U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C., 20549

                                 FORM 10-QSB/A-1
                              (Filed July 27, 2000)


(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, 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 February
14, 2000, is 18,069,079.

<PAGE>2

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


ASSETS

Current Assets:
  Cash                                                            $     464,157
  Accounts receivable, net of allowance for doubtful
    accounts of $31,370                                               2,863,618
  Capitalized project costs                                              96,432
  Costs and estimated earnings in excess of billings
    on uncompleted contracts                                            611,458
  Assets held for sale                                                  977,935
  Other current assets                                                   68,102
                                                                  -------------
      TOTAL CURRENT ASSETS                                            5,081,702

  Cash-restricted                                                        74,565
  Property and equipment, net of accumulated depreciation
    and amortization $1,229,453                                       1,003,824
  Other assets                                                           62,319
                                                                  -------------
      TOTAL ASSETS                                                $   6,222,410
                                                                  =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Notes payable                                                   $   1,552,821
  Accounts payable                                                    8,248,738
  Billings in excess of costs and estimated earnings
    on uncompleted contracts                                          1,441,321
  Accrued expenses and other liabilities                                545,456
                                                                  -------------
      TOTAL CURRENT LIABILITIES                                      11,788,336

Long-Term Liabilities:
   Accrued future operation and maintenance costs
     associated with energy service agreements                        1,080,424
                                                                  -------------
      TOTAL LIABILITIES                                              12,868,760
                                                                  -------------
Commitments and contingencies

Shareholders' Equity (Deficit):
  Preferred Stock, Series C, 842,500 shares authorized,
    649,120 issued and outstanding (Aggregate $3,245,600
    liquidation preference)                                                 649
  Preferred Stock, Series D, 157,500 shares authorized,
    issued and outstanding and held in escrow                                 -
  Preferred Stock, Series E, 50,000 shares authorized,
    issued and outstanding                                                   50
  Common Stock, $.001 par value, 24,000,000 shares authorized:
    Class A common stock, 23,999,000 shares authorized,
      18,641,302 issued and outstanding                                  18,739
    Class B common stock, 1,000 shares authorized, none
      issued and outstanding                                                  -
    Additional paid-in capital                                       27,246,955
    Notes receivable - stockholders                                  (3,940,850)
    Accumulated deficit                                             (29,971,893)
                                                                  -------------
         TOTAL SHAREHOLDERS' DEFICIT                                 (6,646,350)
                                                                  -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)              $   6,222,410
                                                                  =============


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

<PAGE>3

                            Onsite Energy Corporation
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)


<TABLE>
<CAPTION>



                                           Three Months Ended December 31,     Six Months Ended December 31,
                                                1999              1998             1999            1998
                                           ------------      ------------      ------------    ------------

<S>                                        <C>               <C>               <C>             <C>
Revenues                                   $  2,481,315      $  9,314,702      $ 11,942,471    $ 18,627,461
Utility Revenues                                586,029           141,668           902,346         283,336
                                           ------------      ------------      ------------    ------------
 Total revenues                               3,067,344         9,456,370        12,844,817      18,910,797

Cost of sales                                 1,917,008         7,767,131         9,360,966      15,669,954
                                           ------------      ------------      ------------    ------------
    Gross margin                              1,150,336         1,689,239         3,483,851       3,240,843

Selling, general, and administrative
  expenses                                    2,167,620         2,756,837         5,146,972       5,448,297
Depreciation and amortization expense           131,248           265,002           274,873         555,623
Recovery of reserve provided for sale
   or disposal of subsidiary                          -                 -          (358,670)              -
                                           ------------      ------------      ------------    ------------
     Operating loss                          (1,148,532)       (1,332,600)       (1,579,324)     (2,763,077)
                                           ------------      ------------      ------------    ------------
Other income (expense):
   Interest expense                             (74,485)          (94,635)         (184,968)       (204,701)
   Interest income                               20,382            28,125            26,005          66,049
                                           ------------      ------------      ------------    ------------
     Total other expense                        (54,103)          (66,510)         (158,963)       (138,652)
                                           ------------      ------------      ------------    ------------
Loss before provision for income taxes       (1,202,635)       (1,399,110)       (1,738,287)     (2,901,729)

