**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON
      D.C. 20549**





**FORM
      10-Q**





QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES
      EXCHANGE ACT OF 1934, AS AMENDED:





**For
      the Quarterly Period Ended June 30, 2008**


**_________________________________**




**Commission
      File No. 33-49797**


**_________________________________**




**ETOTALSOURCE,
      INC.**


(Name
      of
      Small Business Issuer in Its Charter)




**Colorado**
            **84-1066959**(State
                or Other Jurisdiction of Incorporation
              or
                Organization)
            (I.R.S.
                Employer Identification No.)**1818
                North Farwell Avenue, Milwaukee, WI**
            **53202**(Address
                of Principal Executive Offices)
            (Zip
                Code)**(****414)
                727-2695**(Issuer’s
                Telephone Number, Including Area
                Code)








Indicate
      by a check mark 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 o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)


Yes
x  No
o




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date: As of June 30, 2008 -299,998,972  shares
      of common stock





Indicate
      by a check mark whether the registrant is (check one):


an
                  accelerated filer
              o
              a
                  non accelerated filer
              o
              or
                  a smaller reporting company
              x









**ETOTALSOURCE,
      INC.**





**FORM
      10-Q**





**TABLE
      OF CONTENTS**




PART
                1
            FINANCIAL
                STATEMENTS
            3Item
                1.
            Financial
                Statements
            3Balance
                Sheet as of June 30, 2008 (Unaudited) and December 31, 2007
                (Audited)
            3Statements
                of Operations for the Three Months and Six Months Ended June
                30, 2008 and 2007
              (Unaudited)
            4Consolidated
                Statements of Cash Flows for the Six Months Ended June
                30, 2008 and 2007 (Unaudited)
            5Notes
                to Condensed Consolidated Financial Statements as of June 30, 2008
(Unaudited)
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and
                Results of Operations
            8Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            11Item
                4.
            Controls
                and Procedures
            11PART
                II
            OTHER
                INFORMATION
            12Item
                1.
            Legal
                Proceedings
            12Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            12Item
                3.
            Defaults
                Upon Senior Securities
            12Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            13Item
                5.
            Other
                Information
            13Item
                6.
            Exhibits
            13SIGNATURES
            
            14CERTIFICATIONS
            
            15


Certification
                  of CEO & CFO Pursuant to 13a-14(a) under the Exchange
                  Act
            15Certification
                  of the CEO & CFO Pursuant to 18 U.S.C. Section
                  1350
            16





2





**PART
      I**




**FINANCIAL
      INFORMATION**


**Item
                  1.**
              **Financial
                  Statements.**





**eTotalSource,
      Inc**


**Balance
      Sheet**





June
                30, 2008 (Unaudited)
            
            December
                31, 2007 (Audited)***Current
                Assets***Cash
            
            $
            572
            
            $
            969Prepaid
                Expense
            
            
            2,950
            
            
            2,950*Total
                Current Assets*
            
            
            3,522
            
            
            3,919***Other
                Assets***Prepaid
                finance cost
            
            
            1,355
            
            
            3,223***Total
                Assets***
            
            $
            4,877
            
            $
            7,142**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)*****Current
                Liabilities***Convertible
                notes payable
            
            $
            50,000
            
            $
            225,000Notes
                payable
            
            
            847,246
            
            
            839,754Judgments
                payable
            
            
            470,928
            
            
            204,788Accounts
                payable and other accrued liabilities
            
            
            289,177
            
            
            283,234Accrued
                compensation payable
            
            
            1,092,203
            
            
            1,092,203Accrued
                interest payable
            
            
            836,482
            
            
            770,204Convertible
                Debentures, less current maturities and net of amortized discount
                of
                $76,884 and $139,207 respectively
            
            
            869,628
            
            
            848,071**Total
                Current Liabilities**
            
            
            4,455,664
            
            
            4,263,254**Commitments
                and Contingencies*****Stockholders'
                Equity (Deficit)***Common
                stock; no par value; 300 million shares authorized,299,998,972
                shares issued and outstanding, respectively
            
            
            6,731,159
            
            
            6,731,159Accumulated
                (deficit)
            
            
            (11,181,946
            )
            
            (10,987,271
            )*Total
                Stockholders' Equity (Deficit)*
            
            
            (4,450,787
            )
            
            (4,256,112
            )***Total
                Liabilities and Stockholders' Equity
                (Deficit)***
            
            $
            4,877
            
            $
            7,142




See
      accompanying notes.





