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

                                   FORM 10-QSB
(Mark One)

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

                For the quarterly period ended September 30, 1997

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

           For the transition period from             to
                                          -----------    ------------

                        Commission file number 2-96455-LA
                                              -------------


                                WATER CHEF, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


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


              7707 E.Acoma Dr.Suite 109, Scottsdale, Arizona 85260
              ----------------------------------------------------
                    (Address of principal executive offices)

                                  602-991-4534
                           ---------------------------
                           (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.
                               
      CLASS                                 OUTSTANDING AS OF SEPTEMBER 30, 1997
      -----                                 ------------------------------------
Common
Par Value $.001 per share                                35,036,237
<PAGE>

                                WATER CHEF, INC.

                                  FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1997

                               TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

                                                                          Page
                                                                          ----
Item 1.   Financial Statements:

          Consolidated Balance Sheet as of September 30, 1997..........     3

          Consolidated Statements of Operations for the three and nine
          month periods ended September 30, 1997 and 1996.................  5

          Consolidated Statements of Cash Flows for the three and nine
          month periods ended September 30, 1997 and 1996.................. 6

          Notes to Consolidated Financial Statements....................... 7

Item 2.   Management's Discussion and Analysis of Results
          of Operations and Financial Condition............................ 8


PART II - OTHER INFORMATION

Item 3.   Exhibits and Reports on Form 8-K................................. 11

Signatures................................................................. 12

                                       2
<PAGE>

                        WATER CHEF, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS

                                                            September 30, 1997
                                                            ------------------
                                                              (Unaudited)
CURRENT ASSETS:
   Cash ...................................................   $   55,765
   Accounts receivable, net of allowance for
   doubtful accounts of $51,940 at September 30, 1997
   and $51,940 at December 31, 1996 .......................       62,113
   Inventories, net .......................................    1,178,858
   Deposits and other .....................................       57,180
                                                              ----------
       Total Current Assets ...............................    1,353,916

PROPERTY AND EQUIPMENT, at cost less accumulated
  depreciation of $666,729 at September 30, 1997 and
  $278,375 at December 31, 1996 ...........................      374,642

PATENTS, DESIGNS AND TRADEMARKS, at cost less
  accumulated amortization of $36,848 at September 30, 1997
  and $18,943 at December 31, 1996.........................      181,381

INVESTMENT IN CHINA JOINT VENTURE (notes) .................      148,000
FRANCHISE SALE ............................................      500,000

OTHER .....................................................       55,067
                                                              ----------
                                                              $2,613,006
                                                              ==========








                   The accompanying notes are an integral part
                      of these consolidated balance sheets.

                                       3
<PAGE>
                        WATER CHEF, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                      LIABILITIES AND STOCKHOLDERS' DEFICIT

                                                       September 30, 1997
                                                       ------------------
                                                          (Unaudited)
CURRENT LIABILITIES:
   Accounts payable:
     Trade ...........................................   $   818,291
     Other ...........................................         3,418
   Accrued expenses and other ........................       369,041
   Current portion of notes payable ..................       712,183
                                                         -----------

       Total Current Liabilities .....................     1,902,933
                                                         -----------

NOTES PAYABLE, net of current portion ................     1,966,916
                                                         -----------
MINORITY INTEREST IN CONSOLIDATED JOINT
  VENTURE (Note 3) ...................................       253,000
                                                         -----------
STOCKHOLDERS' DEFICIT:
   Preferred Stock, $.001 par value,10,000,000 shares
     authorized; 120,000 shares issued and outstanding
     at September 30, 1996 ...........................           120
   Common Stock, $.001 par value, 40,000,000 shares
     authorized; 35,036,237 shares issued and
     outstanding at September 30, 1996 ...............        35,036
   Additional paid-in capital ........................     2,909,914
   Common Stock Issued ...............................     2,251,626
   Treasury stock, ...................................        (5,768)
   Accumulated deficit ...............................    (6,700,770)
                                                         -----------
       Total Stockholders' Deficit ...................    (1,509,842)
                                                         -----------
                                                         $ 2,613,006
                                                         ===========





                   The accompanying notes are an integral part
                      of these consolidated balance sheets.

