**UNITED
STATES**


**SECURITIES
AND EXCHANGE COMMISSION**


Washington,
DC 20549




**FORM
10-QSB**




**[X]**
    QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended **January 31, 2005**





**[_]**
    TRANSITION
      REPORT PURSUANT TO 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ________ to ________








Commission
file number:  **0-29213**








**HOUSE
OF BRUSSELS CHOCOLATES INC.**


(Exact
name of small business issuer as specified in its charter)








**NEVADA**
    
    **52-2202416**(State
      or other jurisdiction of
    
    (IRS
      Employer Identification No.)incorporation
      or organization)





**One
Riverway, Suite 1700, Houston, Texas, 77056**


(Address
of principal executive offices)





**(713)
599-0800**


(Issuer’s
telephone number)










State the
number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date: **31,104,579
Shares of $0.001 par value Common Stock outstanding as of March 11,
2005.**








Transitional
Small Business Disclosure Format (check one): Yes [_] **No
[X]**























**HOUSE
OF BRUSSELS CHOCOLATES INC.**





**FORM
10-QSB**


**For
The Quarter Ended January 31, 2005**





**INDEX**











PART
      I - FINANCIAL INFORMATIONITEM
      1.
    FINANCIAL STATEMENTSITEM
      2.
    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATIONSITEM
      3.
    CONTROLS AND PROCEDURESPART
      II--OTHER INFORMATIONITEM
      2.
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE
      OF PROCEEDSITEM
      6.
    EXHIBITSSIGNATURES




**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**




**PART
I - FINANCIAL INFORMATION**











**ITEM
      1.**
    
    **FINANCIAL
  STATEMENTS**Consolidated
      Condensed Balance Sheets as of January 31, 2005 (unaudited) and April 30,
      2004Unaudited
      Consolidated Condensed Statements of Operations for the Three and Nine
      Month PeriodsEnding
      January 31, 2005 and January 31, 2004Unaudited
      Consolidated Condensed Statement of Changes in Shareholders’ Equity for
      the Nine Month PeriodFrom
      April, 30, 2004 to January 31, 2005Unaudited
      Consolidated Condensed Statements of Cash Flows for the Nine Month PeriodsEnding
      January 31, 2005 and January 31, 2004Notes
      to the Unaudited Consolidated Condensed Financial Statements




HOUSE
OF BRUSSELS CHOCOLATES INC.
 
 
 
  
 CONSOLIDATED
FINANCIAL STATEMENTS
 AS OF
JANUARY 31, 2005
 AND FOR
THE THREE MONTH AND NINE MONTH PERIODS ENDED
 JANUARY
31, 2005 AND 2004
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Consolidated
      Condensed Balance Sheets as of January 31, 2005 and April 30,
      2004**
      ****
      ****
  **JANUARY
      31, 2005**
    
    **APRIL
      30, 2004**(unaudited)**ASSETS**Current
      assetsCash
    
    $
    101,843
    
    $
    153,438Accounts
      receivable, net
    
    
    1,109,312
    
    
    414,835Inventory
    
    
    2,170,740
    
    
    1,286,838Prepaid
      expenses and other
    
    
    445,684
    
    
    479,386Total
      current assets
    
    
    3,827,579
    
    
    2,334,497Property,
      plant and equipment, net
    
    
    3,198,130
    
    
    1,006,990Goodwill
    
    
    1,043,790
    
    
    -Other
      assets
    
    
    309,870
    
    
    75,046Total
      assets
    
    $
    8,379,369
    
    $
    3,416,533**LIABILITIES
      AND SHAREHOLDERS' EQUITY**Current
      liabilitiesAccounts
      payable
    
    $
    2,337,373
    
    $
    757,137Accrued
      liabilities
    
    
    456,911
    
    
    145,149Current
      portion of capital lease obligation and long term debt
    
    
    68,713
    
    
    -Due
      to related parties
    
    
    322,622
    
    
    313,983Total
      current liabilities
    
    
    3,185,619
    
    
    1,216,269Capital
      lease obligation
    
    
    75,953
    
    
    -Long-term
      debt
    
    
    1,017,706
    
    
    -Total
      liabilities
    
    
    4,279,278
    
    
    1,216,269Commitments
      and contingenciesShareholders'
      equity:Preferred
      stock - $0.001 par value, 4,000,000 shares authorized, none
      outstandingCommon
      stock - $0.001 par value, 60,000,000 shares authorized, 30,898,896 and
      25,560,575 shares issued and outstanding at January 31, 2005 and April 30,
      2004, respectively
    
    
    30,899
    
    
    25,561Additional
      paid-in capital
    
    
    15,286,296
    
    
    11,127,653Accumulated
      other comprehensive income
    
    
    555,261
    
    
    341,660Accumulated
      deficit
    
    
    (11,772,365
    )
    
    (9,294,610
    )Total
      shareholders' equity
    
    
    4,100,091
    
    
    2,200,264Total
      liabilities and shareholders' equity
    
    $
    8,379,369
    
    $
    3,416,533
 
 
 The
accompanying notes are an integral part of these financial
statements
 
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Unaudited
      Consolidated Condensed Statements of Operations for the first three
      months**
      **and nine months ended January 31, 2005
      and 2004**
      ****
      ****
 **THREE
      MONTHS ENDED JANUARY 31,**
    
    **NINE
      MONTHS ENDED JANUARY 31,****2005**
    
    **2004**
    
    **2005**
    
    **2004**Sales
    
    $
    1,770,186
    
    $
    1,000,932
    
    $
    6,702,567
    
    $
    2,343,483Cost
      of sales
    
    
    2,236,668
    
    
    816,711
    
    
    6,053,622
    
    
    1,553,108Gross
      margin
    
    
    (466,482
    )
    
    184,221
    
    
    648,945
    
    
    790,375Selling,
      general and administrative expenses
    
    
    1,098,414
    
    
    248,517
    
    
    2,947,750
    
    
    1,105,182Income
      (loss) from operations
    
    
    (1,564,896
    )
    
    (64,296
    )
    
    (2,298,805
    )
    
    (314,807
    )Other
      income and (expense)
    
    
    (29,886
    )
    
    63,601
    
    
    (178,950
    )
    
    23,843Net
      loss
    
    $
    (1,594,782
    )
    $
    (695
    )
    $
    (2,477,755
    )
    $
    (290,964
    )Weighted-average
      number of common shares outstanding
    
    
    30,849,616
    
    
    20,555,526
    
    
    29,469,107
    
    
    20,555,526Basic
      and diluted loss per share
    
    $
    (0.05
    )
    $
    (0.00
    )
    $
    (0.08
    )
    $
    (0.01
    )
    The
accompanying notes are an integral part of these financial
statements
 
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      ****Unaudited
      Consolidated Condensed Statement of Changes in Shareholders' Equity for
      the**
      **nine months ended January 31, 2005****
      ****
      ****
 **COMMON
      STOCK**
    
    **ADDITIONAL
      PAID IN**
    
    **ACCUMULATED**
    
    **ACCUMULATED
      OTHER COMPREHENSIVE**
    
    **SHAREHOLDERS'****SHARES**
    
    **AMOUNT**
    
    **CAPITAL**
    
    **DEFICIT**
    
    **INCOME**
    
    **EQUITY**Balance
      April 30, 2004
    
    
    25,560,575
    
    $
    25,561
    
    $
    11,127,653
    
    $
    (9,294,610
    )
    $
    341,660
    
    $
    2,200,264Warrants
      and options exercised for common stock
    
    
    4,518,021
    
    
    4,518
    
    
    2,678,250
    
    
    -
    
    
    -
    
    
    2,682,768Stock-based
      compensation for services
    
    
    97,574
    
    
    98
    
    
    187,903
    
    
    -
    
    
    -
    
    
    188,001Options
      under the 2004 stock option plan
    
    
    
    
    
    
    
    
    193,745
    
    
    -
    
    
    -
    
    
    193,745Stock
      issued in settlement of debt
    
    
    96,968
    
    
    97
    
    
    235,535
    
    
    -
    
    
    -
    
    
    235,632Private
      placements
    
    
    301,716
    
    
    302
    
    
    326,311
    
    
    -
    
    
    -
    
    
    326,613Warrants
      issued
    
    
    -
    
    
    -
    
    
    257,223
    
    
    -
    
    
    -
    
    
    257,223Stock
      issued for acquisition of Debas Chocolates
    
    
    324,042
    
    
    324
    
    
    929,676
    
    
    -
    
    
    -
    
    
    929,999Shares
      held in contingency
    
    
    -
    
    
    -
    
    
    (650,000
    )
    
    -
    
    
    -
    
    
    (650,000
    )Net
      loss
    
    
    -
    
    
    -
    
    
    -
    
    
    (2,477,755
    )
    