Provision for income taxes                          200                 -             3,800               -
                                           ------------      ------------      ------------    ------------
Net loss                                   $ (1,202,835)     $ (1,399,110)     $ (1,742,087)   $ (2,901,729)
                                           ============      ============      ============    ============
Net loss allocated to common shareholders  $ (1,202,835)     $ (1,449,478)     $ (1,742,087)   $ (2,927,304)
                                           ============      ============      ============    ============
Basic and diluted loss per common share:   $      (0.06)     $      (0.08)     $      (0.09)   $      (0.16)
                                           ============      ============      ============    ============
Weighted average number of shares
   used in per common share calculation:     18,663,907        18,488,514        18,646,373      18,381,886
                                           ============      ============      ============    ============
</TABLE>


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


<PAGE>4

                            Onsite Energy Corporation
                  Condensed Consolidated Statement of Cashflows
                                   (Unaudited)

<TABLE>
<CAPTION>



                                                              Six Months Ended December 31,
                                                                  1999             1998
                                                              ------------     ------------
<S>                                                         <C>               <C>
Cash flows from operating activities:

Net loss                                                      $ (1,742,087)    $ (2,901,729)
Adjustments to reconcile net loss to net cash
  provided (used in) by operating activities:
    Amortization of excess purchase price over
      net assets acquired                                                -          251,195
    Amortization of acquired contract costs                         50,590          121,643
    Provision for bad debts                                         (3,630)          90,000
    Depreciation                                                   274,873          304,428
    Recovery of reserve provided for sale or
      disposal of subsidiary                                      (358,670)               -
    Compensation related to stock issuance                          47,500                -
    Stock issued to 401k                                            46,283                -
(Increase) decrease:
    Accounts receivable                                          2,975,144       (2,323,397)
    Costs and estimated earnings in excess of
      billings on uncompleted contracts                            493,271                -
    Inventory                                                        6,107           (9,123)
    Other assets                                                  (299,351)         (62,302)
    Cash-restricted                                                 70,334                -
Increase (decrease):
    Accounts payable                                              (639,328)       2,798,729
    Billings in excess of costs and estimated
      earnings on uncompleted contracts                             74,952        1,293,554
    Accrued expenses and other liabilities                        (603,355)         (54,518)
    Deferred income                                                  7,877          (21,156)
                                                              ------------     ------------
      Net cash provided by (used in) operating activities          400,510         (512,676)
                                                              ------------     ------------
Cash flows from investing activities:
    Purchases of property and equipment                            (28,185)         (57,402)
    Loan to shareholders                                          (161,017)      (1,147,537)
                                                              ------------     ------------
      Net cash provided by (used in) investing activities         (189,202)      (1,204,939)
                                                              ------------     ------------
Cash flows from financing activities:
    Proceeds from issuance of preferred stock                    1,000,000        1,000,000
    Proceeds from exercise of stock options                              -           20,227
    Proceeds from borrowings                                       111,986          102,422
    Repayment of notes payable - related party                    (211,914)        (194,581)
    Repayment of notes payable                                  (1,547,631)        (674,865)
                                                              ------------     ------------
      Net cash provided by (used in) financing activities         (647,559)         253,203
                                                              ------------     ------------
Net decrease in cash                                              (436,251)      (1,464,412)

Cash, beginning of year                                            900,408        2,093,006
                                                              ------------     ------------
Cash, end of quarter                                          $    464,157     $    628,594
                                                              ============     ============

</TABLE>


The  accompanying  notes are an integral  part of these  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 dba ONSITE SYCOM Energy  Corporation (the "Company") as of
          and for the year ended June 30, 1999 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  December  31, 1999, and the
          consolidated  statements  of  operations  and cash  flows  for the six
          months ended  December  31, 1999 and 1998,  represents  the  financial
          position and results of operations of the Company.

NOTE 3:   Financial  Statement  Restatement.  The  Company  had  previously been
          corresponding with the SEC regarding the Company's Form 10-KSB for the
          year ended June 30, 1998. In response to information  submitted by the
          Company,  on December 3, 1999, the SEC sent a comment letter directing
          the Company to restate its financial  statements  for each of the last
          three fiscal years ended June 30, 1999,  1998, and 1997 as well as for
          the quarter ended September 30, 1999. The restatement is the result of
          a review of the  Company's  accounting  policies  as it related to the
          timing of the recognition of revenues and expenses.

