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, 1999

___  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 of            (I.R.S. Employer Identification No.)
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 May 10,
1999 is 18,584,663.

<PAGE>2

                            Onsite Energy Corporation
                      Condensed Consolidated Balance Sheet
                                 March 31, 1999
                                   (Unaudited)


                                     ASSETS

Current Assets:
    Cash                                                           $    578,741
    Accounts receivable, net of allowance for doubtful                   
      accounts of $13,000                                             6,554,083
    Inventory                                                           189,018
    Capitalized Project Costs                                            65,498
    Costs and estimated earnings in excess of billings
      on uncompleted contracts                                        2,230,237
    Other current assets                                                220,469
                                                                   ------------
           TOTAL CURRENT ASSETS                                       9,838,046

    Cash-restricted                                                     133,695
    Property and equipment, net of accumulated 
      depreciation and amortization                                   1,584,597
    Excess of purchase price over net assets 
      acquired, net of amortization of $391,000                       3,186,925
    Other assets                                                         65,936
                                                                   ------------
           TOTAL ASSETS                                            $ 14,809,199
                                                                   ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Notes payable - related parties                                $    290,063
    Notes payable                                                     1,811,282
    Accounts payable                                                  8,581,371
    Billings in excess of costs and estimated                          
      earnings on uncompleted contracts                               2,631,395
    Accrued expenses and other liabilities                              982,187
                                                                   ------------
          TOTAL CURRENT LIABILITIES                                  14,296,298

Long-Term Liabilities:
    Accrued future operation and maintenance costs
      associated with energy services agreements                        465,359
                                                                   ------------
          TOTAL LIABILITIES                                          14,761,657
                                                                   ------------
Commitments and contingencies

Shareholders' Equity:
    Preferred Stock, Series C, 842,500 shares authorized,
      633,674 issued and outstanding (Aggregate $2,066,400             
      liquidation preference)                                               633
    Preferred Stock, Series D, 157,500 shares authorized,
      issued and outstanding and held in escrow                               -
    Common Stock, $.001 par value, 24,000,000 shares authorized:
      Class A common stock, 23,999,000 shares authorized, 
        18,551,621 issued and outstanding                                18,552
      Class B common stock, 1,000 shares authorized,
        none issued and outstanding                                           -
    Additional paid-in capital                                       25,485,866
    Notes receivable - stockholders                                  (3,172,611)
    Accumulated deficit                                             (22,284,898)
                                                                   ------------
         TOTAL SHAREHOLDERS' EQUITY                                      47,542
                                                                   ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $ 14,809,199
                                                                   ============


The accompanying notes are an integral part of the financial statements


<PAGE>3

                            Onsite Energy Corporation
                 Condensed Consolidated Statement of Operations
                                   (Unaudited)



<TABLE>
<CAPTION>

                                                Three Months Ended March 31,                   Nine Months Ended March 31,
                                                1999                  1998                    1999                  1998
                                          --------------        --------------          --------------        --------------

<S>                                       <C>                   <C>                     <C>                   <C>           
Revenues                                  $   12,632,384        $    3,452,652          $   31,271,427        $    8,994,035

Cost of sales                                  9,299,313             2,677,705              24,949,680             6,819,570
                                          --------------        --------------          --------------        -------------- 
   Gross margin                                3,333,071               774,947               6,321,747             2,174,465

Selling, general, and 
   administrative expenses                     2,691,633             1,033,769               8,139,931             2,475,031