    -
    
    
    (2,477,755
    )Foreign
      currency translation adjustment
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    213,601
    
    
    213,601Balance
      January 31, 2005
    
    
    30,898,896
    
    $
    30,899
    
    $
    15,286,296
    
    $
    (11,772,365
    )
    $
    555,261
    
    $
    4,100,091
   The
accompanying notes are an integral part of these financial
statements
 
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      ****Unaudited
      Consolidated Condensed Statement of Cash Flows for the nine
      months**
      **ended January 31, 2005 and
      2004****
      ****
      ****
 **NINE
      MONTHS ENDED JANUARY 31,****2005**
    
    **2004****CASH
      FLOWS FROM OPERATING ACTIVITIES**Net
      loss
    
    $
    (2,477,755
    )
    $
    (290,963
    )Adjustments
      to reconcile net loss to net cashused
      in operating activitiesDepreciation
      and amortization
    
    
    334,514
    
    
    96,584Provision
      for bad debts
    
    
    112,739
    
    
    -Issuance
      of compensatory common stock, stock warrants and stock options
    
    
    381,746
    
    
    97,759Stock
      issued in settlement of trade payables
    
    
    235,632
    
    
    -Changes
      in non-cash working capital itemsAccounts
      receivable
    
    
    (779,511
    )
    
    (404,732
    )Inventory
    
    
    (612,854
    )
    
    (304,701
    )Prepaid
      expenses and other assets
    
    
    84,729
    
    
    (43,605
    )Accounts
      payable and accrued liabilities
    
    
    816,433
    
    
    (111,891
    )Net
      cash used by operating activities
    
    
    (1,904,327
    )
    
    (961,549
    )**CASH
      FLOWS FROM INVESTING ACTIVITIES**Capital
      expenditures
    
    
    (1,175,309
    )
    
    (37,961
    )Purchase
      of Debas Chocolate, Inc.
    
    
    (200,000
    )
    
    -Purchase
      of the assets of the Candy Jar
    
    
    -
    
    
    (277,912
    )Net
      cash used by investing activities
    
    
    (1,375,309
    )
    
    (315,873
    )**CASH
      FLOWS FROM FINANCING ACTIVITIES**Proceeds
      from long term debt
    
    
    36,755
    
    
    57,464Proceeds
      from related party loans
    
    
    -
    
    
    150,238Repayments
      of related party loans
    
    
    (9,302
    )
    
    -Repayments
      of obligations under capital lease
    
    
    (89,961
    )
    
    (17,837
    )Proceeds
      from issuance of common stock and warrants
    
    
    3,266,603
    
    
    1,393,957Net
      cash provided by financing activities
    
    
    3,204,095
    
    
    1,583,822Effect
      of foreign exchange rate changes on cash
    
    
    23,946
    
    
    1,611Increase
      (decrease) in cash and cash equivalents
    
    
    (51,595
    )
    
    308,011Cash
      and cash equivalents, beginning of the period
    
    
    153,438
    
    
    56,364Cash
      and cash equivalents, end of the period
    
    $
    101,843
    
    $
    364,375**SUPPLEMENTAL
      CASH FLOW INFORMATION**Cash
      paid for income taxes
    
    $
    -
    
    $
    -Cash
      paid for interest
    
    
    -
    
    
    -





The accompanying notes are an integral part of these
financial statements








**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
  **1.**
    **Nature
      of Operations**
 
 House of
Brussels Chocolates Inc., a Nevada corporation ("We" or the "Company"), trades
under the symbol of HBSL on the OTC Bulletin Board. We were originally
incorporated under the name of House of Brussels Chocolates Inc. on March 5,
1998. We manufacture gourmet quality chocolate products in our plants located in
Vancouver, B.C., Canada, and Fresno, California. We have over 20 years
experience in manufacturing and distributing high-end chocolates. Our
award-winning products have a long history of customer acceptance and are
manufactured to the strictest standards. In February 2004, we also created a
wholly-owned subsidiary, "ChocoMed Inc.", to investigate the use of chocolate as
a carrier for dietary supplements, functional foods and pharmaceutical compounds
to treat various medical conditions.
 
 **2.**
    **Significant
      Events**
 
 In May
2004, we executed an agreement with Walgreens for the sale of private label
chocolates using our "Truffelinos" and "Truffelinos Lite" trademarks. As part of
the agreement, we transferred those trademarks to Walgreens and received a
guarantee that Walgreens would purchase not less than $3,000,000 in product
annually for a two (2) year period. Founded in 1901, Walgreens is a national
retail pharmacy chain that is largely considered to be the leader in innovative
drugstore retailing. Walgreens operates over 4,200 drugstores in 44 states and
Puerto Rico.
 
 During
the period from November 2004 through February 2005, we completed a significant
upgrade in our manufacturing facilities. As part of this transition, we vacated
our 32,000 square foot operating plant near downtown Vancouver in favor of
approximately 74,000 square feet of modern office, manufacturing and inventory
warehouse space located in an industrial community in Delta, British Columbia.
Though previous capacity was adequate to meet historic needs, our prior
facilities did not provide the opportunity to reengineer work flows or allow the
most effective layout of our manufacturing equipment. Further, we believe the
age of our previous plant required an escalating investment in maintenance to
support our quality control standards. Our new facilities substantially increase
our capacity. The layout of these facilities more exactly meets our needs and we
believe will result in significant cost savings arising from efficiencies in
workflow, maintenance and inventory management. Monthly rents and utilities
associated with our previous plant totaled approximately $14,000. Monthly rents
and utilities for our new facility range from $39,000 to $43,000. We also
incurred costs related to our move between plants and invested approximately
$550,000 in capital expenditures and leasehold improvements preparing our new
facility for productive operation.
 
 In
addition, our cost reduction and production efficiency review resulted in
the December 1, 2004 closure of our manufacturing facilities at 2065 Oakdale
Avenue, San Francisco, California. The shutdown of this operating location was
undertaken to reduce manufacturing costs and consolidate domestic west coast
operations at our newly acquired production facilities in Fresno, California.
The inventories and manufacturing assets previously located at the San Francisco
plant have been reallocated to support operations at both our Fresno and Delta,
British Columbia locations.
  On July
29, 2004, we entered onto a stock purchase agreement with DeBas Chocolates,
Inc., a California corporation ("DeBas") whereby we purchased all of the
outstanding shares of common stock of DeBas. We undertook this acquisition to
expand our manufacturing capacity, increase revenues, enhance product lines and
add a variety of highly recognizable gourmet trademarks to our family of
offerings. As part of the transaction, we also acquired a strategically located
manufacturing and production facility, which we believe, will assist in lowering
the cost of our product distribution. Additionally, Guy Debbas, Founder and
President of DeBas, will remain with us as Vice President of Product Development
under a five-year employment agreement.
 
 We
acquired all of the outstanding shares of DeBas from Guy Debbas, its sole
shareholder. We agreed upon a purchase price of $1,130,000 payable in $200,000
cash and 324,042 shares of our restricted common stock valued at $930,000. In
addition, we absorbed approximately $1,124,000 in net liabilities from DeBas. Of
the purchase price tendered, $150,000 cash and 226,481 shares of our common
stock have been held in escrow awaiting distribution to either Mr. Debbas or
future cancellation by the Company. The market value of the amounts escrowed is
$800,000. For accounting purposes, approximately $700,000 of these escrowed
amounts have been excluded from purchase price as we believe they are currently
non-estimable or will not be paid. The accompanying financial statements include
$650,000 as an offset to additional paid in capital for shares held in escrow to
account for this purchase price adjustment. As of January 31, 2005, we have
identified and recorded nearly $550,000 in liabilities which offset future
purchase payments to Mr. Debbas. Of the remaining amount due, $98,000 is
withheld contingent upon the achievement of revenue goals. We had tentatively
recognized $920,000 in goodwill associated with this acquisition, but have since
adjusted it to $1,044,000. Our goodwill allocation is subject to substantial
revision based upon final valuation of the assets and liabilities absorbed in
the purchase. The funds utilized for the purchase were derived from the cash and
equity of the Company.
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
 The terms
and conditions of the stock purchase agreement were the result of arm's length
negotiations between the parties. We believe the transaction was favorable to us
in view of the payment terms, synergies associated with the personnel absorbed
and the market value of the underlying assets of DeBas. No formal appraisal or
fairness opinion was done in connection with this transaction.
 
