UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C., 20549

                                  FORM 10-QSB/A
                                (Amendment No. 1)
                          (Filed on November 12, 1998)



(Mark One)

|X|  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended December 31, 1997.

|_|  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           (IRS Employer Identification No.)
     incorporation or organization)


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

               (760) 931-2400
       (Issuer's telephone number)




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 February
19, 1998 is 14,712,372.


<PAGE>2


                            ONSITE ENERGY CORPORATION


Part I -  Financial Information                                           Page

     Item 1   Financial Statements

          Condensed Consolidated Balance Sheet at
          December 31, 1997                                                 3

          Condensed Consolidated Statements of Operations
          Three Months Ended December 31, 1997 and 1996
          Six Months Ended December 31, 1997 and 1996                       4

          Condensed Consolidated Statements of Cash Flows
          Six Months Ended December 31, 1997 and 1996                       5

          Notes to Condensed Consolidated Financial Statements              6

     Item 2   Management's Discussion and Analysis of
              Financial Condition and Results of Operations                 8


Item 1. Financial Statements


                  [Remainder of page intentionally left blank]





<PAGE>3

                            Onsite Energy Corporation
                      Condensed Consolidated Balance Sheet
                                December 31, 1997
                                     Assets

Current Assets:
   Cash                                                           $   1,642,509
   Cash-restricted                                                      152,925
   Accounts receivable, net of allowance for doubtful
      accounts of $15,030                                             2,619,332
   Costs and estimated earnings in excess of billings
      on uncompleted contracts                                          460,840
   Other assets                                                          33,055
                                                                  -------------
       TOTAL CURRENT ASSETS                                           4,908,661

Cash-restricted                                                          78,990
Costs incurred on future projects                                         1,767
Property and equipment, net of accumulated 
    depreciation and amortization                                       809,366
Goodwill, net of amortization of $1,533,333                              73,887
Other                                                                   128,994
                                                                  -------------

       TOTAL ASSETS                                               $   6,001,665
                                                                  =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                               $   1,704,709
   Billings in excess of costs and estimated earnings
      on uncompleted contracts                                          178,691
   Current portion of notes payable                                      75,572
   Accrued expenses and other liabilities                               868,078
                                                                  -------------

       TOTAL CURRENT LIABILITIES                                      2,827,050

Long Term Liabilities:
   Accrued future operation and maintenance costs
      associated with energy services agreements                        421,432
                                                                  -------------
       TOTAL LIABILITIES                                              3,248,482

Commitments and contingencies

Shareholders' Equity:
   Preferred Stock, Series C, 1,000,000 shares
      authorized, 200,000 issued and outstanding
      (Aggregate $1,000,000 liquidation preference)                         200
   Common Stock, $.001 par value, 24,000,000 
      shares authorized:
      Class A common stock, 23,999,000 shares authorized,
      14,661,272 shares issued and outstanding                           14,661
      Class B common stock, 1,000 shares authorized,
      none issued and outstanding                                             -
   Additional paid-in capital                                        20,191,975
   Accumulated deficit                                              (17,453,653)
                                                                  ------------- 
TOTAL SHAREHOLDERS' EQUITY                                            2,753,183
                                                                  -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                        $   6,001,665
                                                                  =============

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

<PAGE>4


                            Onsite Energy Corporation
                 Condensed Consolidated Statements of Operations


<TABLE>
<CAPTION>


                                                 Three Months Ended        Six Months Ended
                                                      December 31,            December 31,
                                             1997       1996            1997            1996



<S>                                    <C>           <C>            <C>            <C>       
Revenues                               $3,303,578    $2,935,524     $5,541,383     $6,246,390

Cost of sales                           2,555,071     1,965,966      4,141,865      4,460,505
                                       ----------     ---------      ---------      ---------
       Gross Margin                       748,507       969,558      1,399,518      1,785,885

Selling, General,
     and Administrative Expenses          938,755       943,663      1,429,025      1,913,391
Depreciation and Amortization             158,147       169,714        263,924        289,483
                                          -------       -------        -------        -------

      Operating loss                     (348,395)     (143,819)      (293,431)      (416,989)
                                         ---------     ---------      ---------      ---------

Other income (expense):
     Interest (expense)                         -       (42,386)        (8,588)      (100,830)
     Interest income                        9,271         2,704         13,374          7,376
     Other income (expense)                (5,559)            -         (5,559)            -  
                                          -------     ---------         -------      ---------

      Total other income (expense)          3,712       (39,682)          (773)       (93,454)
                                            -----      --------           -----       --------


Loss from operations
     before provision for income taxes   (344,683)     (183,501)      (294,204)      (510,443)

Provision for income taxes                  5,499            -          12,237              -
                                            -----      --------         ------       --------

