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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 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, 2004

** ̈**  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)  |                                  

Suite 208, 750 Terminal Avenue, Vancouver, BC, Canada,
  V6A 2M5 
  (Address of principal executive offices)

(604) 713-8052 
  (Issuers telephone number)

____________________________________________________________________ (Former name, former address and former fiscal year, if changed since last
  report)

State the number of shares outstanding of each of the issuers
  classes of common stock, as of the latest practicable date: 23,195,561 Shares of $0.001 par value Common Stock outstanding as of March
  3, 2004.

Transitional Small Business Disclosure Format (check one):
  Yes ** ̈**   No
  **x**

---

HOUSE OF BRUSSELS CHOCOLATES INC.

FORM 10-QSB For The Quarter Ended January 31, 2004

INDEX

|PART I - FINANCIAL INFORMATION | 3                                                                                          
|------------------------------ | -------------------------------------------------------------------------------------------
|                               |                                                                                            
|ITEM 1.                        | FINANCIAL STATEMENTS                                                                       
|ITEM 2.                        | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS
|ITEM 3.                        | CONTROLS AND PROCEDURES                                                                    
|                               |                                                                                            
|PART II--OTHER INFORMATION     | 10                                                                                         
|                               |                                                                                            
|ITEM 2.                        | CHANGES IN SECURITIES AND USE OF PROCEEDS                                                  
|ITEM 5.                        | OTHER INFORMATION                                                                          
|ITEM 6.                        | EXHIBITS AND REPORTS ON FORM 8-K                                                           
|                               |                                                                                            
|SIGNATURES                     | 12                                                                                         



Page 2 of 12

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| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

PART I - FINANCIAL INFORMATION

|ITEM 1. | FINANCIAL STATEMENTS                                                                                                        
|------- | ----------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                             
|        | Consolidated Balance Sheets as of January
      31, 2004 and April 30, 2003                                                 
|        |                                                                                                                             
|        | Consolidated Statements of Operations
      for the Nine and Three Month PeriodsEnding January
      31, 2004 and 2003      
|        |                                                                                                                             
|        | Consolidated Statement of Changes in
      Shareholders Equity for the PeriodFrom April,
      30, 2003 to January 31, 2004
|        |                                                                                                                             
|        | Consolidated Statements of Cash Flows
      for the Nine and Three Month PeriodsEnding January
      31, 2004 and 2003      
|        |                                                                                                                             
|        | Notes to the Consolidated Financial Statements
      for the Quarter Ended January 31, 2004                                 

Page 3 of 12

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CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTER ENDED JANUARY 31, 2004



F-1

---

| | Consolidated Balance Sheets as of January 31, 2004 and April 30, 2003(expressed in U.S. dollars)
| | ------------------------------------------------------------------------------------------------
|

|                                                              |   | JANUARY 31  |   |   | APRIL 30   |  
|------------------------------------------------------------- | - | ----------- | - | - | ---------- | -
|                                                              |   | 2004        |   |   | 2003       |  
|                                                              |   | (unaudited) |   |   | (audited)  |  
|                                                              |   |             |   |   |            |  
|ASSETS                                                        |   |             |   |   |            |  
|Current assets                                                |   |             |   |   |            |  
|Cash                                                          | $ | 364,375     |   | $ | 56,364     |  
|Accounts receivable,
      net                                |   | 609,511     |   |   | 204,779    |  
|Inventory                                                     |   | 1,374,562   |   |   | 1,016,040  |  
|Prepaid expenses                                              |   | 152,839     |   |   | 144,872    |  
|Total current assets                                          |   | 2,501,287   |   |   | 1,422,055  |  
|                                                              |   |             |   |   |            |  
|Software                                                      |   | 39,933      |   |   | 4,734      |  
|Property, plant and equipment, net                            |   | 962,249     |   |   | 681,980    |  
|Other assets                                                  |   | 102,544     |   |   | 16,906     |  
|                                                              | $ | 3,606,013   |   | $ | 2,125,675  |  
|                                                              |   |             |   |   |            |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                          |   |             |   |   |            |  
|Current liabilities                                           |   |             |   |   |            |  
|Accounts payable
      and accrued liabilities                | $ | 941,205     |   | $ | 1,053,096  |  
|Due to related parties                                        |   | 210,238     |   |   | 60,000     |  
|Loan payable                                                  |   | 272,177     |   |   | -          |  
|Current portion
      of obligations under capital lease      |   | 10,772      |   |   | 28,609     |  
|Total current liabilities                                     |   | 1,434,392   |   |   | 1,141,705  |  
|                                                              |   |             |   |   |            |  
|Long-term debt                                                |   | -           |   |   | 214,713    |  
|                                                              |   | 1,434,392   |   |   | 1,356,418  |  
|                                                              |   |             |   |   |            |  
|Capital stock                                                 |   |             |   |   |            |  
|Authorized                                                    |   |             |   |   |            |  
|60,000,000
      common shares, $0.001 par value              |   |             |   |   |            |  
|4,000,000
      preferred shares                              |   |             |   |   |            |  
|Issued                                                        |   |             |   |   |            |  
|22,922,834
      (April 30, 2003 - 19,541,422 ) common shares |   | 22,922      |   |   | 19,541     |  
|Additional paid-in capital                                    |   | 6,525,265   |   |   | 5,739,892  |  
|Warrants issued in connection with private placements         |   | 1,107,010   |   |   | 204,048    |  
|Accumulated other comprehensive income                        |   | 334,237     |   |   | 332,626    |  
|Accumulated deficit                                           |   | (5,817,813  | ) |   | (5,526,850 | )
|                                                              |   | 2,171,621   |   |   | 769,257    |  
|                                                              | $ | 3,606,013   |   | $ | 2,125,675  |  

The accompanying notes are an integral part of these financial
  statements

F-2

---

| | Consolidated Statement of Operations for the Nine and Three Month Periods
      Ending January 31, 2004 and January 31, 2003(expressed in U.S. dollars)
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
|

|                                              |   |                     |   |   | FOR THE THREE MONTH  |  
|--------------------------------------------- | - | ------------------- | - | - | -------------------- | -
|                                              |   | FOR THE NINE MONTHS |   |   | PERIOD NOVEMBER 1 TO |  
|                                              |   | ENDED JANUARY 31    |   |   | JANUARY 31           |  
|                                              |   | 2004                |   |   | 2003                 |  
|                                              |   | (unaudited)         |   |   | (unaudited)          |  
|                                              |   |                     |   |   |                      |  
|                                              |   |                     |   |   |                      |  
|Sales                                         | $ | 2,343,483           |   | $ | 2,330,800            |  
|Cost of sales, excluding amortization         |   | 1,511,022           |   |   | 1,240,144            |  
|Gross profit                                  |   | 832,461             |   |   | 1,090,656            |  
|                                              |   |                     |   |   |                      |  
|Selling, general and administrative expenses  |   | 1,026,840           |   |   | 1,187,990            |  
|Amortization of software                      |   | 12,090              |   |   | 1,043                |  
|Amortization of property, plant and equipment |   | 84,494              |   |   | 101,493              |  
|                                              |   | 1,123,424           |   |   | 1,290,526            |  
|                                              |   |                     |   |   |                      |  
|Net (loss) income                             | $ | (290,963            | ) | $ | (199,870             | )
|                                              |   |                     |   |   |                      |  
|Weighted-average number of common shares      |   | 20,555,526          |   |   | 61,013,632           |  
|outstanding *                                 |   |                     |   |   |                      |  
|Basic and diluted loss per share              | $ | (0.01               | ) | $ | 0.00                 |  

|* | The prior period weighted-average number of common
        shares outstanding is calculated before giving effect to a 1-for-5 reverse
        split of the Company's common shares that occurred on March 5, 2003
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial
  statements

