U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   Form 10-QSB

                                   (Mark One)

   (X) QUARTERLY REPORT UNDER SECTION 13 0R 15 (d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                For the quarterly period ended September 30, 2002

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

               For the transition period from..............to.................

                         Commission file number 0-30544

                                WATER CHEF, INC.

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



              Delaware                                   86-0515678
              --------                                   ----------
             (State of other jurisdiction             (IRS Employer
             of incorporation or organization)      identification No.)


            1007 Glen Cove Avenue, Suite 1, Glen Head, New York 11545
                    (Address of principal executive offices)

                                  516-656-0059
                           (Issuer's telephone number)

   (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 CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.

                                OUTSTANDING AS OF


        CLASS                                       November 21, 2002
        -----                                       -----------------
        Common
        Par value $0.001 per share                   89,564,286


<PAGE>


                                WATER CHEF, INC.
                                  Form 10 - QSB
                    For the Quarter Ended September 30, 2002


                                Table of Contents


<TABLE>
<CAPTION>
<S>                                             <C> <C>                                <C>
                                                                                     Page


Part I - FINANCIAL INFORMATION

         Item 1   Financial Statements (Unaudited)
                  Balance sheet as of September 30, 2002                               2
                  Statements of operations for the three and nine
                          month periods ended September 30, 2002 and 2001              3
                  Statements of cash flows for the nine month periods
                          ended September 30, 2002 and 2001                            4
                  Notes to Financial Statements                                        5 - 10


         Item II  Management's Discussion and Analysis or Plan of Operation            11 -13


Part II - OTHER INFORMATION

         Item 1 - Legal Proceedings                                                    14
         Item 2 - Changes in Securities and Use of Proceeds                            14
         Item 3 - Defaults Upon Senior Securities                                      14
         Item 4 - Submission of Matters to a Vote of Security Holders                  14
         Item 5 - Other Information                                                    14
         Item 6 - Exhibits and Reports on Form 8-K                                     15

Signatures                                                                             16

</TABLE>





<PAGE>


                                WATER CHEF, INC.

                                  BALANCE SHEET

                               SEPTEMBER 30, 2002

                                   (Unaudited)

<TABLE>
<CAPTION>

                                     ASSETS

CURRENT ASSETS:
<S>                                                                               <C>
     Cash                                                                         $       41,753
     Inventories                                                                         185,500
     Prepaid expenses and other current assets                                             3,163
                                                                                   -------------
         TOTAL CURRENT ASSETS                                                            230,416

PATENTS AND TRADEMARKS (net of
     accumulated amortization of $2,771)                                                  23,284
                                                                                   -------------
                                                                                  $      253,700
                                                                                   =============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Accounts payable                                                             $      387,128
     Accrued expenses and other current liabilities                                    2,265,265
     Notes payable (including accrued interest of $224,264)                              833,734
     Preferred dividends payable                                                         747,331
     Loans payable to shareholder (including accrued interest of $51,518)                424,299
                                                                                   -------------
         TOTAL CURRENT LIABILITIES                                                     4,657,757
                                                                                   -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
     Preferred stock, $.001 par value;
         10,000,000 shares authorized;
         145,500 shares issued and outstanding,
         liquidation preference $990,000                                                     146
     Common stock, $.001 par value;
         90,000,000 shares authorized;
         89,564,286 shares issued and outstanding                                         89,564
     Additional paid-in capital                                                       10,182,933
     Stock subscription receivable                                                       (45,500)
     Stock to be issued                                                                  237,000
     Treasury stock, 4,400 common shares, at cost                                         (5,768)
     Accumulated deficit                                                             (14,862,432)
                                                                                   -------------
         TOTAL STOCKHOLDERS'  DEFICIT                                                 (4,404,057)
                                                                                   -------------

                                                                                  $      253,700
                                                                                   =============
</TABLE>


                       See notes to financial statements.

                                        2

<PAGE>

                                WATER CHEF, INC.