Net loss                               $ (350,182)   $ (183,501)     $(306,441)     $(510,443)
                                       ==========    ==========      ==========     ==========

Basic and diluted loss per
     Common share                      $   (0.03)    $   (0.02)      $   (0.03)     $   (0.05)
                                       =========     =========       =========      =========

Weighted average shares outstanding    13,519,572    10,859,203      12,231,872     10,698,414
                                       ==========    ==========      ==========     ==========
</TABLE>





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



<PAGE>5


                            Onsite Energy Corporation
                 Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>


                                                                     Six Months Ended
                                                                       December 31,
                                                                 1997                 1996           
                                                            --------------       --------------
<S>                                                      <C>                    <C>
Cash flows from operating activities:

    Net loss                                                 $  (306,441)          $  (510,443)

Adjustments to reconcile  net loss to 
    net cash used in operating activities:
    Amortization of goodwill                                     200,000              200,000
    Amortization of acquired contract costs                            -              363,536
    Depreciation and amortization                                 63,924               89,483
Change in operating assets and liabilities:
    Accounts receivable                                       (1,235,923)            (673,083)
    Increase (decrease) in costs related to billings
      and estimated earnings on uncompleted contracts           (331,264)              10,060
    Other assets                                                (116,753)             243,526
    Cash-restricted                                               41,252              (43,244)
    Accounts payable and accrued expenses                      1,054,863             (456,255)
    Deferred income                                                    -               25,000

                                                             -----------           ----------
Net cash used in operating activities                           (630,342)            (751,420)
                                                             -----------           ----------

Cash flows from investing activities:
    Acquisition of Fixed Assets                                 (123,190)                  -
                                                             -----------           ---------
    Net cash used in investing activities                       (123,190)                  - 
                                                             -----------           ---------

Cash flows from financing activities:
    Proceeds from issuance of stock                            1,947,287                   -
    Proceeds from exercise of stock options                        4,964              20,110
    Repayment of long-term debt                                  (83,104)           (212,372)
                                                             -----------           --------- 
      Net cash provided by (used in) financing activities      1,869,147            (192,262)
                                                             -----------           ---------

      Net increase (decrease) in cash                          1,115,615            (943,682)

Cash, beginning of year                                          526,894             976,470
                                                             -----------           ---------
Cash, end of period                                          $ 1,642,509           $  32,788
                                                             ===========           =========

</TABLE>


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



<PAGE>6

                            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, as amended, for Onsite Energy Corporation
     (the  "Company")  for the year  ended  June 30,  1997.  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 condensed  consolidated  balance sheet as of December 31, 1997,  and
     the condensed consolidated  statements of operations and cash flows for the
     three and six  months  ended  December  31,  1997 and 1996,  represent  the
     financial position and results of operations of the Company. The results of
     operations  for the three and six months  ended  December 31, 1997 and 1996
     are not necessarily indicative of the results to be expected for the entire
     year.

NOTE 3: In February 1997, the Financial  Accounting Standards Board issued a new
     statement  titled  "EARNINGS  PER SHARE" ("FAS 128").  The new statement is
     effective  for both interim and annual  periods  ending after  December 15,
     1997.  FAS 128  replaces  the  presentation  of primary  and fully  diluted
     earnings per share with the  presentation of basic and diluted earnings per
     share.  Basic  earnings per share  excludes  dilution and is  calculated by
     dividing income  available to common  stockholders by the  weighted-average
     number of common shares  outstanding for the period.  Diluted  earnings per
     share  reflects the  potential  dilution  that could occur if securities or
     other  contracts  to issue common  stock were  exercised or converted  into
     common  stock or resulted in the  issuance of common stock that then shared
     in the earnings of the entity.  Common stock  equivalents for the three and
     six months ended December 31, 1997 were  anti-dilutive  and excluded in the
     earnings per share computation for the periods presented.

NOTE 4: On October 28,  1997,  the  Company  entered  into a Stock  Subscription
     Agreement  (the "Stock  Agreement")  with  Westar  Capital,  Inc.  ("Westar
     Capital").  Pursuant to the Stock  Agreement,  the  Company  made a private
     placement  of  2,000,000  shares of its  Class A Common  Stock at $0.50 per
     share  and  200,000  shares  of its  newly  created  Series  C  Convertible
     Preferred Stock ("Series C Stock") at $5.00 per share. Each share of Series
     C Stock is  convertible  into five shares of the  Company's  Class A Common
     Stock and earns a dividend of 9.75 percent per annum.