 **3.**
    **Significant
      Accounting Policies**
 
 **Basis
of presentation**
 The
accompanying consolidated financial statements have been prepared by the Company
in accordance with generally accepted accounting principles in the United States
for interim financial information. Certain information and disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. In the opinion of the
Company's management, the unaudited consolidated financial statements contain
all adjustments necessary (consisting of normal recurring adjustments) for a
fair presentation of the financial position as of October 31, 2004 and the
results of our operations for the period then ended. These financial statements
should be read in conjunction with the audited financial statements and related
notes of the Company included in our Form 10-KSB for the year ended April 30,
2004 filed with Securities Exchange Commission on July 29, 2004.
 
 **Principles
of consolidation**
 These
consolidated financial statements include the accounts of House of Brussels
Chocolates Inc. and all its subsidiaries after the elimination of intercompany
accounts and transactions.
 
 **Use
of estimates**
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
 
 **Business
combinations and goodwill**
 Business
combinations and goodwill are accounted for in accordance with FASB 141 and 142
respectively. As such, the purchase method of accounting is applied to all
acquisitions and goodwill is not amortized unless its value is impaired.
 
 **Accounts
receivable**
 Accounts
receivable result from sales to wholesale customers and are net of an allowance
for doubtful accounts and returns. The Company reviews the allowances on a
quarterly basis, and at that time, the allowances are adjusted to maintain them
at an amount estimated to be adequate to cover any future losses.
 
 **Inventories**
 Inventories
include finished goods, packaging supplies, and raw materials. Finished goods
are valued at the lower of cost or net realizable value, on a weighted average
basis. Packaging and raw materials are valued at the lower of cost or net
realizable value, on a first in first out basis.
 
 We
regularly verify inventory balances using rotating item counts. On a quarterly
basis, we perform physical inventory counts of all items, and reconcile those
counts to our general ledger balances. During each count we identify and adjust
inventory for items which are damaged, obsolete, or require an adjustment to
book value. From time to time, an accounting reserve may be required to offset
the value of inventory for items that remain on our books, but which may have a
risk of impaired net realizable value. No such reserve was required as of
January 31, 2005 or April 30, 2004.
 
 **Software,
land, building, plant and equipment**
 Purchases
of software, land, buildings, plant and equipment are recorded at cost.
Depreciation and amortization rates are determined based upon the estimated
useful life of the asset. Land is not depreciated. Maintenance and repairs are
charged to expenses as they are incurred. In the event facts and circumstances
indicate the carrying value of capital assets may be impaired, an evaluation of
recoverability is performed. If an evaluation is required, the estimated future
undiscounted cash flow associated with the asset is compared to the asset's
carrying amount to determine if a write-down to market or discounted cash flow
is required.
 ****HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****HOUSE OF BRUSSELS CHOCOLATES INC.**
 **Notes
to the Unaudited Consolidated Condensed Financial Statements**
 
 Depreciation
and amortization is calculated using the following estimated lives and
methods:
 
 **Category**
    **Life**
    **Method**Software
      and computer equipment
    3
    years
    Declining
      balanceBuilding
    20
    years
    Declining
      balanceAutomotive
    3
    years
    Declining
      balanceFurniture
      and fixtures
    5
    years
    Declining
      balanceProduction
      equipment and molds
    10
    years
    Declining
      balanceLeasehold
      improvements
    5
    to
      15 years
    Declining
      balanceLeased
      equipment
    5
    years
    Declining
      balanceOther
      equipment
    5
    years
    Declining
      balance
 
 **Accumulated
other comprehensive income**
 Accumulated
other comprehensive income (loss) is reported on the Consolidated Balance Sheet
and comprehensive loss is reported on the Consolidated Statement of Changes in
Shareholders' Equity.
 
 Results
of operations for foreign entities are translated using the average exchange
rates during the period. For foreign entities, assets and liabilities are
translated to U.S. dollars using the exchange rates in effect at the balance
sheet date. Resulting translation adjustments are recorded as a component of
other comprehensive loss.
 
 **Revenue
Recognition**
 Sales
revenue is recognized when our products are shipped. In largest part, we ship
via FedEx, UPS and standard highway transport. We recognize sales when risk of
loss and ownership is transferred to our customers. In some instances, sales
contracts may contain certain rights to return product or obligate us to
participate in product mark downs with our customers. In such instances, our
contracts are reviewed individually to determine an appropriate revenue reserve.
 
 **Cost
of Sales**
 Cost of
sales represents costs directly related to the manufacture and distribution of
the Company's products. Primary costs include raw materials, packaging, direct
labor, including employee benefits, overhead, and shipping and
handling.
 
 Cost of
sales includes the following amounts of depreciation and amortization of
manufacturing assets:
 
 **THREE
      MONTHS ENDED JANUARY 31,**
    
    **NINE
      MONTHS ENDED JANUARY 31,****2005**
    
    **2004**
    
    **2005**
    
    **2004**Depreciation
      and amortization of manufacturing assets
    
    $
    158,321
    
    $
    22,308
    
    $
    224,552
    
    $
    66,923
 ****
 **Stock
Based Compensation**
 During
the fiscal year ended April 30, 2004, we elected a timely transition to "fair
market value" based accounting for stock options in accordance with "Statement
of Accounting Standard 148." As a result, we currently recognize the fair market
value of all options awarded to officers, elected directors and employees as
compensation expense in the accompanying financial statements.
 
 **Income
taxes**
 The
Company recognizes income tax expense as it is incurred, but does not recognize
the potential value of tax benefits associated with its retained losses until
such benefits are probable and likely to materialize.
 
 **Other
recently issued accounting pronouncements**
 Other
recently issued accounting pronouncements will have no significant impact on the
Company and its reporting methods.
 
 **Reclassifications**
 Depreciation
and amortization of manufacturing assets, previously presented in selling,
general and administrative expenses, has been reclassified into cost of sales.
Interest income, interest expense and foreign currency transaction adjustments,
previously presented in selling, general and administrative expenses have been
reclassified to other income and expenses. The impact of these reclassifications
is as follows:
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
 **THREE
      MONTHS ENDED JANUARY 31,**
    
    **NINE
      MONTHS ENDED JANUARY 31,****2005**
    
    **2004**
    
    **2005**
    
    **2004**Increase
      in cost of sales
    
    $
    158,321
    
    $
    22,308
    
    $
    224,552
    
    $
    66,923Decrease
      (increase) in selling, general and administrative expenses
    
    
    (188,207
    )
    
    41,293
    
    
    (403,502
    )
    
    (43,080
    )Increase
      (decrease) in other income and expenses
    
    
    29,886
    
    $
    (63,601
    )
    $
    178,950
    
    $
    (23,843
    )
 
 **4.**
    **Accounts
      Receivable Financing Agreement**
 
 O n
September 28, 2004, we entered into an accounts receivable financing agreement
with an asset based lender. Under the terms of this agreement, the lender will
finance 80% of the value of certain receivables assigned for their collection.
The lender charges a fee of one-half percent (0.5%) of the face amount of any
invoice financed. In addition, we agreed to pay interest in the amount of one
and one-half percent (1.5%) on the face value of invoices financed for each 15
day period the amount due on that invoice is outstanding. Collateral under this
agreement includes all present or future contracts for sales, accounts
receivable, deposit accounts, chattel paper, letters of credit and inventories
whether now or hereafter owned or existing, consigned by or to, or acquired by
House of Brussels Inc. or its subsidiary Brussels Chocolates Ltd. There is
currently no amount due under this financing agreement.
 
 
 **5.**
    **Accounts
      Receivable**
 
 Accounts
receivable consists of the following:
 **JANUARY
      31, 2005**
    
    **APRIL
      30, 2004**Accounts
      receivable
    
    $
    1,260,815
    
    $
    453,599Allowance
      for bad debts
    
    
    (102,528
    )
    
    (14,642
    )Allowance
      for returns
    
    
    (48,975
    )
    
    (24,122
    )$
    1,109,312
    
    $
    414,835
 
 **6.**
    **Inventories**
 
 Inventories
consist of the following:
 **JANUARY
      31, 2005**
    
    **APRIL
      30, 2004**Finished
      goods
    
    $
    886,047
    
    $
    394,792Unpackaged
      finished goods
    
    
    104,701
    
    
    32,800Packaging
      materials
    
    
    767,251
    
    
    418,628Raw
      materials
    
    
    349,503
    
    
    349,522Inventory
      Development Costs
    
    
    63,238
    
    
    91,096$
    2,170,740
    
    $
    1,286,838
 
 Inventory
Development Costs include molds, tools, dies, film and film plates related to
our inventory of packaging materials. These costs are charged to expense over
the lesser of their expected useful lives, or the life of the product line to
which they relate.
 
