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, 2000.

     TRANSITION REPORT UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 For the transition period from       to

Commission File Number 1-12738


                            ONSITE ENERGY CORPORATION
                 -----------------------------------------------
                 (Name of small business issuer in its charter)


          Delaware                                  33-0576371
----------------------------------       -------------------------------------
(State or other jurisdiction             (I.R.S.  Employer Identification No.)
of incorporation or organization)


        701 Palomar Airport Road, Suite 200, Carlsbad, CA         92009
        --------------------------------------------------     ---------
         (Address of principal executive offices)              (Zip Code)


Issuer's telephone number, including area code:  (760) 931-2400


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

The number of Class A common stock, $0.001 par value, outstanding as of November
9, 2000 is 19,392,396.


<PAGE>2
Part I - Financial Information

Item 1. Financial Statements

                            Onsite Energy Corporation
                      Condensed Consolidated Balance Sheet
                               September 30, 2000
                                   (Unaudited)

<TABLE>
<S>                                                                                                <C>

ASSETS

Current Assets:
    Cash                                                                                           $    546,202
    Accounts receivable, net of allowance for doubtful accounts of $37,000                              847,787
    Costs and estimated earnings in excess of billings on uncompleted contracts                          14,055
    Other assets                                                                                         88,724
                                                                                                   -------------
           TOTAL CURRENT ASSETS                                                                       1,496,768

    Property and equipment, net of accumulated depreciation and amortization of $372,000                387,535
    Other assets                                                                                         27,748
                                                                                                   -------------
           TOTAL ASSETS                                                                            $  1,912,051
                                                                                                   =============

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
    Notes payable, current portion                                                                 $    183,127
    Capitalized lease obligation, current portion                                                       219,305
    Liabilities in excess of assets held for sale                                                     4,136,016
    Accounts payable                                                                                  2,020,459
    Billings in excess of costs and estimated earnings on uncompleted contracts                         520,983
    Accrued expenses and other liabilities                                                            1,098,434
                                                                                                   -------------
          TOTAL CURRENT LIABILITIES                                                                   8,178,324

Long-Term Liabilities:
    Notes payable, less current portion                                                                 139,381
    Capitalized lease obligation, less current portion                                                  121,737
    Deferred income                                                                                     801,096
                                                                                                   -------------
          TOTAL LIABILITIES                                                                           9,240,538
                                                                                                   -------------

Commitments and contingencies

Shareholders' Equity (Deficit):
     Preferred Stock, Series C, $.001 par value, 842,500 shares authorized,
         649,120 issued and outstanding
         (aggregate $3,245,600 liquidation preference)                                                      649
     Preferred Stock, Series D, $.001 par value,
        157,500 shares  authorized,  issued and outstanding and held in escrow                                -
     Preferred Stock, Series E, $.001 par value, 50,000 shares authorized,
        issued and outstanding  (aggregate $1,000,000 liquidation preference)                                50
    Common stock, $.001 par value, 24,000,000 shares authorized:
       Class A common stock, 23,999,000 shares authorized, 19,347,730 issued and
        outstanding                                                                                      19,348
       Class B common stock,  1,000 shares authorized, none issued and outstanding                           --
    Additional paid-in capital                                                                       27,906,386
    Notes receivable - shareholders                                                                    (838,964)
    Accumulated deficit                                                                             (34,415,956)
                                                                                                   -------------
         TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                                        (7,328,487)
                                                                                                   -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                               $  1,912,051
                                                                                                   =============
</TABLE>



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

<PAGE>3

                            Onsite Energy Corporation
                 Condensed Consolidated Statement of Operations
                                   (Unaudited)
<TABLE>
<S>                                                                     <C>                       <C>

                                                                            Three Months Ended September 30,
                                                                              2000                     1999
                                                                         ------------             -------------
Revenues                                                                 $ 2,090,509              $  9,594,181
Progect incentive revenue                                                    844,122                   145,900
                                                                         ------------             -------------
  Total revenues                                                           2,934,631                 9,740,081

Cost of sales                                                              1,327,486                 7,443,959
                                                                         ------------             -------------

