================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              ____________________
                         
                                   FORM 10-QSB

[x]              QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934.

                For the quarterly period ended September 30, 1997

                                       OR

[ ]             TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                            OF THE EXCHANGE ACT

            For the transition period from ___________ to ___________

                         Commission File Number 0-29192

                               T/F PURIFINER, INC.
        (Exact name of small business issuer as specified in its charter)

              DELAWARE                             14-1708544
     (State or other jurisdiction       (I.R.S.  Employer  Identification No.)
  of incorporation or organization)

    3020 High Ridge Road, Suite 100,
        Boynton Beach, Florida                        33426
(Address of principal executive offices)            (Zip Code)

                                 (561) 547-9499
                           (Issuer's telephone number)

                                       N/A
              (Former name, former address and former fiscal year,
                          if changed since last report)
                              ____________________

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                  Yes        [X]                 No        [ ]

         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                         DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the  distribution of
securities under a plan confirmed by the court.

                  Yes        [ ]                 No        [ ]


APPLICABLE   ONLY  TO  CORPORATE   ISSUERS:   State  the  number  of  shares
outstanding  of each of the  issuer's  classes of common  equity,  as of the
latest practicable date: November 1, 1997: 5,205,879.

<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                               T/F Purifiner, Inc.
                             Condensed Balance Sheet
                               September 30, 1997
                                   (Unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                                         $ 1,140,086
  Trade accounts receivable, net                                        170,555
  Inventories                                                           530,559
  Prepaid expenses and other current assets, net                         78,972
                                                                    -----------
Total current assets                                                  1,920,172

Property and equipment, net                                             349,418
Patents and trademarks, net                                             200,245
Costs in excess of net assets acquired, net                             125,774
Other assets                                                             57,345
                                                                    -----------
                                                                    $ 2,652,954
                                                                    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable - trade                                          $   160,992
  Accrued expenses                                                      150,478
  Customer deposits and other                                           112,888
  Current portion of note payable and capital lease obligations          39,583
  Note payable to shareholder, net of discount of $52,667             1,947,333
  Note payable to former shareholder                                    103,468
                                                                    -----------
Total current liabilities                                             2,514,742

Note payable to former shareholder                                      295,258
Note payable and capital lease obligations                               45,670
Deferred rent                                                             6,640
Liability to equity investee                                             16,000
                                                                    -----------
Total liabilities                                                     2,878,310

Contingencies

Stockholders' Equity:
  Common Stock, $.001 par value                                           5,205
  Preferred Stock, $.001 par value                                         --
  Additional paid-in-capital                                          6,752,332
  Unearned compensation                                                 (35,333)
  Loans receivable                                                      (73,931)
  Accumulated deficit                                                (6,873,629)
                                                                    -----------
Total capital deficiency                                               (225,356)
                                                                    -----------
                                                                    $ 2,652,954
                                                                    ===========
See accompanying notes to condensed financial statements 
                                       2

<PAGE>



                               T/F Purifiner, Inc.

                       Condensed Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>

                           Three Months Ended September 30,   Nine Months Ended June 30,
                           --------------------------------   --------------------------
                                     1996           1997          1996           1997
                                     ----           ----          ----           ----
<S>                            <C>                <C>        <C>            <C>        
Net sales                      $   378,528        312,022    $ 1,219,825    $ 1,160,211
Cost of sales                      201,097        249,580        694,966        758,131
                               -----------    -----------    -----------    -----------
Gross profit                       177,431         62,442        524,859        402,080


Operating expenses:
  Selling                          273,567        804,869        625,777      2,009,065
  General and administrative       178,235        222,092        503,629        836,774
  Deferred profit                   (7,117)        (1,704)        12,323         (8,167)
                               -----------    -----------    -----------    -----------
                                   444,685      1,025,257      1,141,729      2,837,672
                               -----------    -----------    -----------    -----------
  Operating loss                  (267,254)      (962,815)      (616,870)    (2,435,592)


Other income (expense):
  Interest expense                  (7,018)       (80,391)       (24,417)       (96,366)
  Interest income                     --           20,169           --           49,229
                               -----------    -----------    -----------    -----------


Net loss                       $  (274,272)   $(1,023,037)   $  (641,287)   $(2,482,729)
                               ===========    ===========    ===========    ===========

Loss per common share          $      (.08)   $      (.20)   $      (.20)   $      (.48)
                               ===========    ===========    ===========    ===========

Weighted average common          3,627,495      5,186,076      3,151,423      5,154,987
  shares outstanding             =========      =========      =========      =========

</TABLE>




See accompanying notes to condensed financial statements.

