                            STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                         Three Months Ended September 30,   Nine Months Ended September 30,
                                                        ---------------------------------  --------------------------------
                                                             2002              2001            2002              2001
                                                        ---------------   ---------------  -------------    ---------------

<S>                                                  <C>               <C>               <C>             <C>
Net Sales                                            $               - $               - $       40,000  $               -
                                                        ---------------   ---------------  -------------    ---------------

Costs and Expenses:
    Cost of sales                                                    -                 -         43,480                  -
    Selling, general and administrative                        166,460           324,580        618,283            856,453
    Research and development                                         -            53,125              -            159,375
    Non-dilution agreement termination costs                         -                 -      1,044,677                  -
    Loss (gain) on settlement of debt                           21,900            (3,390)        95,150           (144,021)
    Interest expense                                            37,868           106,181        135,104            139,813
                                                        ---------------   ---------------  -------------    ---------------
                                                               226,228           480,496      1,936,694          1,011,620
                                                        ---------------   ---------------  -------------    ---------------

Loss from continuing operations                               (226,228)         (480,496)    (1,896,694)        (1,011,620)
                                                        ---------------   ---------------  -------------    ---------------

Discontinued operations:
    Loss from discontinued operations                                -           (49,177)             -            (36,003)
                                                        ---------------   ---------------  -------------    ---------------

Net Loss                                                      (226,228)         (529,673)    (1,896,694)        (1,047,623)

Preferred stock dividends                                      (27,075)          (27,075)       (81,225)           (81,225)
                                                        ---------------   ---------------  -------------    ---------------

Net Loss Applicable to
    Common Stockholders                              $        (253,303)$        (556,748)$   (1,977,919) $      (1,128,848)
                                                        ===============   ===============  =============    ===============

Basic and Diluted Loss Per Common Share:
    Continuing operations                            $           (0.00)$           (0.01)$        (0.02) $           (0.01)
    Discontinued operations                                      (0.00)            (0.00)         (0.00)             (0.00)
                                                        ---------------   ---------------  -------------    ---------------

                                                     $           (0.00)$           (0.01)$        (0.02) $           (0.01)
                                                        ===============   ===============  =============    ===============

Weighted Average Common Shares Outstanding -
    Basic and Diluted                                       89,564,286        82,776,924     88,372,478         79,054,222
                                                        ===============   ===============  =============    ===============


</TABLE>


















                       See notes to financial statements.

                                        3
<PAGE>
                                 WATER CHEF, INC.

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                     Nine Months Ended September 30,
                                                                                 ---------------------------------------
                                                                                        2002                  2001
                                                                                 ------------------    -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                            <C>                  <C>
     Net loss                                                                   $       (1,896,694)  $       (1,047,623)
         Adjustments to reconcile net loss to net cash
            used in operating activities
                Depreciation and amortization                                                1,389                  225
                Non-cash compensation                                                       36,000              209,050
                Amortization of debt discount                                                    -               62,000
                Common stock issued for non-payment
                   of note and interest payable                                                  -               12,300
                Loss on settlement of debt                                                  95,150             (144,021)
                Non-dilution agreement termination cost                                  1,044,677                    -
         Change in assets and liabilities
            Inventories                                                                    (26,250)            (419,348)
            Prepaid expenses and other current assets                                        6,500              (26,396)
            Accounts payable and accrued expenses                                          343,123              509,459
                                                                                 ------------------    -----------------
         Net cash used in continuing operations                                           (396,105)            (844,354)
         Net cash provided by (used in) discontinued operations                             45,061             (275,598)
                                                                                 ------------------    -----------------
NET CASH USED IN OPERATING ACTIVITIES                                                     (351,044)          (1,119,952)
                                                                                 ------------------    -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of property, plant and equipment                                                   -                 (551)
                                                                                 ------------------    -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from notes payable                                                                 -              450,000
     Repayment of notes payable                                                                  -              (25,000)
     Proceeds from sale of preferred and common stock                                      359,000              584,770
                                                                                 ------------------    -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                  359,000            1,009,770
                                                                                 ------------------    -----------------

NET INCREASE (DECREASE) IN CASH                                                              7,956             (110,733)

CASH AT BEGINNING OF PERIOD                                                                 33,797              158,100

                                                                                 ------------------    -----------------
CASH AT END OF PERIOD                                                           $           41,753   $           47,367
                                                                                 ==================    =================

</TABLE>











                       See notes to financial statements.

