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 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 incorporation or            (I.R.S. Employer 
organization)                                              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
February 19, 1998 is 14,712,372.




<PAGE>2


                           Onsite Energy Corporation
                          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                                            2,737,779
   Costs and estimated earnings in excess of billings
     on uncompleted contracts                                         581,084
   Other assets                                                        20,340

      TOTAL CURRENT ASSETS                                          5,134,637

Cash-restricted                                                        78,990
Costs incurred on future projects                                       1,767
Property and equipment, net of accumulated
  depreciation and amortization                                       677,408
Goodwill, net of amortization of $1,536,201                           210,664
Other                                                                  24,159

      TOTAL ASSETS                                                 $6,127,625

                     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                $1,704,709
   Billings in excess of costs and estimated earnings
     on uncompleted contracts                                         151,135
   Current portion of notes payable                                    75,572
   Accrued expenses and other liabilities                             613,884

      TOTAL CURRENT LIABILITIES                                     2,545,300

Long Term Liabilities:
   Accrued future operation and maintenance costs
     associated with energy services agreements                       421,432

      TOTAL LIABILITIES                                             2,966,732

Commitments and contingencies

Shareholders' Equity:
   Preferred Stock, Series A, 4,000 shares authorized,
     none issued and outstanding                                         -
   Preferred Stock, Series B, 625,000 shares authorized,
     none issued and outstanding                                         -
   Preferred Stock, Series C, 1,000,000 shares authorized,
     200,000 issued and outstanding                                       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                          14,659
     Class B common stock, 1,000 shares authorized,
     none issued and outstanding                                         -
Additional paid-in capital                                         20,191,977
Accumulated deficit                                               (17,046,303)

      TOTAL SHAREHOLDERS' EQUITY                                    3,160,533

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $  6,127,265

The accompanying notes are an integral part of the financial statements.



<PAGE>3


                               Onsite Energy Corporation
                     Consolidated Statements of Operations
                                  (Unaudited)



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



Revenues                         $3,706,109  $2,935,524  $5,943,914  $6,246,390

Cost of sales                     2,555,071   1,965,966   4,141,865   4,460,505
    Gross Margin                  1,151,038     969,558   1,802,049   1,785,885

Selling, General,
    and Administrative Expenses     938,755     943,663   1,429,025   1,913,391
Depreciation and Amortization       153,328     169,714     259,105     289,483

    Operating income (loss)          58,955    (143,819)    113,919    (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)


Income (loss) from operations
    before provision
    for income taxes                 62,667    (183,501)     113,146   (510,443)

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

Net income (loss)             $    57,168  $  (183,501)  $  100,909  $(510,443)


Net income (loss) per
    Class A common share      $       **   $     (0.02)  $       **     $(0.05)


Weighted average shares 
       outstanding             13,519,572   10,859,203   12,231,872  10,698,414



** less than $ 0.01 per share



The accompanying notes are an integral part of the financial statements.


<PAGE>4


                           Onsite Energy Corporation
                     Consolidated Statements of Cash Flows
                                  (Unaudited)

                                                      Six Months Ended
                                                        December 31,
                                                    1997           1996
Cash flows from operating activities:
 
     Net income (loss)                        $      100,909    $(510,443)

Adjustments to reconcile net income (loss)
   to net cash provided by (used in) 
   operating activities:
     Amortization of goodwill                        202,868      200,000
     Amortization of acquired contract costs               -      363,536
     Depreciation and amortization                    56,237       89,483
Change in operating assets and liabilities:
     Accounts receivable                          (1,354,370)    (673,083)
     Increase (decrease) in costs related to
     billings and estimated earnings on 
     uncompleted contracts                          (479,064)      10,060
     Other assets                                        797      243,526
     Cash-restricted                                  41,252      (43,244)
     Accounts payable and accrued expenses           801,029     (456,255)
     Deferred income                                       -       25,000

       Net cash provided (used) by operating
       activities                                   (630,342)    (751,420)

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

     Net cash provided (used) by 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  (used)  by
        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

Noncash investing and financing activities:
     Acquisition of Westar Business Services,
       Inc.:
     Accounts Receivable                      $      518,029   
     Water Treatment Plants                          599,457
     Equipment                                        27,216
     Intangible and Other Assets                     147,631
     Accounts Payable                                (40,874)

        Common Stock and Paid in Capital
        to acquire WBS, Inc.                  $    1,251,459


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,  as  amended, for
                    Onsite  Energy  Corporation  ("Onsite") 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 December 31, 1997, and
                    the 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  Onsite.  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 forthcoming year.