    Gross margin                                                           1,607,145                 2,296,122

Selling, general, and administrative expenses                              1,004,244                 2,979,350
Depreciation and amortization expense                                         69,800                   143,625
Recovery of reserve provided for sale
   of subsidiary                                                                  --                  (358,670)
                                                                         ------------             -------------
     Operating income (loss)                                                 533,101                  (468,183)
                                                                         ------------             -------------

Other income (expense):
   Interest expense                                                          (28,773)                 (118,834)
   Gain on sale of property and equipment                                     15,045                        --
   Interest income                                                                --                     5,623
                                                                         ------------             -------------

     Total other expense                                                     (13,728)                 (113,211)
                                                                         ------------             -------------

Income (loss) before provision for income taxes and
  extraordinary item                                                         519,373                  (581,394)

Provision for income taxes                                                        --                     3,600
                                                                         ------------             -------------

Income (loss) from operations                                                519,373                  (584,994)

Extraordinary item:
  Gain on extinguishment of liabilities                                       42,742                        --
                                                                         ------------             -------------

Net income (loss)                                                        $   562,115              $   (584,994)
                                                                         ============             =============

Net income (loss) allocated to common shareholders                       $   481,075              $ (1,347,756)
                                                                         ============             =============

Basic earnings (loss) per common share
   Income (loss) from operations                                         $      0.02              $      (0.07)
   Extraordinary item                                                             --                        --
                                                                         ------------             -------------
   Net income (loss)                                                     $      0.02              $      (0.07)
                                                                         ============             =============

Diluted earnings (loss) per common share
   Income (loss) from operations                                         $      0.01              $      (0.07)
   Extraordinary item                                                             --                        --
                                                                         ------------             -------------
   Net income (loss)                                                     $      0.01              $      (0.07)
                                                                         ============             =============

</TABLE>

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


<PAGE>4

                            Onsite Energy Corporation
                  Condensed Consolidated Statement of Cashflows
                                   (Unaudited)

<TABLE>

<S>                                                                            <C>                  <C>

                                                                                Three Months Ended September 30,
                                                                                   2000                 1999
                                                                               ------------         ------------
Cash flows from operating activities:
Net income (loss)                                                              $   562,115          $  (584,994)
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
       Amortization of excess purchase price over net assets acquired                   --                8,279
       Amortization of acquired contract costs                                          --              (59,147)
       Depreciation and amortization                                                69,800              135,345
       Recovery of reserve provided for sale or disposal of subsidiary                  --             (358,670)
       Non-cash compensation upon issuance of stock                                     --               47,500
       Non-cash compensation for stock options under a variable plan               176,902                   --
(Increase) decrease:
       Accounts receivable                                                        (335,751)             705,086
       Costs and estimated earnings in excess of billings
           on uncompleted contracts                                                (53,541)             381,431
       Capitalized project costs                                                    94,617                   --
       Other assets                                                                (56,988)             (13,585)
       Cash-restricted                                                                  --               29,063
Increase (decrease):
       Accounts payable                                                            (24,504)             980,634
       Billings in excess of costs and estimated earnings
           on uncompleted contracts                                                302,072             (440,965)
       Accrued expenses and other liabilities                                     (140,251)            (594,497)
       Deferred income                                                             (45,005)             (23,739)
                                                                               ------------         ------------
             Net cash provided by operating activities                             549,466              211,741
                                                                               ------------         ------------
Cash flows from investing activities:
       Purchases of property and equipment                                          (5,609)             (21,186)
       Loans to shareholders                                                       (88,964)            (242,424)
                                                                               ------------         ------------
             Net cash used in investing activities                                 (94,573)            (263,610)
                                                                               ------------         ------------
Cash flows from financing activities:
       Proceeds from issuance of preferred stock                                        --            1,000,000
       Proceeds from notes payable                                                 136,122                   --
       Repayment of notes payable - related party                                       --             (130,458)
       Repayment of notes payable                                                 (270,893)          (1,132,756)
                                                                               ------------         ------------
             Net cash used in financing activities                                (134,771)            (263,214)
                                                                               ------------         ------------
Net increase (decrease) in cash                                                    320,122             (315,083)