Depreciation and amortization expense            258,421               151,497                 814,044               415,421
                                          --------------        --------------          --------------        -------------- 
   Operating income/(loss)                       383,017              (410,319)             (2,632,228)             (715,987)
                                          --------------        --------------          --------------        -------------- 
Other income/(expense):
   Interest expense                              (38,571)               (5,762)               (206,882)              (14,350)
   Interest income                                30,341                 9,392                  96,390                22,766
   Other expense                                       -               (47,641)                      -               (53,200)
                                          --------------        --------------          --------------        -------------- 
     Total other expense                          (8,230)              (44,011)               (110,492)              (44,784)
                                          --------------        --------------          --------------        -------------- 
Net income/(loss)                         $      374,787        $     (454,330)         $   (2,742,720)       $     (760,771)
                                          ==============        ==============          ==============        ==============
Earnings/(Loss) per common share:
   Basic                                  $         0.02        $        (0.03)         $        (0.16)       $        (0.06)
                                          ==============        ==============          ==============        ==============
   Diluted                                $         0.02                     *                       *                     *
                                          ==============        ==============          ==============        ==============
Shares used in per common share 
  calculation:
   Basic                                      18,537,128            14,714,361              18,433,065            13,061,167
                                          ==============        ==============          ==============        ==============
   Diluted                                    22,567,490                     *                       *                     *
                                          ==============        ==============          ==============        ==============

</TABLE>


 *Not applicable as effect would be anti-dilutive


The accompanying notes are an integral part of the financial statements

<PAGE>4

                           Onsite Energy Corporation
                  Condensed Consolidated Statement of Cash Flows


<TABLE>
<CAPTION>


                                                                        Nine Months Ended
                                                                             March 31,
                                                                       1999             1998
                                                                  -------------    -------------

<S>                                                             <C>              <C>
Cash flows from operating activities:

Net loss                                                          $  (2,742,720)   $    (760,771)

Adjustments to reconcile net loss to net cash
   used in operating activities:
   Amortization of goodwill                                             376,793          266,667
   Amortization of acquired contract costs                              131,720          101,048
   Provision for bad debts                                               90,000                -
   Depreciation                                                         437,251          148,754
Change in operating assets and liabilities:
   Accounts receivable                                               (3,125,213)      (3,213,391)
   Billings related to costs and estimated earnings
     on uncompleted contracts                                        (1,542,681)         800,611
   Inventory                                                            (10,803)        (110,273)
   Other assets                                                         244,402         (804,143)
   Cash-restricted                                                       24,141           41,252
   Accounts payable                                                   5,201,100        1,958,506
   Accrued expenses and other liabilities                              (503,806)               -
                                                                  -------------    -------------
   Net cash used in operating activities                             (1,419,816)      (1,571,740)
                                                                  -------------    -------------
Cash flows from investing activities:
   Purchases of property and equipment                                  (63,670)        (327,597)
   Loans to stockholders                                             (1,837,394)               -
                                                                  -------------    -------------
   Net cash used in investing activities                             (1,901,064)        (327,597)
                                                                  -------------    -------------
Cash flows from financing activities:
   Proceeds from exercise of stock options                               23,479           20,157
   Proceeds from issuance of stock                                    2,000,000        1,947,287
   Repayment of notes payable-related party                            (178,266)         (83,104)
   Payments on borrowings, net                                          (38,598)               -
                                                                  -------------    -------------
   Net cash provided by financing activities                          1,806,615        1,884,340
                                                                  -------------    -------------
Net increase (decrease) in cash                                      (1,514,265)         (14,997)

Cash, beginning of year                                               2,093,006          526,894
                                                                  -------------    -------------
Cash, end of period                                               $     578,741    $     511,897
                                                                  =============    =============
</TABLE>


The accompanying notes are an integral part of the 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   dba  ONSITE  SYCOM  Energy
                      Corporation  (the  "Company") as of and for the year ended
                      June  30,  1998.  In  the  opinion  of   management,   the
                      accompanying unaudited financial statements of the Company
                      contain  all  adjustments   (consisting   only  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 March 31, 1999, and
                      the  consolidated  statements of operations and cash flows
                      for the three and nine  months  ended  March 31,  1999 and
                      1998,  represent  the  financial  position  and results of
                      operations of the Company.

