be taken from an electric power grid supplied by hydro, wind, solar or nuclear energy.

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

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

ERC Development to Date

            In October of 2008, we completed our first ERC prototype reactor capable of processing 1 kilogram of CO₂ per day. We anticipate that commercialization of ERC will require us to develop reactors capable of processing not less than 100 tons of CO₂ per day; however, there is no guarantee that we will successfully produce reactors of that size. Production of commercially viable ERC reactors will depend on continued research and development, successful testing of small-scale ERC reactors, and securing of additional financing. This testing is underway in our research facilities, and is complemented by the parallel engineering of a scaled-up demonstration plant by BC Research Inc.

Pictured Above, Design for Bench Scale ERC Reactor

Established and Emerging Market for ERC and its Chemical Products

            The technology behind ERC can be applied to any scale commercial venture which outputs CO₂ into the atmosphere, though it is expected to be most effective when applied to large scale stationary sources. We anticipate that, once fully commercialized, we will be able to offer ERC as a CO₂ management system to various industry including steel, cement, fermentation processes, power generation and pulp and paper.

            As described, the ERC process can be used to produce a variety of different chemical products from CO₂. The first products that Mantra are targeting are formic acid and its salts. These products have existing markets as commodity chemicals and sell for between $1,000 and $1,500 per tonne, with global consumption being in excess of 600,000 tonnes per year. Formic acid and its salts are used in a variety of industrial applications, including silage preservation, leather tanning, textiles production, oil well drilling, and de-icing, and show enormous potential for market expansion through their use in chemical energy storage.

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

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Mixed-Reactant Fuel Cell (MRFC)

            We retain the exclusive worldwide license for the MRFC technology. The MRFC is a novel fuel cell architecture that utilizes a mixture of the fuel and oxidant, and as a result, does not need a membrane. Conventional fuel cells (typically powered by hydrogen or methanol) must keep the fuel and oxidant separate, leading to several complications: a costly, failure-prone ion-selective membrane must be used to separate but ionically connect the cathode and anode chambers; complex reactant distribution and manifolding; and heavy, thick bipolar plates for separating cells. By contract, the MRFC has no membrane, has a simple reactant distribution mechanism, and contains no bipolar plates; as a result, the system is projected to be cheaper, lighter, and more robust than conventional fuel cells.

            The MRFC thus offers the potential to provide distributed or grid-connected clean, affordable heat and power. Being very versatile due to its simplicity, the MRFC can address several markets, including emergency backup power, stationary combined heat and power, industrial vehicles such as forklifts, and transportation. The first target market for this technology is distributed emergency backup power for telecommunications.

            The MRFC was invented and developed at the University of British Columbia by Professor Emeritus Colin Oloman and his team. In July 2014, we brought the technology into our internal lab for development, which culminated in May 2015 in a video we released showcasing an electric scooter powered exclusively by our MRFC technology. This video was intended to promote the technology to strategic partners and investors. Much of our research budget and activity over the period of January to May 2015 was dedicated to the design and construction of this scooter and the subsequent production of the demonstration video.We are currently exploring possibilities for joint development of the fuel cell with strategic partners.

Energy Storage

            Formate salts and formic acid, which can be produced from CO₂ via ERC, are excellent energy carriers and effective fuels for the MRFC. Thus, the integration of ERC and MRFC represents an energy storage solution whereby intermittent renewable electricity can be stored as formate/formic acid when it is available, and liberated when it is needed. The availability of energy storage is widely recognized as the next most critical factor for increased renewables penetration.

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Competition

            There are several existing alternative methods to ERC which convert CO₂ into useful products. Other methods include, for example:

• Thermo-chemical reactions to produce carbon monoxide, formic acid, methane or methanol;
• Bio-chemical reactions to produce methane;
• Photo-chemical reactions to produce carbon monoxide, formaldehyde or formic acid; and
• Photo-electro-chemical reaction to produce carbon monoxide and possibly methane & methanol.

            Some thermo-chemical methods are established commercial industrial processes (e.g. production of methanol from CO₂) however, like ERC, most of these alternative methods of CO₂ conversion are still at the level of laboratory research and development projects. These alternative methods typically suffer from the following problems:

• Low reaction rate and low CO₂ space velocity make it too costly and time consuming to process industrial quantities of CO₂ ;
• Low selectivity for specified product(s) makes it harder to control product yield;
• High operating temperature and pressure requires large quantities of fossil fuels to power reaction; and
• Highly expensive and cumbersome hydrogen (H₂) is required as a feed reactant.

            Based on scholarship and test results to date, we believe that, compared with alternative methods of CO₂ conversion, ERC, when converting CO₂ to formate or formic acid, has several notable advantages including the following:

• Medium reaction rate allows for commercially viable CO₂ processing times;
• Medium CO₂ space velocity gives the ability to treat comparatively large volumes of CO₂ ;
• High product selectivity for formate and formic acid;
• Low operating temperature and pressure make it possible to rely on renewable sources of electricity instead of fossil fuels; and
• Hydrogen (H₂) is not required as feed reactant.