 **7.**
    **Prepaid
      Expenses and Other Assets**
 
 Prepaid
expenses and other assets consist of the following:
 **JANUARY
      31, 2005**
    
    **APRIL
      30, 2004**Travel
      advances and miscellaneous
    
    $
    150,233
    
    $
    397,190Deposits,
      promotions and royalties
    
    
    249,871
    
    
    18,065Insurance
    
    
    45,580
    
    
    64,131$
    445,684
    
    $
    479,386
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
 **8.**
    **Property,
      Plant and Equipment, Net**
 
 Property,
plant and equipment consisted of the following:
 **JANUARY
      31, 2005**
    
    **APRIL
      30, 2004****ACCUMULATED**
    
    **NET
      BOOK**
    
    **NET
      BOOK****COST**
    
    **DEPRECIATION**
    
    **VALUE**
    
    **VALUE**Land
    
    $
    175,950
    
    $
    -
    
    $
    175,950
    
    $
    -Building
    
    
    1,022,050
    
    
    45,801
    
    
    976,249
    
    
    -Software
    
    
    162,850
    
    
    105,254
    
    
    57,596
    
    
    55,124Automotive
    
    
    73,966
    
    
    59,711
    
    
    14,255
    
    
    11,273Computer
      equipment
    
    
    201,150
    
    
    162,460
    
    
    38,690
    
    
    25,242Furniture
      and fixtures
    
    
    191,794
    
    
    106,755
    
    
    85,039
    
    
    10,434Production
      equipment and molds
    
    
    2,623,948
    
    
    1,151,623
    
    
    1,472,325
    
    
    874,299Leasehold
      improvements
    
    
    301,688
    
    
    34,315
    
    
    267,373
    
    
    -Leased
      equipment
    
    
    146,886
    
    
    65,045
    
    
    81,841
    
    
    -Other
      equipment
    
    
    95,121
    
    
    66,310
    
    
    28,811
    
    
    30,618$
    4,995,404
    
    $
    1,797,274
    
    $
    3,198,130
    
    $
    1,006,990
 
 **9.**
    **Due
      to Related Parties**
 
 Amounts
due to related parties are advances made to us by the directors, or past
directors, of the Company. Amounts due to related parties consisted of the
following:
 **JANUARY
      31, 2005**
    
    **APRIL
      30, 2004**Advances
      payable to Grant Petersen, CEO
    
    $
    -
    
    $
    20,407Advances
      payable to Evan Baergen, former Officer
    
    
    5,955
    
    
    94,011Advances
      due to Steven Whittington, former Officer
    
    
    48,248
    
    
    48,248Advances
      payable to Richard Siemens, Director
    
    
    -
    
    
    99,844Short-term
      note payable to Distacom, affiliate
    
    
    -
    
    
    51,473Short-term
      Note payable to Guy Debbas
    
    
    263,619
    
    
    -Advances
      payable to William Donovan, Director
    
    
    4,800
    
    
    -$
    322,622
    
    $
    313,983
 
 In
connection with our acquisition of DeBas, we absorbed a short term note payable
to Guy Debbas, currently that subsidiary's President. The principal amount due
at January 31, 2005 is $253,427 payable in monthly installments of $24,065 and
bearing a rate of interest of 5% per annum.
 
 **10.**
    **Capital
      Lease Liability**
 
 In
connection with its acquisition of Debas, the Company has acquired certain
leased manufacturing equipment through Santa Barbara Leasing. Lease payments of
$1,555.68 are due monthly through May 2009 at which time the leased equipment
may be purchased at a bargain price of $1.00.
 
 Brussels
Chocolates Ltd. has entered into a lease agreement with Ocean Park Ford for
factory cleaning equipment and a security system. Lease payments of $861.16 are
due monthly through November 2009 at which time the leased equipment may be
purchased at a bargain price of $3,515.63.
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
 **11.**
    **Long-Term
      Debt**
 
 In
connection with its acquisition of DeBas, the Company assumed long-term debt
consisting of bank loans and lines of credit. This indebtedness includes amounts
due to Business Loan Center (New York), County Bank (California), California
Bank and Trust (California) and Bank of America (California). The loan from
Business Loan Center carries an annual interest rate of 5.58% over LIBOR and
requires monthly payments of $5,340. The principle balance is $726,981 and
security pledged includes all real estate, plant machinery and equipment,
furniture, inventory and accounts receivable. Monthly payments on the loan from
County Bank are $2,940 and the principle balance is $116,698 (bearing interest
at Prime plus 1.5%). The County Bank debt is guaranteed by the U.S. Small
Business Administration and collateralized by all inventory, chattel paper,
accounts, equipment and general intangibles owned or later acquired. The loan
from California Bank is also guaranteed by the U.S. Small Business
Administration. It requires monthly payments of $2,719 and has a principle
balance of $125,887 (bearing interest at Prime plus 1.5%). The security given on
this debt consists of inventory, accounts, equipment, general intangibles and
fixtures along with machinery and furniture. The loan from Bank of America has a
principal balance of $2,480 and is collateralized by an automobile. The lines of
credit issued by Bank of America and County Bank and are currently at their
maximum amounts $100,000 (bearing interest at LIBOR plus 3.77%) and $8,870
respectively.
 
 Principle
payments for the next five years are estimated to be:
 
 2005
    67,9002006
    70,6162007
    74,1472008
    79,3372009
    86,477
 
  **12.**
    **Share
      Capital**
 
 The
Company issued a total of 5,338,321 shares during the 9 month period ended
January 31, 2005. During the same period, 880,170 share purchase warrants were
issued, 504,391 warrants expired and 4,571,317 warrants were exercised for a net
decrease in warrants of 4,195,538. Shares and warrants were issued to investors
for private placements and to consultants for stock-based compensation. The fair
value of each warrant was estimated on the date of grant using the Black-Scholes
option-pricing model and the resulting equity value or expense has been included
in the accompanying financial statements.
 
 
 **13.**
    **Contingent
      Liabilities**
 
 **Non-Cancelable
Lease Obligation**
 The
Company's new administrative offices and manufacturing facility, located in
Delta, BC are leased under a fifteen (15) year operating lease which expires
July 31, 2019. Base rent does not include operating expenses, taxes or a
management fee for which the company is also liable. Annual base rent on the
premises is currently $415,260, payable in monthly installments of
$34,605.
 
 Minimum
annual payments under the lease as of August 1, 2004, for the next five years
are:
 2004
    
    $
    415,2602005
    
    
    415,2602006
    
    
    415,2602007
    
    
    430,3542008
    
    
    430,3542009Total
    
    $
    2,106,488
 
 **Obligation
Under Employment Agreement**
 In
connection with our purchase of DeBas, we entered into a five year employment
agreement with its former shareholder, Guy Debbas. Under the terms of this
agreement, Mr. Debbas became the Company's Vice President of Product Development
at an annual salary of $100,000. In addition, Mr. Debbas received an option to
purchase 50,000 shares of our common stock at an exercise price of $2.38 per
share until July 29, 2007. This option was granted in accordance with the terms
of our 2004 Stock Option Plan and vests with respect to 100% of its shares in
one year from the date of grant. The agreement also included terms requiring
certain duties of confidentiality and non-competition from Mr. Debbas. This
agreement provides for termination of employment with or without cause and in
the event of disability or death. If the agreement is terminated without cause,
Mr. Debbas will be entitled to a severance payment of $25,000.
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
 **14.**
    **Related
      Party Transactions**
 
 **Debt
Conversion**
 On
November 30, 2002, we issued 1,500,000 investment units to Evan Baergen, our
then Chief Financial Officer, and 1,500,000 investment units to Grant Petersen,
our current Chief Executive Officer, President and Director. The units were
issued upon the conversion of two (2) notes payable by the Company to Mr.
Baergen and Mr. Petersen in the amount of $75,000 each in compensation for
services rendered. The notes were converted at price of $0.05 per investment
unit. The fair market value of our common stock at the date of the conversion
agreement was $0.04. The terms of the conversion were set in a letter agreement
with the Company. Each unit was comprised of one share of common stock and one
share purchase warrant. Each share purchase warrant entitled the holder to
purchase one share of common stock at a price of $0.30 per share during the
period from issuance until May 2004. A total of 1,500,000 shares and 1,500,000
share purchase warrants were issued to each of Mr. Baergen and Mr. Petersen.
During May 2004, Mr. Petersen exercised his option to purchase all of the shares
of our common stock available under his warrants. During May 2004, Mr. Baergen
also exercised his option to purchase 293,920 shares of common stock available
under his warrants. All securities issued in connection with these transactions
were endorsed with a restrictive legend confirming that the securities could not
be resold without registration under the Act or an applicable exemption from the
registration requirements of the Act.
 
