House of Brussels Chocolates Inc.

House of Brussels Chocolates Inc.

March 22, 2005 13:50 ET

House of Brussels Completes Plant Realignments and Comments on Reported Third Quarter Financial Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: HOUSE OF BRUSSELS CHOCOLATES INC.

OTC Bulletin Board SYMBOL: HBSL

MARCH 22, 2005 - 13:50 ET

House of Brussels Completes Plant Realignments and
Comments on Reported Third Quarter Financial Results

HOUSTON, TEXAS--(CCNMatthews - March 22, 2005) - House of Brussels
Chocolates Inc. (OTCBB:HBSL)

Annual Potential Manufacturing Capacity Increased to Over $100 million

House of Brussels Chocolates Inc. ("Brussels" or "HBSL"), through its
CEO Grant Petersen is pleased to announce the effective completion of
its new 78,000 square foot, state of the art, manufacturing facility in
Delta BC, Canada, and the closing of its two smaller aged facilities in
Vancouver and San Francisco. Equipment and product lines from the former
Candy Jar location in San Francisco have been moved and integrated into
its expanded artisan DeBas facility in Fresno, CA and its "everyday"
mass produced products are now being manufactured in its high tech Delta
plant. For comparison purposes, the old Vancouver plant had two active
manufacturing lines, the new Delta plant has seven lines now up and
running with two more to be added over the next two months. It has taken
almost nine months to accomplish this move and expansion, and to make
matters even more complicated, much of it was accomplished while the
Company was in its historical high season. There is no question that
such a monumental task would have to have a negative affect on the
Company's bottom line during this time, but with this behind, Brussels
is now well prepared to meet the accelerated demands required of it by
its "Blue Chip" clients such as Walgreens, Costco, Schokinag and several
currently unnamed major private label retailers. A more detailed
explanation of where the Company is heading can be heard in replay of
the Company's recent Conference Call accessible at this web location:
http://biz.yahoo.com/cc/0/53280.html or from the Company's website:
www.brusselschocolates.com.

Financial Results

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

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

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

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

Bob Wesolek, CFO of HBSL, summarized Q3 2005 as follows; "We have
accomplished a great deal during our third fiscal quarter. Though we've
incurred losses in the process, we firmly believe that the investments
we've made form the foundation upon which future success will be
realized."

Please note: Figures quoted are based on the Company's Form 10-QSB filed
on March 17, 2005.

Grant Petersen CEO said, "We have truly had a remarkable three quarters
which could go unnoticed if one were to only look at the reported
numbers. As mentioned above, I encourage interested shareholders or
interested parties to listen to the Conference Call replay to get a real
'feel' as to where your Company is heading. I am sure that you will be
pleasantly surprised." Petersen went on to say, "We are having our
annual shareholders meeting along with the official Grand Opening
celebration of the new Delta facility, at the Delta facility on April
1st. I want to personally invite each of you to attend. I am sure that
once you see the results of our efforts, you will be as excited as each
of us at Brussels."

Dr. William Donovan, Chairman of the Board, and President of Brussels
wholly owned subsidiary, ChocoMed, commented, "As a major shareholder
first, and Chairman second, I could not be more pleased as to the
accomplishments of operational management and what they have created for
such a small short term cost to the shareholders. The stock price
decline over these past six months has been painful, but I am convinced
that the future of your Company could not be brighter." Donovan
continued, "I also strongly recommend to all to access the replay of the
Conference Call. In addition to the comments, questions and answers
covering the conventional chocolate side of the business, ChocoMed, and
some of the exciting things that are happening with it are also
discussed."

About House of Brussels Chocolates Inc. (www.brusselschocolates.com)

For more than 20 years, House of Brussels Chocolates has manufactured
and distributed high-end, award-winning chocolates. HBSL's 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. In addition to its house brands, HBSL
creates custom packaging, shaping and sizing as well as private labels
for numerous North American retailers.

DeBas Chocolatier, a wholly owned subsidiary of HBSL, produces the
Company's artisan chocolates. Every piece of DeBas chocolate is
handcrafted to be a true work of art that is distinctly superior in
quality and taste. DeBas is also famous for its panned chocolate
products such as chocolate-covered coffee beans, fruits and nuts. The
DeBas factory is certified as organic by the State of California, in
addition to being Orthodox Kosher certified.

Safe Harbor: Certain statements in this news release regarding future
expectations and plans may be regarded as "forward looking statements"
as defined by federal law. Although the Company believes such statements
are based on reasonable assumptions, there is no assurance that actual
outcomes will not be materially different. Any such statements are made
in reliance on the "safe harbor" protections provided under the Private
Securities Reform Act of 1995. They are subject to various risks,
including uncertainties regarding timing, and capital availability, as
discussed in detail in House of Brussels quarterly and annual reports
filed with the SEC.


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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    House of Brussels Chocolates Inc.
    Investor Relations
    1-800-661-1524
    or
    House of Brussels Chocolates Inc.
    Grant Petersen
    1-800-661-1524
    info@hobc.us
    www.brusselschocolates.com