            In addition to these advantages, we consider most developers of CO2 utilization technologies to not be directly competitive with Mantra. This is because a) the supply of CO2from industrial sources is very large, allowing for multiple technologies to be successful commercially, and b) most technologies generate different products from CO2 than those produced by Mantra, and thus will not be competitors in the sale of chemical products.

            However, because ERC has not yet been tested at a commercially viable scale, there is no guarantee that any of the advantages cited by us will translate into actual competitive advantages for ERC over competing methods for CO₂ conversion at an industrial scale. Also, like other competing methods, ERC suffers from fast cathode deterioration, and we must successfully isolate or develop a better ERC cathode in order to gain a competitive advantage in this regard. We have had success developing methods for improving the activity and extending the lifetime of the cathode at the bench scale and expect these methods to translate into significant process improvements as ERC is scaled up.

            Our competition consists of a number of small companies capable of competing effectively in the alternative energy market as well as several large companies that possess substantially greater financial and other resources than we do. Many of these competitors are substantially larger and better funded than us, and have significantly longer histories of research, operation and development. Our competitors include technology providers or energy producers using biomass combustion, biomass anaerobic digestion, geothermal, solar, wind, new hydro and other renewable energy sources. In addition, we will face well-established competition from electric utilities and other energy companies in the traditional energy industry who have substantially greater financial resources than we do.

            Our competitors may be able to offer more competitively priced and more widely available energy products than ours and they also may have greater resources than us to create or develop new technologies and products.

            Therefore, there is no assurance that we will be successful in competing with existing and emerging competitors in the alternative energy industry or traditional energy industry.

            We plan to identify business opportunities with interested parties and potential customers by networking and participating in conferences and exhibitions related to greenhouse gas emissions reduction and alternative energy sources and technologies. The strategic and geographic focus of our business is currently the North American market. We believe that one of our competitive advantages is our online carbon reduction marketplace which brings energy/carbon reduction products and service providers into direct contact with consumers and enables the facilitation of business contacts. The focus of our online carbon reduction marketplace is not on business-to-business carbon trading, as is the case with many of our competitors.

            While our competitors may be operating similar business models, we plan to build our competitive position in the industry by:

• filling our Scientific Advisory Board with skilled and proficient professionals;
• developing and acquiring technologies to establish sustainable fuel supply chains;

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• providing a comprehensive range of services; and
• providing marketing and promotion services to generate public awareness and enhance the reputation of sustainability initiatives.

            However, since we are still a young company, we face the same problems as other start-up companies in other industries. Our competitors may develop similar technologies to ours and use the same methods as we do, and they may generally be able to respond more quickly to new or emerging technologies and changes in legislation and industry regulation. Additionally, our competitors may devote greater resources to the development, promotion and sale of their technologies or services than we do. Increased competition could also result in loss of key personnel, reduced margins or loss of market share, any of which could harm our business.

Government Regulations

            Some aspects of our intended operations, upon commercial deployment of our technologies, will be subject to a variety of federal, provincial, state and local laws, rules and regulations in North America and worldwide relating to, among other things, worker safety and the use, storage, discharge and disposal of environmentally sensitive materials. For example, we are subject to the Resource Conservation Recovery Act (“RCRA”), the principal federal legislation regulating hazardous waste generation, management and disposal.At this time, our small-scale laboratory operations are in compliance with, but are not significantly impacted by, waste disposal regulations.

            Under some of the laws regulating the use, storage, discharge and disposal of environmentally sensitive materials, an owner or lessee of real estate may be liable for the costs of removing or remediating certain hazardous or toxic substances located on or in, or emanating from, such property, as well as related costs of investigation and property damage. Laws of this nature often impose liability without regard to whether the owner or lessee knew of, or was responsible for, the presence of the hazardous or toxic substances. These laws and regulations may require the removal or remediation of pollutants and may impose civil and criminal penalties for violations. Some of the laws and regulations authorize the recovery of natural resource damages by the government, injunctive relief and the imposition of stop, control, remediation and abandonment orders. The costs arising from compliance with environmental and natural resource laws and regulations may increase operating costs for both us and our potential customers. We are also subject to safety policies of jurisdictional-specific Workers Compensation Boards and similar agencies regulating the health and safety of workers.

            In addition to the forgoing, in the future our U.S., Canadian and global operations may be affected by regulatory and political developments at the federal, state, provincial and local levels including, but not limited to, restrictions on offset credit trading, the verification of offset projects and related offset credits, price controls, tax increases, the expropriation of property, the modification or cancellation of contract rights, and controls on joint ventures or other strategic alliances.