Cash, beginning of period                                                          226,080              900,408
                                                                               ------------         ------------
Cash, end of period                                                            $   546,202          $   585,325
                                                                               ============         ============

</TABLE>


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

<PAGE>5
                            ONSITE ENERGY CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:        As     contemplated by   the   Securities and Exchange Commission
               under Item 310 of  Regulation  S-B,  the  accompanying  financial
               statements  and footnotes  have been condensed and do not contain
               all  disclosures   required  by  generally  accepted   accounting
               principles and, therefore, should be read in conjunction with the
               Form 10-KSB for Onsite Energy  Corporation  (the "Company") as of
               and for the year  ended  June 30,  2000 and all other  subsequent
               filings. In the opinion of management, the accompanying unaudited
               financial  statements  contain  all  adjustments  (consisting  of
               normal  recurring  adjustments)  necessary to present  fairly its
               financial  position and results of its operations for the interim
               period.

NOTE 2:        The consolidated  balance sheet as of September 30, 2000, and the
               consolidated   statements  of  operations   and  cash  flows  for
               the three months ended September 30, 2000 and 1999, represent the
               financial position and results of operations of the Company.  The
               results for the interim  period ended  September 30, 2000 are not
               necessarily indicative of results that will be obtained in future
               periods.

NOTE 3:        Earnings  per share  calculations  for the  three  month  periods
               ended  September  30, 2000 and September 30, 1999 are as follows:



<PAGE>6

<TABLE>
<S>                                                 <C>                <C>

                                                                   Three Months
                                                               Ended September 30,
                                                            2000               1999
                                                      -------------   --------------
                         BASIC
Net Income/(Loss)                                     $    562,115    $   (584,994)
Less:  Preferred stock dividends                           (81,040)       (762,762)
                                                      -------------   --------------

Net income/(loss) allocated to common shareholders    $    481,075    $ (1,347,756)
                                                      =============   ==============

Weighted average number of common shares                18,694,159      18,628,894
                                                      =============   ==============

Basic earnings/(loss) per common share                $       0.02    $      (0.07)
                                                      =============   ==============

                       DILUTED
Net income available to common shareholders           $    481,075    $ (1,347,756)
Preferred stock dividends                             $     81,040               *
                                                      -------------   --------------

Net income available to common shareholders
      plus assumed conversion                         $    562,115    $ (1,347,756)
                                                      =============   ==============

Weighted average number of common shares                18,694,159      18,628,894

Common stock equivalent shares representing assumed
     conversions of preferred stock                     23,995,600               *

Common stock equivalent shares representing shares
     issuable upon exercise of stock options               362,471               *
                                                      -------------   --------------

Weighted average number of shares used in
     calculation of diluted income per common share     43,052,230      18,628,894
                                                      =============   ==============

Diluted earnings per common share                     $       0.01    $      (0.07)
                                                      =============   ==============

 * Not applicable as effect would be anti-dilutive

</TABLE>

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

Background

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995. With the exception of historical facts
stated  herein,  the matters  discussed  in this  quarterly  report are "forward
looking" statements that involve risks and uncertainties that could cause actual
results to differ  materially  from  projected  results.  The "forward  looking"
statements  contained  herein  are  cross-referenced  to  this  paragraph.  Such
"forward  looking"  statements  include,  but are not  necessarily  limited  to,
statements  regarding  anticipated  levels of future  revenue and earnings  from
operations of the Company, projected costs and expenses related to the Company's

