Preheat oven to 350°F. Grease and flour two 8-inch round cake pans.
In a large mixing bowl sift together flour, sugar, baking powder and salt.
Make a well in the center and add butter, watermelon juice, strawberry extract, eggs, and red food color. Beat with a hand mixer on medium speed for about 1 minute, or until ingredients are fully incorporated.
Sift 1 cup of chocolate chips with 1 tablespoon flour and then gently stir into batter.
Pour batter into prepared pans, dividing equally among both. Equally divide about 1/4 cup chocolate chips between the two cake pans. (The remaining chocolate chips will be used between the layers of the cake when you frost it.) Bake 20 to 30 minutes or until a toothpick comes out mostly clean.
Cool in pans on wire racks. When cakes have cooled completely, turn out onto wire racks.
* To make watermelon juice, simple cut about 1/4 a medium size watermelon into chunks. Place in blender and puree until smooth.