            We are not aware of any material violations of environmental permits, licenses or approvals issued with respect to our operations. We expect to comply with all applicable laws, rules and regulations relating to our intended business. At this time, we do not anticipate any material capital expenditures to comply with environmental or various regulations and requirements.

            While our intended projects or business activities have been designed to produce environmentally friendly green energy or other alternative products for which no specific regulatory barriers exist, any regulatory changes that impose additional restrictions or requirements on us or on our potential customers could adversely affect us by increasing our operating costs and decreasing potential demand for our technologies, products or services, which could have a material adverse effect on our results of operations.

Research and Development Expenditures

           During the year ended May 31, 2015, we spent $698,567 on research and development. For the last two fiscal years, we have spent $1,094,845 on research and development. We anticipate that we will incur $4,200,000 in expenses on research and development (including wages and commercialization efforts) for ERC and MRFC,as well as other technologies we may acquire over the next 12 months.We believe that we may receive public funding and/or the award of further contract research and development projects during the 2016 fiscal year, which will help meet the financing necessary to carry out these activities.

Employees

            As of September 16, 2015, we had eight full-time employees, including three in management, one in administrative duties and four in research and development. Additionally, we have retained a number of consultants for legal, accounting and investor relations services.None of our employees are represented by a collective bargaining agreement, and we believe that our relations with our employees are good.

Intellectual Property

            We previously acquired the process for the “Continuous Co-Current Electrochemical Reduction of Carbon Dioxide”, or the ERC technology, on November 2, 2007 as embodied by and described in the following Patent Cooperation Treaty application:

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            The Patent Cooperation Treaty filing was made with a Receiving Office in 2006 and a written opinion was issued by International Searching Authority regarding the patentability of the invention which is the subject of the application. Finally, the examination and grant procedures will be handled by the relevant national or regional authorities. On March 31, 2008 we initiated the national patent process. The national patent process has been initiated in in Europe, the U.S., Canada, Australia, India, and China.

            As of the date of this annual report, we have been awarded the following patents:

            We have not filed for protection of our trademark. We own the copyright of our logo and all of the contents of our website, www.mantraenergy.com.

ITEM 1A - RISK FACTORS

            Not required under Regulation S-K for “smaller reporting companies.”

ITEM 1B – UNRESOLVED STAFF COMMENTS

            Not required under Regulation S-K for “smaller reporting companies.”

ITEM 2 – PROPERTIES

            Our principal executive offices are located at 1562 128th Street, Surrey, British Columbia, Canada V4A 3T7. Our telephone number is (604) 560-1503. The office is approximately 1,200 square feet in size and is leased for a term of 24 months. The lease began on June 1, 2014 and will end in June 2016. Currently we pay approximately $1,300 per month for our office space in Surrey.

            Our research facilities are located at 202-3590 West 41^st Avenue, Vancouver, British Columbia, Canada, V6N 3E6. The telephone number is (604) 267-4005. The facility is approximately 1,400 square feet in size and is leased for a term of two years beginning on July 1, 2014. Currently we pay approximately $3,600 per month in rent.

            We believe that our existing facilities are suitable and adequate to meet our current business requirements. We maintain a website at www.mantraenergy.com and the information contained on that website is not deemed to be a part of this annual report.

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ITEM 3 - LEGAL PROCEEDINGS

            From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

ITEM 4 – MINE SAFETY DISCLOSURES

            Not applicable.

PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

            Our common stock is currently available for quotation on the OTCQB market under the symbol “MVTG.” Previously, our common stock was available for quotation on the Over-the-Counter Bulletin Board under the symbol “MVTG.”

            For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.

            On September 15, 2015, the closing sale price of our common stock, as reported by the OTC Markets, was $0.08 per share. On September 16, 2015, there were 422 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

Dividend Policy

            We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.

Recent Sales of Unregistered Securities

            During the quarter ended May 31, 2015, we sold 138,889 shares of common stock for $25,000.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

            We did not purchase any of our registered securities during the period covered by this Annual Report.

ITEM 6 – SELECTED FINANCIAL DATA

            Not required under Regulation S-K for “smaller reporting companies.”

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ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

            This Management's Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of its management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

            Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors known to us could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that its assumptions are based upon reasonable data derived from and known about our business and operations and the business and operations of the Company. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to, expected market demand for the Company’s services, fluctuations in pricing for materials, and competition.

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.

            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. To carry out our business strategy, we have acquired or licensed technologies from third parties that require further development before they can be brought to market. We are also developing 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 have also entered into formal relationships with consultants, contractors, retailers and manufacturers who specialize in the areas of environmental sustainability in order to carry out our business strategy.

            We have acquired and own a process for the electro-reduction of carbon dioxide (“ERC”) and have the exclusive world license for a mixed-reactant fuel cell (“MRFC”). We are developing these technologies toward commercial applications.