<PAGE>7


energy  services  agreements,  and the  availability  of future  debt and equity
capital on  commercially  reasonable  terms.  Factors  that could  cause  actual
results  to  differ  materially  include,  in  addition  to  the  other  factors
identified  in this  report,  the cyclical  and  volatile  price of energy,  the
inability to continue to contract  sufficient  customers to replace contracts as
they become completed,  unanticipated  delays in the approval of proposed energy
efficiency  measures by the  Company's  customers,  delays in the receipt of, or
failure to receive  necessary  governmental or utility permits or approvals,  or
the renewals thereof,  risks and uncertainties  relating to general economic and
political conditions, both domestically and internationally,  changes in the law
and regulations governing the Company's activities as an energy services company
and the  activities  of the nation's  regulators  and public  utilities  seeking
energy  efficiency as a cost  effective  alternative to  constructing  new power
generation  facilities,  results of project specific and company working capital
and financing efforts and market conditions,  and other risk factors detailed in
the Company's  Securities  and Exchange  Commission  filings  including the risk
factors  set forth in the  Company's  Form 10-KSB for the fiscal year ended June
30, 2000 (as the same has been  amended).  Readers of this report are  cautioned
not to put undue reliance on "forward  looking"  statements  which are, by their
nature,  uncertain as reliable  indicators  of future  performance.  The Company
disclaims any intent or obligation to publicly  update these  "forward  looking"
statements, whether as a result of new information, future events or otherwise.

The Company is an energy services company ("ESCO") that assists energy customers
in lowering their energy costs by developing,  engineering,  installing,  owning
and  operating  efficient,  environmentally  sound energy  efficiency  and power
supply  projects,  and  advising  customers  on  the  purchasing  of  energy  in
deregulating  energy  markets.  The Company  offers its services to  industrial,
commercial and institutional  customers. By combining development,  engineering,
analysis,  and project and financial  management  skills, the Company provides a
comprehensive package of services,  ranging from feasibility  assessment through
construction and operation for projects incorporating energy efficient lighting,
energy  management  systems,  heating,  ventilation and air conditioning  (HVAC)
upgrades,  cogeneration and other energy efficiency measures.  In addition,  the
Company offers bill auditing,  tariff  analysis,  transmission  and distribution
analysis and upgrades,  and measurement and verification  ("M&V") services.  The
Company also provides  professional  consulting  services in the areas of direct
access  planning,  market  assessment,  business  strategies  and public  policy
analysis.  The Company has been accredited by the National Association of Energy
Service  Companies.  It is the Company's  mission to help  customers  save money
through independent energy solutions.

As of June 30, 2000, the Company's  auditors issued a qualified  opinion subject
to the  Company's  ability to continue  as a going  concern.  The going  concern
issues are the result of continued  operating  losses,  negative working capital
and negative  shareholders'  equity.  See the  Liquidity  and Capital  Resources
discussion  below for  details  of the  Company's  plan for  dealing  with these
issues.

In October 1997, the Company acquired Westar Business Services,  Inc., which was
renamed Onsite Business Services,  Inc., and subsequently  renamed Onsite Energy
Services,  Inc. ("OES"). OES previously provided utility services and industrial
water  services  primarily  in the  states of  Kansas,  Missouri  and  Oklahoma.
However,  as a result  of the  February  2000 sale of  substantially  all of the
assets of Onsite/Mid-States, Inc. ("OMS"), a wholly-owned subsidiary of OES, and
the loss of certain key  employees of OES in connection  with that  transaction,
all as discussed in detail below, OES currently  focuses primarily on industrial
water services.

In February  1998,  OES acquired the  operating  assets of  Mid-States  Armature
Works, Inc. through its newly-formed  subsidiary,  OMS. OMS provides specialized
medium and high voltage electrical  fabrication,  installation,  maintenance and
repair  services to municipal  utility  customers  and others,  primarily in the
states of Kansas,  Nebraska,  Missouri, Iowa and Oklahoma. In February 2000, OMS

<PAGE>8


completed  a  transaction  to sell  substantially  all of the assets of OMS to a
private  buyer in  exchange  for  $300,000  cash plus  uncollected  earnings  on
existing  projects that were  transferred as part of the assets.  As part of the
transaction, all of the employees of OMS and certain key employees of OES ceased
employment  with OMS and/or OES, as applicable,  and began  employment  with the
buyer.

In April 1998,  the Company  formed Onsite Energy de Panama,  S.A., a Panamanian
corporation, to facilitate the development and acquisition of potential projects
in  Panama  and Latin  America.  There has been no  financial  activity  in this
subsidiary since its inception.

