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 March 31, 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.

                                                     OUTSTANDING AS OF
          CLASS                                        March 31, 1997
          -----                                        --------------
Common
Par Value $.001 per share                                16,836,574
<PAGE>

                                WATER CHEF, INC.

                                  FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 1997

                               TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION
                                                                Page
                                                                ----
Item 1.   Financial Statements:

          Consolidated Balance Sheets as of March 31, 1997
          and December 31, 1996.................................. 3

          Consolidated Statements of Operations for the three
          month periods ended March 31, 1997 and 1996............ 5

          Consolidated Statements of Cash Flow for the three
          month periods ended March 31, 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.................. 10

Signatures....................................................... 11

                                       2
<PAGE>
                                WATER CHEF, INC.

                          CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                    March 31,       December 31,
                                                      1997              1996
                                                    ---------       ------------
                                                   (Unaudited)
CURRENT ASSETS:
   Cash                                            $   38,529       $   18,553
   Accounts receivable, net of allowance for
    doubtful accounts of $51,939.97 at March 31,
    1997 and $51,939.97 at December 31. 1996           21,698           91,985
   Inventories, net                                   527,465          495,910
   Deposits and other                                 203,883          452,138
                                                   ----------       ----------

       Total Current Assets                           791,575        1,058,586
                                                   ----------       ----------

PROPERTY AND EQUIPMENT, at cost less accumulated
 depreciation of $351,418 at March 31, 1997 and
 $278,375 at December 31, 1996                        497,798          679,690

PATENTS, DESIGNS AND TRADEMARKS, at cost less
 accumulated  amortization  of $20,292 at
 March 31, 1997 and $18,943 at December 31, 1996      193,485           39,297

INVESTMENT IN CHINA JOINT VENTURE (Note 3)            148,000          148,000

OTHER                                                 445,516          104,999
                                                   ----------       ----------
                                                   $2,076,374       $2,030,572
                                                   ==========       ==========


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

                                       3
<PAGE>
                                WATER CHEF, INC.

                          CONSOLIDATED BALANCE SHEETS

                     LIABILITIES AND STOCKHOLDERS' DEFICIT


                                                        March 31,   December 31,
                                                          1997          1996
                                                        ---------   ------------
                                                       (Unaudited)
CURRENT LIABILITIES:
  Accounts payable:
     Trade                                            $   780,296   $   852,407
     Other                                                338,416        54,396
  Accrued expenses and other                              609,198       879,966
  Current portion of notes payable                        312,898       232,739
                                                       ----------    ----------

      Total Current Liabilities                         2,040,808     2,020,508
                                                       ----------    ----------

NOTES PAYABLE, net of current portion                   2,618,438     2,798,600
                                                       ----------    ----------

Minority Interest (Note 3)                                253,000       253,000

STOCKHOLDERS' DEFICIT:
  Preferred Stock, $.001 par  value,10,000,000
     shares authorized;  93,000 shares issued and
     outstanding at March 31, 1997 and 52,500 shares
      issued and outstanding at December 31, 1996         432,330           215
  Common Stock, $.001 par value, 40,000,000 shares
     authorized; 16,836,574 shares issued and
     16,836,574 outstanding at March 31, 1997 and
     16,836,574 shares issued and 16,836,574
     outstanding at December 31, 1996                      16,836        16,836
  Common Stock to be issued (93,000 shares)               199,660       397,342
  Additional paid-in capital                            2,909,914     2,892,961
  Treasury stock, at cost                                  (5,768)       (5,768)
  Accumulated deficit                                  (6,388,678)   (6,334,122)
                                                       ----------    ----------

      Total Stockholders' Deficit                      (2,835,872)   (3,032,536)
                                                       ----------    ----------
                                                       $2,076,374    $2,030,572
                                                       ==========    ==========

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

                                       4
<PAGE>
                                WATER CHEF, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS

           FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
                                  (UNAUDITED)


                                                           1997          1996
                                                           ----          ----

Net sales                                             $    40,025   $    18,613

Cost of sales                                              50,669        61,313
                                                      -----------   -----------

Gross margin                                              (10,644)      (42,760)

Selling, general and administrative expenses              288,434       245,832
                                                      -----------   -----------

        Loss from operations                             (299,078)     (288,592)
                                                      -----------   -----------
Other income (expense):
Forgiveness-Debt. SBA
Sale of WaterChef Franchise:                             (261,221)
  Interest expense                                        (24,225)      (68,462)
  Other, net                                                 --              --
                                                      -----------   -----------
Total other expense                                       (24,225)      (68,462)
                                                      -----------   -----------

Loss before provision for income taxes                    (62,081)     (357,054)

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

NET LOSS                                              $   (62,081)  $  (357,054)
                                                      ===========   =========== 
loss per common share and common
share equivalent                                      $       (  )  $      (.04)