3




**eTotalSource,
      Inc**


**Statement
      of Operations**


**(Unaudited)**




**Three
                Months Ended June 30,**
            
            **Six
                Months Ended June 30,****2008**
            
            
            **2007**
            
            
            **2008**
            
            
            **2007****Revenues**
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -**General
                and Administrative Expenses**
            
            
            6,181
            
            
            104,888
            
            
            13,832
            
            
            121,111**Operating
                Income (Loss)**
            
            
            (6,181
            )
            
            (104,888
            )
            
            (13,832
            )
            
            (121,111
            )**Other
                Income (Expense)**Interest
                expense
            
            
            (64,067
            )
            
            (103,701
            )
            
            (178,975
            )
            
            (180,095
            )Other
                income (expense), net
            
            
            (934
            )
            
            -
            
            
            (1,868
            )
            
            (20
            )**Total
                Other Income (Expense)**
            
            
            (65,001
            )
            
            (103,701
            )
            
            (180,843
            )
            
            (180,115
            )**Net
                (Loss)**
            
            $
            (71,182
            )
            $
            (208,859
            )
            $
            (194,675
            )
            $
            (301,226
            )**Basic
                and Diluted (Loss) per Share**
            
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )**Weighted
                Average Common Shares Outstanding**
            
            
            299,998,972
            
            
            95,705,363
            
            
            299,998,972
            
            
            90,603,747




See
      accompanying notes.




4


**eTotalSource,
                  Inc.****Statements
                  of Cash Flows****(Unaudited)**
 **Six
                    Months Ended June 30,****2008**
                
                **2007****Cash
                    Flows From (Used in) Operating Activities:**Net
                    (loss)
                
                $
                (194,675
                )
                $
                (301,226
                )Amortization
                
                
                1,868
                
                
                -Amortization
                    of discounted convertible debentures
                
                
                21,557
                
                
                46,665Stock
                    options and warrant expense
                
                
                -
                
                
                48,873Changes
                    in assets and liabilities:Decrease
                    (increase) in prepaid expense
                
                
                -
                
                
                (2,950
                )Increase
                    (decrease) in payables, and accrued liabilities
                
                
                13,435
                
                
                6,303Increase
                    (decrease) in accrued interest payable
                
                
                157,418
                
                
                133,211Net
                    Cash (Used in) Operating Activities
                
                
                (397
                )
                
                (69,124
                )**Cash
                    Flow From (Used in) Financing Activities:**Proceeds
                    from issuance of convertible debt
                
                
                -
                
                
                72,000Net
                    Cash (Used in) Financing Activities
                
                
                -
                
                
                72,000Increase
                    (Decrease) in Cash
                
                
                (397
                )
                
                2,876Cash
                    - Beginning of Period
                
                
                969
                
                
                563Cash
                    - End of Period
                
                $
                572
                
                $
                3,439**Supplemental
                    Disclosures of Cash flow Information:**Interest
                    paid
                
                $
                -
                
                $
                -Income
                    taxes paid
                
                
                -
                
                
                -Non-cash
                    investing and financing transactions:Accounts
                    Payable
                
                
                7,492
                
                
                -Note
                    Payable
                
                
                (7,492
                )
                
                -Conversion
                    of convertible debentures
                
                
                -
                
                
                24,000Discount
                    on convertible debentures
                
                
                -
                
                
                14,400Convertible Note
                    Payable
                
                
                175,000
                
                
                -Accrued
                    Interest Payable
                
                
                91,140
                
                
                -Judgment
                    Payable
                
                
                (266,140
                )
                
                -


See
      accompanying notes .




5


**eTotalSource,
      Inc.**




**Notes
      to Condensed Financial Statements as of June 30, 2008**




**NOTE
                  1.**
              **BUSINESS
                  AND SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES**


The
      financial statements have been prepared in accordance with Securities Exchange
      Commission requirements for interim financial statements. Therefore, they do
      not
      include all information and footnotes required by accounting principles
      generally accepted in the United states for complete financial statements.
      These
      financial statements should be read in conjunction with the financial statements
      and notes there to contained in the Company’s Annual Report on Form 10-KSB for
      the year ended December 31, 2007 as filed with the Securities Exchange
      Commission.