                                        4

<PAGE>


                                WATER CHEF, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      Nine Months Ended September 30, 2002
                                   (Unaudited)

1.       BASIS OF PRESENTATION

         The accompanying  unaudited  financial  statements have been prepared
         in accordance with generally  accepted accounting  principles for
         interim financial  information and the instructions to Form 10-QSB.
         Accordingly, they do not include all the information and footnotes
         required by generally accepted  accounting  principles for complete
         financial  statements.  In the opinion of  management,  all
         adjustments  (which  include only normal  recurring  adjustments)
         necessary to present fairly the financial  position,  results of
         operations and cash flows for all  periods  presented  have been made.
         The  results of  operations  for the nine month period ended  September
         30, 2002,  are not  necessarily  indicative  of the  operating  results
         that may be expected for the year ending  December 31, 2002.  These
         financial  statements  should be read in conjunction with the Company's
         December 31, 2001 Form 10-KSB, financial statements and accompanying
         notes thereto.

         In November  2001,  the Company  sold its water  cooler and filter
         operations  segment.  Accordingly,  this segment of the  Company's
         business  is reported as  discontinued  operations  for the three and
         nine months ended  September 30, 2002 and 2001. The three and nine
         months ended  September 30, 2001 has been restated to reflect such
         operations as discontinued.


2.       GOING CONCERN

         The  accompanying  financial  statements  have been  prepared  assuming
         that the Company will continue as a going  concern.  The Company has
         had recurring  losses.  Additionally,  the Company had working  capital
         and total capital  deficiencies  of  approximately  $4,427,000 and
         $4,404,000,  respectively,  at September 30, 2002. These conditions
         raise  substantial  doubt about the Company's ability to continue as a
         going concern.  Management's  plans with respect to these matters
         include  restructuring  its existing  debt,  settling its existing debt
         by issuing shares of its common stock,  raising  additional  capital
         through future  issuances of stock and / or debentures.  The
         accompanying  financial  statements do not include any adjustments
         that might be necessary should the Company be unable to continue as a
         going concern.


3.       RECENT ACCOUNTING PRONOUNCEMENTS

         a.       Effective  January  1, 2002,  the  Company  adopted  SFAS No.
                  142  "Goodwill  and Other  Intangible Assets."  Under SFAS No.
                  142,  goodwill  acquired in the  acquisition  will not be
                  amortized  but instead  be tested  annually  for  impairment.
                  The  adoption  of SFAS No. 142 had no impact on the Company's
                  financial position or results of operations.


                                       5
<PAGE>

                                WATER CHEF, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      Nine Months Ended September 30, 2002
                                   (Unaudited)
- continued


         b.       In August 2001, the FASB issued Statement of Financial
                  Accounting  Standards No. 144 ("SFAS 144"), "Accounting  for
                  the Impairment or Disposal of Long-lived  Assets." SFAS 144
                  superceded  Statement of Financial  Accounting  Standards No.
                  121,  "Accounting  for the Impairment of Long-lived  Assets
                  and  Assets  to be  Disposed  of"  and  the  accounting  and
                  reporting  provisions  of  Accounting Principles  Board
                  Opinion No. 30,  "Reporting  the Results of Operations -
                  Reporting the Effects of Disposal of a Segment of a Business,
                  and Extraordinary,  Unusual and Infrequently Occurring Events
                  and  Transactions."  SFAS 144 also  amends  Accounting
                  Research  Bulletin  No.  51,  "Consolidated Financial
                  Statements,"  to eliminate the  exception to  consolidation
                  for a subsidiary  for which control is likely to be
                  temporary.  The  provisions  of SFAS 144 are  effective  for
                  fiscal  years beginning after December 15, 2001.

                  The most  significant  changes  made by SFAS 144 are (1)
                  goodwill  is removed  from its scope and, therefore,  it
                  eliminates the  requirements of SFAS 121 to allocate  goodwill
                  to long-lived  assets to be tested for  impairment,  and (2)
                  it  describes a  probability-weighted  cash flow  estimation
                  approach to apply to  situations  in which  alternative
                  courses of action to recover the  carrying amount of  long-
                  lived  assets are under  consideration  or a range is
                  estimated  for the amount of possible  future cash flows.  The
                  Company's  adoption of SFAS 144 on January 1, 2002 did not
                  have a material effect on its financial position or results of
                  operations.