F-3

---

| | Consolidated Statement of Changes in Shareholders' Equity for the 
      Period from April 30, 2003 to January 31, 2004(expressed in U.S. dollars)
| | --------------------------------------------------------------------------------------------------------------------------------------------------
|

|                                            |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   | ACCUMU-    |   |   |          | 
|------------------------------------------- | --------------- |  | - | ---------- |  | - | ------------------- | - |  | --------------------- | - | - | ---------- | - | - | ---------- | - | - | -------- | 
|                                            |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   | LATED      |   |   |          | 
|                                            |                 |  |   |            |  |   |                     |   |  | WARRANTS ISSUED IN    |   |   |            |   |   | OTHER      |   |   |          | 
|                                            | COMMON**STOCK** |  |   | ADDITIONAL |  |   | **CONNECTION** WITH |   |  |                       |   |   | COMPREHEN- |   |   | SHARE-     |  
|                                            |                 |  |   |            |  |   | PAID**IN**          |   |  | **PRIVATE**PLACEMENTS |   |   |            |   |   | SIVE       |   |   | HOLDERS' | 
|                                            | SHARES          |  |   | **AMOUNT** |  |   | CAPITAL             |   |  | WARRANTS              |   |   | **AMOUNT** |   |   | DEFICIT    |   |   | INCOME   | 
|                                            |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|                                            |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Balance  April 30, 2003 (audited)          | 19,541,422      |  | $ | 19,541     |  | $ | 5,739,892           |   |  | 6,550,790             |   | $ | 204,048    |   | $ | (5,526,850 | ) | $ | 332,626  | 
|                                            |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Expired share purchase warrants             |                 |  |   |            |  |   |                     |   |  | (280,000              | ) |   |            |   |   |            |   |   |          | 
|Stock-based compensation - May 1, 2003      |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|in exchange for services @$0.394/share      | 22,775          |  |   | 23         |  |   | 8,950               |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Stock-based compensation - May 3, 2003      |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|in exchange for services @$0.20/unit        | 200,000         |  |   | 200        |  |   | (163,592            | ) |  | 800,000               |   |   | 203,392    |   |   |            |   |   |          | 
|Stock-based compensation - May 15, 2003     |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|in exchange for services @$0.10/share       | 171,883         |  |   | 172        |  |   | 17,016              |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Stock-based compensation - May 15, 2003     |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|in exchange for services @$0.10/unit        | 74,256          |  |   | 74         |  |   | (5,063              | ) |  | 74,256                |   |   | 12,415     |   |   |            |   |   |          | 
|Private Placements #110-112; 114- 115,      |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|June & July, 2003 @ $.55/unit               | 348,183         |  |   | 348        |  |   | 90,902              |   |  | 348,183               |   |   | 100,250    |   |   |            |   |   |          | 
|Private Placements #113, 117-122,           |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Sep & Oct 2003 @$.55/unit                   | 528,265         |  |   | 528        |  |   | 57,367              |   |  | 528,265               |   |   | 227,650    |   |   |            |   |   |          | 
|Private Placement #116 - Sep 10, 2003       |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|@$.45/unit                                  | 27,778          |  |   | 28         |  |   | 12,472              |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Warrants issued in exchange for services -  |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Sep 15, 2003 @$.10/warrant                  |                 |  |   |            |  |   | (24,000             | ) |  | 240,000               |   |   | 24,000     |   |   |            |   |   |          | 
|Stock-based compensation - Oct 3, 2003      |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|in exchange for finance fee @$0.55/share    | 2,000           |  |   | 2          |  |   | 1,098               |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Warrant exercise - Oct 24, 2003 @$.10/share | 240,000         |  |   | 240        |  |   | 47,760              |   |  | (240,000              | ) |   | (24,000    | ) |   |            |   |   |          | 
|Warrant exercise - Oct 24, 2003 @$.65/share | 20,000          |  |   | 20         |  |   | 18,738              |   |  | (20,000               | ) |   | (5,758     | ) |   |            |   |   |          | 
|Private Placements #123-125 , Nov 2003      |                 |  |   |            |  |   |                     |   |  |                       |   |   |            |   |   |            |   |   |          | 
|and January 2004 @ $.55 unit                | 1,064,454       |  |   | 1,064      |  |   | 113,633             |   |  | 912,454               |   |   | 421,033    |   |   |            |   |   |          | 
|Private Placement #126 - Jan 30, 2004       | 200,000         |  |   | 200        |  |   | 183,300             |   |  |                       |   |   |            |   |   |            |   |   |          | 
|Warrant exercise - Jan 29, 2004 @$.65/share | 181,818         |  |   | 182        |  |   | 196,351             |   |  | (181,818              | ) |   | (78,352    | ) |   |            |   |   |          | 
|Warrant exercise - Jan 29, 2004 @$.30/share | 100,000         |  |   | 100        |  |   | 30,640              |   |  | (100,000              | ) |   | (740       | ) |   |            |   |   |          | 

The accompanying notes are an integral part of these financial
  statements

F-4

---

| | Consolidated Statement of Changes in Shareholders' Equity for the 
      Period from April 30, 2003 to January 31, 2004(expressed in U.S. dollars)
| | --------------------------------------------------------------------------------------------------------------------------------------------------
|

|                                        |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   | ACCUMU-    |   |   |          | 
|--------------------------------------- | --------------- |  | - | ---------- |  | - | ------------------- |  |  | --------------------- | - | - | ---------- |  | - | ---------- | - | - | -------- | 
|                                        |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   | LATED      |   |   |          | 
|                                        |                 |  |   |            |  |   |                     |  |  | WARRANTS ISSUED IN    |   |   |            |  |   | OTHER      |   |   |          | 
|                                        | COMMON**STOCK** |  |   | ADDITIONAL |  |   | **CONNECTION** WITH |  |  |                       |   |   | COMPREHEN- |  |   | SHARE-     |  
|                                        |                 |  |   |            |  |   | PAID**IN**          |  |  | **PRIVATE**PLACEMENTS |   |   |            |  |   | SIVE       |   |   | HOLDERS' | 
|                                        | SHARES          |  |   | **AMOUNT** |  |   | CAPITAL             |  |  | WARRANTS              |   |   | **AMOUNT** |  |   | DEFICIT    |   |   | INCOME   | 
|                                        |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   |            |   |   |          | 
|Stock-based compensation - Jan 1, 2004  |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   |            |   |   |          | 
|Executive signing bonus -               |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   |            |   |   |          | 
|warrants @ $.99/share                   |                 |  |   |            |  |   |                     |  |  | 50,000                |   |   | 23,072     |  |   |            |   |   |          | 
|Stock issued in partial payment         |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   |            |   |   |          | 
|for the purchase of                     |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   |            |   |   |          | 
|"The Candy Jar"                         | 200,000         |  |   | 200        |  |   | 199,800             |  |  |                       |   |   |            |  |   |            |   |   |          | 
|Expired share purchase warrants         |                 |  |   |            |  |   |                     |  |  | (266,250              | ) |   |            |  |   |            |   |   |          | 
|Foreign currency translation adjustment |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   |            |   |   | 1,611    | 
|Loss for the period                     |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   | (290,963   | ) |   |          | 
|Comprehensive loss                      |                 |  |   |            |  |   |                     |  |  |                       |   |   |            |  |   |            |   |   |          | 
|Balance  January 31, 2004 (unaudited)  | 22,922,834      |  | $ | 22,922     |  | $ | 6,525,265           |  |  | 8,415,880             |   | $ | 1,107,010  |  | $ | (5,817,813 | ) | $ | 334,237  | 