Weighted average number of common shares
  and common share equivalents outstanding             16,836,574    15,836,574
                                                      ===========   ===========


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

                                       5
<PAGE>
                                WATER CHEF, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
                                   (UNAUDITED)

                                                             1997        1996
                                                             ----        ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                                  ($357,054)  ($537,714)
Adjustments to reconcile net loss to net
 cash used in operating activities:
   Depreciation and amortization                             64,198      63,340
   Non Operating Cash Flow Adjustments                            0    (125,187)
 Change in assets and liabilities:
 Increase in accounts receivable                            (12,966)    (74,923)
    Decrease (increase) in inventories                     (112,160)     31,940
    Increase in investment in China joint venture                 0           0
    Increase in prepaid expenses and other assets           (27,758)    (72,418)
    Increase (decrease) in accounts payable                  29,224     324,772
    Increase in accounts payable-China joint venture              0           0
    Increase in accrued expenses and other liabilities      549,663      94,674
                                                          ---------   ---------
        Net cash used in operating activities             $(133,147)  $(295,516)
                                                          ---------   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property and equipment                  $(336,209)  $ 139,478
   Acquisition of patents, designs and trademarks         $       0   $       0
                                                          ---------   ---------

      Net cash used in investing activities               $(336,209)  $ 139,478
                                                          ---------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from borrowings on notes payable                196,371     432,814
   Payments on notes payable                                (83,740)    (12,500)
   Proceeds from preferred and common stock, net            129,931           0
                                                          ---------   ---------

          Net cash provided by financing activities         242,562     420,314
                                                          ---------   ---------

Net increase (decrease) in cash                              39,500     (14,680)

Cash beginning of period                                     94,174      61,551
                                                          ---------   ---------

Cash, end of period                                       $ 133,674   $  46,871
                                                          =========   =========
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.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 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 three-month period ended March 31, 1997, are not necessarily  indicative
of the operating  results that may be expected for the year ending  December 31,
1997.  These  financial  statements  should  be read  in  conjunction  with  the
Company's December 31, 1996 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 March 31, 1997, Inventories consist of the following:

        Raw Material              516,795
        Finished Goods             10,670
                                 --------
                                 $527,465
                                 ========

(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
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 three months ended March 31, 1997.

                                       7
<PAGE>

(4) In December 1995 the company  purchased all of the outstanding  common stock
of Natural Water  Systems Inc.  Boulder,  Co for 1,Million  shares of Water Chef
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 quarter ending March 31, 1997 were $40.025.  The first quarter
of the year is the  lowest  of the  season  for  water  coolers.  The  companies
manufacturing  facilities  were  shut  down  to  save  money.  Sales  were  from
inventories.  The company used the time and  resources to prepare for the season
which starts in April. Cost reduction programs have brought the cost of sales in
line to result in positive gross margin for the second quarter production.

Selling,  general and  administrative  expenses for the quarter were $(288,592).
The high expense total as a percentage of sales  resulted  primarily the Company
electing to not seek low margin business in the off season.

Net loss for the quarter was $62,081.

Liquidity and Capital Resources

The Company's  working capital  deficit  increased from $961,922 at December 31,
1996 to $1,249,233 at March 31, 1997 The deficit increased  primarily because of
the net loss for the quarter.  The Company's current ratio was .39 to 1 at March
31, 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  Company's  Series A Preferred  Stock,  one share of
Company's  common  stock and one Series A Warrant  to  purchase  four  shares of
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,
1997 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 the  assets of the  Company  and are
guaranteed by an officer and director of the Company.

During February and March 1994, the Chairman and Chief Executive  Officer of the
Company,  and  affiliate  of his advanced the Company a total of $26,000 to meet

                                       8
<PAGE>

the 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  is
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.

In December 1995 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, 1996 $400,000 had been raised.

Management of the Company believes that the marketing and  distribution  network
it has created and the sale of the franchises, along with its continuing efforts
to  penetrate  current  markets  and  create  new  markets  (such as retail  and
international),  will produce a volume of sales sufficient to operate profitably
during 1997.  There can be no  assurance  that  additional  debt funding will be
available  to  the  Company.   The  Company's   management  believes  that  with
anticipated cash flow from operations,  if funding is obtained, the Company will
have  sufficient  working capital with which to fund its operations for the next
twelve months.

                                       9
<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
          Coopers & Lybrand resigned as auditor for the Company.

          The Company  filed Form 8-K,  dated May 30,  1997,  to report that the
          Company had engaged Arthur Andersen & Co. as auditor for the Company.



                                       10
<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:  July 31, 1997                             /s/ C. Gus Grant
                                                 -------------------------------
                                                 C. Gus Grant
                                                 President, Director and Chief
                                                 Executive Officer
                                                 (Principal Operating Officer)






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