         c.       On April 30, 2002,  the FASB issued SFAS No. 145,  "Rescission
                  of FASB Statement No. 4, 44 and 64, Amendment of FASB
                  Statement  No.13,  and  Technical  Corrections."  The
                  rescission  of SFAS No.4, "Reporting Gains and Losses from
                  Extinguishments,  and SFAS No.64,  "Extinguishments  of Debt
                  Made to Satisfy  Sinking  Fund  Requirements,"  which  amended
                  SFAS No.4 will affect  income  statement classification  of
                  gains and losses from  extinguishment of debt. SFAS No.4
                  requires that gains and losses from  extinguishment  of debt
                  be classified  as an  extraordinary  item, if material.  Under
                  SFAS  No.  145,  extinguishment  of  debt  is now  considered
                  a risk  management  strategy  by the reporting  enterprise
                  and the FASB does not believe it should be  considered
                  extraordinary  under the criteria in APB Opinion  No.30,
                  "Reporting  the Results of  Operations - Reporting the Effects
                  of Disposal of a Segment of a  Business,  and  Extraordinary,
                  Unusual and  Infrequently  Occurring Events  and
                  Transactions,"  unless  the debt  extinguishment  meets  the
                  unusual  in  nature  and infrequency  of  occurrence  criteria
                  in APB Opinion  No. 30.  SFAS No. 145 will be  effective  for
                  fiscal years  beginning  after May 15, 2002.  The Company has
                  not yet determined the impact of SFAS No.145 on its financial
                  position and results of operations, if any.

                                       6
<PAGE>

                                WATER CHEF, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      Nine Months Ended September 30, 2002
                                   (Unaudited)
- continued


         d.       In June 2002, the FASB issued SFAS No.146,  "Accounting for
                  Costs  Associated with Exit or Disposal Activities."  SFAS No.
                  146 addresses  financial  accounting and reporting for costs
                  associated with exit or disposal  activities and nullified
                  Emerging  Issues Task Force Issue No. 94-3,  "Liability
                  Recognition  for  Certain  Employee  Termination  Benefits
                  and  Other  Costs  to Exit an  Activity (including  Certain
                  Costs  Incurred in a  Restructuring)."  SFAS No. 146 requires
                  that a liability for a cost  associated  with an exit or
                  disposal  activity be recognized  when the  liability  is
                  incurred.  A  fundamental  conclusion  reached by the FASB in
                  this  statement  is that an  entity's commitment  to a plan,
                  by itself,  does not create a present  obligation  to others
                  that meets the definition  of a liability.  SFAS No. 146 also
                  establishes  that fair value is the  objective  for initial
                  measurement of the  liability.  The provisions of this
                  statement are effective for exit or disposal   activities
                  that  are  initiated  after  December  31,  2002,  with  early
                  application encouraged.  The  Company  has not yet  determined
                  the  impact  of SFAS  No.146  on its  financial position and
                  results of operations, if any.


4.       PREFERRED STOCK:

         -        At September 30, 2002, dividends in arrears on preferred stock
                  was $747,331.

         -        In September  2002, the Company's Board of Directors  approved
                  the Private  Placement Sale of 125,000 shares of  One-Year
                  15%  Convertible  Preferred  stock at $1.00 per share.  These
                  shares  convert to the Company's  common stock at $0.03 per
                  share, or 33.33 shares of common for each $1.00 invested.  All
                  accrued dividends payable are payable in shares of common
                  stock.

                  In September  2002,  the Company sold 37,000 shares for
                  $37,000.  These funds are not refundable to the  investor,
                  as  such,  these  amounts  have  been  recorded  as  "Stock
                  to be  issued"  in the accompanying financial statements.


5.       COMMON STOCK

         -        In  February  2002,  the  Company's  Board of  Directors
                  approved  the  increase  in the number of authorized common
                  shares to 190,000,000 pending shareholders' approval.

         -        During the nine months ended  September 30, 2002, the Company
                  sold  2,500,000  shares of its common stock, for net proceeds
                  of $100,000.

                                       7
<PAGE>


                                WATER CHEF, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      Nine Months Ended September 30, 2002
                                   (Unaudited)
- continued


         -        During the nine months  ended  September  30,  2002,  the
                  Company  issued an  aggregate  of 450,000 shares of its common
                  stock for consulting services totaling $36,000.

         -        During the nine months  ended  September  30, 2002,  the
                  Company  received  $200,000 for  4,000,000 shares  of  its
                  common  stock  to be  sold,  which  shall  be  issued  upon
                  the  approval  of the shareholders on the increase of the
                  authorized  capital shares of the Company.  These funds are
                  not refundable  to the  investor,  as such these  amounts have
                  been recorded as "Stock to be issued" in the  accompanying
                  financial  statements.  These  shares  are not  included  for
                  basic and  diluted earnings per share calculations.

         -        During  the  nine  months  ended  September  2002,  the
                  Company  collected  $22,000  of the  stock subscription
                  receivable.