The accompanying notes are an integral part of these financial
  statements

F-5

---

| | Consolidated Statement of Cash Flows for the Nine and Three Month Periods
      Ending January 31, 2004 and January 31, 2003(expressed in U.S. dollars)
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
|

|                                                                   |   |                     |   |   |                      |   |   | FOR THE THREE MONTH |  
|------------------------------------------------------------------ | - | ------------------- | - | - | -------------------- | - | - | ------------------- | -
|                                                                   |   | FOR THE NINE MONTHS |   |   | PERIOD NOVEMBER 1 TO |  
|                                                                   |   | ENDED JANUARY 31    |   |   | JANUARY 31           |  
|                                                                   |   | 2004                |   |   | 2003                 |   |   | 2004                |  
|                                                                   |   | (unaudited)         |   |   | (unaudited)          |   |   | (unaudited)         |  
|CASH FLOWS FROM OPERATING ACTIVITIES                               |   |                     |   |   |                      |   |   |                     |  
|Net (loss) income for the period                                   | $ | (290,963            | ) | $ | (199,870             | ) | $ | (695                | )
|Adjustments to reconcile
      net loss for the period to net cash |   |                     |   |   |                      |   |   |                     |  
|used in operating
      activities                                 |   |                     |   |   |                      |   |   |                     |  
|Amortization of
      software                                     |   | 12,090              |   |   | 1,043                |   |   | 4,379               |  
|Amortization of
      property and equipment                       |   | 84,494              |   |   | 101,493              |   |   | 27,857              |  
|Gain on disposal
      of assets                                   |   | -                   |   |   | (20,447              | ) |   | -                   |  
|Common stock issued
      for payment of fees                      |   | 97,759              |   |   | 81,712               |   |   | 23,072              |  
|Common stock issued
      for partial payment of "The Candy Jar"   |   | 200,000             |   |   |                      |   |   | 200,000             |  
|Changes in non-cash working capital items                          |   |                     |   |   |                      |   |   |                     |  
|Accounts receivable                                                |   | (396,352            | ) |   | (463,645             | ) |   | 376,410             |  
|Inventory                                                          |   | (281,197            | ) |   | (248,071             | ) |   | (121,494            | )
|Prepaid expenses                                                   |   | 3,994               |   |   | (68,288              | ) |   | (16,047             | )
|Other assets                                                       |   | (87,685             | ) |   | (15,448              | ) |   | (86,357             | )
|Accounts payable
      and accrued liabilities                     |   | (14,845             | ) |   | 153,817              |   |   | (677,707            | )
|Unearned revenue                                                   |   | -                   |   |   | -                    |   |   | (1,914              | )
|                                                                   |   | (672,705            | ) |   | (677,704             | ) |   | (272,496            | )
|CASH FLOWS FROM FINANCING ACTIVITIES                               |   |                     |   |   |                      |   |   |                     |  
|Proceeds from (repayments of) loans                                |   | 40,727              |   |   | (273,517             | ) |   | (7,423              | )
|Proceeds from (repayments to) related parties                      |   | 148,469             |   |   | (160,170             | ) |   | 68,633              |  
|Proceeds from long term debt                                       |   | -                   |   |   | 53,268               |   |   | -                   |  
|Stock subscriptions received                                       |   | -                   |   |   | 75,000               |   |   | -                   |  
|Repayments of obligations under capital lease                      |   | (20,620             | ) |   | (61,153              | ) |   | (7,290              | )
|Proceeds from issuance of convertible securities                   |   | 30,000              |   |   | 1,258,622            |   |   | 30,000              |  
|Proceeds from issuance of common shares                            |   | 1,363,957           |   |   | 121,500              |   |   | 837,412             |  
|                                                                   |   | 1,562,533           |   |   | 1,013,550            |   |   | 921,332             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                               |   |                     |   |   |                      |   |   |                     |  
|Purchase of (proceeds from disposal of) property and equipment     |   | (353,742            | ) |   | 122,322              |   |   | (333,563            | )
|Proceeds from common shares for purchase of subsidiary             |   | -                   |   |   | 1,505,317            |   |   | -                   |  
|Change in accumulated deficit from acquisition of subsidiary       |   | -                   |   |   | (1,871,334           | ) |   | -                   |  
|                                                                   |   | (353,742            | ) |   | (243,695             | ) |   | (333,563            | )
|Foreign exchange effect on cash                                    |   | (228,075            | ) |   | (77,818              | ) |   | (11,668             | )
|                                                                   |   |                     |   |   |                      |   |   |                     |  
|Increase (decrease) in cash and cash equivalents                   | $ | 308,011             |   | $ | 14,333               |   | $ | 303,605             |  
|Cash and cash equivalents, beginning of the period                 |   | 56,364              |   |   | 8,444                |   |   | 60,770              |  
|                                                                   |   |                     |   |   |                      |   |   |                     |  
|Cash and cash equivalents, end of the period                       | $ | 364,375             |   | $ | 22,777               |   | $ | 364,375             |  

The accompanying notes are an integral part of these financial
  statements

F-6

---

| | Consolidated Statement of Cash Flows for the Nine and Three Month 
      Periods Ending January 31, 2004 and January 31, 2003(expressed in U.S. dollars)
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
|

|                                              |   |                     |  |   |                      |  |   | FOR THE THREE MONTH | 
|--------------------------------------------- | - | ------------------- |  | - | -------------------- |  | - | ------------------- | 
|                                              |   | FOR THE NINE MONTHS |  |   | PERIOD NOVEMBER 1 TO | 
|                                              |   | ENDED JANUARY 31    |  |   | JANUARY 31           | 
|                                              |   | 2004                |  |   | 2003                 |  |   | 2004                | 
|                                              |   | (unaudited)         |  |   | (unaudited)          |  |   | (unaudited)         | 
|SUPPLEMENTAL CASH FLOW INFORMATION            | $ | -                   |  | $ | -                    |  | $ | -                   | 
|Cash paid for income taxes                    |   | -                   |  |   | -                    |  |   | -                   | 
|Cash paid for interest                        |   |                     |  |   |                      |  |   |                     | 
|SUPPLEMENTAL NON-CASH INVESTING AND FINANCING |   |                     |  |   |                      |  |   |                     | 
|ACTIVITIES                                    |   | -                   |  |   | -                    |  |   | -                   | 