        NOTE  3:      Earnings  per  share  calculations  for the three and nine
                      month  periods ended March 31, 1998 and March 31, 1999 are
                      as follows:

<TABLE>
<CAPTION>
                                                                Three Months                           Nine Months
                                                               Ended March 31,                       Ended March 31,
                                                          1999               1998                1999              1998
                                                     -------------      -------------       -------------     ------------- 
<S>                                                  <C>                <C>                 <C>               <C>           
             BASIC

 Net income/(loss)                                   $     374,787      $    (454,330)      $  (2,742,720)    $    (760,771)
 Less:  Preferred stock dividends                          (51,596)           (24,375)           (127,339)          (24,375)
                                                     -------------      -------------       -------------     ------------- 
 Net income/(loss) allocated to common 
    shareholders                                     $     323,191      $    (478,705)      $  (2,870,059)    $    (785,146)
                                                     =============      =============       =============     ============= 
 Weighted average number of common shares               18,537,128         14,714,361          18,433,065        13,061,167
                                                     =============      =============       =============     ============= 
 Basic earnings/(loss) per common share              $        0.02      $       (0.03)      $       (0.16)    $       (0.06)
                                                     =============      =============       =============     ============= 
             DILUTED

Net income available to common shareholders          $     323,191      $           *       $           *     $           * 
Preferred stock dividends                                   51,596                  *                   *                 *
                                                     -------------      -------------       -------------     ------------- 
Net income available to common shareholders
   plus assumed conversion                           $     374,787      $           *       $           *     $           *
                                                     =============      =============       =============     ============= 
Weighted average number of common shares                18,537,128                  *                   *                 *

Common stock equivalent shares representing
   assumed conversion of Preferred Stock Series C        2,645,872                  *                   *                 *

Common stock equivalent shares representing
   shares issuable upon exercise of stock options        1,006,866                  *                   *                 *

Common stock equivalent shares representing
   shares issuable upon exercise of warrants               377,624                  *                   *                 *
                                                     -------------      -------------       -------------     ------------- 
Weighted average number of shares used in 
   calculation of diluted earnings per common share     22,567,490                  *                   *                 *
                                                     =============      =============       =============     ============= 
Diluted earnings per common share                    $         .02                  *                   *                 *
                                                     =============      =============       =============     ============= 

</TABLE>

 *Not applicable as effect would be anti-dilutive


        NOTE  4:      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"

<PAGE>6

                      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 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 state'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 10KSB for the fiscal  year ended June
                      30, 1998.  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.


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

Background

The Company,  which is the largest U.S. independent accredited energy efficiency
services company (ESCO), develops,  designs,  constructs,  finances and operates
comprehensive  energy  services  projects and assists  customers in reducing the
cost of purchased  electricity  and fuel.  The Company also offers  professional
consulting  services  in the areas of market  assessment,  business  strategies,
public policy analysis,  environmental studies and utility  deregulation.  It is
the Company's mission to save its customers money and improve the quality of the
environment through independent energy solutions.

In October 1997, the Company acquired Westar Business Services,  Inc., which was
renamed  Onsite  Business  Services,  Inc. at the time of  acquisition  and then
recently  renamed  Onsite Energy  Services,  Inc. in April,  1999  ("OES").  OES
provides  high voltage  electrical  construction  and  engineering  services and
industrial  water  services  primarily  in the  states of Kansas,  Missouri  and
Oklahoma.

In February  1998,  OES acquired the  operating  assets of  Mid-States  Armature
Works, Inc. through a newly-formed subsidiary,  Onsite/Mid-States, Inc. ("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 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.

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.

<PAGE>7


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

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

Results of Operations

Nine  Months  Ended  March  31, 1999 Compared to the Nine Months Ended March 31,
1998

Revenues for the nine months ended March 31, 1999 were  $31,271,427  compared to
$8,994,035 for the nine months ended March 31, 1998, an increase of $22,277,392,
or 247.7 percent. The increase in revenues was primarily due to the inclusion of
revenues from the newly acquired subsidiaries, SO Corporation and LTS. After the
elimination of the subsidiaries not included in the previous year,  revenues for
the nine  month  period  ended  March 31,  1999  were  $14,372,781  compared  to
$8,994,035 for the nine months ended March 31, 1998. The increase of $5,378,746,
or 59.8 percent is due to the addition of and further completion on several long
term energy turn-key design and construction  projects for the Company.  Revenue
recognition for these projects  increased by approximately  $3,700,000,  or 69.3
percent in the nine months ended March 31, 1999 over the nine months ended March
31, 1998.