                                       3

<PAGE>



                                               T/F Purifiner, Inc.

                                         Condensed Statements of Changes
                                   in Stockholders' Equity (Capital Deficiency)
                                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                                   Total
                                    Common       Stock      Additional                                          Stockholders'
                               -----------------------       Paid-In-     Unearned      Loans     Accumulated  Equity (Capital
                                    Shares      Amount       Capital    Compensation  Receivable    Deficit      Deficiency) 
                               ------------------------------------------------------------------------------------------------


<S>                               <C>          <C>        <C>            <C>          <C>         <C>            <C>        
Balance at January 1, 1997        5,097,080    $ 5,097    $ 6,323,505    $(123,114)   $   --      $(4,390,900)   $ 1,814,588

Cancellation of common stock         (8,676)        (9)       (22,491)        --          --             --          (22,500)

Exercise of stock options, net      116,975        117        238,469         --       (73,931)          --          164,655

Issuance of compensatory
  stock options and warrants           --         --           92,849      (92,849)       --             --             --

Amortization of unearned
  compensation                         --         --             --        180,630        --             --          180,630

Issuance of Stock Purchase
   Warrant                             --         --          120,000         --          --             --          120,000

Net loss                               --         --             --           --          --       (2,482,729)    (2,482,729)
                                ---------------------------------------------------------------------------------------------

Balance at September 30, 1997     5,205,379    $ 5,205    $ 6,752,332    $ (35,333)   $(73,931)   $(6,873,629)   $  (225,356)
                                =============================================================================================

</TABLE>


See accompanying notes to condensed financial statements.
















































                                                      4

<PAGE>
                               T/F Purifiner, Inc.
                       Condensed Statements of Cash Flows
                  Nine months ended September 30, 1996 and 1997
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                   1996           1997
                                                                   ----           ----
<S>                                                           <C>            <C>         
Operating activities                                          $  (641,287)   $(2,482,729)
Net loss
Adjustments to reconcile net loss to net cash
 used in operating activities:
    Amortization                                                   12,021        102,403
    Issuances of Common Stock compensatory options
     and warrants                                                  27,679        180,630
    Cancellation of common stock                                     --          (10,000)
    Depreciation and amortization of property and equipment        24,712         56,701
    Changes in operating assets and liabilities:
      Trade accounts receivable, net                              (72,636)       (43,749)
      Inventories                                                (102,763)       (90,320)
      Prepaid expenses and other current assets                   (33,060)       (36,491)
      Other assets                                                 (5,839)       (10,504)
      Accounts payable - trade                                    (17,527)      (153,242)
      Accrued expenses                                            176,733         73,401
      Customer deposits and other                                  37,475       (142,737)
      Accrued interest and other payables - related parties       (58,417)          --
      Deferred rent                                                (1,484)        (6,750)
                                                              -----------    -----------
Net cash used in operating activities                            (654,393)    (2,563,387)

Investing activities
Patents and trademarks                                           (183,302)       (56,475)
Purchases of property and equipment                               (69,644)      (184,802)
Acquisition of DB Filters                                          (1,275)          --
(Increase) decrease in other assets, net                          (33,362)         6,100
Increase in note receivable from shareholder/officer                 --         (200,000)
Decrease in note receivable from shareholder/officer                 --          200,000
                                                              -----------    -----------
Net cash used in investing activities                            (287,583)      (235,177)

Financing activities
Increase in deferred issuance and financing costs                 (92,300)       (70,325)
Proceeds from issuances of Common Stock and
  exercise of stock options, net                                  976,155      1,193,749
Collection of subscription receivables                              7,000           --
Proceeds from notes payable                                       225,000         20,200
Payment on notes payable and capital lease obligations            (34,996)       (23,283)
Proceeds from shareholder loans                                    16,000      2,000,000
Payment on shareholder loans                                      (51,213)          --
Payment on former shareholder loans                                  --         (103,300)
Borrowing from investee                                            25,000         20,875
Repayment to investee                                             (41,612)       (28,226)
                                                              -----------    -----------
Net cash provided by financing activities                       1,029,034      3,009,690
                                                              -----------    -----------
Increase in cash and cash equivalents                              87,058        211,126
Cash and cash equivalents at beginning of period                   31,732        928,960
                                                              -----------    -----------
Cash and cash equivalents at end of period                    $   118,790    $ 1,140,086
                                                              ===========    ===========

During 1997 and 1996, the Company entered into capital lease  obligations in the amount
 of approximately $49,000 and $7,500, respectively.