The accompanying notes are an integral part of these financial
  statements

F-7

---

| | Notes to the Consolidated Financial Statements for the Quarter 
      Ended January 31, 2004(expressed in U.S. dollars)
| | -----------------------------------------------------------------------------------------------------------------------
|

|1. | General On March 4, 2003, Green Fusion Corporation changed its name to House
        of Brussels Chocolates Inc. and now trades under the symbol of HBSL on
        the OTC Bulletin Board. House of Brussels Chocolates Inc. was incorporated
        on March 5, 1998 in the State of Nevada. Effective May 1, 2002, the Company
        acquired all of the issued and outstanding shares of House of Brussels
        Holdings Ltd., which owns and operates Brussels Chocolates Ltd. (collectively
        referred to as Brussels Chocolates). Brussels Chocolates is
        a manufacturer and wholesaler of premium Belgium-style chocolates. On
        May 10, 2002, the Company also acquired all of the issued and outstanding
        shares of GFC Ventures Corp., a company that had been supplying management
        services to House of Brussels Chocolates Inc. and had facilitated the
        purchase of House of Brussels Holdings Ltd. by the Company. In October
        2003, the Company formed a wholly owned US subsidiary to further its business
        development in the United States. On November 19, 2003, House of Brussels
        Chocolates (USA), Ltd. (HOBC (USA)), the newly formed wholly
        owned subsidiary of the Company, purchased certain assets of The Candy
        Jar, Inc., a California corporation which manufactured and retailed ultra
        gourmet chocolate products. In exchange for the purchased assets, HOBC
        (USA) agreed to a purchase price of $233,820 cash and 200,000 shares of
        restricted stock of the Company.
      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 at January 31, 2004 and the results of operations for the
        periods then ended. For further information, refer to the financial statements
        and notes thereto included in the Companys Form 10-KSB for the year
        ended April 30, 2003. These consolidated financial statements include
        the accounts of House of Brussels Chocolates Inc. and its legal subsidiaries
        and all significant intercompany accounts and transactions have been eliminated
        on consolidation.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | Significant accounting
        policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |  |  | Category                        | Rate    | Method                             
| |  |  | ------------------------------- | ------- | -----------------------------------
| |  |  | Automotive equipment            | 30%     | Diminishing balance                
| |  |  | Computer equipment and software | 30%     | Diminishing balance                
| |  |  | Furniture and fixtures          | 20%     | Diminishing balance                
| |  |  | Other equipment                 | 20%     | Diminishing balance                
| |  |  | Production equipment and moulds | 10%     | Diminishing balance & straight line
| |  |  | Leasehold improvements          | 5 years | Straight-line                      

| |    | 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.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | d) | Revenue is recognized upon delivery of product. One-time
        licensing fees are non-refundable and are recognized when received.                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | e) | Recently issued accounting pronouncements will have
        no significant impact on the Company and its reporting methods.                                                                                                                                                                                                                                                                                         

F-8

---

| | Notes to the Consolidated Financial Statements for the Quarter 
      Ended January 31, 2004(expressed in U.S. dollars)
| | -----------------------------------------------------------------------------------------------------------------------
|

|3. | Accounts receivable
|-- | -------------------

|   |                                             |   | January 31 |  |   | April 30 | 
|-- | ------------------------------------------- | - | ---------- |  | - | -------- | 
|   |                                             |   | 2004       |  |   | 2003     | 
|   | Trade receivables, net of doubtful accounts | $ | 502,676    |  | $ | 161,738  | 
|   | Other receivables                           |   | 106,835    |  |   | 43,041   | 
|   | Total                                       | $ | 609,511    |  | $ | 204,779  | 
|   |                                             |   |            |  |   |          | 
|4. | Inventory                                  

|   |                           |   | January 31 |  |   | April 30  | 
|-- | ------------------------- | - | ---------- |  | - | --------- | 
|   |                           |   | 2004       |  |   | 2003      | 
|   | Finished goods            | $ | 453,870    |  | $ | 279,978   | 
|   | Unpackaged finished goods |   | 67,554     |  |   | 62,292    | 
|   | Packaging material        |   | 464,563    |  |   | 267,545   | 
|   | Raw material              |   | 288,226    |  |   | 307,379   | 
|   | Development costs         |   | 100,349    |  |   | 98,846    | 
|   | Total                     | $ | 1,374,562  |  | $ | 1,016,040 | 
|   |                           |   |            |  |   |           | 
|5. | Prepaid expenses          |   |            |  |   |           | 

|   |                                    |   | January 31 |  |   | April 30 | 
|-- | ---------------------------------- | - | ---------- |  | - | -------- | 
|   |                                    |   | 2004       |  |   | 2003     | 
|   | Travel advances and miscellaneous  | $ | 39,627     |  | $ | 13,869   | 
|   | Prepaid consulting fees            |   | 17,500     |  |   | 35,000   | 
|   | Due from related party             |   | -          |  |   | 45,021   | 
|   | Deposits, promotions and royalties |   | 70,769     |  |   | 46,331   | 
|   | Insurance                          |   | 24,943     |  |   | 4,651    | 
|   |                                    | $ | 152,839    |  | $ | 144,872  | 
|   |                                    |   |            |  |   |          | 
|6. | Fixed assets                      

| |                                     |   | January 31, 2004 | 
| | ----------------------------------- | - | ---------------- | 
| |                                     |   |                  | 
| |                                     |   | Cost             | 
| |                                     |   |                  | 
| | Software                            | $ | 80,817           | 
| |                                     |   |                  | 
| | Automotive equipment                | $ | 52,828           | 
| | Computer equipment                  |   | 131,448          | 
| | Furniture and fixtures              |   | 103,983          | 
| | Leasehold improvements              |   | 383,596          | 
| | Other equipment                     |   | 87,165           | 
| | Production equipment and moulds     |   | 1,430,293        | 
| | Total property, plant and equipment | $ | 2,189,313        | 