Cost of sales for the nine month  period  ended March 31, 1999 was  $24,949,680,
compared  to  $6,819,570  for the nine month  period  ended March 31,  1998,  an
increase of $18,130,110, or 265.9 percent. After elimination of the subsidiaries
not included in the previous year, cost of sales for the nine month period ended
March 31, 1999 were  $11,942,181  compared to $6,819,570  for the same period in
1998,  an increase  of  $5,122,611,  or 75.1  percent.  The  increase is largely
attributed to the increase in project costs for the long term projects mentioned
above for Onsite and OES.

Gross  margin for the nine months ended March 31, 1999 was  $6,321,747,  or 20.2
percent of revenues, compared to $2,174,465 or 24.2 percent of revenues, for the
nine months ended March 31,  1998.  After  elimination  of gross margin from the
subsidiaries  not  included in the  previous  period,  gross margin for the nine
months  ended  March 31,  1999 were  $2,430,600,  or 16.9  percent of  revenues,
compared to  $2,174,465,  or 24.2  percent of revenues for the nine months ended
March 31, 1998.  The Company  typically  engages in several  different  types of
business with substantially  different margin results.  The project types are as
follows: turn-key design and energy construction projects that produce a typical
margin  in  the  20  to  35  percent  range;  fee  based  projects,   where  the
subcontractors  are hired by the  customer  and, as such,  the costs and related
revenues do not flow through the Company and the margin can range  anywhere from
30  to  80  percent;   consulting   contracts  where  the  typical  margins  are
approximately 50 percent; and lighting installation projects, through LTS, where
the margins typically are lower,  usually in the range of 10 to 20 percent. As a
result  of the mix in  margins,  the  gross  margin  for any  given  period  can
fluctuate  significantly  and not  necessarily  be  indicative  of a trend.  The
decrease in gross margin as a percentage of sales was primarily  attributable to
lower  than  normal  gross  margins  on  several  long  term   turn-key   energy
construction contracts under implementation in the nine month period ended March
31, 1999.

Selling,  General and  Administrative  ("SG&A") expenses were $8,953,975 for the
nine month  period  ended March 31, 1999,  compared to  $2,890,452  for the nine
months  ended  March  31,  1998.   The  increase  of   $6,063,523  is  primarily
attributable to the addition of the  subsidiaries  mentioned  previously.  After
elimination of the SG&A expenses  attributable to these  subsidiaries,  the SG&A
expense for the nine months  ended  March 31, 1999 were  $4,009,423  compared to
$2,873,777,  an increase of $1,135,646,  or 39.5 percent. The increase is mainly
due to an  increase  in  legal  and  accounting  fees.  The  rise of  legal  and
accounting  fees in the quarter ended March 31, 1999 is  attributable to the due
diligence work for the new  subsidiaries and a legal matter (settled in February
1999) with Westar Capital, Inc. and its related entities.

<PAGE>8


Net other expense was $110,492 for the nine months ended March 31, 1999 compared
to $44,784 in net other  expense for the nine months ended March 31,  1998.  The
increase is largely due to additional  interest  expense from the newly acquired
subsidiaries  and their existing  interest  bearing debts partially offset by an
increase  in interest  income  from SO  Corporation.  After  elimination  of the
subsidiaries not included in the previous year, net other income was $97,966 for
the period ended March 31, 1999 compared to net other expense of $44,784 for the
period ended March 31, 1998, an increase of $142,750, or 318.8 percent. The main
reason for the  increase is the growth of interest  income,  offset by a smaller
increase of interest expense.

