Forward Looking Statements

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

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

Business Overview

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

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

Results of Operations for the Period From January 22, 2007 (Date of Inception) to August 31, 2009 and for the Three Months Ended August 31, 2009.

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 have generated $30,916 in revenues. For the three months ended August 31, 2009 we generated revenues of $13,798 compared to $8,000 during the same period in 2008. As at August 31, 2009, we had total assets of $118,208 and total liabilities of $675,229. Since our inception on January 22, 2007 to August 31, 2009, we have an accumulated deficit of $4,236,979. 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 $4,207,785 from the date of our inception to August 31, 2009, including $313,697 in research and development costs, $737,203 in management fees, $510,180 in professional fees, $577,042 in shareholder communications and awareness, and $433,048 in consulting and advisory expenses.

For the three months ended August 31, 2009, we incurred total expenses of $408,546 including $62,244 in research and development costs, $52,621 in management fees, $48,659 in professional fees, $83,821 in shareholder communications and awareness, and $28,041 in consulting and advisory expenses.

By comparison, our total operating expenses for the three months ended August 31, 2008 were $413,138 including $19,624 in research and development costs, $94,033 in management fees, $91,363 in professional fees, $104,491 in shareholder communications and awareness, and $23,773 in consulting and advisory expenses.

Net Loss

Since our inception on January 22, 2007 to August 31, 2009, we have incurred a net loss of $4,236,979. For the three months ended August 31, 2009, we incurred a net loss of $411,776 compared to our net loss of $409,752 for the same period in 2008. Our net loss per share for the period ended August 31, 2009 was $0.02; the same as for the period ended August 31, 2008.

Liquidity and Capital Resources

As of August 31, 2009, we had no cash in our bank accounts and a working capital deficit of $658,040. As of August 31, 2009, we had total assets of $118,208 and total liabilities of $675,229.

Our net loss of $4,236,979 from January 22, 2007 (date of inception) to August 31, 2009 was mostly funded by a combination of private placements and loans. From January 22, 2007 (date of inception) to August 31, 2009, we raised net proceeds of $2,262,495 in cash from the issuance of common stock, $250,000 from the issuance of convertible debentures and $6,544 from bank indebtedness for a total of $2,519,039 of cash provided by financing activities for the period.

We received net cash of $193,544 from financing activities for the three months ended August 31, 2009 compared to $300,000 for the same period in 2008. During both periods all cash received from financing activities was generated from the issuance of our common stock.

We used net cash of $196,864 in operating activities for the three months ended August 31, 2009 compared to $304,070 for the same period in 2008. We used net cash of $2,363,404 in operating activities for the period from January 22, 2007 (date of inception) to August 31, 2009.

We did not use any cash in investing activities for the three months August 31, 2009 compared to net cash of $28,319 in investing activities for the same period in 2008.

During the three months ended August 31, 2009 we had a decrease of $3,320 in our cash position compared to a decrease of $25,269 for the same period in 2008. Our monthly cash requirements for three month period ended August 31, 2009 was approximately $65,621 compared to $101,357 for the same period in 2008. At our current cash position and if this cash requirement continues, we do not have sufficient cash to cover our expenses for one month.

On October 16, 17 and 28, 2008, we issued three convertible debentures for total proceeds of $250,000 which bear interest at 10% per annum, are unsecured and due one year from date of issuance. The unpaid amount of principal and accrued interest can be converted at any time at the holder's option into 625,000 shares of our common stock at a price of $0.40 per share. We also issued 250,000 detachable, non-transferable share purchase warrants. Each share purchase warrant entitles the holder to purchase one additional share of our common stock for a period of two years from the date of the issue at an exercise price of $0.50 per share. As at August 31, 2009, we recorded accretion expense of $38,275, increasing the carrying value of the convertible debentures to $242,345.

We expect that our total expenses will increase over the next year as we increase our business operations. We have not been able to reach the break-even point since our inception and have had to rely on outside capital resources. We do not anticipate making significant revenues for the next year. Over the next 12 months, we plan to primarily concentrate on commercializing our ERC technology and associated projects. Below is a summary of our anticipated expenditures over the next 12 months:

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

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

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

Off-Balance Sheet Arrangements

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

Inflation

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

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in note 2 of the notes to our consolidated financial statements for the year ended May 31, 2009 filed in an Annual Report on Form 10-K. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

Use of Estimates

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

Long-lived Assets

In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", we test long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

Stock-based Compensation

We record stock-based compensation in accordance with SFAS No. 123R, "Share Based Payments", using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

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