            In the past, we contracted out our development work to various laboratories. As of July 1, 2014, we have been carrying out research and development on these technologies in our own internal laboratory with our own staff in Vancouver, BC. These activities include: experimentation to improve the process performance; process and economic modeling to optimize the costs of a commercial system; design and simulation of pilot systems for technology demonstration and validation; business development activities such as the establishment of strategic and technology development partners; and the design and fabrication of laboratory prototypes, among others.

            Current trends are positive for the company, as government regulation, public sentiment and industrial players increasingly support technological solutions with reduced environmental impacts. Specifically, regulations on carbon emissions (such as the BC carbon tax or the US EPA’s recently announced Clean Power Plan) are placing costs or limitations on the amount of CO₂ that emitters can release into the atmosphere. The two technologies that currently make up our portfolio both directly address CO₂ emissions and contribute to their reduction.

Results of Operations

Fiscal year Ended May 31, 2015 Compared to Fiscal year Ended May 31, 2014

            The following summary of our results of operations should be read in conjunction with our audited financial statements for the years ended May 31, 2015 and 2014.

            Our operating results for the years ended May 31, 2015 and 2014 are summarized as follows:

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Revenue

            Our revenue for the year ended May 31, 2015 was $198,908, compared to our revenue for the year ended May 31, 2014, which was $274,584, representing approximately a 28% decrease. During the year ended May 31, 2015, revenue decreased because the contracted research project that we are conducting for our client Alstom advanced into a new phase (from Phase 2 to Phase 3). Phase 3 of this project has a smaller budget than Phase 2 due to reduced research activities, and as such, our revenue derived from this project has reduced accordingly.

Operating Expenses

            Our operating expenses for the years ended May 31, 2015 and May 31, 2014 are outlined in the table below:

            The increase in operating expenses for the year ended May 31, 2015, compared to the same period in fiscal 2014, was mainly due to increases in research and development, consulting and advisory fees and management fees. The increase in research and development were mainly the result of an increase in stock-based compensation and research and development activities. The increase in consulting and advisory and management fees was mainly the result of increased stock-based compensation. We also had increases in deprecation due to increased capital assets subject to amortization in the current year compared to the prior year, in shareholder communications and awareness from increased efforts and expenditures to improve our visibility to investors in new regions, such as Europe, Japan and the U.S., including travel to and within these regions and exhibiting and attending corresponding conferences.

            Slightly offsetting those increases were decreases in business development as we had an ongoing research and development contract, and our focus was on executing this contract as opposed to further expanding business activities, professional fees because of changes to our auditing firm and legal firm that resulted in reduced costs, as well as a reduced number of patent applications being filed, travel and promotion as a result of a decrease in travel during the current year compared to the prior year and a decrease in foreign exchange gain as a result of the relative increase in the value during fiscal 2015 of the U.S. Dollar against the Canadian Dollar. Our revenues are largely in Canadian Dollars and a substantial amount of our expenses are paid in Canadian Dollars.

            Our general and administrative expenses consist of office occupation expenses, communication expenses (cellular, internet, fax and telephone), bank charges, foreign exchange, courier, postage costs and office supplies. Our professional fees include legal, accounting, and auditing fees. Business development, consulting and advisory costs include fees paid, shares issued and options granted to contractors and advisory board members.

Liquidity and Financial Condition

            As of May 31, 2015, our total current assets were $166,204 and our total current liabilities were $1,524,500, resulting in a working capital deficit of $1,358,296 compared to working capital of $348,045 as at May 31, 2014.

            We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard we have historically raised additional capital through equity offerings and loan transactions.

12

Cash Flows

            The decrease in cash that we experienced during fiscal 2015 as compared to an increase of cash during fiscal 2014 was primarily due to the decrease during fiscal 2015 of cash received from the sale of our common stock, as we only raised $329,339 from financing activities during fiscal 2015, compared to $2,287,542 in the prior year. We expect that our total expenses will increase over the next year as we increase our business operations, which is subject to raising additional funds, for which we currently have no commitments. 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, subject to raising additional funds, we plan to primarily concentrate on commercializing our ERC technology and associated projects.

            In order to fully carry out our business plan, we need additional financing of approximately $5,100,000 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 our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Inflation

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

Critical Accounting Policies

            Our consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in note 2 of the notes to our financial statements. 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.

Basis of Presentation/Principles of Consolidation

13

            These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of our company and our subsidiaries, Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All the subsidiaries are wholly-owned with the exception of Climate ESCO Ltd., which is 64.55% owned and Mantra Energy Alternatives Ltd., which is 88.21% owned. All inter-company balances and transactions have been eliminated.

Use of Estimates

            The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, valuation of inventory, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. Our company bases our estimates and assumptions on current facts, historical experience and various other factors that we believe 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 our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Accounts Receivable

            Our company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables our company considers at risk.

