Haha, ouch! Nice work, you rolled a 2, you get +1 for being a warrior (giving you a total roll score of 3). You took down the Water Demon who only had a power score of 2.
You still have 3 life points: 
and when the next Stage is available may continue. Well done!
Lady P sends her appreciation at this positive turn of events. She would have thanked you in person but is currently supervising the careful and thorough cleaning of her beloved parasol.