     In a related transaction on October 28, 1997, the Company entered  into  a 
     Plan  and   Agreement  of   Reorganization (the "Reorganization Agreement")
     with Westar  Capital,  Westar  Energy, Inc., and Westar Business  Services,
     Inc.  ("WBS").  Pursuant  to  the  Reorganization  Agreement,  the  parties
     effected a "tax free" exchange under Section 368(a)(1)(B)  of  the Internal
     Revenue Code of 1986, as amended (the "Reorganization").  Specifically, the
     Company acquired 100 percent of WBS's issued and outstanding capital stock,
     consisting solely of Common Stock,  

<PAGE>7


     no par value, in exchange for 1,700,000 shares of  the  Company's  Class  A
     Common  Stock,  par value $0.001 per share.  An  additional  800,000 shares
     of the  Company's  Class A Common Stock will be delivered to Westar Capital
     in the event  that WBS  executes  certain  additional  business  contracts.
     The number of shares issued was determined through negotiations between the
     parties.  As a result of the  Reorganization,  WBS  is  now  a wholly-owned
     subsidiary  of  the  Company,  and  has changed its name to Onsite Business
     Services,  Inc.  ("OBS").  

     OBS  provides  performance  contracting  services,  utility  services  and 
     industrial water services in the states of Kansas, Missouri and Oklahoma.

     The following  presents Pro Forma information  as  if  the  acquisition  of
     WBS occurred on July 1, 1996:

<TABLE>
<CAPTION>


                                      Three Months Ended                 Six Months Ended
                                         December 31,                      December 31,

                                      1997          1996                1997           1996
                                      ----          ----                ----           ----

<S>                                 <C>           <C>               <C>             <C>       
Revenues                            $3,453,245    $3,702,445        $ 6,140,052     $7,404,890
                                    ==========    ==========        ===========     ==========

Loss from Operations                $(403,062)    $(293,972)        $ (512,872)     $(587,943)
                                    ==========    ==========        ===========     ==========

Net Loss                            $(404,849)    $(293,972)        $ (525,109)     $(587,943)
                                    ==========    ==========        ===========     ==========

Basic and Diluted Loss Per Share    $   (0.03)    $   (0.03)        $    (0.04)     $   (0.05)
                                    ===========   ==========        ===========     ==========

</TABLE>

NOTE 6: The purpose of this amendment to the Form 10-QSB for the Company for the
     period  ending  December  31,  1997  (the  "Original Filing") is to reflect
     adjustments  arising  from  inadvertent  errors in the way it was  accruing
     revenue  from  some of its  projects  which  was not  consistent  with  the
     percentage of completion method of accounting for revenue  recognition,  in
     the  valuation  of  equipment  acquired in a business  combination,  and in
     revenue recognition on two contracts.

     Any item in the Original  Filing  not  expressly changed hereby shall be as
     set forth in the Original Filing.  All information contained in this amend-
     ment  and  the  Original Filing is subject to updating and supplementing as
     provided in the Company's periodic reports filed with the SEC subsequent to
     the date of such reports.

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

The  information  included in this Form 10-QSB/A  should be read in  conjunction
with  Management's  Discussion  and Analysis and financial  statements and notes
thereto included in the Company's Form 10-KSB,  as amended,  for the fiscal year
ended June 30, 1997.

<PAGE>8


Background

The Company is a comprehensive  energy  services  company (an ESCO) that assists
its customers in reducing  electricity and fuel costs by developing,  designing,
constructing,  owning and  operating  efficient,  environmentally  sound  energy
projects.  The Company offers a full range of professional  consulting services,
which include direct access planning, market assessments,  business strategy and
public    policy    analyses,    utility    deregulation    and    environmental
impact/feasibility  studies.  It is the Company's  mission to save its customers
money and improve  the quality of the  environment  through  independent  energy
solutions.

The  Company,  a  Delaware  corporation,  was  formed  pursuant  to  a  business
reorganization  effective  February  15,  1994 (the  "Reorganization"),  between
Western Energy Management,  Inc., a Delaware corporation formed in 1991 ("WEM"),
and Onsite Energy, a California corporation formed in 1982 ("Onsite-Cal"). Under
the  Reorganization,  Onsite-Cal  merged with and into the Company,  and a newly
formed  subsidiary of the Company  merged with and into WEM,  which survived and
became a wholly-owned  subsidiary of the Company. This transaction was accounted
for as a purchase of Onsite-Cal by the Company.

As of October 28, 1997, the Company owns all of the stock in OBS, which provides
performance contracting services, utility services and industrial water services
primarily in the states of Kansas, Missouri and Oklahoma.

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

Six Months Ended December 31, 1997 Compared to the Six Months Ended December 31,
1996

        Results of  Operations.  Revenues for the six months ended  December 31,
1997 were  $5,541,383  compared to $6,246,390  for the six months ended December
31, 1996.  The  decrease in revenues was  attributed  to several  smaller  sized
contracts in 1997, rather than one significant contract in 1996.