The
      results of operations for the interim period shown in this report are not
      necessarily indicative of results to be expected for the full year. In the
      opinion of management, the information contained herein reflects all adjustments
      necessary to make the results of operations for the interim period a fair
      statement of such operations. All such adjustments are of a normal recurring
      nature.





*Use
      of Estimates*





The
      preparation of condensed consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the date of the consolidated financial statements and the
      reported amounts of revenue and expenses during the reporting period. Actual
      results may differ from those estimates.





*Going
      Concern Uncertainty*





The
      Company’s financial statements are prepared based on the going concern
      principle. That principal anticipates the realization of assets and payments
      of
      liabilities through the ordinary course of business. No adjustments have been
      made to reduce the value of any assets or record additional liabilities, if
      any,
      if the Company were to cease to exist. The Company has incurred significant
      operating losses since inception. These operating losses have been funded by
      the
      issuance of capital, loans and advances. There are not guarantees that the
      Company will continue to be able to raise the funds necessary. Additionally,
      the
      lack of capital may limit the Company’s ability to establish a viable
      business.


**NOTE
                  2.**
              **CONVERTIBLE
                  NOTES PAYABLE**




The
      Company has a Convertible
      notes payable with interest at 6% payable monthly, due in 2001, unsecured.
      Principal ($50,000 at June 30, 2008) and accrued interest ($19,996 at June
      30,
      2008) are convertible to common stock at $.50 per share. The note and interest
      are in default.


**NOTE
                  3.**
              **NOTES
                  PAYABLE**





The
      Company has a Note
      payable with interest at 6% payable monthly, due in 2001, unsecured. Principal
      ($25,000 at June 30, 2008) and accrued interest ($9,998 at June 30, 2008) are
      due. Warrants also issued to note holder to purchase 18,750 shares of common
      stock for five years at $.50 per share. The note and interest are in default.





The
      Company has a Note payable to an unrelated individual; principal and interest
      at
      12%, due October 15, 2006. Principal ($25,000 at June 30, 2008) and unpaid
      interest ($5,746 at June 30, 2008) are due. The note and interest are
      default.





The
      Company has a Note payable; interest at 15% payable monthly through December
      18,
      2003. Principal ($172,000 at June 30, 2008) and unpaid interest ($67,690 at
      June
      30, 2008) are due. The note and interest are in default.





The
      Company has a note payable; interest at 10% and principal due January 17, 2003,
      extended to December 17, 2003. Principal ($110,000 at June 30, 2008) and unpaid
      interest ($43,871 at June 30, 2008) (with interest increased to 18% and due
      monthly beginning February 17, 2003) are due. The note and interest are in
      default.





The
      Company has a note payable; interest at 15% payable monthly through December
      18,
      2003. Principal ($40,000 at June 30, 2008) and unpaid interest ($15,742 at
      June
      30, 2008) are due. The note and interest are in default.





The
      Company has a note payable ;
      stated
      interest rate of 10% due June 2003, extended to June 2004. As consideration
      for
      forbearance, the note holder received 50,000 shares of common stock in 2004,
      valued at $.525 per share ($26,250). In October 2004, the note was extended
      to
      April 2005. In December 2005, the note was extended to June 2006. Principal
      ($52,483 at June 30, 2008) and unpaid interest ($11,820 at June 30, 2008) are
      due. This note and interest are in default.




6




The
      Company has a note payable; principal and interest at 10% due monthly. This
      note
      is a revolving credit obligation and the Company can repay and borrow up to
      the
      amount of the note. In October 2004, the note was extended to April 2005. In
      December 2005, the note was extended to June 2006. Principal ($262,631 at June
      30, 2008) and unpaid interest ($59,146 at June 30, 2008) are due. This note
      and
      interest are in default.





The
      Company has a note payable;
      principal and interest at 9.2%, due December 4, 2002, extended to May 1, 2003.
      Principal ($20,000 at June 30, 2008) and unpaid interest ($12,136 at June 30,
      2008) are due, unsecured. The note and interest are in default .





The
      Company has a note payable
      to YA Global; principal and interest at 10%, due August 1, 2005. Principal
      ($25,000 at June 30, 2008) and unpaid interest ($7,527 at June 30, 2008) are
      due. The note and interest are in default.





The
      Company has a note payable to YA Global Investors; principal and interest at
      14%, due October 1, 2007. Principal ($7,640 at June 30, 2008) and unpaid
      interest ($1,053 at June 30, 2008) are due.