 **Distacom
Ventures Loan**
 During
fiscal years 2003 and 2004, our Canadian subsidiary borrowed an aggregate of
$343,000 CDN (equal to approximately $250,000) from Distacom Ventures Inc., a
private company controlled by Mr. Richard Siemens, one of our directors and a
greater than 10% shareholder. The loan was secured by a general security
agreement granted by Brussels Chocolates Ltd. against all of its present and
after acquired personal property. Under the terms of the loan, Brussels
Chocolates Ltd. pays interest at the rate of 7% per annum. An initial $180,000
CDN was advanced effective February 12, 2003 and subsequent advances of $20,000
CDN and $143,000 CDN were made on April 30, 2003 and May 2, 2003 respectively.
The maturity date of all amounts advanced was May 31, 2004. During April 2004,
the amounts due Distacom were offset by the exercise of previously issued stock
purchase warrants for 171,689 of our shares at a price of $1.25 each. The shares
issued in connection with this exercise were endorsed with a restrictive legend
confirming that the securities could not be resold without registration under
the Act or an applicable exemption from the registration requirements of the
Act.
 
 
 **Richard
Siemens**
 In
January 2004, Mr. Siemens, one of our directors and a 10% shareholder, forwarded
$99,844 to fund certain share purchase warrants having an exercise price of
$1.25 per share. Subsequent to forwarding the funds however, Mr. Siemens elected
not to exercise. As a result, the warrants associated with the transaction
expired without exercise on January 29, 2005. As such, the funds were accounted
for as a related party liability until September 15, 2004. On that date, Mr.
Siemens used that amount to offset the purchase price of 59,716 investment units
in a private placement transaction. Each investment unit consisted of one share
of our common stock at a purchase price of $1.75 and one share purchase warrant
entitling the Mr. Siemens to purchase one share of our common stock at a price
of $1.85 per share during the period from issuance until September 7,
2005
 
 **Theodore
Labella**
 In
December 2002, we issued 100,000 investment units to Mr. Theodore Labella (a
greater than 5% shareholder) pursuant to the conversion of a convertible note
issued by us in the amount of $20,000. Each unit was comprised of one share of
common stock and one share purchase warrant. Each share purchase warrant
entitled the holder to purchase one share of common stock at a price of $0.30
per share during the period from closing until February 24, 2004. Subsequently,
these share purchase warrants have been exercised in full for proceeds to the
Company in the amount of $30,000.
 
 Also in
December 2002, we issued 250,000 investment units to Mr. Labella, pursuant to a
subscription agreement for proceeds of $50,000. Each unit was comprised of one
share of common stock and one share purchase warrant. Each share purchase
warrant entitles the holder to purchase one share of common stock at a price of
$0.50 per share during the period from closing until March 25, 2004.
Subsequently, these share purchase warrants have been exercised in full for
proceeds to the Company in the amount of $125,000.
 
 In
January 2003, pursuant to a loan agreement between the Company and Mr. Labella
in the amount of $50,000, we issued a total of 930,006 common shares to Mr.
Labella as repayment of the loan plus interest.
 
 On May
15, 2003, we issued 74,256 units to Hideko Ak Labella, spouse of Mr. Labella,
pursuant to a consulting agreement. Each unit was comprised of one share of
common stock and one share purchase warrant. Each share purchase warrant
entitles the holder to purchase one share of common stock at a price of $0.50
(post-split) per share during the period ending May 13, 2004. On April 30, 2004,
these share purchase warrants were exercised in full for proceeds to the Company
in the amount of $37,128. The fair value of each investment unit was estimated
on the date of grant using the Black-Scholes option-pricing model and the
resulting equity value or expense has been included in the accompanying
financial statements.
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
 On July
30, 2004, Mr. Labella purchased 67,000 shares of our common stock at a price of
$2.00 each under the terms of a private placement made to "accredited
investors", as that term is defined in Rule 501 of Regulation D of the Act. The
Company received $134,000 in proceeds from this sale.
 
 On August
18, 2004 and October 8, 2004 Mr. Labella purchased 85,000 and 110,000 shares of
our common stock, respectively, pursuant to the exercise of previously issued
share purchase warrants. The warrants were exercisable at a price of $0.65 per
share, for total proceeds of $126,750. In connection with his second warrant
exercise, we also issued Mr. Labella share purchase warrants for 10,000 shares
of our common stock at an exercise price of $3.00 per share until September 28,
2006.
 
 **GPAV
Investments Ltd.**
 In
December 2002, we issued 500,000 common shares to GPAV Investments Ltd. (a
greater than 5% shareholder) pursuant to a consulting agreement dated November
30, 2002 at a deemed value of $25,000.
 
 On April
30, 2003, we issued 1,000,000 investment units to GPAV Investments Ltd.,
pursuant to a subscription agreement for proceeds of $50,000. Each unit was
comprised of one share of common stock and one share purchase warrant. Each
share purchase warrant entitles the holder to purchase one share of common stock
at a price of $0.30 per share during the period from closing until May 31, 2004.
On April 8, 2004, these share purchase warrants were exercised in full for
proceeds to the Company in the amount of $300,000.
 
 **Stephen
Whittington**
 In
September 2002, Mr. Stephen Whittington (a former director and officer of the
Company) advanced $60,000 to us to assist with cash flow needs. No formal
agreement exists regarding the advance. This loan is unsecured with no fixed
date of repayment.
 
 **Evan
Baergen**
 In
December 2003, Evan Baergen (a former director and officer of the Company)
advanced $88,055 to us to assist with cash flow needs. No formal agreement
existed regarding the advance. This loan was unsecured with no fixed date of
repayment. During May 2004, the total amount due Mr. Baergen was offset by his
exercise of stock purchase warrants for shares of our common at a price of $0.30
each. The shares issued in connection with this exercise were endorsed with a
restrictive legend confirming that the securities could not be resold without
registration under the Act or an applicable exemption from the registration
requirements of the Act.
 
 **William
Donovan, M.D.**
 We
presently have a Consulting Agreement with Dr. William Donovan, our Chairman of
the Board and Director, to provide consulting services regarding the Company's
product development. This Agreement is for a period of 24 months and terminates
on November 6, 2005. Under the terms of the Agreement, Dr. Donovan received a
Share Purchase Warrant for 260,000 shares of our stock at a warrant exercise
price of $1.02 per share. This warrant expires twelve months from the date of
issuance. The fair value of each warrant was estimated on the date of grant
using the Black-Scholes option-pricing model and the resulting equity value or
expense has been included in the accompanying financial statements.
 
 **Directors**
 During
February and March 2004, a total of 1,520,000 share purchase warrants were
issued to four (4) members of our Board of Directors, two of which are also
officers of the Company. All warrants were issued in exchange for services. Our
Chief Financial Officer, Robert Wesolek, received warrants for the purchase of
500,000 shares at an exercise price of $1.65 which expire February 23, 2009. Our
Chief Operating Officer, John Veltheer, received warrants for the purchase of
500,000 shares at an exercise price of $1.85 which expire March 12, 2009. Our
Director, Harold Kahn, received warrants for the purchase of 260,000 shares at
an exercise price of $1.58 which expire March 31, 2009. The residual warrants
relate to a Consulting Agreement with Dr. William Donovan, our Chairman of the
Board, to provide consulting services regarding the Company's product
development. This Agreement is for a period of 24 months and terminates on
November 6, 2005. Under the terms of the Agreement, Dr. Donovan received a share
purchase warrant for 260,000 shares of our stock at a warrant exercise price of
$1.02 per share. These issuances were completed pursuant to Section 4(2) of the
Act.
 
 On July
30, 2004, we issued 260,000 shares of our common stock to two members of our
Board of Directors pursuant to the exercise of previously issued share purchase
warrants. Dr. William Donovan, our Director and Chairman, received 160,000 of
these shares, and Harold Kahn, our Director, received 100,000 of these shares.
The warrants had exercise prices ranging from $1.02 to $1.58. We received
$321,200 in total proceeds from these exercises. In connection with these
transactions, we also issued share purchase warrants for 260,000 shares as a
financing incentive to these Directors at an exercise price of $3.00 per share.
Dr. William Donovan, our Director and Chairman, received one of these warrants
for 160,000 shares, and Harold Kahn, our Director, received one of these
warrants for 100,000 shares. The term of the warrants ranged from July 27, 2006
to March 31, 2009.
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      **Notes
      to the Unaudited Consolidated Condensed Financial Statements**
      ****
      ****
 On
November 22, 2004, Mr. Dale Frey, received warrants for the purchase of 100,000
shares of our common stock at an exercise price of $1.30 per share until
November 22, 2005, and warrants for the purchase of 60,000 shares of our common
stock at an exercise price of $1.45 per share until November 22, 2007. Mr. Frey
was also granted 100,000 stock options under our 2004 Stock Option Plan. These
options are exercisable at $1.40 per share until November 22, 2005.
 