6.       LOSS ON SETTLEMENT OF DEBT

         The Company was a defendant in an action brought by certain  debenture
         holders (The "Bridge  Loans") in New Hampshire  Superior Court seeking
         repayment of $300,000 of debenture  principal  together with interest
         from 1997,  and the  issuance of penalty  shares for non payment of
         principal  and  interest.  In  addition,  the plaintiff's  claim that
         they had suffered by the  Company's  failure to register the shares
         issued under the warrant agreement.

         The Company had interposed  defenses and counterclaims.  In connection
         with the debentures,  the Company had issued  6,667  shares of common
         stock for every  $1,000 of debt at a price of $0.15 per share.  The
         Company claimed that it was owed the $300,000  consideration  for such
         shares.  In addition,  the Company had issued warrants  for the
         purchase of  2,500,000  shares of common  stock at an  exercise  price
         of $0.15 per share exercisable  until April 2002.  Furthermore,  the
         Company had issued another  100,000 shares of common stock to each
         debenture holder, or 1,300,000 shares, at a price of $0.15 per share.

         In the second  quarter of 2002,  the Company and the Bridge  Lenders
         settled  this  dispute  requiring  the Company to: (i) Issue  3,000,000
         shares of common  stock  valued at $497,500 in lieu of the  principal
         and interest owed to the debenture holders who participated
         ("participants")  in this legal action. The Company prior to the
         settlement had recorded the debentures at $300,000,  plus accrued
         interest of $39,400,  for a total of $339,400.  The  difference
         between the  $497,500  settlement  and the  $339,400,  or $158,100,  is
         recorded  as a loss on  settlement  of  debt.,  (ii)  Extend  the
         warrants  attached  to the  participants' debentures

                                       8
<PAGE>


                                WATER CHEF, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      Nine Months Ended September 30, 2002
                                   (Unaudited)
- continued


         for another two years until June 2004,  and (iii) Issue  additional
         shares if the product of the  $497,500, as valued for the  3,000,000
         shares  above,  divided by the  average  daily  trading  price for the
         30 days subsequent to the settlement,  is greater than the original
         3,000,000 shares. Due to these requirements the Company is obligated to
         issue an additional  14,037,671  shares, due to the average trading
         price of $0.0292 in the 30 days subsequent to the settlement. As of
         September 30, 2002, neither the 3,000,000 nor the additional shares of
         14,037,671 have been issued.

         The debenture  holders that did not participate  ("non-participating
         debentures") in the above legal action had total  debentures of
         $75,000,  plus accrued interest of $9,850 as of the settlement date. In
         conjunction with the above  settlement,  the  Company  settled  these
         outstanding  non-participating  debentures,  plus accrued  interest,
         with the issuance of 750,000  shares of common  stock  valued at
         $0.0292 per share.  The terms of their warrants were not extended,  nor
         are they entitled to receive  additional shares based of the Company's
         common stock  achieving a certain average trading price 30 days
         subsequent to the settlement with the participating  debenture holders.
         The Company has recorded a $62,950 gain with regard to the settlement
         of the non-participating debentures.  As of September 30, 2002, the
         750,000 shares have not been issued.


7.       NON-DILUTION AGREEMENT TERMINATION COST

         In May 2002, the Company has agreed to issue to the Company's
         President and Chief  Executive  Officer,  and the related  parties of
         such, an aggregate of 14,923,958  shares of its common stock in
         connection  with the voluntary  surrender of a  non-dilution  agreement
         that the  President had entered into with the Company in June 1997. The
         Company has recorded the liability of  approximately  $1,045,000  based
         upon the market price of its shares in May 2002, which is included in
         accrued expenses and other current liabilities.


8.       COMMITMENTS AND CONTINGENCIES

         -        The Company is a defendant in an action,  brought by a
                  customer,  relating to a series of contracts that the Company
                  entered into.  These contracts were with the Company's
                  discontinued  water cooler and filter  operation.  Such
                  operations  were sold in November  2001,  however  legal
                  actions with regards to the  operations  prior to the sale,
                  remain the Company's  responsibility.  The customer claims
                  that the Company  breached  these  contracts by shipping
                  certain goods that did not conform to the contract.  Most of
                  the damages that the customer  seeks  consist of lost
                  business  profits.  Company  management,  and legal counsel,
                  believe that the action is without merit. The Company has made
                  a $5,000  settlement  offer to the  customer,  for the
                  nuisance  value  of the  lawsuit.  The customer has rejected
                  such offer,  and has proposed a $75,000  settlement.  The
                  Company has made a provision of $5,000 for this lawsuit as of
                  September 30, 2002.