            **The remainder of this page left intentionally blank**


<PAGE>6



      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,
                    1996 were anti-dilutive and excluded  in  the  earnings per
                    share computation.

                           Onsite Energy Corporation
                              Earnings Per Share
                                  (Unaudited)

<TABLE>
<CAPTION>
                                          For the Three              For the Six
                                           Months Ended              Months Ended
                                           December 31,              December 31,
                                         1997        1996         1997          1996
<S>                                     <C>          <C>          <C>           <C>

     BASIC EARNINGS PER SHARE:

Net Income (Loss)                       $ 57,168     $ (183,501)   $ 100,909    $(510,443)

Less-Preferred Stock Dividends             3,419              -        3,419            -

   Net Income applicable to common 
      shareholders                      $    53,749  $ (183,501)   $  97,490    $ (510,443)


Weighted Average number of common shares 13,519,572  10,859,203   12,231,872    10,698,414

Basic Earnings (Loss) per Share        $        **   $    (0.02) $        **    $    (0.04)


     DILUTED EARNINGS PER SHARE:

Net Income from primary income per 
  common share                         $    53,749   $  (183501) $   97,490     $ (510,443)

Add:  Preferred Stock Dividend               3,419            -       3,419              -

     Net Income for diluted earnings 
       (loss) per share                     57,168      (183,501)   100,909       (510,443)

Weighted average number of shares 
   used in calculating basic earnings 
   per common share                     13,519,572    10,859,203 12,231,872     10,698,414

Add:  Common equivalent shares           1,237,480             -    866,318              -

Weighted Average number of shares used 
   in calculation of diluted earnings 
   per share                            14,757,052    10,859,203 13,098,190     10,698,414

   Diluted Earnings (Loss) per Share   $        **    $    (0.02) $      **     $    (0.04)


</TABLE>
** Less than $ 0.01 per share



<PAGE>7



      NOTE 4:     On October 28, 1997, Onsite Energy Corporation, Inc.  entered
                  into  a  Stock Subscription Agreement (the "Stock Agreement")
                  with Westar  Capital,  Inc.  Pursuant to the Stock Agreement,
                  Onsite  has  made  a  private   placement   of   Two  Million
                  (2,000,000) shares of Onsite's Class A Common Stock  at Fifty
                  Cents  ($.50)  per  share  and Two Hundred Thousand (200,000)
                  shares  of  Onsite's  newly  created   Series  C  Convertible
                  Preferred  Stock  at Five Dollars ($5.00)  per  share.   Each
                  share of Onsite's Series  C  Convertible  Preferred  Stock is
                  convertible into five shares of Onsite's Class A Common Stock
                  and earns a dividend of 9.75% per annum.

                  In  a related transaction on October 28, 1997, Onsite entered
                  into   a   "Plan   and   Agreement  of  Reorganization"  (the
                  "Reorganization Agreement")  with  Westar  Business Services,
                  Inc., a Kansas corporation ("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,  Onsite  acquired  100% of
                  WBS's issued and outstanding capital stock, consisting solely
                  of  Common  Stock,  no par value, in exchange for One Million
                  Seven Hundred Thousand (1,700,000) shares of Onsite's Class A
                  Common Stock, par value  $0.001  per  share.   An  additional
                  800,000  shares  of  Onsite  Class  A  Common  Stock  will be
                  delivered  to  Westar  Capital  in  the  event  that  WBS has
                  executed  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  Onsite,  and legally changed its
                  name to Onsite Business Services, Inc.

                  WBS   provides  performance  contracting  services,   utility
                  services  and  industrial  water  services  in  the states of
                  Kansas,  Missouri  and  Oklahoma.   The  acquisition provides
                  Onsite with the ability to develop new markets  in  the  mid-
                  west and other areas.


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

                              Three Months Ended        Six Months Ended
                                  DECEMBER 31,            DECEMBER 31,

                           1997          1996          1997         1996

Revenues              $  3,855,776   $ 3,702,445   $ 6,542,582   $  7,404,890

Income (Loss) from 
  Operations          $      4,288   $  (293,972)  $  (105,522)  $   (587,943)

Net Income (Loss)     $      2,501   $  (293,972)  $  (117,759)  $   (587,943)

Income (Loss) Per
  Share               $         **   $      0.03)  $        **   $      (0.05)



** Less than $ 0.01 per share


<PAGE>8



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  the  premier
independent   provider   of   energy  efficiency   services   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 wholly-owned 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.