Gross margin for the six months ended December 31, 1997 was $1,399,518,  or 25.3
percent of revenues,  compared to $1,785,885,  or 28.6 percent of revenues,  for
the six months ended December 31, 1996. The decrease in margin  reflects a lower
budgeted gross margin on one large contract in process during the period.

Selling,  General and  Administrative  expenses ("SG&A") were $1,429,025 for the
six month period ended  December 31, 1997,  compared to  $1,913,391  for the six
months ended  December 31,  1996.  The  reduction of $484,366 or 25.3 percent is
attributable  to the continued  efforts by the Company to implement  savings and
expense  reductions  in an effort to improve  overall  operating  results.  This
decrease was partially offset by the increased SG&A from OBS for the period from
October 28, 1997 to December 31, 1997.

Net other  income/expense  was a $773 expense for the six months ended  December
31,  1997,  compared to $93,454 in net other  expense  for the six months  ended
December  31,  1996.  The  decrease  is due to a  decline  in  interest  expense
attributable to substantial reductions in principal loan balances outstanding.

Net  loss  for  the  six  months  ended  December  31,  1997  was  $306,441,  or
approximately  $0.03 loss per share,  compared to net loss of $510,443,  or $.05
loss per share for the six month period ended December 31, 1996.

<PAGE>9


Three Months Ended December 31, 1997 Compared to the Three Months Ended December
31, 1996

        Results  of  Operations.  Revenues  for the  three  month  period  ended
December 31, 1997 were  $3,303,578,  compared to $2,935,524 for the three months
ended December 31, 1996, an increase of $368,054,  or 12.5 percent. The increase
in revenues is due to the completion of several new smaller sized  contracts and
the recognition of revenues of the newly-acquired OBS.

Gross  margin was  $748,507,  or 22.7  percent of revenues  for the  three-month
period  ended  December  31,  1997,  compared to  $969,558,  or 33.0  percent of
revenues for the  three-month  period ended  December 31, 1996.  The decrease in
margin  resulted  from  smaller  margins on smaller  contracts in 1997 and lower
margin on one large  contract  in  process  during the  period,  versus a larger
margin on one large contract in 1996.

SG&A  expenses  were  $938,755  for the three  months  ended  December 31, 1997,
compared to $943,663  for the three months  ended  December 31, 1996.  The small
change was attributable to the Company's  continued efforts to decrease expenses
offset by the additional  expenses  acquired with OBS,  offset by increased SG&A
associated with OBS.

Net other  income/expense  was $3,712 in other  income in the three months ended
December 31, 1997,  compared to $39,682 in net other expense for the three month
period ended December 31, 1996, a decrease of $43,394. The decrease in net other
expense was substantially attributable to a decrease in interest expense.

Net loss for the three months ended December 31, 1997 was $350,182, or 
approximately $0.03 loss per share,  compared to net loss of $183,501, or $0.02
loss per share.

        Liquidity and Capital Resources. The Company's cash and cash equivalents
were  $1,642,509  as of December 31,  1997,  compared to $526,894 as of June 30,
1997.  Working  capital was  $2,081,611  as of December  31, 1997  compared to a
negative working capital of $30,333 as of June 30, 1997. The increase in working
capital is largely due to the  transaction,  including  the sale of  securities,
with Westar Capital completed in October 1997.

Cash flows used by operating activities during the six months ended December 31,
1997 were  $630,342,  compared  to cash flows used by  operating  activities  of
$751,420 for the six months ended December 31, 1996, a decrease of $121,078.

Cash  flows used by  investing  activities  included  $123,190  of fixed  assets
purchased  during the six months ended December 31, 1997. There was no cash flow
from investing activities for the six months ended December 31, 1996.

Cash flows  provided by  financing  activities  were  $1,869,147  during the six
months  ended  December  31,  1997,  compared  to cash flows  used by  financing
activities of $192,262 for the comparable period last year. The increase in cash
provided by financing  activities  in the current year  includes  $1,947,287  in
proceeds  from the  issuance  of stock to  Westar  Capital,  which is  offset by
$83,104 in repayment of long-term debt.

<PAGE>10

     Year 2000. The Company is developing plans to address issues related to the
impact on its  computer  systems of the year  2000.  Financial  and  operational
systems are being  assessed  and plans are being  developed  to address  systems
modification  requirements.  The financial impact of making the required systems
changes is not expected to be material to the Company's  consolidated  financial
position, liquidity and results of operations.

<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



Dated: November 12, 1998         By:  RICHARD T. SPERBERG                  
                                    ------------------------------
                                    Richard T. Sperberg
                                    Chief Executive Officer (Principal Executive
                                    Officer) and Interim Chief Financial Officer
                                    (Principal Accounting and Financial Officer)