                                       9

<PAGE>

                                WATER CHEF, INC.
                          NOTES TO FINANCIAL STATEMENTS
                      Nine Months Ended September 30, 2002
                                   (Unaudited)

- continued


         -        In May 2001, the Company  entered a distribution  agreement
                  with a company (the "Sub  distributor") based in the State of
                  Jordan.  The Sub  distributor  has agreed to purchase no fewer
                  than 100 units of the Company's  "PureSafe  Water  Station",
                  in the calendar year  commencing  January 1, 2001. A minimum
                  purchase  of 50  units  are  required  to be  purchased  in
                  each of the  subsequent  years commencing  January 1, 2002 and
                  2003,  respectively.  During the year ended  December 31,
                  2001,  18 units  have been  shipped  under  this  agreement.
                  The sale will be  recognized  when the  Company receives
                  payments.  The Company has recorded the costs of the inventory
                  shipped in cost of sales, since return of the items is
                  uncertain.

                  The  Company  is a  plaintiff  in a criminal  action  brought
                  before  the court in the  Kingdom of Jordan,  claiming the
                  full payment for  PureSafe  Water  Stations  shipped,  its
                  related  costs and damages.  Criminal  charges  have been
                  brought  against a former  sub-distributor  and against two
                  management  employees of the Jordan  National  Bank and
                  against the Jordan  National  Bank. A trial date has not yet
                  been set.


9.       SUBSEQUENT EVENT

         In October 2002 the Company sold an additional  $35,500 of their 15%
         Convertible  Preferred  Stock at $1.00 per share.










                                       10

<PAGE>



ITEM II: Management's Discussion and Analysis or Plan of Operations


 Introduction:

         Until the fourth  quarter of 2001 Water Chef was engaged in the
         manufacture  and marketing of water coolers and water  purification and
         filtration  products.  In the fourth quarter of 2001, the Company
         negotiated the sale of this  business in order to focus its  activities
         on its  PureSafe  line of  business.  The PureSafe Water  Station  has
         been  designed by the  Company to meet the needs of  communities  who
         either do not have access to municipally  treated water, or for those
         whose municipal systems have been compromised,  either by environmental
         factors or because of faulty design or maintenance.

 Results of Operations

         During 2001 Water Chef made the  strategic  decision to exit the water
         cooler and consumer  filter  segments of its business in order to
         concentrate  its  resources on the  development  of the market for the
         PureSafe Water Station.  With the sale of these assets  consummated in
         December 2001, the Company's  water cooler and consumer  businesses
         are reported as  discontinued  operations  for the three month and nine
         month  periods ended September 30, 2001,  resulting in a loss from
         discontinued  operations of $49,177 and $36,003 for the three and nine
         month periods  respectively.  The discontinued  operations were sold in
         December 2001, and no operations existed for theses businesses in 2002.

         For the three  month  periods  ended  September  30,  2002 and
         September  30,  2001 Water Chef  reported no revenues.  For the nine
         month periods ended  September 30, 2002 and September 30, 2001 the
         Company  reported revenues of $40,000 and $0  respectively.  The
         PureSafe unit purchased in the first quarter of 2002 by White Cross
         Partners for placement in Honduras was delivered in the Third Quarter,
         the personnel  responsible for its operation and  maintenance  were
         trained,  and the Catholic  Diocese of  Tegucigalpa  is producing  pure
         water for the people on a daily basis.  White Cross  Partners  expects
         to purchase  additional  units in the Fourth Quarter.

         Cost of  sales  for the  three  and  nine  month  periods  ended
         September  30,  2002  were $0 and  $43,480 respectively compared to $0
         in the three and nine month periods ended September 30, 2001.

         Selling,  general and  administrative  expenses for the three months
         ended  September 30, 2002 were $162,460 compared to $324,580  for the
         three  months  ended  September  30,  2001, a decrease of $162,120 or
         50%; and $618,283  for the nine months  ended  September  30, 2002
         compared  to $856,453  for the nine months  ended September  30, 2001,
         a decrease of $238,170 or 28%.  The  reduction in expenses is primarily
         due to reduced staffing and consulting costs and lower rent, business
         travel and marketing expenses.