F-9

---

| | Notes to the Consolidated Financial Statements for the Quarter 
      Ended January 31, 2004(expressed in U.S. dollars)
| | -----------------------------------------------------------------------------------------------------------------------
|

|   |                                     |   | April 30, 2003 | 
|-- | ----------------------------------- | - | -------------- | 
|   |                                     |   |                | 
|   |                                     |   | Cost           | 
|   |                                     |   |                | 
|   | Software                            | $ | 31,584         | 
|   |                                     |   |                | 
|   | Automotive equipment                | $ | 48,826         | 
|   | Computer equipment                  |   | 111,975        | 
|   | Furniture and fixtures              |   | 172,845        | 
|   | Leasehold improvements              |   | 354,533        | 
|   | Other equipment                     |   | 69,967         | 
|   | Production equipment and moulds     |   | 974,562        | 
|   | Total Property, plant and equipment | $ | 1,732,708      | 
|   |                                     |   |                | 
|7. | Accounts payable                   

| |                |   | January 31 |  |   | April 30  | 
| | -------------- | - | ---------- |  | - | --------- | 
| |                |   | 2004       |  |   | 2003      | 
| | Trade payables | $ | 574,199    |  | $ | 945,486   | 
| | Other payables |   | 367,006    |  |   | 107,610   | 
| | Total          | $ | 941,205    |  | $ | 1,053,096 | 

|8.  | Due to related parties
        Amounts due to related parties are advances made by the directors, or
        past directors, of the Company and have no stated terms of repayment.                                                                                                                                                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|9.  | Loan payable
        The loan payable was obtained from a company controlled by two shareholders.
        The loan is repayable by May 31, 2004 and accrues interest at the rate
        of 7% per annum. The loan was advanced and is repayable in Canadian dollars
        and is secured by a General Security Agreement having a first charge over
        the assets of the Company.                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10. | Obligations under capital lease
        The Company has leased certain manufacturing equipment through CIBC Leasing
        and one vehicle from Ford Leasing. The leases all expire during the current
        year.                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|11. | Share capital
        The Company issued a total of 3,381,412 shares during the nine month period
        ended January 31, 2004. During the same nine month period, 2,953,158 share
        purchase warrants were issued, 546,250 warrants expired and 541,818 warrants
        were exercised for a net increase in warrants of 1,865,090. Shares and
        warrants were issued to investors for private placements and to consultants
        for stock-based compensation.

F-10

---

| | Notes to the Consolidated Financial Statements for the Quarter 
      Ended January 31, 2004(expressed in U.S. dollars)
| | -----------------------------------------------------------------------------------------------------------------------
|

|**12.** | Subsequent events
        In February, 2004, a subsidiary company named ChocoMed, Inc. was incorporated
        to serve as an umbrella company for House of Brussels, with the purpose
        of investigating the use of chocolate as a carrier for dietary supplements,
        functional foods and pharmaceutical compounds to treat various medical
        conditions. Also, a Medical Advisory Board has been formed to provide
        guidance to House of Brussels management as we continue to explore new
        opportunities.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-11

---

| | Supplemental Statement of Expenses for the Nine and Three Month Periods
      Ended January 31, 2004 and 2003(expressed in U.S. dollars)
| | ----------------------------------------------------------------------------------------------------------------------------------------
|

|                                                   |   |                     |   |   |                      |   |   | FOR THE THREE MONTH |  
|-------------------------------------------------- | - | ------------------- | - | - | -------------------- | - | - | ------------------- | -
|                                                   |   | FOR THE NINE MONTHS |   |   | PERIOD NOVEMBER 1 TO |  
|                                                   |   | ENDED JANUARY 31    |   |   | JANUARY 31           |  
|                                                   |   | 2004                |   |   | 2003                 |   |   | 2004                |  
|                                                   |   | (unaudited)         |   |   | (unaudited)          |   |   | (unaudited)         |  
|                                                   |   |                     |   |   |                      |   |   |                     |  
|Selling expenses                                   |   |                     |   |   |                      |   |   |                     |  
|Bad debts                                          | $ | 17,928              |   |   | (10,268              | ) | $ | 381                 |  
|Interest and bank
      fees                       |   | 5,400               |   |   | (687                 | ) |   | 1,912               |  
|Office and miscellaneous                           |   | 7,437               |   |   | 2,175                |   |   | 1,174               |  
|Promotion and advertising                          |   | 177,215             |   |   | 65,944               |   |   | 49,140              |  
|Rent and utilities                                 |   | 102,652             |   |   | 135,491              |   |   | 27,893              |  
|Salaries, benefits
      and consulting fees       |   | 257,668             |   |   | 403,724              |   |   | 68,682              |  
|Travel and entertainment                           |   | 72,521              |   |   | 55,764               |   |   | 39,684              |  
|                                                   |   | 640,821             |   |   | 652,143              |   |   | 188,866             |  
|                                                   |   |                     |   |   |                      |   |   |                     |  
|General and administrative expenses                |   |                     |   |   |                      |   |   |                     |  
|Interest, bank fees
      and foreign exchange     |   | (29,243             | ) |   | 30,321               |   |   | (65,513             | )
|Office and miscellaneous                           |   | 34,575              |   |   | 37,693               |   |   | 12,466              |  
|Promotion and advertising                          |   | -                   |   |   | 3,837                |   |   | -                   |  
|Professional fees                                  |   | 130,909             |   |   | 110,343              |   |   | (16,331             | )
|Rent and utilities                                 |   | 15,924              |   |   | 28,151               |   |   | 6,045               |  
|Salaries, benefits
      and consulting fees       |   | 225,114             |   |   | 314,753              |   |   | 27,463              |  
|Travel and entertainment                           |   | 8,740               |   |   | 31,196               |   |   | 5,389               |  
|Gain on write-off
      of long-term assets        |   | -                   |   |   | (20,447              | ) |   | -                   |  
|                                                   |   | 386,019             |   |   | 535,847              |   |   | (30,481             | )
|                                                   |   |                     |   |   |                      |   |   |                     |  
|Total selling, general and administrative expenses | $ | 1,026,840           |   | $ | 1,187,990            |   | $ | 158,385             |  

F-12

---

| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

ITEM 2.           MANAGEMENT'S
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCORPORATE
  HISTORY

House of Brussels Chocolates Inc. (We, the Company
  or House of Brussels) owns and operates Brussels Chocolates Ltd.
  (Brussels Chocolates) and House of Brussels Chocolates (USA) Ltd. (HOBC
  USA). We are a premier manufacturer and distributor of gourmet chocolate
  products in Canada, the United States and overseas. HOBC USA, then The
  Candy Jar, Inc., began manufacturing chocolates at its San Francisco based
  facilities in 1977. Brussels Chocolates began operations and production at its
  Vancouver facilities in 1983. Both manufacturers enjoy reputations synonymous
  with high-quality gourmet Belgian chocolates.

We were originally incorporated under the laws of the State
  of Nevada on March 5, 1998 under the name Green Fusion Corporation.
  On May 6, 2002, we completed the acquisition of House of Brussels Holdings Ltd.
  (House of Brussels Holdings). House of Brussels Holdings was the
  sole shareholder of Brussels Chocolates. This acquisition was completed pursuant
  to a share purchase agreement with House of Brussels Holdings and its shareholders
  dated April 2, 2002. We issued 6,000,000 shares to the shareholders of House
  of Brussels Holdings in exchange for all of the issued and outstanding shares
  of House of Brussels Holdings. This acquisition became effective as of May 1,
  2002. In connection with this acquisition, we changed our fiscal year-end from
  December 31st to April 30th. In October 2003, we incorporated
  our wholly owned US subsidiary, HOBC USA, to further business development in
  the United States. In November 2003, HOBC USA acquired the manufacturing equipment
  and business assets of The Candy Jar, Inc. of San Francisco, CA. We issued 200,000
  shares to the shareholders of The Candy Jar, Inc. in connection with the transaction.
  In February 2004, we incorporated a wholly owned US subsidiary, ChocoMed, Inc.
  (ChocoMed) to act as an umbrella company to house our interest in
  investigating the use of chocolate as a carrier for dietary supplements, functional
  foods and pharmaceutical compounds to treat various medical conditions.