                                       4
<PAGE>
                        WATER CHEF, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (UNAUDITED)

                                    Three Months Ended     Nine Months Ended
                                        September 30,         September 30
                                    -----------------     --------------------
                                    1997        1996        1997         1996
                                    ----------------      --------------------

Net sales ....................  $  289,948  $   90,720   $  524,527  $  309,351
Cost of sales ................     301,412      51,697      530,386     181,517
                                ----------  ----------   ----------  ----------
Gross margin .................     (11,464)     39,023       (5,859)    127,834

Selling, general &
administrative expenses ......     480,919     150,056    1,176,203      76,167
                                ----------  ----------    ---------  ----------

Profit (Loss) from operations     (492,383)   (111,033)   1,182,062)     51,667
Sale of WaterChef-Franchise ..                              261,221
Gain-Relieve-Debt ............     706,254                  706,254
Other income (expense):
   Interest expense ..........     (39,942)    (47,765)    (108,323)    (55,027)
                                ----------  ----------   ----------  ----------
Net Profit (Loss) before
 provision for income taxes ..     173,929    (158,798)    (322,910)     (3,360)

Provision for income taxes ...          --          --           --          --
                                ----------  ----------   ----------  ----------

NET PROFIT(LOSS) .............     173,929    (158,798)    (322,910)     (3,360)

Less-Preferred Dividends .....         (--)        (--)         (--)        (--)
                                ----------  ----------   ----------  ----------
NET PROFIT(LOSS) AVAILABLE
  FOR COMMON STOCK ...........  $  173,929  $ (158,798)  $ (322,910) $   (3,360)
                                ==========  ==========   ==========  ==========
Profit (Loss) per common share
and common share equivalent ... $     .005  $     (.01)  $     (.01) $
                                ==========  ==========   ==========  ==========
Weighted average number
of common shares and
common share equivalents
outstanding ..................  35,036,237  15,836,574   35,036,237  15,836,574
                                ==========  ==========   ==========  ==========

                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       5
<PAGE>
                        WATER CHEF, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (UNAUDITED)

                                                             1997         1996
                                                             ----         ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ....................................  $  (322,910)  $  (3,360)
Adjustments  to  reconcile  net  income  (loss)
 to net cash  used in  operating  activities:
   Depreciation and amortization .....................      (87,209)   (107,666)
   Non-Operating Cash Flow Adjustments ...............      (47,356)    (33,305)
   Change in assets and liabilities:
   (Increase) decrease  in accounts receivable, net ..       29,872     167,814
   Decrease (increase) in inventories ................     (682,948)   (485,583)
   Increase in investment in China Joint Venture .....            0           0
   Increase (decrease) in prepaid expenses
      and other assets ...............................            0           0
   Increase (decrease) in accounts payable ...........       85,094     230,034
   Increase in accounts payable-China Joint Venture ..     (148,000)   (148,000)
   Increase (decrease) in accrued expenses and other
      liabilities ....................................     (362,925)   (194,806)
                                                        -----------   ---------
   Net cash used in operating activities .............  $(1,536,382)  $(574,872)
                                                        -----------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment ..............  $   583,422   $ 689,009
  Acquisition of patents, designs and trademarks .....  $  (142,084)  $ (60,393)

  Net cash used in investing activities ..............  $   441,338   $ 628,616
                                                        -----------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings on notes payable ..........  $  (757,086)  $(664,486)
  Payments on notes payable ..........................       16,953      71,887
  Proceeds from preferred and common stock, net ......    1,872,389     463,234

  Net cash provided by financing activities ..........  $ 1,132,256   $(129,365)
                                                        -----------   ---------