</TABLE>

See accompanying notes to condensed financial statements.



                                       5

<PAGE>



                               T/F Purifiner, Inc.
                          Notes to Financial Statements
                                   (Unaudited)

1.   BASIS OF PRESENTATION AND COMPANY

The unaudited  condensed  financial  statements as of September 30, 1997 and for
the three and nine month periods ended September 30, 1996 and 1997 are unaudited
and, in the opinion of management,  include all adjustments  (consisting only of
normal and recurring adjustments) necessary for a fair presentation of financial
position  and results of  operations  for these  interim  periods.  Such interim
financial  statements  have been prepared on the basis of  presentation  as more
fully described in the Company's annual financial  statements and should be read
in  conjunction  with the  Company's  audited  financial  statements  which  are
included in the Company's  Form 10-KSB.  The results of operations  for the nine
month period ended  September  30, 1997 are not  necessarily  indicative  of the
results to be expected for the entire year.

The Company has incurred recurring losses from operations since inception, which
has resulted in continuing  cash flow  difficulties  and the continuing need for
additional financing.  These factors raise substantial doubt about the Company's
ability to continue as a going concern. In order to continue as a going concern,
the Company must obtain  additional  financing,  which it is  endeavoring  to do
through the issuance of additional securities.

However,  there is no  assurance  that the Company  can  complete  its  proposed
issuances or that it can obtain adequate additional financing from other sources
or  that  profitable  operations  can be  sustained.  The  inability  to  obtain
additional  financing when needed,  would have a material  adverse effect on the
Company, including requiring the Company to curtail or cease its operations. The
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  of recorded asset amounts that might be necessary as a result of
the above uncertainty.

At  September  30,  1997,  deferred  issuance  costs of  approximately  $32,000,
included in other assets,  represent costs incurred by the Company in connection
with the Company's planned  issuances of securities.  Such costs will be charged
directly  against the net proceeds of the related offering if it is successfully
completed or will be expensed if the  offering is  abandoned.  At September  30,
1997 other current assets includes  approximately  $19,000 of deferred financing
costs,  net, which represent costs  associated with obtaining QIP debt financing
(Note 5)and are being  amortized to interest  expense over the remaining term of
the agreement.

2.   INVENTORIES

At September 30, 1997, inventories consist of the following:


            Raw materials                                      $ 384,712
            Finished goods                                       131,137
            Supplies                                              14,710
                                                               ---------
                                                               $ 530,559
                                                               ========= 

                                       6

<PAGE>


                               T/F Purifiner, Inc.
                    Notes to Financial Statements (continued)
                                   (Unaudited)

3.   CONTINGENCIES

During  1995,  the  Company  commenced  a patent  infringement  case  against  a
competitor  which is currently  anticipated to go to trial in late 1997 or early
1998. The competitor  subsequently  asserted certain  counterclaims  against the
Company  and  certain  of  its   employees.   The  ultimate   outcome  of  these
counterclaims  cannot  currently  be  determined  at this  time but the  Company
believes  it has  meritorious  defenses  and will  eventually  prevail  in these
actions.

In  April  1996,  the  Company  became a party  to an  action  filed by a former
independent  contractor  claiming certain  commissions and other damages due him
pursuant to an  agreement.  Pursuant to the  agreement,  as  adjudicated  by the
Court, the Company will resolve this case through  arbitration and, although the
ultimate  outcome of this matter cannot be determined at this time, the Company,
upon advice of counsel, believes it has meritorious defenses and will eventually
prevail in this matter.