OUR BUSINESS

House of Brussels is a premier manufacturer and distributor
  of gourmet chocolate products. We distribute our products through licensed retail
  outlets and a worldwide wholesale network. We offer a full line of premier quality,
  Belgian chocolates made with high-grade chocolate and other quality ingredients.

Our signature product is the chocolate hedgehog, which marries
  the traditional Belgian symbol of good luck (i.e., the hedgehog) with taste
  (i.e., chocolate) for a strong customer appeal. Even though many of House of
  Brussels products are based on its signature hedgehog, including the recently
  released Sonic The Hedgehog® chocolate bar  under license from SEGA®
  of America, Inc., our future sales growth is directed towards emerging market
  trends. In addition to a broad spectrum of products in the Gourmet and Ultra-Gourmet
  categories, House of Brussels now manufactures no-sugar-added/low-carbohydrate
  products and several nutritional supplement bars.

We manufacture all of our chocolate products in-house at our
  manufacturing facilities in Vancouver, BC, Canada and San Francisco, CA. Both
  of these facilities currently operate under capacity, and thus provide ample
  production capabilities to support our planned ramp up in sales and operations.

We sell our products to a diversified group of wholesalers.
  Large customers such as SLC Sweets (a company known for its spokesperson, Suzanne
  Somers), Nordstrom and Costco now represent a significant portion of our revenue.
  We continue to focus our marketing and sales efforts on large companies with
  the objective of reducing our overhead and administration

Page 4 of 12

---

| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

expenses as a percentage of our revenues. However, this strategy,
  if successful, will make us more dependent on a few, large customers.

RECENT CORPORATE DEVELOPMENTS

Since our acquisition of Brussels Chocolates, we have restructured
  the organization by reducing overhead and staff, eliminating retail operations
  and simplifying and updating product lines. A principal component of our restructuring
  was to close our retail stores in order to focus our business exclusively on
  the wholesale market. We are now concentrating on increasing the utilization
  of our production facility, on a year-round basis, by obtaining consistently
  large wholesale supply contracts. The objective of this focus is to enable us
  to operate at a higher rate of capacity usage and to avoid the historical cyclical
  revenue results that Brussels Chocolates has been subject to in the past. These
  historical cyclical revenue results have reflected peak sales of chocolate products
  during the Christmas, Valentines and Easter holiday periods. Historically,
  premium chocolate sales have been weaker in the spring and summer months underscoring
  our need to diversify our product offerings and manufacture chocolates that
  will increase our revenue during these slow periods.

As planned, we have scaled back our retail operations to three
  outlet stores, one of which is scheduled for closure on March 31, 2004, in conjunction
  with its lease expiry. All three locations are currently profitable and serve
  as good showcases for our products. In August 2003, we sold the assets of all
  three stores and signed a license agreement with the purchaser to continue selling
  our products and operating the stores under the House of Brussels Chocolates
  name. We received a onetime license fee for this transaction. Management remains
  focused on the wholesale market, while we continue to receive the benefits associated
  with a local retail presence.

Our management has taken three important steps to provide
  the diversification and revenue required to meet our business objectives. First,
  we recently launched our Sonic The HedgehogTM candy bar, which is
  based on one of the most recognizable video game character in the world. We
  originally signed an 18-month licensing agreement, expiring on December 31,
  2004, with Sega Corporation, allowing us to manufacture and sell this candy
  bar anywhere in the world. In exchange for this right, we granted Sega a royalty
  of 5% of any sales of this product. In subsequent negotiations, we have extended
  our license period with Sega through December 31, 2005 and narrowed our license
  territories to North and South America. To date, most sales efforts have been
  in North America.

Secondly, we are concentrating on expanding our No-Sugar-Added/Low-Carb
  product set. Consumers are learning that they can still reduce the amount of
  sugar they are ingesting without sacrificing taste. This new type of chocolate
  is enjoying substantial growth, largely due to the popularity of such diets
  as the Atkins DietTM. Additionally, there is great interest in using
  the No-Sugar-Added/Low-Carb products to deliver dietary supplements, functional
  foods and pharmaceutical compounds to treat various medical conditions.

Lastly, during November 2003 we formed and expanded (February
  2004) a Medical Advisory Board consisting of health care specialists with a
  goal to evaluate and identify key companies, personnel and products involved
  with new advances in utilizing chocolate as a highly palatable carrier for various
  compounds. These compounds span the spectrum from simple dietary supplements,
  to pharmaceutical compounds targeting specific types of medical conditions.
  The board intends to identify research projects and supporting personnel to
  facilitate the manufacture and commercialization of these products. We incorporated
  a wholly owned subsidiary, ChocoMed, Inc., in February, 2004 to manage the business
  opportunities we anticipate from this sector.

On November 19, 2003, we entered into a Purchase Agreement
  with The Candy Jar, Inc. (Candy Jar), a California corporation located
  in San Francisco, CA, whereby we purchased certain assets for our business of
  manufacturing and retailing gourmet chocolate products. The terms and conditions
  of the Purchase Agreement were the result of arm's length negotiations. We believe
  the transaction was favorable to us in view of the market value of the assets
  purchased and the

Page 5 of 12

---

| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

payment terms, although no formal appraisal or fairness opinion
  was done. The assets were purchased by our newly formed subsidiary, HOBC USA.
  Upon completion of the transaction, a copy of the Purchase Agreement was filed
  with the SEC under Form 8-K dated November 24, 2003.

We primarily manufacture the ultra-gourmet chocolate coated
  truffles made famous by the Candy Jar at our San Francisco facility. Additionally,
  this facility has the capability to produce all products currently manufactured
  in our Vancouver plant. With minor changes, we will also be able to manufacture
  HOBC USAs full line of chocolates in Vancouver. This provides us increased
  flexibility in production scheduling and shipping to our west coast customers,
  thereby reducing production and shipping costs in general.

Since HOBC USAs products are sold primarily under the
  Truffelinos trademark, Brussels Chocolates has also secured the rights to the
  Truffelinos name. Brussels Chocolates sales team is making sales proposals
  and presentations to long-standing Candy Jar customers such as Nordstrom, Williams-Sonoma,
  Macys and other high-end national retailers in an effort to increase sales.
  We view this as an opportunity to quickly increase Brussels Chocolates
  client base and introduce a broader line of products for distribution through
  these large customers.

Continuing sales initiatives include introducing high margin,
  cutting edge products such as No-Sugar-Added/Low-Carb chocolates and our new
  proprietary supplement bars to existing and newer clients.

RESULTS OF OPERATIONS

Revenues

We generated $2,343,483 and $2,330,800 in sales revenues for
  the nine months periods ended January 31, 2004 and January 31, 2003, respectively.
  This increase of $12,683 represents a 0.6% growth in total revenue for the fiscal
  year to date. Our revenues for the three month periods ended January 31, 2004
  and January 31, 2003 were $1,000,932 and $1,028,119, respectively. A decrease
  of $27,187, representing a decline of 2.6% in total revenue for this fiscal
  quarter when compared to the same fiscal quarter in the prior year. Included
  in this periods revenues are revenues from the plant in San Francisco.
  Revenues from the San Francisco operations for the period from November 19,
  2003 to January 31, 2004 totaled over $162,000.