The
      Company has a note payable to YA Global; principal and interest at 12%, due
      August 1, 2005. Principal ( $100,000 at June 30, 2008) and unpaid interest
      ($38,367) at June 30, 2008) are due. The note and interest are in
      default.


**NOTE
                  4.**
              **CONVERTIBLE
                  DEBENTURES**





The
      Company has a Convertible debentures payable to a YA Global, principal and
      interest at 12%, payable November 1, 2008, secured by 225,000,000 shares of
      common stock and 7 million warrants. Principal and accrued interest convertible
      to common stock at a
      conversion price equal to the lower of (i) $.024 price per share of common
      stock
      or (ii) 80% of the lowest closing bid price of our common stock, as quoted
      by
      Bloomberg, L.P., for the five trading days immediately preceding the conversion
      date. At the due date the Company has the option to repay the debt or issue
      common stock. The principal balance as of June 30, 2008 was
      $849,250.





The
      Company has a Convertible
      debentures payable to a YA Global,, principal and interest at 12%, payable
      December 21, 2008. Principal and accrued interest convertible to common stock
      at
      a conversion price equal to the lower of (i) $.0018 price per share of common
      stock or (ii) 80% of the lowest closing bid price of our common stock, as quoted
      by Bloomberg, L.P., for the five trading days immediately preceding the
      conversion date. At the due date the Company has the option to repay the debt
      or
      issue common stock. The principal balance as of June 30, 2008 was
      $7,642.





On
      April
      13, 2007, the Company issued a convertible debenture to YA Global, in the
      principal amount of $72,000(principal and interest at 12% payable April 13,
      2009). Principal and accrued interest convertible to common stock at a
      conversion price equal to the lower of (i) $.0018 price per share of common
      stock or (ii) 80% of the lowest closing bid price of our common stock, as quoted
      by Bloomberg, L.P., for the five trading days immediately preceding the
      conversion date. The principal balance as of June 30, 2008 was
      $72,000.





On
      December 4, 2007, the Company issued a convertible debenture to YA Global,
      in
      the principal amount of $17,620(principal and interest at 15% payable November
      9, 2008). Principal and accrued interest convertible to common stock at a
      conversion price equal to the lower of (i) $.002 price per share of common
      stock
      or (ii) 95% of the lowest volume weighted average price of our common stock,
      as
      quoted by Bloomberg, L.P., for the thirty trading days immediately preceding
      the
      conversion date. The principal balance as of June 30, 2008 was
      $17,620.





7


**Item
                2.**
            **Management's
                Discussion And Analysis Or Plan Of
                Operations.**




***Forward-Looking
      Statements and Associated Risks.***  *This
      Report contains forward-looking statements. Such forward-looking statements
      include statements regarding, among other things, (a) our projected sales and
      profitability, (b) our growth strategies, (c) anticipated trends in our
      industry, (d) our future financing plans, (e) our anticipated needs for working
      capital, (f) our lack of operational experience, and (g) the benefits related
      to
      ownership of our common stock. Forward-looking statements, which involve
      assumptions and describe our future plans, strategies, and expectations, are
      generally identifiable by use of the words “may,” “will,” “should,” “expect,”
“anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of
      these words or other variations on these words or comparable terminology. This
      information may involve known and unknown risks, uncertainties, and other
      factors that may cause our actual results, performance, or achievements to
      be
      materially different from the future results, performance, or achievements
      expressed or implied by any forward-looking statements. These statements may
      be
      found under “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” and “Business,” as well as in this Report generally.
      Actual events or results may differ materially from those discussed in
      forward-looking statements as a result of various factors, including, without
      limitation, the risks outlined under “Risk Factors” and matters described in
      this Report generally. In light of these risks and uncertainties, there can
      be
      no assurance that the forward-looking statements contained in this report will
      in fact occur as projected.*




**Description
      of Our Business**





The
      Company was incorporated in Colorado on September 16, 1987 as Premium
      Enterprises, Inc. (“Premium”) On December 20, 2002, Premium entered into a Plan
      and Agreement of Reorganization with eTotalSource, Inc., a California
      corporation (the “Company” or “eTotalSource”) and its shareholders whereby
      Premium acquired 91% of the issued and outstanding common stock of eTotalSource
      in exchange for 15,540,001 shares of common stock of Premium. The contract
      was
      completed December 31, 2002. On June 17, 2003, shareholders voted to amend
      the
      Articles to change the name of Premium Enterprises, Inc. to eTotalSource,
      Inc.