          The  SEC  took  exception  to  certain   applications   of  accounting
          principles  as  applied  by the  Company in the areas of the timing of
          revenue recognition where utility incentive payments are a part of the
          Company's  revenue  stream,  the  timing of revenue  recognition  with
          respect to the sale of future utility revenue  payments and the timing
          of revenue and expense  recognition  relative to contracts  containing
          future commitments of services following the implementation of certain
          projects.  As a result,  the Company  restated  its  previously  filed
          financial  statements  for each of the fiscal  years  ending  June 30,
          1997,  1998 and 1999,  as well as the first (a second  amendment)  and
          second fiscal quarters ended September 30, 1999 and December 31, 1999.

          The  Company  implemented  several  projects  in fiscal 1998 where the
          price to the customer was less than the cost to implement the project,
          creating a loss for accounting purposes. This "loss" was recovered and
          profits  were  achieved  through  the  Company's  retaining a share of

<PAGE>6

          utility incentive  payments that resulted from energy savings from the
          implemented  project.  In these instances,  the Company  estimated its
          revenue  from these  utility  incentive  payments and  recognized  the
          revenue as the project was being  implemented  using the percentage of
          completion  methodology.  The SEC has  required  the  Company to defer
          recognition  of the utility  incentive  payment  component  of revenue
          until the point in time that the  utility is billed for the  incentive
          payments.  Generally, these billings occur on a quarterly basis over a
          three year period.

          Further,  the Company  sold other  future  utility  incentive  payment
          streams to a third party on a non-recourse  basis.  At the time of the
          sale, in fiscal 1997 and 1998, the Company  recognized  revenue to the
          extent it received  cash.  The SEC has  required the Company to record
          these  payments as a  financing  transaction  (debt) and to  recognize
          revenue  related to the  utility  incentive  payments  on an as billed
          basis, again quarterly over a three year period.

          In addition,  the Company has a small number of contracts for which it
          has a  commitment  to provide  relamping  and other  ongoing  services
          several  years after the initial  implementation  of the project.  The
          Company  originally  recognized all the revenue and an estimate of the
          future cost as the project was being implemented. The SEC has required
          the  Company  to defer a portion  of the  revenue  and  eliminate  the
          reserve for future cost until the relampings actually occur.

          The  following   table   presents  the  statements  of  operations  as
          originally  filed and as amended  for the three and six month  periods
          ended December 31, 1999:


<TABLE>
<CAPTION>


                                                      Three Months Ended                     Three Months Ended
                                                      December 31, 1999                      December 31, 1998
                                            As Originally Filed     As Restated    As Originally Filed     As Restated

<S>                                            <C>                 <C>               <C>                  <C>
Revenues                                       $  3,100,972        $  3,067,344       $  9,320,493         $  9,456,370
                                               ============        ============       ============         ============
Net (loss)                                     $ (1,179,756)       $ (1,202,835)      $ (1,506,998)        $ (1,399,110)
                                               ============        ============       ============         ============
Net loss per share - basic and diluted         $      (0.06)       $     (0.06)       $      (0.08)        $      (0.08)
                                               ============        ============       ============         ============

                                                      Six Months Ended                       Six Months Ended
                                                      December 31, 1999                      December 31, 1998
                                            As Originally Filed     As Restated    As Originally Filed     As Restated

Revenues                                       $ 12,676,544        $ 12,844,817       $ 18,639,043         $ 18,910,797
                                               ============        ============       ============         ============
Net (loss)                                     $ (1,918,711)       $ (1,742,087)      $ (3,117,505)        $ (2,901,729)
                                               ============        ============       ============         ============
Net loss per share - basic and diluted         $      (0.10)       $     (0.09)       $      (0.17)        $      (0.16)
                                               ============        ============       ============         ============

</TABLE>

NOTE 4.   For  current  disclosures,  refer  to Form 10-QSB for the period ended
          March 31, 2000.



<PAGE>7


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

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
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, 1999 (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.


Background

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
complete  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 upgrade  and  aggregation  services.  The  Company  also  provides
professional consulting services in the areas of direct access planning,  market
assessment,  business  strategies,  public policy  analysis,  and  environmental
impact  feasibility  studies.  The Company has been  accredited  by the National
Association of Energy Service Companies. It is the Company's mission to save its
customers money and improve the quality of the environment  through  independent
energy solutions.