Management believes fiscal year-to-date revenues might have
  been higher except for the negative first fiscal quarter impact in Canadian
  revenues resulting from the SARS outbreak. The SARS
  outbreak impacted many industries and although the outbreak occurred early in
  the year, its effects are still felt today. In addition, revenues for the fiscal
  quarter ended January 31, 2004 were negatively affected by a decrease in sales
  to SLC Sweets. Overall, we believe the stability in our earnings between comparative
  periods reflects positively upon the quality of our products, and our ability
  to maintain current customers while awaiting completion of longer sales cycles
  associated with our large customer focus.

Cost of Sales

Our cost of sales increased to $1,511,022, for the nine month
  period ended January 31, 2004, as compared to cost of sales of $1,240,144 for
  the nine months ended January 31, 2003. This increase was $270,878 or 21.8%.
  Our cost of sales for the three month periods ended January 31, 2004 and January
  31, 2003 were $811,006 and $576,428, respectively, an increase of $234,578 or
  40.7%. The net result of the changes in both revenue and cost of sales for the
  nine month period resulted in a comparative decrease in our gross margin ratios
  of approximately 11.2%. The comparative decrease in gross margin ratios for
  the three month periods was 25%.

Page 6 of 12

---

| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

Despite our efforts to reduce costs and increase manufacturing
  efficiency, our gross profit margin decreased comparatively for both the nine
  and three month periods ended January 31, 2004. This decline can be attributed
  to several factors. First, during the previous fiscal year, higher one time
  licensing fees were included in revenue. Such fees do not carry an associated
  cost with them. Second, current year costs of sales include higher fixed overhead
  costs (such as factory rent and utilities) compared to total cost of sales in
  the previous year. In the prior year, an agreement with the former shareholders
  of Brussels Chocolates (who were also landlords of our rented premises at that
  time) provided several months free rent of our manufacturing facility following
  the purchase of Brussels Chocolates. Third, during this quarter we applied new
  productions standards to our raw inventory which resulted in an increase to
  cost of goods. Finally, higher than expected operating costs were incurred in
  our new plant in San Francisco. Steps are being implemented to reduce these
  costs for the next quarter.

Operating Expenses

Our total selling, general and administrative expenses, net
  of amortization, decreased to $1,026,840 for the nine months ended January 31,
  2004, compared to $1,187,990 for the nine months ended January 31, 2003. This
  is a decrease of $161,150 or 13.6%. For the three months ended January 31, 2004,
  operating expenses decreased by $152,121 or 49% to $158,385 from $310,506 as
  at January 31, 2003.

Our selling expenses decreased to $640,821 for the nine months
  ended January 31, 2004, compared to $652,143 for the nine months ended January
  31, 2003, a decrease of $11,322 or 1.7%. For the three months ended January
  31, 2004, selling expenses increased by $11,148 or 6.2% to $188,866 when compared
  to selling expense of $177,718 for the same period in the prior year. Many selling
  expenses increased comparatively during the nine and three months periods, however,
  bad debts and salaries decreased more than proportionately. We reduced salaries
  and consulting fees for the nine month period from $403,724 (January 31, 2003)
  to $257,668 (January 31, 2004), a decrease of 36.2% or $146,056. This was a
  significant factor in keeping the sales costs low. Last fiscal year we experienced
  a recovery of bad debts during our first fiscal quarter. This recovery was significant
  enough to create a $10,268 gain on the settlement of bad debts. This year, however,
  we have normalized bad debts and incurred $17,928 in expense. We have also increased
  current year expenditures related to tradeshows and our sales efforts in the
  United States. These selling efforts have resulted in higher promotion and travel
  expenses. We believe these expenditures are a necessary part of our plan to
  target large, multi-location customers, increase production and reduce the overhead
  associated with a large number of sales to smaller customers. Promotion expenses
  increased by $111,271 (169%) for the nine month period, to $177,215 (January
  31, 2004) from $65,944 (January 31, 2003). Travel expenses were $72,521 at January
  31, 2004, an increase of $16,757 (30%) over $55,764 of travel expenses that
  were incurred for the same nine month period in the previous year.

Our general and administrative expenses decreased to $386,019
  for the nine months ended January 31, 2004, compared to $535,847 for the nine
  months ended January 31, 2003, a decrease of $149,828 or 28%. This decrease
  can be attributed in part to the increase in value of the Canadian dollar and
  the resulting gain on foreign exchange. During this fiscal quarter, general
  and administrative expenses decreased by $163,269 to a recovery of $30,481 compared
  to $132,788 for the three months ended January 31, 2003. This decrease in our
  general and administrative expense is primarily attributable to decreases in
  salaries, benefits and consulting fees of $35,060 (January 31, 2004 - $27,463;
  January 31, 2003 - $62,523) and the gain on foreign exchange included in interest,
  bank fees and foreign exchange, which resulted in a total decrease in this item
  of $73,532 (January 31, 2004  ($65,513); January 31, 2003 - $8,019). Also
  during this quarter we reversed an accrual for professional fees which were
  forgiven. This has resulted in a credit balance of $16,331 (January 31, 2003
  $41,006) for the quarter.

Page 7 of 12

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| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

Loss

As a result of the combined impact of the foregoing, our loss
  increased to $290,963 for the nine months ended January 31, 2004 from $199,870
  for the nine months ended January 31, 2003, representing an increase of $91,093
  or 45.6%. Our three month net loss of $695 is now compared to the net income
  of $111,365 for the same period in the previous year, a difference of $112,060
  or 100.6%.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Working Capital

We had positive working capital of $1,066,895 as of January
  31, 2004, compared to positive working capital of $280,350 as of our fiscal
  year ended April 30, 2003. This continues our trend of steadily improved working
  capital. We had cash in the amount of $364,375 as of January 31, 2004, compared
  to cash in the amount of $56,364 as of April 30, 2003.

Our accounts receivable increased to $609,511 as of January
  31, 2004, ($666,598 January 31, 2003), compared to $204,779 as of April
  30, 2003 and are net of any doubtful accounts. This large increase in receivables
  is a result of the cyclical nature of our business and the addition of $159,836
  in accounts receivable from our new operations plant in San Francisco.

Our inventory increased to $1,374,562 as of January 31, 2004,
  compared to $1,016,040 as of April 30, 2003. The inventory amounts included
  in this quarter contain raw materials finished goods and packaging materials
  inventories from our San Francisco operations in the amount of $101,481.

Our accounts payable decreased to $941,205 as of January 31,
  2004, compared to $1,053,096 as of April 30, 2003. The decrease in our accounts
  payable is attributable to our increased cash position and resulting payments
  to creditors. Even though our working capital is steadily improving, we are
  still reliant on obtaining favorable terms from our suppliers to help provide
  working capital to support the cyclical nature of our sales.

The loan payable from a company controlled by two shareholders
  of Brussels Chocolates is due in less than 4 months and is now classified as
  a current liability, compared to April 30, 2003, when it was classified as a
  long term liability.