Net loss for the nine month period ended March 31, 1999 was $2,742,720, or $0.16
loss per basic common share,  compared to a net loss of $760,771,  or $0.06 loss
per basic common  share for the nine month  period  ended March 31, 1998.  After
elimination of the newly acquired  subsidiaries not in the previous period,  the
net loss for the nine month period ended March 31, 1999 was $1,486,419, compared
to $760,771 for the nine month  period ended March 31, 1998,  an increase in the
loss of 95.4 percent.

Three  Months  Ended March 31, 1999 Compared to the Three Months Ended March 31,
1998

Revenues  for the three  month  period  ended  March 31,  1999 were  $12,632,384
compared to $3,452,652 for the three months ended March 31, 1998, an increase of
$9,179,732,  or 265.9  percent.  The increase is primarily due to the additional
revenues of the newly acquired subsidiaries.  After elimination of revenues from
the acquired subsidiaries not included in the previous period,  revenues for the
three month period ended March 31, 1999 were  $5,197,652  compared to $3,452,652
for the three month period ended March 31, 1998, an increase of  $1,745,000,  or
50.5 percent. Consulting income for the Company increased by 44.6 percent, which
was  mainly  attributable  to the  addition  of a new  service  provided  by the
Company.  The other share of the  increase in  consulting  income was due to new
contracts from government sponsored projects. Another area of revenue growth for
the Company  occurred in the long term energy turn-key  design and  construction
projects for the Company.  Revenue  recognition for these projects  increased by
117.3 percent from the quarter ended March 31, 1999 over the quarter ended March
31, 1998.

Cost of sales for the three month  period  ended March 31, 1999 was  $9,299,313,
compared to $2,677,705  for the same period ended March 31, 1998, an increase of
$6,621,608, or 247.3 percent. After elimination of the subsidiaries not included
in the  previous  year,  cost of sales for the quarter  ended March 31, 1999 was
$4,519,036,  compared to $2,677,705  for the  comparable  period in the previous
year, an increase of  $1,841,331,  or 68.8  percent.  This increase is primarily
related to the  increase in the revenue  recognized  for the long term  projects
mentioned above.

Gross  margin was  $3,333,071,  or 26.4  percent of revenues for the three month
period ended March 31, 1999,  compared to $774,947,  or 22.4 percent of revenues
for the three month period ended March 31, 1998.  After the  elimination  of the
activity from the newly  acquired  subsidiaries,  the gross margin for the three
month  period  ended March 31, 1999 was  $678,616,  or 13.1  percent of revenues
compared to  $774,947,  or 22.4  percent of revenues  for the same period  ended
March 31, 1998. The main reason for the decline in gross margin is a decrease in
margin on one large long term  project for the  Company  for the  quarter  ended
March 31, 1999.

SG&A  expenses  were  $2,950,054  for the three  months  ended  March 31,  1999,
compared to $1,185,266  for the three months ended March 31, 1998.  The increase
of $1,764,788, or 148.9 percent, was largely attributable to the additional SG&A
expenses acquired with the new  subsidiaries,  as well as increased SG&A expense
associated  with a new office in Northern  California.  After the elimination of
the activity from the newly  acquired  subsidiaries,  SG&A expense for the three
month period ended March 31, 1999 was $1,218,462  compared to $1,180,828 for the
same period in fiscal year 1998, an increase of $37,634,  or 3.2 percent,  which
is primarily associated with the new Northern California office.

Net other  expense was $8,230 for the three month  period  ended March 31, 1999,
compared to $44,011 in net other  expense for the three month period ended March
31,  1998,  a decrease of $35,781,  or 81.3  percent in net other  expense.  The
reason for this  decline is the write off of $47,641 of  uncollectible  accounts

<PAGE>9


receivable  in the  quarter  ended  March 31,  1998.  After  elimination  of the
contributions  from  subsidiaries  acquired in the fourth quarter of fiscal year
end June 30, 1998,  net other income was $47,644 for the quarter ended March 31,
1999,  compared  to net other  expense of $44,011 for the  comparable  period in
1998.  The net increase of $91,655,  or 208.3  percent is  primarily  due to the
increase of interest income.  The interest income is related to interest accrued
for loans to LTS and SO Corporation and related parties.