As of June 30, 1999, 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 a negative  shareholders'  equity. See the "Liquidity and Capital Resources"

<PAGE>8

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 recently  renamed Onsite Energy
Services,  Inc.  ("OES").  OES provides  utility  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 February 2000,  OES 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.

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 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,  ONSITE  SYCOM  received  690,000  shares  of  ONSITE  SYCOM  Common  Stock
originally issued for the acquisition of LTS, as well as a ten year non-interest
bearing note for approximately $936,000, which may be repaid by LTS by providing
lighting services to ONSITE SYCOM. Onsite Sycom incurred a loss of approximately
$652,000 as a result of the sale. In addition,  the note has been fully reserved
for due to doubt surrounding its recoverability.

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 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.  In the fiscal first
quarter,  the Company made a decision to explore the sale or  disposition of its
lighting subsidiaries.

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

Results of Operations

In order to perform parallel six and three month comparisons,  the activity from
certain  subsidiaries  had to be  eliminated  from each fiscal  year.  The after
elimination  comparisons  exclude the activity of LTS from the December 31, 1998
operations,  and the  activity  of all of LTS,  REEP and ERSI from  consolidated
balances for the six and three months ended December 31, 1999.

Six months ended December 31, 1999 compared to the six months ended December 31,
1998

Revenues  for the six month  period  ended  December  31, 1999 were  $12,844,817

<PAGE>9

compared to  $18,910,797  for the same period in 1998, a decrease of $6,065,980,
or 32.08 percent.  After the elimination of amounts related to the  subsidiaries
identified above, revenues for the six month period ended December 31, 1999 were
$8,708,575, compared to $12,272,820 for the same period in 1998. The decrease of
$3,564,245,  or 18.85 percent,  was primarily due to the 90 percent  decrease in
revenue recognized on long term construction contracts at SO Corporation.

Cost of sales for the six months ended December 31, 1999 was $9,360,966 compared
to  $15,669,954  for the six months  ended  December  31,  1998,  a decrease  of
$6,308,988,  or 40.26  percent.  After  eliminations  of cost of sales  from the
identified subsidiaries,  cost of sales were $6,673,098 for the six months ended
December 31, 1999, compared to $9,823,691 for the comparable period in 1998. The
decrease of $3,150,592,  or 20.11  percent,  was due to the decrease in the long
term construction contracts SO Corporation as mentioned above.

Gross  margin for the six month period  ended  December 31, 1999 was  $3,483,851
(27.12 percent of revenues),  compared to $3,240,843 (17.14 percent of revenues)
for the six month period ended  December 31, 1998.  The increase in gross margin
as a percentage  of sales was the result of several  contracts in the six months
ended December 31, 1998 with lower than historical margins as well as lower than
typical margins at LTS. After the  elimination of  subsidiaries  not included in
both periods,  the gross margin for the six month period ended December 31, 1999
was  $2,035,477  (23.37  percent of  revenues),  compared to  $2,449,130  (19.96
percent of revenues) for the six month period ended December 31, 1998.

Selling,  general and  administrative  ("SG&A") expense for the six months ended
December 31, 1999 was $5,146,972 compared to $5,448,297 for the six months ended
December  31,  1998,  a  decrease  of  $301,325,  or  5.53  percent.  After  the
elimination of SG&A expenses of the identified subsidiaries,  SG&A expenses were
$3,953,459  for the six months ended  December 31, 1999,  compared to $4,883,713
for the same  period on the  previous  year,  a decrease of  $930,253,  or 17.07
percent.  This  decrease is  primarily  attributable  to the ongoing  attempt by
management to reduce SG&A costs, including reduction in personnel and locations,
among other things.

Goodwill amortization and depreciation expense for the six months ended December
31, 1999 was  $274,873,  compared to $555,623 for the  comparable  period in the
previous year, a decrease of $280,750,  or 50.53 percent.  After the elimination
of the identified subsidiaries,  goodwill amortization and depreciation expenses
for the six months ended December 31, 1999 were  $262,594,  compared to $398,304
for the comparable period last year. The primary reason for the decrease was due
to the elimination of amortization of goodwill for SO Corporation resulting from
the write-off of the remaining goodwill at the fiscal year ended June 30, 1999.