In January  1997, a patent  holder  filed an action  against the Company for non
payment of approximately  $21,000 of unpaid royalties claimed by him and seeking
a permanent  injunction  against the Company's  manufacturing and selling of the
covered Purifiner products.  The case is scheduled to go to trial in  the summer
of 1998.  Although  the  Company  believes  it has meritorious  defenses against
certain of the monetary  amounts  alleged by the licensor  patent owner,  it has
offered to pay the patent  holder such alleged  unpaid  royalties,  which amount
relates  primarily to the timing of the royalty payment and legal fees regarding
defending certain patents pending of the licensor.  The Company,  upon advice of
counsel,  does not believe the license holder will be in a position to obtain an
injunction  against the  Company's  manufacturing  and selling of the  Purifiner
products.  However,  the ultimate outcome of this matter cannot be determined at
this time.

In late 1996 and subsequently,  TF Systems,  Inc.'s former law firm claimed that
it was due  approximately  $313,000 in legal fees related primarily to obtaining
the  manufacturing  and marketing  rights to the Purifiner for TF Systems,  Inc.
("TFS") and the Company.  TFS was  awaiting  the judgment of an appellate  court
which,  if adjudicated in TFS's favor,  would have provided TFS with  sufficient
funds to pay such legal  fees and other  possible  legal fee  claims  from other
attorneys  aggregating  approximately $72,000 at September 30, 1997. On February
26, 1997,  the  appellate  court ruled against TFS and,  accordingly,  the funds
discussed above are not currently  available to TFS to satisfy such claims.  T/F
Purifiner,  Inc. did not assume these obligations as part of its purchase of TFS
and  management  believes  such  amounts  are  not  the  responsibility  of  T/F
Purifiner, Inc.   On  June 24, 1997,  TFS's  former  law  firm filed a complaint





                                       7

<PAGE>

                               T/F Purifiner, Inc.
                    Notes to Financial Statements (continued)
                                   (Unaudited)

3.   CONTINGENCIES (CONTINUED)

against the Company, TFS, Richard C. Ford,  individually and an inactive company
controlled by Richard C. Ford  demanding  payment of  approximately  $313,000 of
legal fees and costs,  plus interest and attorney fees. The ultimate  outcome of
this  litigation  and other  unasserted  claims  against the  Company  cannot be
determined  at this time. No liability has been recorded for any of these claims
in the accompanying balance sheet.

4.   JOINT VENTURE

Effective  January 1, 1996, the Company  entered into a joint venture  agreement
whereby such venture,  TF Purifiner Ltd.  ("Ltd"),  will sell and distribute the
Company's product in Europe, the Middle East and certain African countries.  The
Company has an approximate  45% interest in Ltd's  operations  (50% common stock
voting interest) and is accounting for Ltd using the equity method.  The Company
is not  required to fund Ltd and will sell product to Ltd until such time as Ltd
decides to exercise its rights under the agreement to manufacture  the Company's
products.  Ltd was initially  capitalized with approximately $88,000 provided by
one of its  shareholders.  Through  September 30, 1997, Ltd advanced the Company
approximately  $137,000, to be used to fund certain patent and trademark filings
for the venture's  exclusive  territory.  At September  30, 1997,  approximately
$16,000 remained  unexpended.  For the three and nine months ended September 30,
1997 and 1996,  the  Company had sales of  approximately  $11,000 and $53,000 in
1997, respectively,  and $6,000, and $248,000 in 1996,  respectively,  to Ltd at
negotiated  prices.  At September  30, 1997 and 1996,  approximately  $9,000 and
$12,000  has been  deferred as  unrealized  intercompany  profit  related to the
inventory sold to Ltd which is included in Ltd's inventory at September 30, 1997
and 1996, respectively. The Company is currently in the process of renegotiating
this joint  venture  agreement  relating to the ownership / licensing of various
pending  patents filed by Ltd's funding  shareholder,  as well as other matters.
The ultimate outcome of these negotiations cannot be determined at this time.

At September 30, 1997 and 1996  summarized  financial  information  of Ltd is as
follows:

                                                  1996      1997
                                                  ----      ----
      Total assets                            $363,000    $590,000
      Total liabilities (1)                    630,000   1,411,000
      Capital deficiency                     (267,000)    (821,000)
      Total revenues                           218,000     319,000
      Gross profit                              81,000     130,000
      Net loss                                (267,000)   (345,000)

(1) Includes  approximately  $1,355,000  and $559,000 at September  30, 1997 and
1996,  respectively,  of  loans  due  to  one  of  Ltd's  foreign  shareholders,
collateralized by substantially all the tangible assets of Ltd.


