U.S. SECURITIES AND EXCHANGE COMMISSION

                        WASHINGTON, D.C.,  20549

                          FORM 10-QSB


(Mark One)
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 incorporation 
 or organization)                                 (I.R.S. Employer
                                                   Identification No.)


701 Palomar Airport Road, Suite 200, Carlsbad, CA              92009
      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)


ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (760) 931-2400


CHECK WHETHER THE ISSUER (1)  FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15(D) OF THE EXCHANGE ACT  DURING THE PAST 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
SUBJECT   TO   SUCH   FILING   REQUIREMENTS    FOR    THE    PAST    90   DAYS.
YES    X       No

The  number  of  Class  A  common  stock, $0.001  par value, outstanding as  of
November 11, 1997 is 14,644,172


<PAGE>
                                    Onsite Energy Corporation
                                    Consolidated Balance Sheet
                                        September 30, 1997
                                            Assets

Current Assets:
  Cash                                                 $316,326
  Cash-Restricted                                       151,025
  Accounts Receivable, net of allowance for
   doubtful accounts of $15,030                         965,906
  Costs and estimated earnings in excess of
   billings on uncompleted contracts                    227,839
  Other assets                                           26,074
                                                    -----------

     TOTAL CURRENT ASSETS                             1,687,170

Cash-restricted                                          78,990
Costs incurred on future projects                         1,409
Property and equipment, net of accumulated
  depreciation and amortization                          38,850
Goodwill, net of amortization of $1,433,333             166,667
Other                                                    24,159
                                                    -----------

     TOTAL ASSETS                                     1,997,245
                                                    ===========

            LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable                                   $1,101,784
  Billings in excess of costs and estimated
   earnings on uncompleted contracts                     14,226
  Current portion of notes payable                       75,572
  Accrued expenses and other liabilities                391,993
                                                     ----------

     TOTAL CURRENT LIABILITIES                        1,583,575

Long-Term Liabilities:
  Related party notes payable                            31,805
  Accrued future operation and maintenance costs
   associated with energy services agreements           421,432
                                                     ----------

     TOTAL LIABILITIES                                2,036,812
                                                     ----------

Commitments and contingencies

Shareholders' Equity (Deficit):
  Preferred Stock, Series A, 4,000 shares authorized,
   none issued and outstanding                                -
  Preferred Stock, Series B, 625,000 shares authorized,
   none issued and outstanding                                -
  Common Stock, $.001 par value, 24,000,000 shares
   authorized:
   Class A common stock, 23,999,000 shares authorized,
    10,944,172 issued and outstanding                    10,942
   Class B common stock, 1,000 shares authorized,
    none issued and outstanding                               -
  Additional paid-in capital                         17,052,963
  Accumulated deficit                               (17,103,472)
                                                     ----------
    TOTAL SHAREHOLDERS' EQUITY (DEFICIT)            (    39,567)
                                                     ---------- 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 (DEFICIT)                                           $1,997,245
                                                     ----------

The accompanying notes are an integral part of the financial statements

<PAGE>
                            Onsite Energy Corporation
                        Consolidated Statements of Operations
                                  (Unaudited)
                                    

                                         Three Months Ended
                                            September 30,
                                       1997                    1996

Revenues                            $ 2,237,805             $ 3,310,866

Cost of sales                         1,586,794               2,494,539
                                    -----------             -----------
  Gross Margin                          651,011                 816,327
                                    -----------             -----------
Selling, General,
  and Administrative Expenses           490,270                 969,728
Depreciation and Amortization           105,777                 119,769
                                    -----------             -----------

  Operating income (loss)                54,964                (273,170)
                                    -----------             -----------
Other income (expense):
  Interest (expense)                     (8,588)                (58,444)
  Interest income                         4,103                   4,672
                                    -----------             -----------
     Total other income (expense)      (  4,485)               ( 53,772)
                                    -----------             -----------
                             
Income (loss) from operations
  before provision(benefit)
   For income taxes                      50,479                (326,942)

Provision (benefit) for
income taxes                              6,738                       -
                                    -----------             ----------- 

Net income (loss)                     $  43,741             $  (326,942)
                                    ===========             ===========

Net income (loss) per Class A
  common share                             *                      (0.03)
                                    ===========             ===========

Weighted average shares outstanding  10,944,172              10,535,547
                                    ===========             ===========


*Less than $0.01 per share


The accompanying notes are an integral part of the financial statements

<PAGE>
                            Onsite Energy Corporation
                        Consolidated Statements of Cash Flows
                                  (Unaudited)

                                             Three Months Ended
                                                September 30,
                                          1997                  1996

Cash flows from operating activities:

Net income (loss)                         $    43,741           $  (326,942)

Adjustments to reconcile net income
 (loss) to net cash provided by
 (used in) operating activities:
   Amortization of goodwill                   100,000               100,000  
   Amortization of acquired contract
    costs                                           -               224,381
   Provision for bad debts                      6,772                     -
   Depreciation and amortization                5,777                19,769
Change in operating assets and liabilities:
   Accounts receivable                      (107,724)              (551,155)
   Increase (decrease) in billings
    related to costs and estimated
    earnings on uncompleted contracts       (262,728)              (129,117)
   Other assets                             (  5,346)                91,737
   Cash-restricted                            43,152               ( 43,244)
   Accounts payable                          130,388                 32,140
   Accrued expenses and other liabilities   (113,301)                     -
   Deferred income                                 -                 25,000
                                            --------               --------
   Net cash used in operating activities    (159,269)              (557,431)
                                            --------               --------
Cash flows from financing activities:

   Proceeds from exercise of stock options         -                 15,604
   Repayment of long-term debt              ( 51,299)              (135,595)
                                            --------               --------
   Net cash used in financing activities    ( 51,299)              (119,991)
                                            --------               --------
   Net increase (decrease) in cash          (210,568)              (677,422)

Cash, beginning of year                      526,894                976,470
                                            --------               --------
Cash, end of year                          $ 316,326              $ 299,048
                                           =========              =========



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/A for Onsite Energy
                  Corporation ("Onsite")  as  of and 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 consolidated balance sheet as of September 30, 1997, and
                  the  consolidated  statements of operations and cash flows
                  for the three months  ended  September  30, 1997 and 1996,
                  represent the financial position and results of operations
                  of Onsite.

      NOTE  3:  Net  income  (loss) per common share is based upon  the  net
                  income (loss)  for  the  period  divided  by  the weighted
                  average   number   of   common  shares  and if dilutive,
                  common  share equivalents outstanding during  the period.
                  Common share equivalents are antidilutive for the three
                  months ending September 30, 1997 and 1996.

      NOTE 4: On October  28, 1997, Onsite entered into a Stock Subscription
                  Agreement  with Westar Capital, Inc. ("Westar Capital"), a
                  wholly  owned   subsidiary   of   Western  Resources  Inc.
                  (NYSE:WR)  and  completed  the  private  placement  of  $2
                  million  of  its  securities  to  Westar  Capital.  Westar
                  Capital  purchased  two  million  (2,000,000)   shares  of
                  Onsite's Class A common Stock at fifty cents ($0.50)  per
                  share   and  two  hundred  thousand  (200,000)  shares  of
                  Onsite's  newly  created Series C convertible Preferred at
                  five dollars ($5.00)  per  share.  Each  share of Series C
                  Convertible  Preferred  Stock  is  convertible  into  five
                  shares  of  Onsite's  Class  A Common Stock  and  earns  a
                  dividend of 9.75 percent per annum.

                  In  a  related  transaction,  Onsite   has  completed  the
                  acquisition of Westar Business Services,  Inc.  ("WBS"), a
                  wholly owned indirect subsidiary of Western Resources Inc.
                  WBS  provides  performance  contracting  services, utility
                  services  and industrial water services primarily  in  the
                  states of Kansas,  Missouri  and  Oklahoma.   The purchase
                  price  was 1.7 million Shares of Onsite's Class  A  Common
                  Stock upon  closing,  plus  an  additional  800,000 shares
                  which  have  been  escrowed,  to  be  released  upon   the
                  development   of   additional  business.  Westar  Business
                  Services has been renamed  Onsite  Business  Services as a
                  part of the transaction.

<PAGE>6

            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS.

BACKGROUND

Onsite  is  a  comprehensive  energy service company ("ESCO") that assists  its
customers in reducing electricity  and  fuel  costs  by  developing, designing,
constructing,  owning  and  operating efficient, environmentally  sound  energy
projects. Onsite 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 Onsite's mission to be a premier  provider of
energy   services   solutions  for  industrial,  institutional  and  commercial
customers.

Onsite,  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
("Western"),  and  Onsite  Energy,  a  California corporation  formed  in  1982
("Onsite-Cal").  Under the Reorganization,  Onsite-Cal  merged  with  and  into
Onsite, and a newly  formed  subsidiary of Onsite merged with and into Western,
which survived and became a whollyowned  subsidiary of Onsite. This transaction
was accounted for as a purchase of Onsite-Cal by Onsite.

As  of  October  31,  1997 Onsite owns all of  the  stock  in  Onsite  Business
Services, 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 Onsite  shall  include all
of its wholly owned subsidiaries.