***History.***




For
      a
      period of time in 1988-1994, Premium operated three fast lube locations, at
      various times in Arizona and Colorado as “Grease Monkey” franchises. The
      locations were unprofitable, two were sold, and the last franchise closed in
      1994.




Premium
      then attempted to enter the automobile and truck tire recycling business in
      1994. It formed a limited partnership, of which it owned 62.5%, and commenced
      limited tire recycling operations. The equipment proved to be inadequate and
      Premium ran out of capital and ceased all operations in 1996. Premium wrote-off
      all of its investment in equipment and licenses for tire recycling in 1996
      and
      became dormant.




***Business.***




The
      sole
      business of the Company is that of eTotalSource. The Company ceased the majority
      of operations in the fourth quarter of 2006 due to lack of
      capital.




***Recent
      Developments***





****   **Management
      Transition** .
      On
      March 27, 2007, the Company’s Board of Directors accepted the resignations of
      Terry Eilers and A. Richard Barber as members of the Board. The Company did
      not
      have a disagreement with any of the resigning directors. Neither Mr. Eilers
nor
      Mr. Barber served on any committees of the Board. On March 27, 2007, the
      Company’s Board of Directors also accepted the resignations of the following
      officers: Terry Eilers, President and Chief Executive Officer, and Michael
      Sullinger, Chief Operating Officer and Secretary. The Company did not have
      a
      disagreement with any of the resigning officers.




In
      addition, on March 27, 2007, the Board of Directors of the Company appointed
      David Marks as a member of the Board and appointed Frank Orlando as Chief
      Restructuring Officer, Chief Financial Officer and Secretary of the Company.
      Mr.
      Orlando and Mr. Marks are not our employees, and as of the date of this report
      we do not have employment contracts with either of them nor agreements regarding
      compensation and related matters. Mr. Orlando and Mr. Marks are each an officer
      of Crivello Group, LLC and other entities. We expect that Crivello Group, LLC
      will enter into a management services agreement with us.




8




The
      Company currently has no active operations, but, is actively pursuing operating
      business acquisition opportunities. The Company expects to incur additional
      losses until it acquires an operating business.   There can be no
      assurance that Company will ever achieve any revenues or profitable
      operations.  The new management team will be undertaking an analysis and
      evaluation of the Company’s assets and liabilities, our financial condition, and
      overall prospects in order to determine whether to continue the Company’s
      current operations or to develop and implement a new business strategy that
      could result in a substantial change in the Company’s business model, a
      liquidation of the Company’s existing assets, and other changes. During this
      evaluation phase, we have operations and reduced our personnel to no full-time
      employees and no part-time employees in order to minimize operating costs
      pending the outcome of the analysis noted above. In addition, during this
      evaluation phase, we anticipate that our operating revenues will be negligible,
      that the Company will generate a significant loss from operations, and that
      the
      Company will need to obtain debt and/or equity financing for working capital
      purposes. No assurance can be given that such financing will be available on
      terms acceptable to the Company.




**Financial
      Condition**




There
      is
      substantial doubt about the ability of ETLS to continue as a going concern
      as
      disclosed in the Note 1 to the six months ended June 30, 2008 financial
      statements filed by ETLS in this Report. The Company continues to have operating
      losses and liquidity shortages, including default conditions on all notes
      payable and judgments payable to creditors. The Company had a net loss of
      $194,674 for the six months ended June 30, 2008. Additionally, as of June 30,
      2008, current liabilities exceed current assets by approximately
      $4,452,142.




Management
      continued to meet operating deficits primarily through short-term borrowings
      and
      may attempt to utilize debt and equity financing alternatives to sustain
      operations. Whether such financing will be available as needed and the ultimate
      form of such financing is uncertain and the effects of this uncertainty could
      ultimately lead to bankruptcy.