14

Intangible Assets

            Intangible assets consist of patents and are stated at cost and have a definite life. Intangible assets are amortized over their estimated useful lives. Our company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. Our company has no intangibles with indefinite lives.

Long-lived Assets

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

Technology Development Revenue Recognition

            Our company performs research and development services. Our company recognizes revenue under research contracts when a contract has been executed, the contract price is fixed and determinable, delivery of services or products has occurred, and collectability of the contract price is considered reasonably assured and can be reasonably estimated. Revenue is based on direct labor hours expended at contract billing rates plus other billable direct costs.

Research and Development Costs

            Research and development costs are expensed as incurred.

Stock-based Compensation

            Our company records 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.

            Our company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by our company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to our company’s 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.

Recent Accounting Pronouncements

            We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

            Not required under Regulation S-K for “smaller reporting companies.”

15

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANTRA VENTURE GROUP LTD.

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Mantra Venture Group Ltd.

We have audited the accompanying balance sheets of Mantra Venture Group Ltd. as of May 31, 2015 and 2014, and the related statements of operations, stockholders’ equity (deficit), and cash flows each of the two years in the period ended May 31, 2015. Mantra Venture Group Ltd.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mantra Venture Group Ltd. as of May 31, 2015 and 2014, and the results of its operations and its cash flows for each of two years in the period ended May 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements the Company has an accumulated deficit of $11,529,916 and a working capital deficit of $1,358,296 as of May 31, 2015 which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT
September 18, 2015

F-2

MANTRA VENTURE GROUP LTD.
Consolidated balance sheets
(Expressed in U.S. dollars)

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

F-3

MANTRA VENTURE GROUP LTD.
Consolidated statements of operations
(Expressed in U.S. dollars)

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

F-4

MANTRA VENTURE GROUP LTD.
Consolidated statements of stockholder’s equity (deficit)
For the Years Ended May 31, 2015 and 2014

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

F-5

MANTRA VENTURE GROUP LTD.
Consolidated statements of stockholder’s equity (deficit)
For the Years Ended May 31, 2015 and 2014

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

F-6

MANTRA VENTURE GROUP LTD.
Consolidated statements of cash flows
(Expressed in U.S. dollars)

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

F-7

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-8

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-9

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-10

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-11

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-12

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-13

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-14

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

The following table summarizes the change in fair value of derivatives:

The Company uses Level 2 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using the Black-Scholes option pricing model based on various assumptions. The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:

F-15

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

Stock transactions during the year months ended May 31, 2015:

Stock transactions during the year ended May 31, 2014:

F-16

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-17

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

As at May 31, 2015, the following share purchase warrants were outstanding:

F-18

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

A summary of the changes of the Company’s non-vested stock options is presented below:

As at May 31, 2015, there was $39,146 of unrecognized compensation cost related to non-vested stock option agreements. This cost is expected to be recognized over a weighted average period of 0.49 years.

Additional information regarding stock options as of May 31, 2015 is as follows:

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:

During the year ended May 31, 2015, the Company recorded stock-based compensation of $322,005 (2014 - $38,200) for stock options granted.

The weighted average fair value of the stock options granted for the year ended May 31, 2015, was $0.30 (2014 - $0.13) per option. F-19

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

F-20

MANTRA VENTURE GROUP LTD.
Notes to the consolidated financial statements
May 31, 2015
(Expressed in U.S. dollars)

The significant components of deferred income tax assets and liabilities as at May 31, 2015 and 2014 are as follows:

F-21

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

            On July 30, 2014, Saturna Group Chartered Accountants LLP (“Saturna Group”) provided notice that they were resigning their services as our company’s independent registered public accounting firm due to mandatory partner rotation requirements.

            The reports of Saturna Group on our company’s financial statements as of and for the fiscal year ended May 31, 2013 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about our company’s ability to continue as a going concern.

            Our company’s Board of Directors participated in and approved the decision to change independent registered public accounting firms.

            Through the interim periods (subsequent to our year ended May 31, 2013) to July 30, 2014 (the date of change in accountants), there have been no disagreements with Saturna Group on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Saturna Group, would have caused them to make reference to the subject matter of the disagreements in connection with their report on the financial statements for such years.

            On July 30, 2014, our company engaged Sadler, Gibb & Associates, L.L.C., Certified Public Accountants as our new independent registered public accounting firm. During the two most recent fiscal years and through July 30, 2014, our company had not consulted with Sadler, Gibb & Associates, L.L.C. regarding any of the following: (i) the application of accounting principles to a specific transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on our company’s financial statements, and none of the following was provided to our company: (a) a written report, or (b) oral advice was provided that Sadler, Gibb & Associates, L.L.C. concluded was an important factor considered by our company in reaching a decision as to accounting, auditing or financial reporting issue; or (iii) any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.