         Water Chef has incurred no research and  development  expense in 2002,
         compared to $53,125 and $159,375 for the three and nine month  periods
         ended  September  30,  2001.  During  the first  nine  months of 2002
         the Company  negotiated  the  settlement of debt and accrued  interest
         for stock,  which  resulted in a reported loss of $95,150 in the nine
         months ended September 30, 2002.

                                       11
<PAGE>

         During the nine months ended  September  30, 2002 the Company agreed to
         issue to the President and Chief Executive Officer,  and related
         parties, an aggregate  14,923,958 shares of its common stock under the
         terms of a  non-dilution  agreement  which the Company and the
         President  had entered into in 1997.  The President subsequently,  on
         behalf of himself and all  related  parties,  voluntarily  surrendered
         all future  rights under this  agreement.  This non-cash event was
         valued at the  then-current  market price of $0.07 per share or
         $1,044,677,  and represents a non-cash cost to the Company.  During
         the nine months ended  September 30, 2001 the Company did not issue any
         shares under the terms of this agreement.

         Interest  expense for the three months  ended  September  30, 2002 was
         $37,868  compared to $106,181 for the three months ended  September
         30,  2001, a decrease of $68,313 or 64%. The  reduction in interest
         expenses for the quarter  ended  September  30, 2002 as compared to
         September  30,  2001,  is  primarily  due to the amortization  of a
         debt  discount  that  occurred  in the third as well as the second
         quarter of 2001.  The Company has interest  expense of $135,104 for the
         nine months ended  September 30, 2002 compared to $139,813 for the nine
         months  ended  September  30,  2001,  a  decrease  of $4,709 or 3%. In
         the nine  months  ended September 30, 2002 the Company  settled various
         notes payable,  and issued  additional  notes payable,  that are
         currently  outstanding  as of September  30, 2002.  For the nine months
         ended  September  30, 2001,  the  Company's  interest expense of
         $139,813,  includes  $62,000 of amortized debt discount.  For the nine
         months ended September 30, 2002, the Company's  interest  expense of
         $135,104 does not include the  amortization of debt discount.

Liquidity and Capital Resources

         At September 30, 2002 the Company had a  stockholders'  deficit of
         approximately  $4,404,000  and a working capital  deficit of
         approximately  $4,427,000.  In addition the Company has incurred losses
         from continuing operations of  approximately  $222,000 and $1,897,000
         for the three and nine month periods ended  September 30, 2002. The
         accompanying  financial  statements have been prepared assuming that
         the Company will continue as a going concern.  These conditions raise
         substantial  doubt about the Company's ability to continue as a going
         concern.  Management's  plans with respect to these issues include
         restructuring  its existing debt, raising  additional  capital  through
         future  issuances  of stock  and/or  equity,  and finding  sufficient
         profitable  markets for its  products  to  generate  sufficient  cash
         to honor all of its  obligations.  The accompanying  financial
         statements  do not  include  any  adjustments  that might be  necessary
         should the Company be unable to continue as a going concern.

         In the second quarter 2002 the Company reached a negotiated  settlement
         concerning  certain  debentures and accrued interest payable
         aggregating  $339,400.  The terms of the settlement agreement call for
         the issuance of  3,000,000  shares of common  stock to be  valued  at
         $497,500.  The  difference  between  the  $497,500 settlement  and the
         $339,400,  or $158,100,  is recorded as a loss on  settlement  of debt.
         An  additional 14,037,671  shares  are to be  issued  due to  Company's
         per  share  stock  price  over  a 30  trading  day measurement  period,
         not having  achieved the $0.15 per share value as set by the initial
         valuation of the 3,000,000 shares at $497,500.  The remaining
         conditions of the settlement,  requires that the Company extend the
         exercise period for 1,666,666  warrants,  attached to these notes
         payable when originally  issued in May 1997, for an additional  two
         years through June 2004,  and that the Company files a  registration
         statement with the Securities  and Exchange  Commission  within 180
         days of the agreement,  to register the 17,037,671 shares.As of
         September 30, 2002, neither the 3,000,000 nor the additional shares of
         14,037,671 have been issued

                                       12

<PAGE>


         Debenture  holders not included in the above  settlement.  ("non-
         participating  debentures"),  settled their debentures  of $75,000,
         plus  accrued  interest of $9,850,  with the  issuance of 750,000
         shares of common stock valued at $0.0292 per share.  The terms of their
         warrants were not extended,  nor are they entitled to receive
         additional  shares based of the Company's common stock achieving a
         certain average trading price 30 days  subsequent to the settlement
         with the  participating  debenture  holders.  The Company has recorded
         a $62,950 gain with regard to the settlement of the non-participating
         debentures.  As of September 30, 2002, the 750,000 shares have not been
         issued.