                                       8


<PAGE>

                               T/F Purifiner, Inc.
                    Notes to Financial Statements (continued)
                                   (Unaudited)


5.   NOTE PAYABLE

On June 19, 1997,  the Company and members of the Ford Family and Taylor  Family
entered into a Securities  Purchase Agreement with Quantum  Industrial  Partners
LDC ("QIP") ("the Agreement"). Pursuant to the Agreement, the Company issued QIP
a  $2,000,000  non-interest  bearing  promissory  note due December 19, 1997 and
received  gross  proceeds  of  $2,000,000.  This note is  subject  to  mandatory
prepayment  prior to its due date upon the  Company's  consummation  of a public
offering  of  either  debt  or  equity  securities.  As  long  as  this  note is
outstanding,  the Company cannot, without the consent of QIP, declare or pay any
dividends,  purchase,  redeem or acquire  any of its Common  Stock or retire its
existing indebtedness other than required periodic payments.

Additionally,  the Company issued a Common Stock Purchase Warrant to QIP for the
purchase of 500,000 shares of the Company's  Common Stock,  exercisable at $2.75
per share and expiring on December 31, 2000. These warrants have been assigned a
value of $120,000 and, accordingly,  such amount has been credited to additional
paid in capital  and the  $2,000,000  note  payable has been  recorded  net of a
$120,000  discount which is being amortized to interest expense over the term of
the note.

The  Company  has also  agreed  to  register  securities  of QIP  under  certain
circumstances.

6.   COMMON STOCK

During the nine months ended September 30, 1997,  116,975 shares of Common Stock
were issued  pursuant to the exercise of options at exercise prices ranging from
$2.00 to $6.00 per share.  As of September  30,  1997,  the Company had received
$164,655  in net cash  proceeds  and was owed  $73,931,  substantially  all from
current or former employees, related to the cashless exercise of these options.

7.   STOCK OPTIONS AND WARRANTS

During the nine months ended  September 30, 1997,  the Company  granted  486,000
options  (58,750  of which  were  subsequently  cancelled  upon  termination  of
employment)  to purchase  Common Stock to various  employees at exercise  prices
ranging  from  $4.50  to  $10.00  and  60,000  options  (40,000  of  which  were
subsequently   cancelled  upon   termination  of  a  consulting   agreement)  to
consultants  at  exercise  prices of $9.00 and  $9.50 per  share.  Additionally,
during this period,  the Company granted 10,000 warrants to various  consultants
which are exercisable at $9.50 per share and expire on January 27, 1999.







                                       9

<PAGE>

                               T/F Purifiner, Inc.
                    Notes to Financial Statements (continued)
                                   (Unaudited)


7.   Stock Options and Warrants (Continued)

During the nine months ended  September 30, 1997 and 1996, the Company  expensed
approximately  $181,000 and $13,200,  respectively related to compensatory stock
options and warrants to various  consultants and the Board of Advisors using the
Black-Scholes Option Pricing Model.

On July 17, 1997, the Board of Directors authorized an increase in the number of
shares of the  Company's  Common  Stock  which may be  granted  pursuant  to the
Company's 1996 Stock Option Plan from 1,625,000 shares to 2.2 million shares.

8.   Related Party Transaction

In January  1997,  as amended,  the  Company  loaned  Richard C. Ford,  its then
President and principal shareholder,  $200,000 bearing interest at 10% per annum
and due in June 1997,  secured by 40,000  shares of the  Company's  Common Stock
owned by Mr. Ford.  On June 19, 1997,  Mr. Ford repaid the entire  principal and
accrued interest on this loan in the amount of $209,078.































                                       10


<PAGE>


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

The following  should be read in conjunction  with  Management's  Discussion and
Analysis  of  Financial  Condition  and  Results of  Operations  included in the
Company's Form 10-KSB.

Other than historical and factual statements, the matters and items discussed in
this Quarterly Report on Form 10-QSB are forward-looking statements that involve
risks and  uncertainties.  Actual  results of the Company may differ  materially
from the results discussed in the  forward-looking  statements.  Certain factors
that could contribute to such differences are discussed with the forward-looking
statements throughout this report.