ITEM 9A – CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

            Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

            Based on management’s evaluation, our chief executive officer and chief financial officer concluded that, as a result of the material weaknesses described below, as of May 31, 2015, our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are:

            We are committed to improving our financial organization. In addition, we will look to increase our personnel resources and technical accounting expertise within the accounting function to resolve non-routine or complex accounting matters. In addition, when funds are available, we will take the following action to enhance our internal controls: Hiring additional knowledgeable personnel with technical accounting expertise to further support our current accounting personnel, which management estimates will cost approximately $100,000 per annum. As our operations are relatively small and we continue to have net cash losses each quarter, we do not anticipate being able to hire additional internal personnel until such time as our operations are profitable on a cash basis or until our operations are large enough to justify the hiring of additional accounting personnel. We currently engage an outside accounting firm to assist us in the preparation of our consolidated financial statements and anticipate doing so until we have a sufficient number of internal accounting personnel to achieve compliance. As necessary, we will engage consultants in the future in order to ensure proper accounting for our consolidated financial statements.

15

            Due to the fact that our internal accounting staff consists solely of a Chief Executive Officer, who functions as our Principal Accounting Officer, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support us if personnel turn over issues within the department occur. We believe this will greatly decrease any control and procedure issues we may encounter in the future.

Management’s report on internal control over financial reporting.

            Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of May 31, 2015 for the reasons discussed above.

            This annual report does not include an attestation report by Sadler, Gibb & Associates, L.L.C., our independent registered public accounting firm regarding internal control over financial reporting. As a smaller reporting company, our management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.

Changes in internal control over financial reporting.

            There were no changes in our internal control over financial reporting that occurred during the quarter ended May 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B – OTHER INFORMATION

            None.

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PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

            Our bylaws state that the authorized number of directors shall be not less than one and not more than fifteen and shall be set by resolution of the board of directors. Our board of directors has fixed the number of directors at three.

            Our current directors and officers are as follows:

            Our directors serve until our next annual shareholder meeting or until his successor is elected who accepts the position. Officers hold their positions at the pleasure of the board of directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.

Larry Kristof - President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director

            Larry Kristof has been our president, chief executive officer, secretary, treasurer and a director since our inception on January 22, 2007 and was appointed as our chief financial officer on January 18, 2011. Mr. Kristof has over 15 years of experience in business development and management. From 2003 until April 2007 he was the president and chief executive officer of Lexington Energy Services Inc., a public company quoted on the OTC Bulletin Board under the symbol LXES.OB.

            Mr. Kristof co-founded Lexington Energy in 2003 and successfully built the company from concept through assets of over $7 million. Under Mr. Kristof’s direction, Lexington Energy designed and commercialized innovative mobile drilling rigs and nitrogen generation technologies. From 2003 to 2005, Mr. Kristof co-founded Lexington Communications Ltd., a company in the business of providing investor and corporate communications expertise to public companies. In early 2003, Mr. Kristof worked as the corporate communications manager of Trivello Energy Corp. (TSX-V: TRV.V), a company engaged in oil and gas exploration and production in western Canada. From 1998 to 2001, Mr. Kristof was the founder and president of Westec Venture Group Inc., a business development and venture capital service provider.

Jonathan Michael Boughen–Director

            Jonathan Michael Boughen has been a director of our company since February 28, 2011.

            From May of 2000 to January of 2006, Mr. Boughen was a sales manager at Ropak Corporation, a company that specializes in plastic packaging, container and film technologies worldwide. His responsibilities and duties included managing the sales team and key distributors and sharing the profit and loss responsibility with the regional plant manager.

            Since June of 2006, Mr. Boughen has been a general manager at Scientek Technology Corporation, a company that specializes in building hospital and laboratory products such as washers and dryers for the processing of surgical instruments and utensils, operating room carts, and laboratory glassware. His responsibilities and duties includes leading the company with full profit and loss responsibility and managing the sales and growth profit through major changes in technology and currency value in a highly competitive market.

Patrick Dodd –VP of Business Development and Director

            Patrick Dodd has been acting our VP of business development since March 1, 2014 and as director since May 7, 2013. Between January 8, 2013 and his appointment as our VP of business development, Mr. Dodd served as our chief technology officer.

            Patrick Dodd began a bachelor’s degree in Chemical Engineering in 2006. This time was rife with experience, as, aside from playing on the varsity football team for five years, he worked as a process engineering intern for two terms at Nexen Inc. in Calgary, Alberta (in 2007 and 2008). At Nexen, Mr. Dodd was responsible for developing an electronic line list and complete set of process flow diagrams for the company’s Balzac gas plant. The following year saw Mr. Dodd engaged as a research assistant in the Chemical Engineering Department at McGill University, where he supplemented multiple Master’s theses by synthesizing a series of “green” succinate-based plasticizers and testing their performance. This work resulted in his being named in two publications.