Recovery of reserve  provided for sale or disposal of subsidiary was a reduction
in operating loss (income) 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. 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
entering into a definitive  agreement for sale.  The ultimate sale resulted in a
loss of approximately $651,000.

Net other  expense for the six months  ended  December  31,  1999 was  $158,963,
compared  to a net other  expense of  $138,652  for the six month  period  ended
December  31,  1998,  an  increase  of  $20,311,  or 14.65  percent.  After  the

<PAGE>10

elimination  of the activity of the identified  subsidiaries,  net other expense
was  $110,262,  compared to $134,684  for the same period in 1998, a decrease of
$24,422, or 18.13 percent.

Net loss for the six months  ended  December 31, 1999 was  $1,742,087,  or $0.09
loss per share, compared to net loss of $2,927,304,  or $0.16 loss per share for
the same period in 1998. After the elimination of revenues and expenses from the
identified  subsidiaries,  net loss for the six month period ended  December 31,
1999 was $2,294,639, compared to $2,967,572 for the comparable period in 1998.

Three months ended December 31, 1999 compared to the three months ended December
31, 1998

Revenues  for the three month period  ended  December 31, 1999 were  $3,067,344,
compared to  $9,456,370  for the three month period  ended  December 31, 1998, a
decrease  of  $6,389,026,  or 67.56  percent.  In order to  perform  a  parallel
comparison,   revenues  and  expenses  of  the  identified   subsidiaries   were
eliminated.  After  eliminations of these  subsidiaries,  revenues for the three
month period ended December 31, 1999 were $2,474,968, compared to $9,456,370 for
the same  period in 1998,  a decrease  of  $6,981,402,  or 73.83  percent.  This
decrease  is  primarily  attributable  to the  decrease  in revenue on long term
construction contracts at SO Corporation.

Cost  of  sales  for the  three  month  period  ended  December  31,  1999  were
$1,917,008,  compared to $7,767,131 for the same period ended December 31, 1998,
a  decrease  of  $5,850,123,  or 75.32  percent.  After the  elimination  of the
activity from the identified subsidiaries, the cost of sales for the three month
period ended December 31, 1999 were  $1,693,565,  compared to $7,767,131 for the
comparable  period in 1998, a decrease of  $6,073,566,  or 78.20  percent.  This
decrease  is  primarily  attributable  to the  decline in  revenues on long term
construction contracts as mentioned above.

Gross Margin for the three months ended December 31, 1999 was $1,150,336  (37.50
percent of revenues), compared to $1,689,239 (17.86 percent of revenues) for the
three months ended December 31, 1998. After the elimination of revenues and cost
of sales of the  identified  subsidiaries,  gross  margin  was  $781,403  (31.57
percent of revenues) for the three months ended  December 31, 1999,  compared to
$1,689,239 (17.86 percent of revenues) for the comparable period in the previous
year.  The  increase  in  margin  as a  percentage  of sales  was a result  of a
concentration  on consulting  projects in the quarter  ended  December 31, 1999,
which generally have higher gross margins.

SG&A was $2,167,620  for the three months ended  December 31, 1999,  compared to
$2,756,837 for the three months ended December 31, 1998, a decrease of $589,217,
or  21.37   percent.   After  the   elimination  of  SG&A  from  the  identified
subsidiaries,  SG&A was $1,904,998 for the three month period ended December 31,
1999,  compared to $2,756,837 for the comparable  period in the previous year, a
decrease of $851,847,  or 30.90 percent.  The decrease was the result of efforts
to reduce SG&A  through a reduction  in  personnel  and  locations,  among other
things.

Goodwill  amortization and  depreciation  expense for the quarter ended December
31, 1999 was $131,248,  compared to $265,002 for the  comparable  quarter in the
previous year, a decrease of $133,754,  or 50.47 percent.  After the elimination
of the identified  subsidiaries,  goodwill amortization and depreciation expense
for the three months ended December 31, 1999 was $131,248,  compared to $265,002
for the comparable  period last year, a decrease of $133,754,  or 50.47 percent.
The primary reason for the decrease was due to the  elimination of  amortization
of goodwill for SO  Corporation  resulting  from the  reduction of the remaining
goodwill at the fiscal year ended June 30, 1999.