GENERAL

The Company was formed in 1987, and commenced limited operations in 1991 when it
obtained  worldwide  manufacturing  and  marketing  rights  to the  Purifiner(R)
products.  The  acceptance  of the  Purifiner  products is the result of various
factors,  including the growing desire of users to extend oil change  intervals,
reduce  maintenance costs,  extend engine life and preserve the environment.  In
1997, the Company has been unable to significantly increase its revenues through
its  current  distribution  network.   Accordingly,  the  Company  has  recently
refocused   certain  of  its   resources  on  the   development   of  commercial
relationships with original equipment manufacturers ("OEM's"), which the Company
believes will result in the increasing  acceptance of the Purifiner  products in
the marketplace and, accordingly,  increase revenues.  There can be no assurance
that such efforts to develop commercial OEM relationships will be successful.

RESULTS OF OPERATIONS

The  following  table sets forth for the periods  indicated  the  percentage  of
revenues  represented by certain items reflected in the Company's  statements of
operations.

                                                 Percentage of Revenues
                                                 ----------------------
                                                       Nine months
                                                   Ended September 30,
                                                   -------------------
                                                    1996         1997
                                                    ----         ----
Net sales                                            100%         100%
Operating costs and expenses:
  Cost of sales                                      (57)         (65)
  Selling expenses                                   (51)        (173)
  General and administrative expenses                (41)         (72)
  Other                                               (1)           -
                                                    -----        -----
Total operating costs and expenses                  (150)        (310)
                                                    -----        -----

Operating loss                                      ( 50)%       (210)%
                                                   =======       ======


                                       11

<PAGE>



NINE MONTHS ENDED  SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED  SEPTEMBER
30, 1996

      Net  Sales.  Net  sales  decreased  by  4.9%  from  $1,219,825  in 1996 to
$1,160,211 in 1997.  This decrease was primarily  attributable  to the effect of
the Company's price reductions  implemented in the last quarter of 1996.  During
1996,  the Company had  approximately  $248,000 of sales to Ltd,  the  Company's
joint  venture  formed  in 1996  compared  to  approximately  $53,000  in  1997.
Approximately,  $9,000 of  intercompany  profit on these  sales to Ltd have been
deferred at September 30, 1997.

      Effective October 15, 1996, the Company  implemented a new product pricing
strategy to reduce the Company's  selling prices to enable end users to obtain a
significantly  improved  return on  investment.  The Company  believed  this new
strategy  would  promote  the  sale of the  Company's  products  and  result  in
increased  long-term  revenues from unit and  replacement  filter sales and also
provide the Company  with the  ability to reduce its  product  costs,  primarily
through  1)  volume   purchase   discounts,   2)  utilization  of  excess  fixed
manufacturing  capacity  and 3)  improved  production  processes.  To date,  the
Company has not realized the significant increase in revenues it had anticipated
as a result of  lowering  its  selling  prices  and,  accordingly,  also did not
realize the anticipated cost savings related thereto.  Therefore,  the Company's
gross margin was adversely  affected.  Accordingly,  effective November 1, 1997,
the  Company   revised  its  pricing   strategy  and  increased  the  prices  of
substantially  all the  Purifiner  units  in  order to  recapture  various  cost
increases from product improvements, material cost increases and to position the
Purifiner  pricing  to be in  alignment  with  the  Company's  strategy  to sell
Purifiners  to  Original  Equipment  Manufacturers  ("OEM's").  The  Company  is
currently refocusing certain of its resources in an effort to sell the Purifiner
directly  to OEM's.  There can be no  assurance  that the OEM's will  eventually
purchase the Purifiner from the Company.

      Cost of Sales.  Cost of sales  increased  by 9% from  $694,966  in 1996 to
$758,131  in 1997.  The  Company's  gross  margin  decreased  from 43% to 34.7%,
substantially all due to the significant  price reductions  implemented in 1996,
cost increases to the product  incurred  primarily for  improvements  and excess
fixed cost manufacturing  capacity offset by the reduction of sales made to Ltd.
at substantially lower sales prices than the Company's  exclusive  international
distributor  pricing.  Unless the Company can increase its  revenues,  its gross
margins  will  continue  to be  adversely  affected  by its  excess  fixed  cost
manufacturing capacity.