In June 1998, the Company acquired Lighting Technology  Services,  Inc. ("LTS").
LTS  provides  energy  efficiency  projects  through  retrofits  of lighting and
controls either  independently  or as a  subcontractor  to other energy services
companies  primarily in Southern  California.  Effective September 30, 1999, the
Company  sold 95 percent of its  interest in LTS. In exchange  for the shares of
LTS, the Company  received the 690,000  shares of the  Company's  Class A Common
Stock that it originally had issued in connection  with the  acquisition of LTS,
as well as a 10 year non-interest bearing note for approximately $936,000, which
may be repaid by LTS by providing lighting services to the Company.  The Company
incurred a loss of approximately  $651,000 as a result of the sale. In addition,
the  note  has  been  fully   reserved  due  to  uncertainty   surrounding   its
recoverability.

On June 30, 1998,  the Company  acquired the assets and certain  liabilities  of
SYCOM Enterprises,  LLC ("SYCOM LLC"), through a newly-formed subsidiary,  SYCOM
ONSITE Corporation ("SO Corporation"). SYCOM LLC was also an ESCO with customers
primarily on the East Coast of the United States.

Effective April 1, 1999, the Company formed REEP Onsite,  Inc. ("REEP") and ERSI
Onsite,  Inc.  ("ERSI"),  for the purpose of acquiring  substantially all of the
assets and certain  liabilities of REEP, Inc. REEP provides  residential  energy
services while ERSI is a commercial lighting contractor. The operations of these
entities  were  terminated  effective  June  30,  2000 in  connection  with  the
termination of the Sale and Noncompetition Agreement discussed below.

Since the close of the SYCOM  transaction in June 1998,  Onsite has  experienced
significant  losses and as a result has terminated  the Sale and  Noncompetition
Agreement with Sycom Corporation effective June 30, 2000. The Company,  however,
will retain the project assets  purchased from SYCOM LLC in June 1998 as well as
projects developed since that date. In connection with the termination,  S. Lynn
Sutcliffe resigned as a director and the President of the Company.

The Company will maintain its  subsidiary,  SO  Corporation,  for the purpose of
completing several long-term construction projects as well as for the management
of other revenue generating  activities and to meet its ongoing  commitments for
M&V for projects primarily located on the East Coast.  Efforts by SO Corporation
to develop any new business in this region ceased as of June 30, 2000.

As of October  15,  2000,  the Company is in default on its  requirement  to pay
dividends  on the  Series  C  Preferred  Stock  for  four  quarters.  Under  the
Certificate of Designations for the Series C Stock if, at any time, four or more
quarterly  dividends,  whether or not consecutive,  on the Series C Stock are in
default, in whole, or in part, the holders of the Series C Stock are entitled to
elect the smallest  number of  directors  as would  constitute a majority of the
Board of  Directors  of the  Company and the  holders of the  Company's  Class A
Common  Stock  as a  class  are  entitled  to  elect  the  remaining  directors.
Additionally,  under the October 1997 Stock Subscription  Agreement entered into
by Westar and the Company, Westar agreed for a period of five years to limit its
equity  ownership of the Company to 45 percent of the outstanding  shares of the
Class A Common  Stock on a fully  diluted  basis and to not take  certain  other
actions  related to  controlling  or attempting to control the Company unless it
receives the Company's  permission via the majority vote of the directors of the


<PAGE>9

Company's  Board of Directors who are not directors  designated by Westar or are
affiliates of Westar.  However,  if, at any time, Westar exercises its rights to
elect the  majority of the Board of  Directors  because  four or more  quarterly
dividends,  whether or not consecutive, on the Series C Stock are in default, in
whole or in part, all directors are entitled to vote on such ownership issue and
not just the non-Westar designated directors.