17

            Upon the completion of his degree at McGill University, in 2010, Mr. Dodd immediately began working toward a Master’s degree in Clean Energy Engineering at the University of British Columbia. In 2012, he capitalized on an opportunity to work as a process engineering intern at Iceland’s Carbon Recycling International, and thus became involved with the concept of carbon utilization. This project led to Mr. Dodd’s involvement with our company, and to complete his degree Patrick completed the early stages of design for our company’s ERC pilot plant, work which has served as the basis for its completed design. Mr. Dodd obtained his Master Degree in 2012 and was immediately engaged with our company wherein he has primarily been engaged in setting up our new internal research and development lab.

W. Glenn Parker –Director

            W. Glenn Parker has been a director of our company since December 9, 2014.

            Mr. Parker founded Wychick Investment Advisors Inc. in 2005 and has served as President since that time. Mr. Parker was employed by D. A. Davidson & Co from 2003 to 2005 as Sr. Vice President and Branch Manager in Bend, Oregon. From 1991 to 2003, Mr. Parker was a 1^st Vice President – Investments and Assistant Manager with Prudential Securities in Portland, Oregon. Since 1999, Mr. Parker has been the President of Cascadia Sportsmanagement Inc., a marketing, consulting and travel company based in Bend, Oregon that is dedicated to the needs of professional and elite athletes and sponsoring corporations.

            Mr. Parker completed his Certified Financial Planning (CFP) designation in 1994 and received his Certified Investment Management Analyst (CIMA) designation in 2000. Mr. Parker has an MBA and a combined Civil Engineering and Business degree from McMaster University in Canada. He is a member of the Investment Management Consultants Association and the CFP Board.

Family Relationships

            None.

Board Independence and Committees

            We are not required to have any independent members of the Board of Directors. The board of directors has determined that (i) each of Larry Kristof and Patrick Dodd, has a relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and is not an “independent director” as defined in the Marketplace Rules of The NASDAQ Stock Market and (ii) Jonathan Michael Boughen and W. Glenn Parker are each an independent director as defined in the Marketplace Rules of The NASDAQ Stock Market.As we do not have any board committees, the board as a whole carries out the functions of audit, nominating and compensation committees, and such “independent director” determination has been made pursuant to the committee independence standards.

Scientific Advisory Board

            Our Scientific Advisory Board provides information and recommendations to our directors and management regarding the scientific and technical aspects of our various technologies, solutions and services. Our Scientific Advisory Board is composed of specialists in the scientific, environmental, electrical and systems engineering fields whom we have engaged as consultants on a part-time basis.

            Our Scientific Advisory Board provides advice and expertise on technology and software design, sustainability, environmental policy, and technology and service assessment and implementation. The board also provides input on the technical, ethical and environmental consequences associated with our technologies, projects and operations.

            We have entered into consulting agreements with the individuals listed below and appointed them as members of our Scientific Advisory Board.

Professor Emeritus Colin Oloman, P. Eng.

            Professor Emeritus Colin Oloman has been a member of our Scientific Advisory Board since November 2, 2007.

            As the inventor of Mantra’s ERC and MRFC technologies, Professor Emeritus Colin Oloman and his work make up the heart of Mantra Energy. Integral as the leader of the Scientific Advisory Board, Professor Oloman has held similar positions as a consultant in the research and development of a variety of electrochemical processes. His notable accomplishments include developing Canada’s first pilot plant for the scrubbing of hydrogen sulfide from pulp mill recovery furnace flue gas from 1965 to 1967, co-inventing and developing the Electro-Luber^TM system to start-up in 1982, and designing, engineering, installing and operating a 20 kW, 10-cell perforated bipolar electrochemical reactor for the production of alkaline peroxide in 1984.

18

            Professor Oloman has published three books and over 45 reports in various industry journals, and is the inventor or co-inventor of over 20 US and international patents. He is a member of the Chemical Engineering Society of Canada and The Electrochemical Society.

Professor PlamenAtanassov, Distinguished Professor (UNM)

            Professor PlamenAtanassov is the Founding Director of UNM’s Center for Emerging Energy Technologies and a Distinguished Professor at the Department of Chemical and Biological Engineering. He obtained his Ph.D. from the Bulgarian Academy of Sciences in Physical Chemistry and Electrochemistry in 1995 and since then has been heavily involved in applied electrochemistry and the development of fuel cell electrocatalysts. This work has primarily taken place at UNM, where Professor Atanassov has been successful in partnering with such companies as Daihatsu, Ballard, and CFD Research Corp., but also includes being a project leader in electrocatalyst development at Superior MicroPowders LLC (now Cabot Corp.).