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
$5,943,914  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 $1,802,049, or 30.3
percent of revenues, compared to  $1,785,885,  or 28.6 percent of revenues, for
the six months ended December 31, 1996.  The increase in margin as a percentage
of revenues was the result of a larger percentage of consulting revenues, which
generally provide higher gross margins.

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 percent is
attributable to the continued  efforts  by  Onsite  to  implement  savings  and
expense reductions in an effort to improve overall operating results.

Net  other  income/expense  was $773 net other 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  of $92,681, or approximately 99 percent,
is due to a decline in interest expense  attributable to substantial reductions
in principal balances outstanding.

Net income for the six months ended December  31,  1997  was  $100,909, or less
than $0.01 income per share, compared to Net loss of $510,443, or $.05 loss per
share  for the six month period ended December 31, 1996. Per share  numbers  in
1997 were  adjusted for dividends accrued on the convertible Series C Preferred
Stock.



<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  $3,706,109,  compared  to  $2,935,524  for  the  three months ended
December  31,  1996, an increase of $770,585, or 26 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 acquisition, Onsite Business
Services, Inc.

Gross Margin was $1,151,038, or  31  percent  of  revenues  for the three month
period ended December 31, 1997, compared to $969,558, or 33 percent of revenues
for the three month period ended December 31, 1996.  The decrease  in margin is
attributable  to  lower  margins reflected from the newly acquired acquisition,
"OBS".

SG&A expenses were $938,755  for  the  three  months  ended  December 31, 1997,
compared to $943,666 for the three months ended December 31, 1996.   The change
was  attributable to Onsite's continued efforts to decrease expenses offset  by
the additional expenses acquired 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 income for the three months ended December 31,  1997  was  $57,168, or less
than $ 0.01 income per share, compared to net loss of $183,501,  or $ 0.02 loss
per share.

LIQUIDITY  AND  CAPITAL  RESOURCES.   Onsite'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 $2,589,337 as of December 31, 1997 compared  to  a negative
working capital $30,333 as of June 30, 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, Inc., which is offset
by  $83,104 in repayment of long-term debt.


PART II  OTHER INFORMATION

Item 1.  Legal Proceedings - None

Item 2.  Changes in Securities - Not Applicable

Item 3.  Defaults upon Senior Securities - Not Applicable


<PAGE>10


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

The Annual Meeting of Stockholders of Onsite was held in San Diego, California,
on December 5, 1997.   The  following  matters  were  submitted  to  a  vote of
stockholders:

      1.  To elect three directors of Onsite by holders of Class A Common Stock
          to  hold  office  until  the  1999 Annual Meeting of Stockholders and
          until their respective successors are elected and qualified; and

      2.  To  approve  amendments  to  Onsite's  1993  Stock  Option  Plan  (I)
          increasing the number of shares  available  for grant under the Plan;
          and  (ii) authorizing the Board of Directors to  amend  the  Plan  as
          necessary to comply with applicable federal and state securities law,
          rules and regulations, and to make discretionary grants of options to
          non-employee directors of Onsite (and approving grants that were made
          by the  Board  of  Directors  to  the non-employee directors in April
          1997, subject to stockholder approval.

Stockholders  of  record at the close of business  on  October  10,  1997  were
entitled to notice of, and to vote at, the meeting.

The following is a summary of the results of that meeting:

      PROPOSAL NO. 1 - ELECTION OF DIRECTORS


Name of Director        Result      Votes For         Votes       Total
                                                      Withheld


Charles C. McGettigan   ELECTED     10,340,002        40,271      10,380,273

Richard T. Sperberg     ELECTED     10,340,002        40,271      10,380,273

Rita A. Sharpe          ELECTED     10,340,002        40,271      10,380,273

      PROPOSAL NO. 2 - AMENDMENT TO STOCK OPTION PLAN

Proposal Result     Votes For   Votes             Votes       Total
                                Against           Withheld


Amendment to
ADOPTED             9,690,375    168,547           21,876     9,880,798
1993 Stock
Option Plan


ITEM 5. OTHER - None


<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:  FEBRUARY 19, 1998     By:  RICHARD T. SPERBERG
                                   Richard T. Sperberg
                                   Chief Executive Officer, 
                                   Chief Financial Officer



DATED:  FEBRUARY 19, 1998     By:  ANGELA BELFIORE
                                   Angela Belfiore
                                   Controller