Net increase (decrease) in cash ......................  $    37,212   $ (75,621)

CASH, beginning of period ............................  $    18,553   $  94,174
                                                        -----------   ---------

CASH, end of period ..................................  $    55,765   $  18,553
                                                        ===========   =========
Supplemental Cash Flow Information:
Cash paid for interest ...............................  $         0   $       0
                                                        ===========   =========
                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       6
<PAGE>
                        WATER CHEF, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1997

(1) The  accompanying  unaudited  consolidated  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,  1997,  are  not  necessarily
indicative  of the  operating  results  that may be expected for the year ending
December  31,  1997,  or with the  Company's  December  31,  1997  Form  10-KSB,
financial statements and accompanying notes thereto.

Pursuant to a Merger  Agreement and Plan of  Reorganization  between the Company
and Water Chef-Nevada dated June 4, 1993 ("the  Agreement"),  the Company issued
3,800,000 shares of its common stock to Water  Chef-Nevada's three stockholders,
in exchange for all issued and  outstanding  common stock of Water  Chef-Nevada.
The common stock issued  represented 62% of the issued and outstanding shares of
its common stock after the merger.  In connection with this  transaction,  Water
Chef-Nevada's  officers and its director  became  officers and a director of the
Company.  This  resulted  in Water  Chef-Nevada's  officers  and  director,  and
directors appointed by Water Chef-Nevada,  controlling the Company's  day-to-day
operations.

In  accordance  with  Accounting  Principles  Board  Opinion  No.16,  the  Water
Chef-Nevada  acquisition  has been accounted for as a reverse  acquisition.  The
historical  financial  statements  prior  to June 4,  1993  are  those  of Water
Chef-Nevada  (Water  Chef-Nevada was formed on January 25, 1993,  therefore,  no
financial  statements are presented prior to that date). For financial statement
presentation purposes, the Company is considered to be the predecessor.

(2) As of September 30, 1997,  Inventories  consist of the following  (including
$236,137 in China facility inventory) :

             Raw Material                  828,030
             Work in Process                12,400
             Finished Goods                338,428
                                        ----------
                                        $1,178,858

(3) In February 1994, the Company entered into an agreement (the "Agreement") to
form a joint  venture,  Tianjin Tahoe Cooler Co., Ltd. (the "Joint  Venture") to
establish and operate a facility to  manufacture  the  Company's  Series I water
coolers in the People's  Republic of China.  The Company's  contribution  to the
Joint  Venture,  in which it will  have a 55%  interest,  will be in the form of
machinery and other equipment in the approximate value of $144,000 (based on the
price of the  equipment  to be supplied  by the  Company to the joint  venture),
$140,000 cash and designs and technology  with an agreed upon value of $156,000.
The minority  interest of $253,000  reflected in the consolidated  balance sheet
represents the minority  shareholder's  proportionate share of the equity of the

                                       7
<PAGE>

Joint  Venture.  No minority  interest has been  reflected  in the  accompanying
consolidated  statements  of  operations  as the Joint  Venture did not have any
material  operations  during the nine months ended September 30, 1997.  However,
design work on the plastic molds (4) In December 1996 the company  purchased all
of the outstanding common stock of Natural Water Systems Inc. Boulder, Co for 1,
Million  shares of  WaterChef  common.  The company  supplies  water  dispensing
systems for Natural  Water  stores and a shower  filter of patented  design that
removes 95% of the chlorine. Chlorine causes dry skin, split ends, scalp flaking
and red eyes,  Chlorine  absorbed  by the body during a shower has been known to
cause cancer of the colon and bladder. It is believed this shower filter product
can grow into a $100 Million business.

