Mix grated cheese with 1/2 teaspoon chili powder. Take 1 teaspoon of the cheese mix and form a ball.
When all cheese balls are done, roll them through flour. Mix egg with water and beat well. Mix the bread crumbs with remaining chili powder. Dip the cheese balls in egg, one at a time, then roll through flour again then back to egg dipping. Lastly roll through bread crumbs and nicely coat the whole ball.
When all balls are coated as above, heat oil in a skillet. The oil should cover at least half the balls. Cook the cheese balls until golden, about 3 minutes on each size. Remove on a paper towel. Stick a toothpick so they're easier to grab and serve.