 The fair
value of each warrant granted our Directors was estimated on the date of grant
using the Black-Scholes option-pricing model and the resulting equity value or
expense has been included in the accompanying financial statements.
 
 **15.**
    **Non-Cash
      Inv****e****sting
      and Financing Activities**
 
 During
the nine months ended January 31, 2005, the Company acquired Debas Chocolate
Inc. in a transaction that involved a cash payment of $200,000, the assumption
of Debt and the issuance of common stock of the Company.
 
 During
the nine months ended January 31, 2004, the Company acquired the assets of The
Candy Jar, a company that had inventory, property, plant and Equipment and
intangible assets. The acquisition was based upon a total purchase price of
$477,912 that included cash payments of $277,912 and the issuance of $200,000 of
common stock.
  
 **HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      ****
      ****Unaudited
      Supplemental Statement of Expenses for the three and
      six****
      ****months****ended January 31,
      2005****
      ****
      ****
 **THREE
      MONTHS ENDED JANUARY 31,**
    
    **NINE
      MONTHS ENDED JANUARY 31,****2005**
    
    **2004**
    
    **2005**
    
    **2004****Selling
      expenses**Bad
      debts
    
    $
    54,120
    
    $
    381
    
    $
    97,945
    
    $
    17,928Promotion
      and advertising
    
    
    132,344
    
    
    49,140
    
    
    214,447
    
    
    177,215Rent
      and utilities
    
    
    30,610
    
    
    27,893
    
    
    58,886
    
    
    102,652Salaries,
      benefits and consulting fees
    
    
    213,751
    
    
    68,682
    
    
    746,089
    
    
    257,668Travel
      and entertainment
    
    
    10,139
    
    
    39,684
    
    
    127,314
    
    
    72,521440,964
    
    
    185,780
    
    
    1,244,681
    
    
    627,984**General
      and administrative expenses**Board
      of Directors Fees
    
    
    127,241
    
    
    -
    
    
    215,435
    
    
    -Depreciation
      expense
    
    
    55,743
    
    
    26,531
    
    
    109,962
    
    
    54,499Office
      and miscellaneous
    
    
    84,229
    
    
    13,640
    
    
    252,143
    
    
    42,012Professional
      fees
    
    
    14,058
    
    
    (16,331
    )
    
    124,941
    
    
    130,909Rent
      and utilities
    
    
    49,241
    
    
    6,045
    
    
    111,729
    
    
    15,924Salaries,
      benefits and consulting fees
    
    
    284,261
    
    
    27,463
    
    
    785,043
    
    
    225,114Travel
      and entertainment
    
    
    42,677
    
    
    5,389
    
    
    103,816
    
    
    8,740657,450
    
    
    62,737
    
    
    1,703,069
    
    
    477,198****
      **Total
      selling, general and administrative expenses**
    
    $
    1,098,414
    
    $
    248,517
    
    $
    2,947,750
    
    $
    1,105,182
   The
accompanying notes are an integral part of these unaudited consolidated
condensed financial statements


**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**


****


**ITEM 2.      MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**





The
following discussion and analysis of the financial condition and results of
operations of the Company should be read in conjunction with the Company’s
unaudited consolidated financial statements and related notes included elsewhere
in this report and our Form 10-KSB for the year ended April 30, 2004 filed with
Securities Exchange Commission on July 29, 2004.




****


**FORWARD
LOOKING STATEMENTS**





The
information contained in this Form 10-QSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve risks and uncertainties, including among other things,
statements regarding the Company's capital needs, business strategy and
expectations. Any statement which does not contain an historical fact may be
deemed to be a forward-looking statement. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"expect", "plan", "intend", "anticipate", "believe", "estimate", "predict",
"potential" or "continue", the negative of such terms or other comparable
terminology. In evaluating forward looking statements, you should consider
various factors, including the risk factors outlined in our latest Form 10-KSB,
and, from time to time, in other reports the Company files with the U.S.
Securities and Exchange Commission (“SEC). These factors may cause the Company's
actual results to differ materially from any forward-looking statement. The
Company disclaims any obligation to publicly update these statements, or
disclose any difference between its actual results and those reflected in these
statements.





**OVERVIEW**





House of
Brussels Chocolates Inc. (“We”, the “Company” or “House of Brussels”) owns and
operates Brussels Chocolates Ltd., House of Brussels Chocolates (USA), Ltd.
(“HOBC USA”) and DeBas Chocolate Inc. (DeBas) (collectively referred to as
“Brussels Chocolates”). We are established manufacturers of gourmet quality
chocolate products with plants in Delta, B.C., Canada, and Fresno, California.
We have over 20 years experience in manufacturing and distributing high-end
chocolates. Our Company offers a full line of gourmet quality chocolates, made
from high-grade ingredients. Our award-winning products have a long history of
customer acceptance and are manufactured to the strictest standards.





During
the past two years, we have completed a substantial transition in our business
strategy. In early 2002, we primarily marketed our products directly to
consumers through 13 high-end retail outlets. Based on our assessment of market
potential and costs, we determined to redirect our efforts. Currently, we pursue
“private labeling” and wholesale distribution customers exclusively. Our clients
represent a diversified group of wholesalers. Large customers such as Walgreens,
Laura Secord, Nordstrom and Costco now represent a significant portion of our
revenue. We continue to focus our marketing efforts at large companies with the
objective of reducing our selling and administrative expenses as a percentage of
our revenues. This strategy, however, makes us more dependent on a few, large
customers.





In May
2004, we executed an agreement with Walgreens for the sale of private label
chocolates using our “Truffelinos” and “Truffelinos Lite” trademarks. As part of
the agreement, we transferred those trademarks to Walgreens and received a
guarantee that Walgreens would purchase not less than $3,000,000 in product
annually for a two (2) year period. Founded in 1901, Walgreens is a national
retail pharmacy chain that is largely considered to be the leader in innovative
drugstore retailing. Walgreens operates over 4,200 drugstores in 44 states and
Puerto Rico.





During
December 2004, we entered into a three (3) year agreement with Schokinag
Chocolate North America Inc. to provide manufacturing, co-packing, marketing and
distribution services with respect to its line of gourmet drinking chocolates.
This agreement appoints the Company as exclusive co-packer for these products
and grants us the lead role in the exclusive introduction and sale of the
Schokinag products to national/regional wholesalers, retail chains and private
label customers throughout North America.










**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**





As a
chocolate wholesaler, we are subject to significant seasonality in demand. We
undertake expansion in new markets with the objective of evening out large
seasonal variations in revenue. One of our goals is to reduce or eliminate the
severity of historical revenue and plant utilization swings. We believe the
diversification of our products and markets will significantly reduce those
seasonal effects. Further, we believe the acquisition of targeted business units
can be accretive to our earnings, enhance revenues and assist in normalizing
demand fluctuations. Consequently, from time-to-time, we investigate and pursue
acquisitions we believe will help consolidate and/or accelerate our growth.





During
the period from November 2004 through February 2005, we completed a significant
upgrade in our manufacturing facilities. As part of this transition, we vacated
our 32,000 square foot operating plant near downtown Vancouver in favor of
approximately 74,000 square feet of modern office, manufacturing and inventory
warehouse space located in an industrial community in Delta, British Columbia.
Though previous capacity was adequate to meet historic needs, our prior
facilities did not provide the opportunity to reengineer work flows or allow the
most effective layout of our manufacturing equipment. Further, we believe the
age of our previous plant required an escalating investment in maintenance to
support our quality control standards. Our new facilities substantially increase
our capacity. The layout of these facilities more exactly meets our needs and we
believe will result in significant cost savings arising from efficiencies in
workflow, maintenance and inventory management. Monthly rents and utilities
associated with our previous plant totaled approximately $14,000. Monthly rents
and utilities for our new facility range from $39,000 to $43,000. We also
incurred costs related to our move between plants and invested approximately
$550,000 in capital expenditures and leasehold improvements preparing our new
facility for productive operation.





In
addition, our cost reduction and production efficiency review resulted in the
December 1, 2004 closure of our manufacturing facilities at 2065 Oakdale Avenue,
San Francisco, California. The shutdown of this operating location was
undertaken to reduce manufacturing costs and consolidate domestic west coast
operations at our newly acquired production facilities in Fresno, California.
The inventories and manufacturing assets previously located at the San Francisco
plant have been reallocated to support operations at both our Fresno and Delta,
British Columbia locations.





At the
date of this report, we are actively involved in on-going negotiations with an
investment bank concerning the establishment of credit facilities.  If
finalized, we intend to use the proceeds from these facilities to support
current year expansion and substantially reduce existing liabilities and
indebtedness.