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

RESULTS OF OPERATIONS

Net  sales for the 3rd  quarter  and 9 months  ending  September  30,  1997 were
$289,948 and $524,527  respectively.  This  compares to a like period of 1996 of
$90,720 and $309,351. The sales increase was 170%. Sales in the 3rd quarter were
limited by 2  occurrences.  The late arrival of parts for the Company's  totally
new water  dispenser line,  which arrived from China in mid August.  This pushed
production into the September period.  Second, there were delays in implementing
a new sales program involving  national  coverage of The Home Depot stores.  The
Home Depot selected the Company's new Tri-Temp  dispenser line as the product to
be offered. Production of the new line started in September and shipments to The
Home Depot  started in mid October.  As with any totally new product  there were
non  recurring  start up costs.  They totaled  $115,000 and were included in the
cost of sales figures. These costs include charges incurred in both the U.S. and
China facilities.

The Company will  deliver 2 other new products in the 4th quarter,  they are the
Village Water stations and an in store dispensing  system.  Both are involved in
the contracts totaling $200 Million over 10 years for the Philippines which were
previously announced.

Delivery  of both  products  to start in the 3rd  quarter  but were  delayed  by
financing  problems of the  customers.  We are informed  these problems have now
been solved.

Selling,  general  and  administrative  expenses  for the quarter and nine month
periods were $480,919 and  $1,176,203  respectively.  These year to year figures
are not comparable when  considering  actual operating  expenses.  Non recurring
adjustments  totaling  $482,000  were made in 1996 which distort the final data.
The 1997 figure  represents a realistic  figure for the  operating  rate for the
period. On this basis SG & A increased 18% while operations  activity  increased
170%.

Net  profit  for the 3rd  quarter  and 9 months  was  $173,929  and  ($322,910).
Comparing  these figures with 1996 the 3rd quarter loss was ($158,798) and the 9
month loss was ($3,360). The losses incurred in the first 2 quarters were due to
low operating levels.  Working capital financing was obtained late in June which
enabled the Company to bring operating levels to a profitable level.

                                       8
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's  working capital  deficit  decreased from $961,922 at December 31,
1996 to $549,017 at September 30, 1997. The deficit decreased  primarily because
of the net profit for the quarter and account adjustments. The Company's current
ratio was .71 to 1 at September 30, 1997 and .52 to 1 at December 31, 1996.

In January 1994, the Company  commenced a private  placement of Units (each Unit
consisting of one share of the Company's  Series A Preferred Stock, one share of
the  Company's  common stock and one Series A Warrant to purchase four shares of
the  Company's  common  stock at a price of $1.00 per share) at a Unit  purchase
price of $10.00.

The Series A Preferred  Stock  provides for a 10% cumulative  dividend,  payable
annually in the Company's common stock or cash, at the Company's  option,  based
upon the  $10.00  Unit  purchase  price.  The  Series A  Preferred  Stock is not
convertible,  and is callable by the Company at any time  following  January 17,
1998 at a price of $11.00 per share. In total, the Company sold 52,500 Units and
received net proceeds of  approximately  $335,000,  after  deduction of offering
expenses of approximately $190,000. The private placement expired in April 1994.

In January and February 1994, Canaccord Capital;  Corporation loaned the Company
a total of $170,000 to meet the temporary  working capital needs of the Company.
These notes bear  interest at 10% and were  payable on February  28,  1994.  The
notes are  secured by  substantially  all these  assets of the  Company  and are
guaranteed by an officer and director of the Company. These notes have been paid
off.

During February and March 1994, the Chairman and Chief Executive  Officer of the
Company, and an affiliate of his advanced the Company a total of $26,000 to meet
temporary  working  capital  needs of the  Company.  A  portion  of these  loans
($13,000) was repaid out of the proceeds of the Company's  private  placement in
March 1994.

The Company's  operations and cash flow has been hampered due to an inability to
raise sufficient capital with which to fund its operations. This lack of capital
has prevented the Company from being able to purchase sufficient  inventory with
which to fill sales orders.