**Going
      Concern Uncertainty**




The
      Company has incurred losses from operations for the three months ended June
      30,
      2008, and such losses are expected to continue. In addition, the Company has
      no
      working capital. The foregoing raises substantial doubt about the Company's
      ability to continue as a going concern. Management's plans include seeking
      additional capital and/or debt financing, and re-evaluation of the Company’s
      business strategy as discussed above in this report. There is no guarantee
      that
      additional capital and/or debt financing will be available when and to the
      extent required, or that if available, it will be on terms acceptable to the
      Company. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




The
      Company currently has no active operations, but, is actively pursuing operating
      business acquisition opportunities, and the organic development of opportunities
      in real estate, investment, and financing.  The Company expects to incur
      additional losses until it acquires an operating business, or until its organic
      business opportunities reach a critical mass.   There can be no
      assurance that Company will ever achieve any revenues or profitable
      operations.




Set
      forth
      below is a discussion of the financial condition and results of operations
      of
      etotalSource, Inc. (the "Company," "we," "us," or "our") for the three months
      ended June 30, 2008 and 2007. The following discussion should be read in
      conjunction with the information set forth in the consolidated financial
      statements and the related notes thereto appearing elsewhere in this quarterly
      report.





**Results
      Of Operations For The** **Three
      Months Ended June 30, 2008, Compared To Three Months Ended** **June
      30, 20** **07.**




***Revenues.***


Revenues
      for the three ended June 30, 2008 and 2007 were $0.





***General
      & Administrative Expenses.***


Operating
      expenses for the three months ended June 30, 2008 were $6,181 as compared to
      $104,888 for the comparable 2007 period, or a decrease of $98,707. This decrease
      was primarily due to the cease in operations of eTotalSource.





***Interest
      Expense***


Interest
      expense for the three months ended June 30, 2008 was $64,067 as compared to
      $103,701 for the comparable 2007 period, a decrease of $39,634. This decrease
      was attributed to completed discounting on the convertible debentures in
      2007.





***Net
      Loss***


Net
      loss
      for the three months ended June 30, 2008 was $71,182 as compared to a net loss
      of $208,589 for the comparable 2007 period, an decrease of $137,407. This
      decrease was attributed to the completed discounting on the convertible
      debentures in 2007.





9





**Results
      Of Operations For The** **Six
      Months Ended June 30, 2008, Compared To Six Months Ended** **June
      30, 2007.**




***Revenues.***


Revenues
      for the three ended June 30, 2008 and 2007 were $0.





***General
      & Administrative Expenses.***


Operating
      expenses for the six months ended June 30, 2008 were $13,832 as compared to
      $121,111 for the comparable 2007 period, or a decrease of $107,279. This
      decrease was primarily due to the cease in operations of
      eTotalSource.





***Interest
      Expense***


Interest
      expense for the six months ended June 30, 2008 was $178,975 as compared to
      $180,095 for the comparable 2007 period, an decrease of $1,120. This decrease
      was attributed to completed discounting of the convertible debentures in
      2007.





***Net
      Loss***


Net
      loss
      for the six months ended June 30, 2008 was $194,674 as compared to a net loss
      of
      $301,226 for the comparable 2007 period, an increase of $106,552. This decrease
      was attributed to the completed discounting of the convertible debentures in
      2007





**L** **iquidity
      & Capital Resources** ***.***




At
      June
      30, 2008, eTotalSource had $572 in cash with which to conduct operations, and
      no
      other capital resources. The company needs equity or debt financing for working
      capital but has no commitments for new capital availability. **** There
      can
      be no assurance that ETLS will be able to pursue its business plan or fully
      exploit business opportunities that management may identify. Accordingly, ETLS
      will need to seek additional financing through loans, the sale and issuance
      of
      additional debt and/or equity securities, or other financing arrangements,
      including loans from our shareholders to cover expenses. ETLS presently has
      no
      sources of capital. ETLS is unable to carry out any plan of business without
      funding. Because of the re-evaluation of our business model currently in
      process, we are unable to quantify and estimate our working capital requirements
      for the 12 months ending December 31, 2008. We cannot predict to what extent
      our
      current lack of liquidity and capital resources will impair the continuation
      of
      business or whether it will incur further operating losses. There is no
      assurance that we can continue as a going concern without substantial funding,
      for which there is no source.