On July
29, 2004, we entered into a stock purchase agreement with DeBas Chocolates,
Inc., a California corporation ("DeBas") whereby we purchased all of the
outstanding shares of common stock of DeBas. We undertook this acquisition to
expand our manufacturing capacity, increase revenues, enhance product lines and
add a variety of highly recognizable gourmet trademarks to our family of
offerings. As part of the transaction, we also acquired a strategically located
manufacturing and production facility which we believe will assist in lowering
the cost of our product distribution. Additionally, Guy Debbas, Founder and
President of DeBas, remains with us as Vice President of Product Development
under a five-year employment agreement. We believe Mr. Debbas is uniquely
skilled in manufacturing efficiencies and product research &
development.





In the
DeBas transaction, we acquired all of the outstanding shares of DeBas from Guy
Debbas, its sole shareholder. We agreed to a purchase price of $1,130,000
payable $200,000 in cash and 324,042 shares of our restricted common stock
valued at $930,000. In addition, we absorbed approximately $1,124,000 in net
liabilities from DeBas. Of the purchase price tendered, 226,481 shares of our
common stock are currently held in escrow awaiting distribution to either Mr.
Debbas or cancellation by the Company. The market value of the amounts escrowed
at the date of purchase was $800,000. For accounting purposes, approximately
$700,000 of these escrowed amounts were excluded from the purchase price as we
believe they will not be paid. As a result of an audit of the DeBas balance
sheet completed October 7, 2004, we increased the amount recognized as goodwill
associated with this acquisition from $920,000 to $1,031,551. Our goodwill
allocation however, remains subject to revision based upon final valuation of
the assets and liabilities absorbed in the purchase. The funds utilized for the
purchase were derived from the cash and equity of the Company.










**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**





The terms
and conditions of the stock purchase agreement were the result of arm's length
negotiations between the parties. We believe the transaction was favorable to us
in view of the payment terms, synergies associated with the personnel absorbed
and the market value of the underlying assets of DeBas. No formal appraisal or
fairness opinion was done in connection with this transaction.





**RESULTS
OF OPERATIONS**





During
the nine month period ended January 31, 2005, we generated $6,703,000 in
revenues which represents a 186% increase in sales volume over the same period
during the previous year. Sales for the three month period ended January 31,
2005 also increased over the prior year by $769,000 or 77%. The amount of our
third quarter increase however, reflects an anticipated slow down in revenue
generation associated with the seasonal low point of our fiscal year. Overall,
increased sales volume can be attributed to a substantial growth in orders from
our expanding private label and wholesale distribution customers.





Our cost
of goods sold for the three and nine month periods ended January 31, 2005
increased over the same periods in the previous year by 174% and 290%,
respectively. During the three month period ended January 31, 2005, our costs of
goods sold exceeded the revenues we generated by $466,000. As a result, our
gross margin percentage for the nine month period ended January 31, 2005 was
reduced to approximately 10%.





In
largest part, our third quarter gross margin loss reflects the impact of costs
incurred in the shutdown of our San Francisco manufacturing facilities and the
relocation of our Vancouver operating plant. In addition to lower than average
margins resulting from our seasonal slowdown, we incurred employee severance,
excess idle and non-productive labor, costs to dismantle fixed assets,
duplicative rents and utilities, relocation costs, and the disposal of certain
supply and maintenance inventories which were obsoleted by these
moves.





Our net
losses for the three and nine month periods were $1,595,000 and $2,478,000
respectively. These losses also reflect the impact of increased selling, general
& administrative expense resulting from our ongoing investment in personnel
required to support our expansion. These employee related expenses include third
quarter stock-based compensation of $127,000 associated with the fair market
value of options granted under our stock option plan together with share
purchase warrants granted to a new member of our Board of
Directors.





**Revenues**





Our sales
revenues for the three and nine month periods ended January 31, 2005 increased
77% and 186% respectively when compared to the same periods during the previous
fiscal year. Sales for the nine month period ended January 31, 2005 were
$6,703,000 and represent an increase of $4,360,000 over the revenues of
$2,343,000 reported for the same period ended January 31, 2004. Sales for the
fiscal quarter ended January 31, 2005 were $1,770,000 and represent an increase
of $769,000 over the revenues of $1,001,000 reported for the fiscal quarter
ended January 31, 2004. Our third fiscal quarter is traditionally the seasonal
low point in our fiscal year. Sales increases over prior years can be attributed
to a significant growth in our revenues from private label and wholesale
distribution customers.








****


**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**


****


**Cost
of Sales**





Cost of
sales for the three and nine month periods ended January 31, 2005 were
$2,237,000 and $6,054,000 respectively. Cost of sales for the current fiscal
quarter increased $2,720,000 or 174% over the cost of sales of $817,000 reported
for the three month period ended January 31, 2004. Cost of sales for the first
nine months of our current fiscal year increased $4,501,000 or 290% over the
cost of sales of $1,553,000 reported for the comparable nine month period in the
previous fiscal year. During the three month period ended January 31, 2005, our
costs of goods sold exceeded the revenues we generated by $466,000. As a result,
our gross margin percentage for the nine month period ended January 31, 2005 was
reduced to approximately 10%.





In
largest part, our third quarter gross margin loss reflects the impact of costs
incurred in the shutdown of our San Francisco manufacturing facilities and the
relocation of our Vancouver operating plant. In addition to lower than average
margins resulting from our seasonal slowdown, we incurred employee severance,
excess idle and non-productive labor, costs to dismantle fixed assets,
duplicative rents and utilities, relocation costs, and the disposal of certain
supply and maintenance inventories which were obsoleted by these
moves.





**Selling,
general and administrative expenses**





Selling
expenses for the three and nine month periods ended January 31, 2005 were
$441,000 and $1,245,000 respectively. Selling expenses for the current fiscal
quarter increased $255,000 or 137% over the selling expenses of $186,000
reported for the three month period ended January 31, 2004. Selling expenses for
the first nine months of our current fiscal year increased $617,000 or 98% over
the selling expenses of $628,000 reported for the comparable nine month period
in the previous fiscal year. In largest part, the increases in selling expenses
for both the three and nine month periods can be attributed to nearly $214,000
and $746,000, respectively, paid in sales salaries, commissions and brokerage
costs associated with our increased revenues. In addition, the costs of bad
debts, travel and entertainment related to our selling efforts have increased by
$ $80,000 or 461% and $55,000 or 76%, respectively for the nine month period
ended January 31, 2005.





General
and administrative expenses for the three and nine month periods ended January
31, 2005 were $651,000 and $1,703,000 respectively. General and administrative
expenses for the current fiscal quarter increased $595,000 over the general and
administrative expense of $63,000 reported for the three month period ended
January 31, 2004. General and administrative expenses for the first nine months
of our current fiscal year increased $1,226,000 or 256% over the general and
administrative expenses of $477,000 reported for the comparable nine month
period in the previous fiscal year. The amounts we’ve incurred for general and
administrative expenses have risen in nearly all categories as a result of our
growth and expansion. Most significantly, during the three and nine month
periods ended January 31, 2005 we have incurred $412,000 and $1,000,000 in
salaries, benefits, consulting and director’s fees. Our prior year salaries,
benefits, consulting, and directors’ fees were much lower as our directors were
not compensated during the first three quarters of the previous year and one of
our senior executive officers resigned and was not replaced during the third
fiscal quarter of that year. In addition, our remaining senior executive made a
one-time arrangement with the Company to decline salaries during the slow
season. As a result, salaries, benefits, consulting, and directors’ fees amounts
reported represent an increase of $385,000 or 1,425% over the salaries,
benefits, directors’ fees of $27,000 reported for the three month period ended
January 31, 2004 and $775,000 or 444% over the salaries, benefits, and
directors’ fees of $225,000 reported for the comparable nine month period in the
previous fiscal year.





**FINANCIAL
CONDITION**





At
January 31, 2005, our total assets equal $8,379,000 which represents an increase
of $4,963,000 or 145% over assets reported at April 30, 2004. Current assets,
including inventories and receivables resulted from an increase in actual and
projected sales volumes and accounted for $1,493,000 of the increase in assets
overall. Substantially all of the residual increase is attributable to assets
purchased in connection with the expansion of our new Delta, British Columbia
manufacturing facility and our acquisition of DeBas. The assets associated with
DeBas include $1,044,000 in goodwill associated with that transaction. Our
acquisition of DeBas also resulted in the absorption of approximately $2,493,000
in additional liabilities. Our current ratio (the ratio of current assets to
current liabilities), is 1.20 at January 31, 2005 which represents a decline
from 1.92 at April 30, 2004. In largest part, the decline in our current ratio
reflects the liabilities absorbed from DeBas together with the impact of the
reduction in our accounts receivable and inventory balances associated with our
current seasonal slowdown. In the event internally generated profits or our
financing efforts do not provide adequate resources to sustain our growth, the
lack of cash required to extinguish liabilities and invest in expansion, could
result in a substantial decline in our expectations of earnings.