         During the nine months  ended  September  30, 2002 the Company  raised
         $100,000  from the sale of 2,500,000 shares of common stock. In
         addition,  the Company sold non refundable  subscriptions  to purchase
         4,000,000 shares of common  stock at $0.05 per share,  for a total
         receipt  of  $200,000,  and  37,000  shares of 15% Convertible
         Preferred stock for $37,000.  Since these shares have not been issued,
         they have been recorded as "Stock to be issued" in the accompanying
         financial  statements.  These shares are not included for basic and
         diluted  earnings per share  calculations.  During the nine months
         ended  September 30, 2002 the Company received  payment of $22,000  for
         shares  issued in 2001,  which was  accounted  for as stock
         subscription receivable.

         The Company also issued 450,000 shares of common stock, in lieu of cash
         for consulting services performed.

         During the nine month  period  ended  September  30, 2001 the Company
         raised  $584,770  through the sale of 11,536,246  shares of common
         stock and settled  accounts  payable,  notes  payable and accrued
         interest of $120, 595 with the issuance of 1,210,000 shares of common
         stock.

         During the nine months ended  September 30, 2002 the Company  issued to
         its  President  and Chief  Executive Officer,  and related parties, an
         aggregate  14,923,958 shares of common stock, valued at $0.07 per share
         or $1,047,677,  owed  under the terms of a  non-dilution  agreement
         that the  Company  and the  President  had entered into in June,  1997.
         Subsequently,  the  President,  on behalf of himself and all related
         parties, voluntarily surrendered all future rights under the agreement.





                                       13
<PAGE>




         Part II           OTHER INFORMATION

         Item 1 - Legal Proceedings

                  The Company is a defendant in an action  brought by a customer
                  relating to  contracts  between the Company  and the
                  customer.  These  contracts,  covering  the  period  1996 to
                  1998,  were with the Company's  discontinued  water cooler and
                  consumer filter operation.  These segments were sold in
                  December 2001,  however legal actions with regard to these
                  operations prior to the sale remain the Company's
                  responsibility.  The customer  claims breach of contract,
                  maintaining  that the Company shipped goods that did not meet
                  the  customer's  specification.  The customer  seeks damages
                  in the form of lost  opportunity  and lost business  profits.
                  The Company and its legal  counsel  believe that the  action
                  is  without  merit.  The  Company  has made a $5,000
                  settlement  offer,  for the nuisance  value  of the  case.
                  The  customer  refused  the  offer,  and  has  proposed  a
                  $75,000 settlement.  At the request of the  litigant  the
                  taking of  depositions  has been put off to 2003.  The Company
                  has made a provision of $5,000 for this lawsuit as of
                  September 30, 2002.

                  The  Company  is a  plaintiff  in a criminal  action  brought
                  before  the court in the  Kingdom of Jordan,  claiming the
                  full payment for  PureSafe  Water  Stations  shipped,  its
                  related  costs and damages.  Criminal  charges  have been
                  brought  against a former  sub-distributor  and against two
                  management  employees of the Jordan  National  Bank and
                  against the Jordan  National  Bank. A trial date has not yet
                  been set.

         Item 2 - Changes in Securities and Use of Proceeds

                  None

         Item 3 - Defaults Upon Senior Securities

                  None

         Item 4 - Submission of Matters to a Vote of Security Holders

                  A Preliminary  Proxy for the purpose of increasing the
                  authorized  common stock of the  Corporation was submitted to
                  the SEC, whose  questions and comments are being  addressed
                  before  resubmission.  Upon approval by the SEC, the proxy
                  will be mailed to shareholders and a vote scheduled.

         Item 5 - Other Information

                  None


                                       14
<PAGE>




         Item 6 - Exhibits and Reports on Form 8-K

                  Exhibits:

                           99.1 and 99.2

                        Reports on Form 8-K:

                           No reports were filed on Form 8-K during the Quarter
                           ended September 30, 2002













                                       15
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                         WATER CHEF, INC.



Date:    November 21, 2002               /s/David A. Conway
                                         David A. Conway
                                         President, and Chief Executive Officer
                                         (Principal Operating Officer)















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