In March  2000,  the  Company  reached an  agreement  with  Westar  whereby  the
dividends due on October 15, 1999,  and January 15, 2000,  were waived by Westar
in  exchange  for the  Company's  release  of  Westar  and its  parent,  Western
Resources,  Inc.,  from certain  non-compete  agreements.  The amounts waived by
Westar  were  16,208  shares of Series C stock  related to the  October 15, 1999
dividend, valued at $28,202, and $83,015 in cash related to the January 15, 2000
dividend.  The Company remains delinquent on the July 15, 1999 (15,823 shares of
Series C Stock valued at $1,661),  the April 15, 2000 ($81,040  cash),  July 15,
2000  ($81,040   cash)  and  the  October  15,  2000  ($81,040   cash)  dividend
requirements

As discussed above, the Company acquired OES, OMS, LTS and SO Corporation during
the fiscal year 1998, and REEP and ERSI during the fiscal year 1999.  During the
fiscal year 2000,  the Company sold LTS, OMS and limited the operation of OES to
industrial water purification in Kansas. In addition, the Company terminated its
Sale and  Noncompetition  agreement with SYCOM  Corporation and discontinued the
operations  of REEP and ERSI.  To  accurately  depict the change in  operations,
liquidity  and  capital   resources,   the  Company  has  given  a  consolidated
comparative and also a comparative that removes the impact of its newly acquired
and or divested  subsidiaries.  The comparative that removes the impact of newly
acquired  and or divested  subsidiaries  includes  the results of Onsite  Energy
Corporation and the results of Onsite Energy Services.

The Company has gone  through  significant  changes over the past few years that
involved aggressive growth through acquisition and the subsequent divestiture or
ceased operations of nearly all of the added/created subsidiaries.  As a result,
the Company anticipates  substantial  reductions in revenues,  cost of sales and
selling,  general and  administrative  expenses.  The Company has focused itself
back on its core  business  of being an energy  services  company  with  primary
emphasis in California markets.

Unless the context indicates  otherwise,  reference to the Company shall include
all of its wholly-owned subsidiaries.

Results of Operations.

Revenues for the three month period ended  September  30, 2000 were  $2,934,631,
compared to $9,740,081, a decrease of $6,805,450,  or 69.9 percent.  Revenues in
the current  year three month period  include  approximately  $566,000,  with no
associated costs, in one time project incentive revenues related to two projects
of  SO  Corporation.   After   elimination  of  discontinued   and  or  divested
subsidiaries,  revenues  for the three  months  ended  September  30,  2000 were
$1,954,564  compared to  $2,378,392,  a decrease of  $423,828.  The decrease was
primarily  due to the  narrowing  of OES  activities  resulting  in a decline in
revenue at OES of $461,656.

Cost of sales for the three  months  ended  September  30,  2000 was  $1,327,486
compared to $7,443,959 for the three months ended September 30, 1999, a decrease
of $6,116,473.  After elimination of discontinued and or divested  subsidiaries,
cost of sales was  $1,149,173  for the three  months ended  September  30, 2000,
compared to $1,818,313, a decrease of $669,140.

Gross margin for the three months ended September 30, 2000 was $1,607,145  (54.8
percent of  revenues),  compared to $2,296,122  (23.6  percent of  revenues),  a


<PAGE>10

decrease of  $688,977.    Gross margin as a percentage of revenues was higher in
the  current  year as a result of  approximately  $566,000  in one time  project
incentive  revenues  with  no  associated  costs,  as  well  as an  increase  in
consulting  revenues with  traditionally  higher margins.  After  elimination of
discontinued  and or divested  subsidiaries,  gross  margin for the three months
ended  September  30, 2000 was  $805,392  (41.2  percent of sales),  compared to
$560,077  (23.5  percent of  sales),  an  increase  in margin of  $245,315.  The
increase as a percentage of revenues was attributable to a higher  proportion of
consulting revenue in the current year.

Selling, general and administrative ("SG&A) expense was $1,004,244 for the three
months ended  September  30,  2000,  compared to  $2,979,350  for the same three
months last year, a decrease of $1,975,106.  After  elimination of  discontinued
and or divested subsidiaries, SG&A for the three months ended September 30, 2000
was  $1,000,571,  compared to $1,014,380,  a decrease of $13,809.  SG&A includes
$176,902 in expense in the current quarter associated with options accounted for
under a variable plan due to the repricing of stock options in June 2000.