Net other  expense was $54,103 in the three  months  ended  December  31,  1999,
compared  to net other  expense  of $66,510  for the three  month  period  ended
December  31,  1998,  a  decrease  of  $12,407,  or  18.65  percent.  After  the
elimination  of net other income and expense from the  identified  subsidiaries,
net other  expense was $55,692 for the three  months  ended  December  31, 1999,
compared  to $66,510 for the same  period in 1998,  an  increase of $10,818,  or
16.27 percent.

<PAGE>11

Net loss for the three months ended December 31, 1999 was  $1,202,835,  or $0.06
loss per share,  compared  to net loss of  $1,399,110,  or $0.08 loss per share.
After the  elimination of revenues and expenses of the identified  subsidiaries,
net loss for the quarter  ended  December 31, 1999 was  $1,310,734,  compared to
$1,399,110  for same period in the previous  fiscal year, a decrease of $88,376,
or 6.32 percent.

Liquidity and Capital Resources

The Company's cash and cash  equivalents  were $464,157 as of December 31, 1999,
compared to  $900,408  as of June 30,  1999,  a decrease  of  $436,251.  Working
capital  was a negative  $7,396,860  as of  December  31,  1999,  compared  to a
negative $6,511,390 as of June 30, 1999.

Cash flows  provided by  operating  activities  were  $400,510 for the six month
period  ended  December  31,  1999  compared  to cash  flows  used in  operating
activities  of $512,676  for the same six month  period in 1998.  The change was
primarily  due to the  decline  in net loss from  $2,901,729  for the six months
ended  December 31, 1998 to  $1,742,087  for the six months  ended  December 31,
1999.

Cash flows used in investing  activities  in the six months  ended  December 31,
1999 were $189,202,  compared to $1,204,939 used in investing  activities in the
comparable  period in the prior year.  The change was  primarily the result of a
reduction in loans for shareholders of $986,520.

Cash flows used in financing  activities  were $647,559 for the six months ended
December 31, 1999,  compared to cash flows  provided by financing  activities of
$253,203 for the six month period ended  December 31, 1998. The increase was due
to an increase in repayments on notes payable of $890,099.

The Company has shown significant net losses for the year ended June 30, 1999 as
well as the six months ended  December 31, 1999.  Management  believes  that the
Company will be able to generate additional revenues and operating  efficiencies
through sales and/or  financing of long term project revenue  streams,  sales of
assets  or  subsidiaries,  as well  as by  other  means  to  achieve  profitable
operations.  During the quarter ended  December 31, 1999, the Company took steps
to mitigate the losses and enhance its future viability.  Subsequent to its most
recent  fiscal year end, the Company  privately  placed  shares of newly created
Series E Convertible Preferred Stock ("Series E Stock") to existing shareholders
for  $1,000,000.  Concurrent  with this  private  placement,  members  of senior
management  of the Company  agreed to receive  shares of the  Company's  Class A
Common  Stock in lieu of a portion of their  salary in an effort to reduce  cash
outflows related to compensation.  During the first quarter, a decision was made
to explore the sale or disposition of the Company's lighting subsidiaries, which
could provide  capital,  reduce  operating  losses and will allow  management to
better focus on its core ESCO business  activities.  Subsequent to September 30,
1999,  the Company sold 95% of its interest in LTS.  Subsequent  to December 31,
1999, OES sold  substantially  all of the assets of OMS to a private party. As a
result of the sale,  OES was able to reduce  staff from six to one  persons.  In
addition,  the Company is exploring strategic  relationships with companies that
could  involve an  investment  in the  Company.  The Company may also raise cash
through the sale of long term future  revenue  streams that it currently owns or
has rights to. The Company is also  examining  ways to further  reduce  overhead
including,  but not limited to, the possibility of targeted staff reductions and
asset sales.  Management  believes  that all of the above actions will allow the
Company to continue as a going concern.  Future cash requirements  depend on the
Company's profitability,  its ability to manage working capital requirements and
its rate of growth. Additional financing through the sale of securities may have
an ownership dilution effect on existing shareholders.