RESULTS OF OPERATIONS.

Revenues  for  the three-month period ended September 30, 1997 were $2,237,805,
compared to $3,310,866  for  the same period in 1996, a decrease of $1,073,061,
or approximately 32.4 percent.  The  decrease  in  revenues was attributable to
several smaller sized contracts in 1997 rather than one significant contract in
1996.

Cost of sales for the quarter ended September 30, 1997 was $1,586,794, compared
to $2,494,539 for the quarter ended September 30, 1996, a decrease of $907,745,
or approximately 36.4 percent.  Gross margin for the  three  month period ended
September  30,  1997  was  $651,011  (29.0  percent  of revenues), compared  to
$816,327  (24.9  percent  of  revenues).  The  increase in gross  margin  as  a
percentage  of  sales  was  the  result  of a larger percentage  of  consulting
revenues, which generally provide higher gross margins.

Selling, general and administrative ("SG&A")  expense  for  the  quarter  ended
September  30,  1997 was $490,270, compared to $969,728 for the quarter ended
September 30, 1996,  a  decrease of $479,458, or approximately 49 percent.  The
decrease in SG&A was primarily  attributable to the continued efforts by Onsite
to implement savings and expense  reductions  in  an  effort to improve overall
operating results.

Net other expense for the quarter ended September 30, 1997 was $4,485, compared
to $53,772 for the three month period ended September 30,  1996,  a decrease of
$49,287,  or approximately 92 percent, is due to a decline in interest  expense
attributable to substantial reductions in principal balances outstanding.

Net income  for the three months ended September 30, 1997 was $43,741 or less 
than $0.01 per share, compared  to a net loss of $326,942, or $0.03 loss per 
share for the same period in 1996.


<PAGE>7


LIQUIDITY AND CAPITAL RESOURCES

Onsite's cash and cash  equivalents  were  $316,326  as  of September 30, 1997,
compared to $526,894 as of June 30, 1997.  Working capital  was  $103,595 as of
September 30, 1997, compared to $30,333 as of June 30, 1997.

Cash flows used by operating activities during the three months ended September
30, 1997 were $159,269, compared to cash flows used by operating activities  of
$557,431 for the same period in 1996, a decrease of $398,162. The decrease is a
result  of  Onsite's  continued  efforts  to implement savings and cash outflow
reductions in an effort to improve overall operating results.

There were no cash flows from investing activities in either of the first three
months of 1997 and 1996.

Cash flows used by financing activities were  $51,299  during  the three months
ended September 30, 1997, compared to $119,991 for the comparable  period  last
year.   Reductions in notes payable of $51,299 in the first three months of the
current fiscal year, compared to reductions in notes payable of $135,595 in the
first three months of fiscal 1996.

                          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

On October  28,  1997,  Onsite entered into a Stock Subscription Agreement with
Westar Capital, Inc. ("Westar  Capital"),  a wholly owned subsidiary of Western
Resources Inc. (NYSE:WR) and completed the private  placement  of $2 million of
its  securities  to  Westar  Capital.  Westar  Capital  purchased  two  million
(2,000,000) shares of Onsite's Class A common Stock at fifty cents ($0.50) per
share  and  two  hundred  thousand  (200,000)  shares of Onsite's newly created
Series C convertible Preferred at five dollars ($5.00) per share. Each share of
Series  C  Convertible  Preferred  Stock is convertible  into  five  shares  of
Onsite's Class A Common Stock and earns a dividend of 9.75 percent per annum.

In  a  related transaction, Onsite has  completed  the  acquisition  of  Westar
Business  Services, Inc. ("WBS"), a wholly owned indirect subsidiary of Western
Resources Inc.  WBS provides performance contracting services, Utility services
and industrial  water  services primarily in the states of Kansas, Missouri and
Oklahoma.  The purchase price was 1.7 million Shares of Onsite's Class A Common
Stock upon closing, plus an additional 800,000 shares which have been escrowed,
to be released upon the  development  of  additional  business. Westar Business
Services  has  been  renamed  Onsite  Business  Services  as  a   part  of  the
transaction.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Full disclosure of the above mentioned items in Item 5. Other, were filed
with  the  Securities  and  Exchange Commission on Form 8-K, dated October  28,
1997, and filed on November 12,  1997.  Financial statements of Onsite Business
Services, Inc. will  be filed by amendment within 60 days.


<PAGE>8

                                  SIGNATURES


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


                                    ONSITE ENERGY CORPORATION




Date:   November 11, 1997           By:   RICHARD T. SPERBERG
                                          Richard T. Sperberg
                                          President,  Chief  Financial  Officer
                                          and Principal Accounting Officer


<PAGE>8