Depreciation  expense for the three month  period ended  September  30, 2000 was
$69,800  compared to  $143,625  for the same three  months in the prior year,  a
decrease  of  $73,825.   After  elimination  of  discontinued  and  or  divested
subsidiaries,  depreciation and amortization  expense for the three months ended
September  30,  2000 was  $69,800,  compared to $69,854 for the same three month
period in 1999.

Recovery of reserve  provided for sale or disposal of subsidiary was a reduction
in the operating loss of $358,670 for the three months ended  September 30, 1999
and is a non  recurring  item  relating  specifically  to the sale of 95% of the
Company's  interest in LTS. In June 1999,  the Company had decided on  exploring
options for the sale of LTS, and at that time established a reserve for possible
loss of  $1,010,000  based upon  estimates  derived  from the facts that existed
prior to a definitive  agreement for sale.  The ultimate sale resulted in a loss
of approximately $651,000.

Net other expense was $13,728 for the three month period ended September 30,
2000,  compared to net other  expense of $113,211  for the same three  months in
1999, a decrease in expense of $99,483. This decrease was primarily attributable
to a decrease in interest expense of $90,061.  After elimination of discontinued
and or  divested  subsidiaries,  net other  expense for the three  months  ended
September  30, 2000 was $13,259  compared to $7,970 for the three  months  ended
September 30, 1999.

Net income for the three months ended September 30, 2000 was $562,115,  or $0.02
per share, after inclusion of an extraordinary gain of $42,742 for the reduction
of liabilities at amounts that were less than the face value of amounts due. Net
loss for the three months ended  September 30, 1999 was $584,994,  or $0.07 loss
per  share.  The  change  from the net loss in the  three  month  periods  ended
September  30,  1999  to  September  30,  2000   represents  an  improvement  of
$1,147,109. After elimination of discontinued and or divested subsidiaries,  net
loss for the three months ended  September  30, 2000 was $263,192  compared to a
net loss of $324,768 for the three months ended September 30, 1999  representing
an improvement of $61,576 in the current three month period.



<PAGE>11


Liquidity and Capital Resources

The Company's cash and cash  equivalents were $546,202 as of September 30, 2000,
compared to $585,325  at  September  30,  1999.  Working  capital was a negative
$6,681,556  as of September  30, 2000,  compared to  $6,079,050 at September 30,
1999, an increase in negative working capital of $602,506.

Cash flows  provided by operating  activities  was $549,466 for the three months
ended  September 30, 2000,  compared to $211,741 for the same three month period
in the prior year. The  improvement is  attributable to having net income in the
current year of $562,115 compared to a loss in the prior year three month period
of $584,994 offset by changes in accounts receivable and accounts payable.

Cash flows used in investing  activities  was $94,573 for the three months ended
September  30,  2000,  compared to $263,610  for the same three month  period in
1999,a  decrease of  $169,037.  The  decrease was  primarily  attributable  to a
decrease in loans to shareholders of $153,460.

Cash flows used in financing  activities was $134,771 for the three months ended
September  30,  2000,  compared to cash flows used in  financing  activities  of
$263,214 for the same three month period last year, a decrease of $128,443.  The
decrease  is due to  reduction  in  repayments  of notes  payable  offset by the
proceeds  from the sale of preferred  stock in the three months ended  September
30, 1999.

The Company has suffered  significant  losses from  operations  for the past two
fiscal  years.  For the years ended June 30, 2000 and 1999,  the Company had net
losses of $6,637,046 and $6,477,458,  respectively,  and had a negative  working
capital of $7,703,629 and an  accumulated  deficit of $34,978,075 as of June 30,
2000.  Management  believes that the Company will be able to generate additional
revenues and improve operating  efficiencies through a substantial  reduction in
overhead,  the  addition  of new  projects  as well as by other means to achieve
profitable  operations.  During the year ended June 30,  2000,  the Company took
steps to mitigate the losses and enhance its future viability. During the fiscal
year, the Company sold its wholly-owned  subsidiaries,  LTS and OMS in an effort
to raise cash and reduce operating losses. In a further step to reduce operating
losses, the Company terminated its Sale and Noncompetition  agreement with Sycom
Corporation,  discontinued  the operations of REEP Onsite,  Inc and ERSI Onsite,
Inc. Management believes that all of the above actions will allow the Company to
continue as a going concern, with reduced revenues and reduced expenses.  Future
cash requirements depend on the Company's profitability,  it's ability to manage
working capital requirements and its rate of growth.