            Professor Atanassov’s current research is focused, among other things, on the development of non-platinum and platinum group metal catalysts. Funding from the US Department of Defense (DOD) and Department of Energy (DOE) supports his work. Professor Atanassov has ongoing research collaborations with many universities in several countries, including a number of US National Laboratories, and has published some 220 peer-reviewed journal articles. He holds more than 30 US and international patents.

Alexey Serov, Ph.D., Research Assistant Professor (UNM)

            Dr. Alexey Serov (Ph.D.) is a Research Assistant Professor at UNM’s Center for Emerging Energy Technologies. After graduating with an Honor Diploma and Gold Medal from the Chemistry Department of Moscow State University, he worked for five years as a researcher in that institution’s Division of Inorganic Chemistry. He then worked as a Senior Researcher at the Samsung SDI R&D Center in the Republic of Korea, for which he was awarded “Best Foreign Researcher”, before obtaining his Ph.D. from the Paul Scherrer Institute and University of Bern with a focus on the chemical properties of Super Heavy Elements and their homologues.

            Dr. Serov’s current research at UNM is directly related to that of Professor Atanassov, and is focused on the synthesis of multicomponent inorganic materials and catalysts by conventional and advanced solution, solid state and ultra-sonic techniques, and the synthesis and characterization of nano-crystalline catalysts for energy storage and conversion applications. He has published nearly 30 peer-reviewed journal papers on electrocatalysis, and is named on dozens of issued US and international patents.

Involvement in Certain Legal Proceedings

            To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

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Code of Ethics

            We adopted a Code of Ethics applicable to all of our directors, officers, employees and consultants, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics was attached as an exhibit to our Registration Statement filed on Form S-1filed with the SEC on February 26, 2008. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

            We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests may be sent in writing to: Mantra Ventures Group Ltd., #562 – 800 15355 24^th Avenue, Surrey, British Columbia, Canada V4A 2H9.

Section 16(a) Beneficial Ownership Compliance Reporting

            Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our shares of common stock and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.

            Based solely on our review of the copies of such forms received by our company, or written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year ended May 31, 2015, all filing requirements applicable to our officers, directors and greater than 10% beneficial owners as well as our officers, directors and greater than 10% beneficial owners of our subsidiaries were complied with, except as noted below.

ITEM 11 - EXECUTIVE COMPENSATION

            The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Chief Executive Officer, the two highest paid executive officers and up to two other highest paid individuals whose total annual salary and bonus exceeded $100,000 for fiscal years 2015 and 2014.

Option/SAR Grants in Fiscal Year Ended May 31, 2015

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Outstanding Equity Awards at Fiscal Year-End Table

            The following table sets forth information for the named executive officers regarding the number of shares subject to both exercisable and unexercisable stock options, as well as the exercise prices and expiration dates thereof, as of May 31, 2015.

Equity Compensation Plan Information

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

            On January 8, 2013, we entered into an employment agreement with Larry Kristof, whereby Larry Kristof has agreed to provide services as chief executive officer of our company. The agreement had an initial term of two years, and automatically renews for continues one year periods unless either party gives notice of its intention to terminate at least 30 days prior to a renewal date. In addition, the employment agreement may be terminated by Larry Kristof, for any reason, by providing at least three month’s advance written notice to our company.As compensation, pursuant to the terms of the employment agreement, Larry Kristof will receive an annual salary of $60,000, payable in equal monthly installments.

            Also on January 8, 2013, our company’s subsidiary, Mantra Energy Alternatives Ltd., entered into an employment agreement with Larry Kristof on the same terms and conditions as the employment agreement with our company.

Director Compensation

            The following table sets forth summary information concerning the total compensation paid to our non-employee directors in fiscal 2015 for services to our company.

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ITEM 12- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of our common stock as of September 16, 2015:

• by each person who is known by us to beneficially own more than 5% of our common stock;

• by each of our officers and directors; and

• by all of our officers and directors as a group.

            Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power and that person’s address is c/o Mantra Venture Group Ltd., #562 – 800 15355 24th Avenue, Surrey, British Columbia, Canada V4A 2H9.

___________________________________________
* Denotes less than 1%

(1) Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of September 16, 2015 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.

(2) Percentage based upon 72,383,203 shares of common stock issued and outstanding as of September 16, 2015.

(3) Includes 50,000 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days and 13,250,000 shares of common stock owned by 0770987 BC Ltd. Larry Kristof, as the President of 0770987 BC Ltd.has investment and voting control over the shares held by this entity.

(4) Includes 100,000 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days.

(5) Includes 50,000 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days.

(6) Represents shares of common stock underlying options which are currently exercisable or become exercisable within 60 days.

(7) Includes 350,000 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days.

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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

            Except as set forth below, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last two fiscal years:

ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

            The aggregate fees billed for the most recently completed fiscal year ended May 31, 2015 and for fiscal year ended May 31, 2014 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

            Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

            Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.

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PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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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.