Net income for the three  months  ended  March 31, 1999 was  $374,787,  or $0.02
earnings per basic common  share,  compared to a net loss of $454,330,  or $0.03
loss per basic  common  share for the three month  period  ended March 31, 1998.
After  the  elimination  of newly  acquired  subsidiaries,  the net loss for the
quarter  ended March 31,  1999 was  $497,763  compared to $454,330  for the same
period in 1998, an increase of $43,433, or 9.6 percent.

Liquidity and Capital Resources

Cash flows used in operating  activities  during the nine months ended March 31,
1999 were  $1,419,816  compared to cash flows used in  operating  activities  of
$1,571,740  for the same period in 1998, a decrease of $151,924 or  9.7 percent.
This  decrease was mainly  attributable  to the decline in prepaid  expenses and
billings in excess of revenue.  The  Company  has a working  capital  deficit of
$4,458,252 as of March 31, 1999,  compared to a deficit of $2,693,367 as of June
30, 1998.

Cash flows used in investing  activities were $1,901,064  during the nine months
ended March 31, 1999,  compared to $327,597  during the same period in 1998. The
increase  of  $1,573,467,  or  480.3  percent,  is  mainly  attributable  to the
acquisitions of loans to stockholders in the newly acquired subsidiaries.

Cash flows  provided by financing  activities  were  $1,806,615  during the nine
months  ended  March 31,  1999,  compared to cash flows  provided  by  financing
activities  of  $1,884,340  for the  comparable  period last year, a decrease of
$77,725, or 4.1 percent.

The Company has shown significant net losses for the year ended June 30, 1998 as
well as the nine months ended March 31, 1999.  Management  believes that it will
be able to  generate  additional  revenues  and achieve  operating  efficiencies
through  sales  generated  through its recent  acquisitions  as well as by other
means to ultimately achieve profitable operations.  The Company has entered into
several significant contracts that have begun contributing revenues in the third
fiscal  quarter of the current  year,  and will  continue  over the next several
quarters.  In  addition,  the Company  anticipates  the signing of several  more
significant  contracts that should begin to contribute to future fiscal quarters
as well.  Management  believes  that all of the  above  actions  will  allow the
Company to continue as a going  concern.  Cash  requirements  beyond the next 12
months depend upon the Company's  profitability,  its ability to manage  working
capital  requirements and its rate of growth.  (See Note 3 Cautionary  Statement
for  Purposes  of  the  "Safe  Harbor"  Provisions  of  the  Private  Securities
Litigation Reform Act of 1995.)

Year 2000

The Company is developing  plans to address  issues related to the impact on its
computer systems of the year 2000. The Company believes that  substantially  all
software  applications  currently  being used for the financial and  operational
systems have adequately  addressed any year 2000 issues.  Most hardware  systems
have been assessed and plans are being developed to address systems modification
requirements. The financial impact of making any required systems changes is not
expected  to be  material  to the  Company's  consolidated  financial  position,
liquidity or results of operations.  Any risks the Company faces are expected to
be external to ongoing operations.  The Company has numerous alternative vendors
for critical  supplies,  materials and components  and thus current  vendors and
subcontractors  who  have  not  adequately  prepared  for the  year  2000 can be
substituted  in  favor of those  that  have  prepared.  (See  Note 3  Cautionary
Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995.)

<PAGE>10

                           Part II - Other Information

Item 1.    Legal Proceedings - None

Item 2.    Changes in Securities - 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 - Not Applicable

Item 6.    Exhibits and Reports on Form 8-K


           Exhibit 27        Financial Data Schedule

<PAGE>11

                                   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:   May 14, 1999                    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