****


**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**


****


**LIQUIDITY
AND CAPITAL RESOURCES**





During
the nine months ended January 31, 2005, our operations were financed using cash
generated from operations, sales of our common stock, the exercise of share
purchase warrants, vendor credit and short term receivables financing. The
completion of our new production facilities, asset purchases, enhancement of
personnel, and the buildup of our inventories and accounts receivable
contributed heavily to the cash required by our operations during this period.
In total, for the nine month period ending January 31, 2005, our investing
activities consumed $1,375,000 and our operations consumed $1,904,000 in excess
of amounts generated by product sales. This shortfall has been substantially
offset by $3,204,000 obtained as a result of our financing activities including
$3,267,000 in capital raised from equity holders.





Cash
required for on-going operations has increased significantly. Our need for raw
materials and our investment in inventories has become sharply higher. We expect
those needs to expand even further over the next six months. Though we seek
customers with non-seasonal demand, our products sales still reflect a strong
element of holiday purchasing. As a result, we face significant cash needs
during the periods in which we generate the least revenue. Further, our
acquisition of DeBas resulted in the use of cash and the absorption of
additional liabilities. Among those liabilities is approximately $260,000 in
employee related taxes which are delinquent. A lien for $156,806 has been placed
against DeBas by the IRS in connection with past due amounts. Since our
acquisition of DeBas, we have paid all new federal tax obligations in full when
due. We have also granted a limited power of attorney to a consultant to
negotiate favorable payment terms and possible reductions in penalties with the
IRS. In addition, we intend to pursue settlement negotiations with respect to a
variety of outstanding DeBas liabilities. In one instance during August 2004, we
reached an agreement with a significant vendor to accept shares of our
restricted common stock in lieu of cash payable under the terms of a previous
liability totaling $235,398.





During
the period from November 2004 through February 2005, we completed a significant
upgrade in our manufacturing facilities. As part of this transition, we vacated
our 32,000 square foot operating plant near downtown Vancouver in favor of
approximately 74,000 square feet of modern office, manufacturing and inventory
warehouse space located in an industrial community in Delta, British Columbia.
Though previous capacity was adequate to meet historic needs, our prior
facilities did not provide the opportunity to reengineer work flows or allow the
most effective layout of our manufacturing equipment. Further, we believe the
age of our previous plant required an escalating investment in maintenance to
support our quality control standards. Our new facilities substantially increase
our capacity. The layout of these facilities more exactly meets our needs and we
believe will result in significant cost savings arising from efficiencies in
workflow, maintenance and inventory management. Monthly rents and utilities
associated with our previous plant totaled approximately $14,000. Monthly rents
and utilities for our new facility range from $39,000 to $43,000. We also
incurred costs related to our move between plants and invested approximately
$550,000 in capital expenditures and leasehold improvements preparing our new
facility for productive operation. Management believes this change of facilities
was required to insure our future success. Without additional financing however,
the associated costs and investments could strain our cash flows.





On
September 28, 2004, we entered into an accounts receivable financing agreement
with an asset based lender. At January 31, 2005, we have no balance due under
this facility.





At the
date of this report, we are actively involved in on-going negotiations with an
investment bank concerning the establishment of credit facilities. If finalized,
we intend to use the proceeds from these facilities to support current year
expansion and substantially reduce existing liabilities and indebtedness.





The
support of our shareholders has been invaluable and we plan to continue our
efforts to raise additional capital from the equity marketplace. In that
connection, we have made application and are actively pursuing listing on a
senior domestic stock exchange.










**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**





If we are
unable to generate operating profits, we will require additional financing to
pay costs including product development, marketing, rent, payrolls and
facilities expense associated with our core business. If short-term and/or
long-term financing cannot be obtained as described, we will have to revise our
planned expansion so that cash flow generated by operations is sufficient to
meet our cash requirements. There is no assurance that additional financing will
be obtained. In the event our financing efforts do not provide adequate
resources to sustain our growth, losses from operations or cash used to invest
in our expansion, could result in substantial decline in our future
expectations.





**Off-Balance
Sheet Arrangements**





We had no
off-balance sheet arrangements during the fiscal quarter ended January 31,
2005.







**ITEM
3.**     **CONTROLS AND
PROCEDURES**





As
required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange
Act”), we carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of January 31, 2005, that
being the date of our most recently completed fiscal quarter. This evaluation
was carried out under the supervision and with the participation of our Chief
Executive Officer, Grant Petersen and Chief Financial Officer, Robert Wesolek.
Based upon that evaluation, these management executives concluded that our
disclosure controls and procedures are effective in timely alerting management
to material information relating to us required to be included in our periodic
SEC filings. There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent to
the date we carried out our evaluation.





Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed our reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the SEC’s rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Exchange Act is accumulated and communicated to management, including our Chief
Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.





During
our most recently completed fiscal quarter ended January
31, 2005 , there
were no changes in our internal control over financial reporting that have
materially affected, or are reasonably likely to affect, our internal control
over financial reporting.





The term
“internal control over financial reporting” is defined as a process designed by,
or under the supervision of, the registrant's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
registrant's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:





1.
    Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      registrant;





2.
    Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the
      registrant are being made only in accordance with authorizations of
      management and directors of the registrant;and





3.
    Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the registrant's assets
      that could have a material effect on the financial
    statements.








****


**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**


****


**PART
II--OTHER INFORMATION**







**ITEM 2.**  **UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS******





During
our quarter ended January 31, 2005, we completed the following transactions in
reliance upon exemptions from registration under the Securities Act of 1933, as
amended (the "Act") as provided in Section 4(2) thereof. All certificates issued
in connection with these transactions were endorsed with a restrictive legend
confirming that the securities could not be resold without registration under
the Act or an applicable exemption from the registration requirements of the
Act. None of the transactions involved a public offering, underwriting discounts
or sales commissions. We believe that each person was a “qualified” investor
within the meaning of the Act and had knowledge and experience in financial and
business matters which allowed them to evaluate the merits and risks of our
securities. Each person was knowledgeable about our operations and financial
condition.





1.
    On
      November 16, 2004, we issued 50,000 share purchase warrants in connection
      with services provided to a third party under the terms of a product Sales
      and Distribution Agreement. Each share purchase warrant is exercisable at
      $1.64 per share until November 16, 2005.





2.
    On
      November 22, 2004, we issued a total of 160,000 share purchase warrants to
      Dale Frey in connection with his appointment to our Board of Directors.
      Mr. Frey also serves as Chairman of our Audit Committee. These share
      purchase warrants are exercisable at $1.30 and $1.45 per share through
      November 22, 2005 and November 22, 2007, respectively.





3.
    On
      January 11, 2005, we issued 45,454 shares of common stock to one (1)
      investor pursuant to the exercise of previously issued share purchase
      warrants. The warrants were exercisable at a price of $0.65 per share.
      Upon the exercise of these warrants, we received proceeds in the amount of
      $29,545.










**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**




****


**ITEM 6.**  **EXHIBITS**





**Exhibit
      Number**
    **Description
      of Exhibit**10.1
    Agreement
      for manufacturing, co-packing, marketing and distribution between House of
      Brussels Chocolates Inc. and Schokinag Chocolate North America
      Inc.10.2
    Product
      and trademark sales Agreement between House of Brussels Chocolates Inc.
      and Walgreens(1)10.3
    Facilities
      Lease Agreement between House of Brussels Chocolates Inc. and 5290
      Investments Ltd.(2)10.4
    Stock
      Purchase Agreement between House of Brussels Chocolates Inc. and DeBas
      Chocolate Inc.(2)10.4
    Employment
      Agreement between House of Brussels Chocolates Inc. and Guy Debbas(3)31.1
    Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





(1)
    Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Registrant’s Annual Report on Form 10-KSB filed on July 29,
      2004.


(2)
    Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Registrant’s Form 8-K filed on August 3,
2004.


(3)
    Previously
      filed with the Securities and Exchange Commission as an exhibit to the
      Registrant’s Form 10-QSB filed on September 14,
2004.









**HOUSE
      OF BRUSSELS CHOCOLATES INC.**
      **FORM
      10-QSB**
      **For
      the Quarter Ended January 31, 2005**





**SIGNATURES**








In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.





**HOUSE
      OF BRUSSELS CHOCOLATES INC.**Date:**March
      17, 2005**By:s/s
      Grant Petersen****
    ****
      **Grant Petersen******
    **Chief Executive Officer,
      President and Director**