***Contractual
      Obligations and Commercial Commitments.***




As
      of
      June 30, 2008, the following obligations were outstanding:





**Contractual
                Obligations**
            
            
            **Less
                than 1 year**Judgments
                payable
            
            $
            471,728Short
                Term note payables
            
            
            897,246Convertible
                debentures
            
            
            869,628Other
                current liabilities
            
            
            2,217,062Total
                contractual cash obligations
            
            $
            4,455,664




10





**Item
      3 - Quantitative and Qualitative Disclosures About Market
      Risk**





None


**Item
                  4.**
              **Controls
                  and Procedures.**




As
      required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the
      end
      of the period covered by this report, we have carried out an evaluation of
      the
      effectiveness of the design and operation of our company’s disclosure controls
      and procedures.  Under
      the
      direction of our Chief Executive Officer and Chief Financial Officer, we
      evaluated our disclosure controls and procedures and internal control over
      financial reporting and concluded that (i) our disclosure controls and
      procedures were effective as of June 30, 2008 and (ii) no change in internal
      controls over financial reporting occurred during the quarter ended June 30,
      2008, that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.





Disclosure
      controls and procedures and other procedures are designed to ensure that
      information required to be disclosed in our reports or submitted under the
      Securities Exchange Act of 1934 is recorded, processed, summarized and reported
      within the time period specified in the Securities and Exchange Commission’s
      rules and forms. Disclosure controls and procedures include, without limitation,
      controls and procedures designed to ensure that information required to be
      disclosed in our reports filed under the Securities Exchange Act of 1934 is
      accumulated and communicated to management including our president and financial
      officer as appropriate, to allow timely decisions regarding required
      disclosure.





11





**PART
      II**




**OTHER
      INFORMATION**


**Item
                  1.**
              **Legal
                  Proceedings.**





On
      March
      27, 2008, Gary Miller received a default judgment against ETotalSource in the
      amount of $266,940.78. The breakdown of the judgment is as follows: principal
      was $175,000, and interest was $91,140.78. Principal and interest have been
      recorded prior to the issuance of this judgment.


**Item
                  2.**
              **Unregistered
                  Sales of Equity Securities and use of
                  Proceeds.**





None.


**Item
                  3.**
              **Defaults
                  Upon Senior
                  Securities.**





As
      of
      June 30, 2008, the Company is in default under the following notes payable:





The
      Company has a Convertible
      notes payable with interest at 6% payable monthly, due in 2001, unsecured.
      Principal ($50,000 at June 30, 2008) and accrued interest ($19,996 at June
      30,
      2008) are convertible to common stock at $.50 per share. The note and interest
      are in default.





The
      Company has Convertible
      notes payables with interest ranging from 6% - 8% payable monthly, due in
      between the years of 2001 and 2003, unsecured. Principal ($175,000 at June
      30,
      2008) and accrued interest ($91,941 at June 30, 2008) are convertible to common
      stock at $.50 per share. Warrants also issued to note holders to purchase 73,748
      shares of common stock for five years at $.50 per share. The notes and interest
      are in default. The note holder received a judgment against the Company on
      March
      27, 2008 in the amount of $266,94 for the principal and interest outstanding.





The
      Company has a Note
      payable with interest at 6% payable monthly, due in 2001, unsecured. Principal
      ($25,000 at June 30, 2008) and accrued interest ($9,998 at June 30, 2008) are
      due. Warrants also issued to note holder to purchase 18,750 shares of common
      stock for five years at $.50 per share. The note and interest are in default.





The
      Company has a Note payable to an unrelated individual; principal and interest
      at
      12%, due October 15, 2006. Principal ($25,000 at June 30, 2008) and unpaid
      interest ($5,746 at June 30, 2008) are due. The note and interest are
      default.





The
      Company has a Note payable; interest at 15% payable monthly through December
      18,
      2003. Principal ($172,000 at June 30, 2008) and unpaid interest ($67,690 at
      June
      30, 2008) are due. The note and interest are in default.





The
      Company has a note payable; interest at 10% and principal due January 17, 2003,
      extended to December 17, 2003. Principal ($110,000 at June 30, 2008) and unpaid
      interest ($43,871 at June 30, 2008) (with interest increased to 18% and due
      monthly beginning February 17, 2003) are due. The note and interest are in
      default.





The
      Company has a note payable; interest at 15% payable monthly through December
      18,
      2003. Principal ($40,000 at June 30, 2008) and unpaid interest ($15,742 at
      June
      30, 2008) are due. The note and interest are in default.