      Selling Expenses. Selling expenses increased by 221% from $625,777 in 1996
to $2,009,065 in 1997. The primary  reasons for this increase were the increases
in various selling  expenses such as salaries for new personnel and consultants,
compensatory  stock  options  and  warrants,  commissions,  office  and  related
expenses,   brochures  and  catalogs,   advertising,   product   evaluation  and
engineering expenses, and travel and trade show expenses in 1997 versus 1996. As
a percentage of revenues, selling expenses increased from 51% in 1996 to 173% in
1997.

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<PAGE>

      Commencing in late 1996,  but primarily in the first two quarters of 1997,
the Company began  implementing a product evaluation  program,  whereby it would
supply Purifiner units, replacement filters and installation services at no cost
to  certain  potential  customers  or  to  assist  its  distributors   potential
customers, to evaluate the effectiveness of the Purifiner.  The costs related to
this  evaluation  program have been charged to selling  expenses and no revenues
have been recognized.  To the extent these evaluations are not successful or the
Company is unable to consummate  these  potential  sales,  the Company's  future
revenues will be adversely effected.

      General and Administrative  Expenses.  General and administrative expenses
increased by 66% from  $503,629 in 1996 to $836,774 in 1997 and, as a percent of
revenues,  increased from 41% to 72%. This dollar  increase was generally due to
the increased level of business activity,  specifically  including  increases in
personnel,  consultants,  compensatory  stock options and warrants,  travel, and
professional fees.

      Operating Loss. As a result of the foregoing, the Company's operating loss
increased from $616,870 in 1996 to $2,435,592 in 1997.

      Interest  Expense  and Income.  Interest  expense  increased  by 295% from
$24,147 in 1996 to $96,366 in 1997.  This increase  resulted from an increase in
average short and long term borrowings outstanding in 1997 versus the comparable
period in 1996,  specifically the $2,000,000 short term loan from QIP.  Interest
income  increased to 49,229 in 1997 as a result of investing  idle cash balances
and interest earned on notes  receivable from its former  president,  which note
was repaid in June 1997.

      Net Loss. As a result of the  foregoing,  the Company's net loss increased
from $641,287 for 1996 to $2,482,729 for 1997.

LIQUIDITY AND CAPITAL RESOURCES

      To  date,  the  Company's  capital  requirements  in  connection  with its
business  activities have been and will continue to be significant.  To fund its
activities,  the Company has been  dependent  upon available cash generated from
operations,   the  proceeds  of  sales  of  its   securities  to  investors  and
stockholders, and other loans, including its June 1997 short term borrowing from
QIP. The Company's 1996 auditors report included an explanatory  paragraph which
stated that because the Company has  sustained  recurring  operating  losses and
negative cash flows from operating  activities,  these factors raise substantial
doubt about the Company's ability to continue as a going concern.

      At September  30, 1997,  the Company had a working  capital  deficiency of
$594,570 and its current ratio (current assets to current  liabilities)  was .76
to 1, as compared with working  capital of $1,727,933 and a current ratio of 3.1
to 1 at December 31, 1996. At September 30, 1997,  the Company had $1,140,086 of
cash  and  cash  equivalents.  Outstanding  short-term  debt  from  lenders  and
shareholders  was  $2,090,384  at  September  30,  1997  and  included  a former
shareholder  loan of $103,468 due to the Estate of Willard Taylor on January 31,
1998 and $1,947,333 net of a discount of $52,667,  due QIP on December 19, 1997.

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<PAGE>

The  proceeds  from the QIP loan  shall be used  solely  for  general  operating
expenses and to hire additional marketing employees for the Company. The balance
of long term debt was  $340,928 at  September  30,  1997,  and included a former
shareholder loan of $295,258 due to the Estate of Willard Taylor.

      At September 30, 1997, the Company owed approximately  $323,000 in current
liabilities  to various trade and other  unrelated  creditors.  These  creditors
continue to provide services to the Company;  however, there can be no assurance
that they will  continue  to do so in the future  while all or a portion of such
amounts remains  outstanding.  The Company has made certain payments and intends
to use a portion of existing  funds and future  financings  to repay the amounts
due to creditors.