Seasonality and Inflation.  Management does not believe that the business of the
Company is effected by seasonality or inflation.

Impact of Recently  Issued  Standards.  In Fiscal 1999, the FASB issued SFAS No.
133,  "Accounting  for  Derivative  Instruments  and Hedging  Activities".  This
statement   establishes   accounting  and  reporting  standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts and for hedging activities.  It requires that an entity recognizes all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position and measures those  instruments at fair value.  Subsequently,  the FASB
issued  SFAS  No.  137,  Accounting  for  Derivative   Instruments  and  Hedging
Activities -- Deferral of the Effective  Date of FASB  Statement No. 133,  which
amends the effective  date of SFAS No. 133 to all fiscal  quarters of all fiscal
years  beginning after June 15, 2000. The Company plans to adopt SFAS No. 133 in
Fiscal Year 2001 and is currently  assessing the impact this statement will have
on its consolidated financial statements. Management believes that the impact of
SFAS No. 133 will not be significant to the Company.

<PAGE>12


In December 1999, the  Securities and Exchange  Commission  (SEC) released Staff
Accounting bulletin (SAB) 101 "Revenue Recognition in Financial Statements". SAB
101 establishes  guidelines in applying generally accepted accounting principles
to the  recognition  of revenue in financial  statements  based on the following
four  criteria;  persuasive  evidence of an  arrangement  exists,  delivery  has
occurred or services  have been  rendered,  the  seller's  price to the buyer is
fixed or determinable,  and  collectibility is reasonably  assured.  SAB 101, as
amended by SAB 101A, is effective no later than the first fiscal  quarter of the
fiscal year beginning  after  December 15, 1999,  except that  registrants  with
fiscal years that begin between December 16, 1999 and March 15, 2000, may report
any resulting  change in accounting  principle no later than their second fiscal
quarter of the fiscal year  beginning  after December 15, 1999. The Company does
not  believe  that the  adoption  of SAB 101 will have a material  effect on its
financial position or result of operations.

Part II - Other Information

Item 1. Legal  Proceedings.  In October  2000,  three former  employees of Sycom
Corporation  (including  one who also had served as an  officer of the  Company)
filed a complaint  (Superior  Court of New Jersey,  Law Division,  Essex County,
Case No.  L9289-00)  against the Company,  Sycom  Corporation and other parties,
including two of the  Company's  current or former  directors and officers,  for
wages, bonuses and commissions (totaling $252,662) allegedly due and owing, plus
interest,  costs of suit and  other  alleged  damages.  The  employees  were not
employees  of the  Company.  The  matter  initially  is set  to be  heard  on an
expedited basis but the defendants,  including the Company,  are contesting this
order and the Company is in the process of preparing its responsive pleadings.

Item 2. Changes in Securities and Use of Proceeds - Not Applicable

Item 3. Defaults upon Senior Securities - Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable

Item 5. Other Information - Not Applicable

Item 6. Exhibits and Reports on Form 8-K

        None

        Exhibit 27   Financial Data Schedules

<PAGE>13

                                   SIGNATURES


In  accordance  with  the  requirements  of the  Securities  Exchange  Act , the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.


                                       ONSITE ENERGY CORPORATION



Date:   November 13, 2000           By: \s\ RICHARD T. SPERBERG
                                            -----------------------------
                                            Richard T. Sperberg
                                            Chief Executive Officer


                                    By: \s\ J. BRADFORD HANSON
                                            -----------------------------
                                            J. Bradford Hanson
                                            Chief Financial Officer and
                                            Principal Accounting Officer