The
      Company has a note payable ;
      stated
      interest rate of 10% due June 2003, extended to June 2004. As consideration
      for
      forbearance, the note holder received 50,000 shares of common stock in 2004,
      valued at $.525 per share ($26,250). In October 2004, the note was extended
      to
      April 2005. In December 2005, the note was extended to June 2006. Principal
      ($52,483 at June 30, 2008) and unpaid interest ($11,820 at June 30, 2008) are
      due. This note and interest are in default.





The
      Company has a note payable; principal and interest at 10% due monthly. This
      note
      is a revolving credit obligation and the Company can repay and borrow up to
      the
      amount of the note. In October 2004, the note was extended to April 2005. In
      December 2005, the note was extended to June 2006. Principal ($262,631 at June
      30, 2008) and unpaid interest ($59,146 at June 30, 2008) are due. This note
      and
      interest are in default.





The
      Company has a note payable;
      principal and interest at 9.2%, due December 4, 2002, extended to May 1, 2003.
      Principal ($20,000 at June 30, 2008) and unpaid interest ($12,136 at June 30,
      2008) are due, unsecured. The note and interest are in default .





The
      Company has a note payable
      to YA Global; principal and interest at 10%, due August 1, 2005. Principal
      ($25,000 at June 30, 2008) and unpaid interest ($7,527 at June 30, 2008) are
      due. The note and interest are in default.





12





The
      Company has a note payable to YA Global; principal and interest at 12%, due
      August 1, 2005. Principal ( $100,000 at June 30, 2008) and unpaid interest
      ($38,367) at June 30, 2008) are due. The note and interest are in
      default.





The
      Company has a Convertible debentures payable to a YA Global, principal and
      interest at 12%, payable November 1, 2008, secured by 225,000,000 shares of
      common stock and 7 million warrants. Principal and accrued interest convertible
      to common stock at a
      conversion price equal to the lower of (i) $.024 price per share of common
      stock
      or (ii) 80% of the lowest closing bid price of our common stock, as quoted
      by
      Bloomberg, L.P., for the five trading days immediately preceding the conversion
      date. At the due date the Company has the option to repay the debt or issue
      common stock. The principal balance as of June 30, 2008 was $849,250. The
      debenture is in default.





The
      Company has a Convertible
      debentures payable to a YA Global,, principal and interest at 12%, payable
      December 21, 2008. Principal and accrued interest convertible to common stock
      at
      a conversion price equal to the lower of (i) $.0018 price per share of common
      stock or (ii) 80% of the lowest closing bid price of our common stock, as quoted
      by Bloomberg, L.P., for the five trading days immediately preceding the
      conversion date. At the due date the Company has the option to repay the debt
      or
      issue common stock. The principal balance as of June 30, 2008 was $7,642. The
      debenture is in default.





On
      April
      13, 2007, the Company issued a convertible debenture to YA Global, in the
      principal amount of $72,000(principal and interest at 12% payable April 13,
      2009). Principal and accrued interest convertible to common stock at a
      conversion price equal to the lower of (i) $.0018 price per share of common
      stock or (ii) 80% of the lowest closing bid price of our common stock, as quoted
      by Bloomberg, L.P., for the five trading days immediately preceding the
      conversion date. The principal balance as of June 30, 2008 was $72,000. The
      debenture is in default.





On
      December 4, 2007, the Company issued a convertible debenture to YA Global,
      in
      the principal amount of $17,620(principal and interest at 15% payable November
      9, 2008). Principal and accrued interest convertible to common stock at a
      conversion price equal to the lower of (i) $.002 price per share of common
      stock
      or (ii) 95% of the lowest volume weighted average price of our common stock,
      as
      quoted by Bloomberg, L.P., for the thirty trading days immediately preceding
      the
      conversion date. The principal balance as of June 30, 2008 was $17,620. The
      debenture is in default.


**Item
                  4.**
              **Submission
                  of Matters to a Vote of Security
                  Holders.**




None.


**Item
                  5.**
              **Other
                  Information**




None.


**Item
                  6.**
              **Exhibits**





31.1
            Certification
                of CEO Pursuant to 13a-14(a) under the Exchange Act32.1
            Certification
                of the CEO pursuant to 18 U.S.C Section
                1350





13





**SIGNATURES**




In
      accordance with the requirements of the Exchange Act, the Registrant has caused
      this Report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




eTotalSource,
              Inc.July
              31,
              2008
            By:
            /s/
              Frank J. OrlandoFrank
              J. OrlandoChief
                Restructuring Officer and
              Chief
                Financial Officer




14