Pursuant  to the  Certificate  of  Designations  for the  Series  C  Convertible
Preferred  Stock  (the  "Series  C  Stock"),  each  holder  of Series C Stock is
entitled,  when and as declared by the Board of Directors of the Company and out

<PAGE>12

of any funds legally  available  therefore to an annual  dividend at the rate of
9.75 percent of the  liquidation  preference  ($5 per share),  which dividend is
payable  quarterly.  All of the issued and outstanding  shares of Series C Stock
are held by Westar Capital, Inc. ("Westar"). Dividends were declared and paid as
required for each of the quarters  through  April 15, 1999.  While the Board has
authorized the payment of dividends to the extent such  declaration  and payment
is allowed under applicable Delaware corporate law, under Delaware law dividends
on the Series C Stock  could not be  declared  and paid as  required on July 15,
1999, October 15, 1999, or January 15, 2000.

Pursuant  to the  Certificate  of  Designations,  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.  Such
voting rights  continue until all dividends  accrued on the Series C Stock shall
have been paid or set apart for  payment,  at which time such voting power shall
cease (until a similar default in payment recurs).  While the Company  currently
is not in default on four or more quarterly dividends,  if the Company is unable
to declare the requisite  quarterly  dividend on April 15, 2000,  Westar, as the
holder of the Series C Stock, shall be entitled to exercise the rights described
above. Furthermore,  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 Company's  Board of Directors who are not directors  designated
by Westar or are affiliates of Westar.  However,  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,  if Westar has  exercised its rights to elect the
majority of the Board of  Directors,  all directors are entitled to vote on such
ownership issue and not just the non-Westar designated directors.

Part II - Other Information

Item 1. Legal  Proceedings.  In October 1998, Energy  Conservation  Consultants,
Inc. ("ECCI"), a Louisiana-based  company,  filed a suit (United States District
Court,  Eastern  District of Louisiana,  Case No. 98-2914)  against OES alleging
breach of contract in connection  with one of the Company's  projects.  The suit
sought  reimbursement for expenses allegedly incurred by ECCI in the preparation
of an audit and lost  profits.  OES settled  this matter in December  1999,  and
execution of the final settlement agreement is pending.

In November 1999, Independent Energy Services,  Inc. ("IES"), a subcontractor to
the Company, filed a suit (United States District Court, District of New Jersey,
Case No.  99-5159  (AET))  against the Company  and three of its  directors  and
officers  alleging breach of contract and related causes of action in connection
with one of the Company's projects.  The suit seeks payment of monies ($434,234)
allegedly due under a subcontract,  as well as consequential  damages,  interest
and costs of suit. The Company filed its answer,  which  included  counterclaims
alleging,  among other things,  that IES breached the  subcontract by failing to
comply  with its terms.  The  Company is  continuing  its  efforts to settle the
matter; however, no settlement agreement has been reached.

In January 2000, IES filed a second action (Superior Court of New Jersey, Morris
County,  Docket No.  L-214-00)  against the Company and two of its directors and
officers  alleging breach of contract and related causes of action in connection
with  another  of the  Company's  projects.  The suit  seeks  payment  of monies
($710,562) allegedly due under a subcontract,  as well as consequential damages,
interest  and costs of suit.  The Company is in the process of  evaluating  this
matter and has not yet filed its responsive pleadings.

<PAGE>13

Additionally,  in January 2000, EUA Cogenex Corporation ("Cogenex") filed a suit
(United States District Court,  District of  Massachusetts,  Case No.  00-10128)
alleging,   among  other  things,  breach  of  contract  in  connection  with  a
Forbearance  Agreement  entered  into by the  Company and  Cogenex.  The Company
negotiated  a standstill  agreement  with Cogenex to maintain the status quo and
allow for  additional  settlement  discussions,  and to  prevent  any  action by
Cogenex against  certain  collateral that secures the debt under the Forbearance
Agreement  without  court  action.  The Company and Cogenex  have  negotiated  a
settlement  of this matter that  involves the execution and filing of an amended
standstill order and a stipulated  judgment if the Company fails to make certain
agreed-upon payments to Cogenex.


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

a)      Reports on Form 8-K

           Form 8-K filed  November  16, 1999,  regarding  the  Acquisition  and
           Release  Agreement  to sell 95 percent of the issued and  outstanding
           stock of Lighting Technology Services, Inc.


           Exhibit 27        Financial Data Schedules

<PAGE>14

                                   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:   July 26, 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