In September 1994, the Company  completed a private placement of 2,578,750 units
at $0.80 per unit,  each unit  consisting  of two shares of common stock and one
Series C warrant to purchase  one share of common  stock at a price of $1.00 per
share.  Net  proceeds to the Company  were  $2,000,442  plus the  conversion  of
$25,000 of debt then  outstanding  into 62,500  shares of the  Company's  common
stock. A partnership in which the Company's former Executive Vice-President is a
controlling partner purchased 350,000 shares of common stock in the offering.

In October 1994, the Company commenced efforts to raise up to $1,200,000 in debt
funding  through  several  sources.  As part of this  effort,  the  Company  was
attempting  to raise  $800,000 in debt funding  (the "Note" or "Notes")  through
private sources. The Notes would be unsecured and payable in one year, including
interest at 10% per annum.  Each Note  holder  would  receive  Series D Warrants
entitling the Note holder to purchase,  at a purchase  price of $0.60 per share,
one  share of the  Company's  common  stock for each  dollar of note  principal.
Through  September 30, 1995 the Company raised  approximately  $485,000  through
this funding source. This funding effort was closed at this point.

                                       9
<PAGE>

In August 1996,  the Montana  Department of Commerce  amended its open Community
Development Block Grant project to assist the Company with an additional loan of
$340,000. The Company borrowed $200,000 of these funds through November 20, 1996
to meet working capital requirements. The balance was drawn in January 6, 1997.

In December 1996 the company commenced efforts to raise $2, Million from private
placement of $5pfd 12% with 5 shares of common stock .As of the end of the first
quarter $400,000 had been raised. This private placement has been modified as of
July 1, 1997 by adding an addition 5 shares of incentive stock.

The company's operations and cash flow have been hampered due to an inability to
raise sufficient capital with which to fund its operations. This lack of capital
has prevented the Company from being able to purchase sufficient  inventory with
which to fill sales orders.

To carry  the  companies  operations  until  the  working  capital  program  was
completed a bridge loan in the amount of $375,000 was negotiated.  The loan will
be repaid by the end of 1997.

The Company raised $1.5 Million in working  capital late in June 1997.  Funds to
purchase parts for coolers from China and US sources were immediately  released.
These parts will be used to fill the Company's backlog of orders for delivery in
the 3rd quarter and 4th quarter.  The funds were not available in time to affect
the company's 2nd quarter operations.

Management of the Company believes that the marketing and  distribution  network
it has  created  along  with the  creation  of new  markets  (such as retail and
international), will produce a volume of sales sufficient to operate profitably.
There  can be no  assurance  that  additional  debt or  equity  funding  will be
available to the Company.

Additional  shares were issued as part of the  Company's  program to improve the
balance sheet and working capital. In total 19,199,663 shares were issued broken
down as follows 10 million  shares to raise the $1.5M.  2.43 million  shares for
the bridge loan.  Seven key  employees  purchased  2.3 million  shares at market
price.  Of these  shares  which  are  restricted,  Gus  Grant  Chairman  and CEO
purchased  960,000.  1 million  shares were issued to settle debt which has been
removed  from the  balance  sheet.  663,000  shares  were  issued  for a private
placement and 400,000 shares were issued as incentive shares for stock sales.

                                       10
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 3.  EXHIBITS AND REPORTS ON FORM 8-K

A.  Exhibits:

          Exhibit 11 Statement RE: Computation of earnings per share

          Exhibit 27 Financial Data Schedule

B.  Reports on Form 8-K:

          The company  filed Form 8-K,  dated  February 27, 1997, to report that
          Arthur Andersen resigned as auditor for the Company.

          The company  filed Form 8-K,  dated May 30,  1997,  to report that the
          Company  had  engaged  Semple and  Cooper,  LLP.  as  auditor  for the
          Company.








                                       11
<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: October 21, 1997                        /s/ C. Gus Grant
                                              -----------------------------
                                              C. Gus Grant
                                              President, Director and Chief
                                              Executive Officer
                                              (Principal Operating Officer)

                                       12