Amounts borrowed from officers and directors of the Company
  (related parties) increased to $210,238 as at January 31, 2004 from $60,000
  at April 30, 2003. These amounts were lent to the Company to provide working
  capital for operations.

Financing of Business Operations

We financed our business operations during the past quarter
  primarily through cash generated from collections of accounts receivable, sales
  of our common stock and share purchase warrants, and through favorable credit
  terms from our suppliers. Cash used in operating activities remained substantially
  unchanged for the nine month period as a whole. Cash generated by financing
  activities increased to $1,562,533 for the nine months ended January 31, 2004
  from $1,013,550 for the nine months ended January 31, 2003. We obtained $148,469
  of additional loans form our officers and directors and shareholders. We received
  $1,363,957 from the issuance of our common shares and exercised share purchase
  warrants. In the prior year, most of the cash generated by financing activities
  came from the issuance of our common shares as part of the reverse takeover
  of House of Brussels Chocolates. We are actively seeking other short-term and
  long-term financing to assist us in providing the necessary working capital
  to meet future production requirements and reduction in trade payables. Management
  has also incurred expenses on behalf of the Company and has deferred some of
  their salaries, commissions and fees for the past several months in order to
  assist in cash flow.

Page 8 of 12

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| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

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, 2004, 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, Mr. Grant Petersen, and Chief
  Operating Officer, Mr. John Veltheer. Based upon that evaluation, our Chief
  Executive Officer and Chief Operating Officer 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 Securities
  and Exchange Commission'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 Accounting Officer, to allow timely decisions regarding required
  disclosure.

During our most recently completed fiscal quarter ended January
  31, 2004, 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.                                                                                                                                          

Page 9 of 12

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| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

PART II--OTHER INFORMATION

ITEM 2.      CHANGES IN SECURITIES
  AND USE OF PROCEEDS

During our quarter ended January 31, 2004, 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.
  Each certificate issued for unregistered securities contained a legend stating
  that the securities have not been registered under the Act and setting forth
  the restrictions on the transferability and the sale of the securities. None
  of the transactions involved a public offering. We believe that each person
  had knowledge and experience in financial and business matters which allowed
  them to evaluate the merits and risks of our securities. We believe that each
  person was knowledgeable about our operations and financial condition.

|1. | 1,064,454 units at a price of $0.55 per unit for
        total proceeds of $585,450 were issued to six investors in November, 2003.
        Each unit was comprised of one share of common stock and one share purchase
        warrant. Each share purchase warrant entitled the holders to purchase
        one share of common stock at a price of $0.65 per share during the period
        from closing until November, 2005. A fee of $49,720 was paid in connection
        with the offering. All sales were made to accredited investors,
        as that term is defined in Rule 501 of Regulation D of the Act.                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2. | 200,000 shares of common stock at a price of $1.00
        per share were issued pursuant to the Purchase Agreement between HOBC
        (USA) and The Candy Jar, Inc. dated November 19, 2003. These shares are
        currently being held in escrow, pending the release of a lien held by
        Marble Bridge Funding Group, Inc., against the purchased assets of the
        Candy Jar, Inc. In the event the Marble Bridge Lien is not completely
        released to the satisfaction of HOBC (USA), within the 360-day escrow
        period, or in the event that HOBC (USA) becomes obligated for any liabilities
        of The Candy Jar, Inc., then the shares held in escrow shall be used as
        an offset by HOBC (USA) for such liabilities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. | 200,000 shares at a price of $1.00 per share for
        total proceeds of $200,000 were issued to one investor in January 2004.
        A fee of $16,500 was paid in connection with the offering. All sales were
        made to a accredited investor, as that term is defined in
        Rule 501 of Regulation D of the Act.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4. | 100,000 shares of common stock were issued pursuant
        to the exercise of Share Purchase Warrants. The warrants were exercisable
        at $0.30 per share; therefore the Company received proceeds in the amount
        of $30,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5. | 181,818 shares of common stock were issued pursuant
        to the exercise of Share Purchase Warrants. The warrants were exercisable
        at $0.65 per share; therefore the Company received total proceeds of $118,181.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6. | 50,000 Share Purchase Warrants were issued pursuant
        to a Sales Executive Agreement. The warrants are exercisable at a price
        of $0.99 per share. Each share purchase warrant entitles the holder to
        purchase one share of common stock at a price of $0.99 per share until
        January 1, 2005. No commissions or fees were paid in connection with the
        issuance.                                                                                                                                                                                                                                                                                                                                                                 

OFF-BALANCE SHEET ARRANGEMENTS

None.

Page 10 of 12

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| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

ITEM 5.      OTHER INFORMATION

On January 13, 2004, we accepted the resignation of Mr. L.
  Evan Baergen as President, Secretary/Treasurer and a director of our Company.
  Mr. Baergen resigned to pursue other business opportunities.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS REQUIRED BY ITEM 601 OF FORM 8-K

|Exhibit Number |  | Description of Exhibit                                                                                                                                                      
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                             
|10.7           |  | Amendment to Merchandise License Agreement
        between House of Brussels Chocolates Inc. and Sega of America, Inc. dated
        July 23,2003 (1)                       
|10.8           |  | Purchase Agreement between House of
        Brussels Chocolates (USA), Ltd. and The Candy Jar, Inc. dated November
        19, 2003 (2)                                     
|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 2002 (3)       
|31.2           |  | Certification
        of Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
        as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (3)
|32.1           |  | 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 2002 (3)       
|32.2           |  | Certification
        of Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
        as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)
|               |  |                                                                                                                                                                             

|(1 | ) | Previously filed with the Securities
        and Exchange Commission as an exhibit to the Registrants Quarterly
        Report on Form 10-QSB filed on September 12, 2003.
|-- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2 | ) | Previously filed with the Securities
        and Exchange Commission as an exhibit to the Registrants Current
        Report filed on November 25, 2003.                  
|(3 | ) | Filed as an Exhibit to this Quarterly
        Report on Form 10-QSB.                                                                                                       
|   |   |                                                                                                                                                                            

REPORTS ON FORM 8-K

We filed a Current Report on Form 8-K on November 19, 2003
  to report the Purchase Agreement between House of Brussels Chocolates (USA),
  Ltd. and The Candy Jar, Inc.

Subsequent to the quarter end, we filed the following Current
  Reports on Form 8-K:

On February 2, 2004, to report the resignation of Mr. L. Evan
  Baergen and the appointments of Mr. Richard Siemens and Dr. William Donovan
  to our Board of Directors.

On February 11, 2004, to report our attendance at the 2004
  NIBA Conference in Las Vegas and the introduction of our current Business Development
  Plan.

Page 11 of 12

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| | FORM 10-QSB
      For the Quarter Ended January 31, 2004
| | --------------------------------------------------------
|

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 15, 2004                                  | 
|----- | ----------------------------------------------- | 
|      |                                                 | 
|      |                                                 | 
|By:   | /s/ Grant Petersen                              | 
|      | Grant Petersen                                  | 
|      | Chief Executive Officer, President and Director | 

Page 12 of 12

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