      Consistent with industry practices, the Company may accept product returns
or provide other credits in the event that a distributor  holds excess inventory
of the Company's  products.  The Company's  sales are made on credit terms which
vary significantly depending on the nature of the sale. In addition, the Company
does not hold  collateral to secure  payment from its United States and Canadian
distributors.  Therefore,  a default in payment by one or more of the  Company's
United States and Canadian  distributors or customers could adversely affect the
Company's business,  results of operations and financial condition.  The Company
believes it has established sufficient reserves to accurately reflect the amount
or  likelihood  of product  returns or credits  and  uncollectible  receivables.
However,  there  can be no  assurance  that  actual  returns  and  uncollectible
receivables will not exceed the Company's reserves.  Any significant increase in
product returns or uncollected  accounts receivable beyond reserves could have a
material  adverse  effect on the Company's  business,  results of operations and
financial condition. The Company has not experienced material product returns or
uncollectible  receivables in the past, however,  there can be no assurance that
such trends will continue in the future.

      Sales of the Company's products will depend principally on end user demand
for such products and acceptance of the Company's products by original equipment
manufacturers.  The oil filtration  industry has  historically  been competitive
and, as is typically the case with  innovative  products,  the ultimate level of
demand for the  Company's  products is subject to a high degree of  uncertainty.
Developing market acceptance, particularly worldwide, for the Company's existing
and  proposed  products  will  require  substantial  marketing  efforts  and the
expenditure  of a  significant  amount  of  funds  to  inform  customers  of the
perceived benefits and cost advantages of its products.

      The Company  currently is not generating  sufficient  revenues to fund its
existing and planned expansion of its operations.  Accordingly,  the Company has
embarked and is  implementing  plans to raise  additional  capital.  The Company
intends to use such  additional  financing to increase its  marketing  and sales
efforts,  including the hiring of additional  sales and technical  personnel and
related  costs,   implementation  of  advertising,   promotional  and  marketing
programs,  and expanded  engineering  capabilities to deal more effectively with
original equipment manufacturers.  Additionally, the Company may hire additional
manufacturing,  operating,  and administrative  personnel and acquire additional
capital equipment and leasehold  improvements,  as required,  as increased sales
levels  are  achieved.  Prior  to  the  due  date  of the  Company's  $2,000,000





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<PAGE>

obligation to QIP, the Company plans on completing  another financing which will
enable it to repay such loan to QIP and provide  sufficient  capital to continue
its expansion plans. However, there can be no assurance that such financing will
be successful.

      The  above  is not an  all  inclusive  listing  of the  Company's  planned
expenditures. In the event that the proceeds from future offerings or financings
are not  received,  the Company will not be able to fully  implement its current
plans. The inability to obtain  additional  financing when needed,  would have a
material  adverse  effect on the  Company,  including  requiring  the Company to
curtail or cease its operations.

IMPACT OF INFLATION

      Inflation  has not had a significant  impact on the Company's  operations.
However, any significant  decrease in the price for oil or labor,  environmental
compliance  costs,  and engine  replacement  costs  could  adversely  impact the
Company's  end  users  cost/benefit  analysis  as to the  use  of the  Company's
products.

QUARTERLY FLUCTUATIONS

      The Company's operating results may fluctuate significantly from period to
period  as  a  result  of a  variety  of  factors,  including  product  returns,
purchasing patterns of consumers, the length of the Company's sales cycle to key
customers and  distributors,  the timing of the introduction of new products and
product enhancements by the Company and its competitors,  technological factors,
variations  in  sales by  product  and  distribution  channel,  and  competitive
pricing.  Consequently, the Company's product revenues may vary significantly by
quarter  and  the  Company's   operating  results  may  experience   significant
fluctuations.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

   a)   Exhibits:
        Exhibit 27 - Financial Data Schedule (Electronic filing only)

   b)   Reports on Form 8-K.
        On July 21, 1997,  the Company  filed a report on Form 8-K reporting (1)
        its entering into a Securities  Purchase  Agreement dated as of June 19,
        1997 among  Quantum  Industrial  Partners LDC, T/F  Purifiner,  Inc. and
        members  of the Ford and Taylor  families  and (2) the  commencement  of
        certain legal proceedings against the Company.













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<PAGE>


                                   SIGNATURES

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

                                                             T/F PURIFINER, INC.
                                                                    (Registrant)


Date:  November 10, 1997                               By  /s/ Keith T.J. Hart
                                                       -----------------------
                                                               Keith T.J. Hart
                                                   Chief Executive Officer and
                                                       Chief Financial Officer



































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