**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 September 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  ̈




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


Yes x No  ̈




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




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


an
      accelerated filer  ̈ a non
      accelerated filer  ̈ 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 September 30, 2008 (Unaudited) and December 31, 2007
                (Audited)
            3Statements
                of Operations for the Three Months and Nine Months Ended September
                30,
                2008 and 2007 (Unaudited)
            4Consolidated
                Statements of Cash Flows for the Nine Months Ended September 30,
                2008 and
                2007 (Unaudited)
            5Notes
                to Condensed Consolidated Financial Statements as of September 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
            
            14CERTIFICATIONSCertification
                of CEO & CFO Pursuant to 13a-14(a) under the Exchange
                ActCertification
                of the CEO & CFO Pursuant to 18 U.S.C. Section 1350











**PART
      I**




**FINANCIAL
      INFORMATION**


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





**eTotalSource,
      Inc**


**Balance
      Sheet**





September 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
            
            
            411
            
            
            3,223***Total
                Assets***
            
            $
            3,933
            
            $
            7,142**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)*****Current
                Liabilities***Convertible
                notes payable
            
            $
            50,000
            
            $
            225,000Notes
                payable
            
            
            839,754
            
            
            839,754Judgments
                payable
            
            
            471,729
            
            
            204,788Accounts
                payable and other accrued liabilities
            
            
            302,243
            
            
            283,234Accrued
                compensation payable
            
            
            1,092,203
            
            
            1,092,203Accrued
                interest payable
            
            
            898,070
            
            
            770,204Convertible
                Debentures, less current maturities and net of amortized discount
                of
                $41,064 and $139,207 respectively
            
            
            905,448
            
            
            848,071**Total
                Current Liabilities**
            
            
            4,559,447
            
            
            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)
            
            
            (11,286,673
            )
            
            (10,987,271
            )*Total
                Stockh4olders' Equity (Deficit)*
            
            
            (4,555,514
            )
            
            (4,256,112
            )***Total
                Liabilities and Stockholders' Equity
                (Deficit)***
            
            $
            3,933
            
            $
            7,142





See
      accompanying notes.


3





**eTotalSource,
      Inc**


**Statement
      of Operations**


**(Unaudited)**





**Three Months Ended September 30,**
            
            **Nine Months Ended September 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007****Revenues**
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -**General
                and Administrative Expenses**
            
            
            5,574
            
            
            9,940
            
            
            19,406
            
            
            131,288**Operating
                Income (Loss)**
            
            
            (5,574
            )
            
            (9,940
            )
            
            (19,406
            )
            
            (131,288
            )**Other
                Income (Expense)**Interest
                expense
            
            
            (98,209
            )
            
            (94,284
            )
            
            (277,183
            )
            
            (274,162
            )Other
                income (expense), net
            
            
            (944
            )
            
            170,250
            
            
            (2,812
            )
            
            170,250**Total
                Other Income (Expense)**
            
            
            (99,153
            )
            
            75,966
            
            
            (279,995
            )
            
            (103,912
            )**Net
                (Loss)**
            
            $
            (104,727
            )
            $
            66,026
            
            $
            (299,401
            )
            $
            (235,200
            )**Basic
                and Diluted (Loss) per Share**
            
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )
            $
            (0.00
            )**Weighted
                Average Common Shares Outstanding**
            
            
            299,998,972
            
            
            126,622,940
            
            
            299,998,972
            
            
            98,665,714





See
      accompanying notes.


4





**eTotalSource,
      Inc.**


**Statements
      of Cash Flows**


**(Unaudited)**





**Nine Months Ended September 30,****2008**
            
            **2007****Cash Flows From (Used in)
                Operating Activities:**Net
                (loss)
            
            $
            (299,401
            )
            $
            (235,200
            )Amortization
            
            
            2,812
            
            
            -Amortization
                of discounted convertible debentures
            
            
            57,377
            
            
            74,146Stock
                options and warrant expense
            
            
            -
            
            
            55,796Changes
                in assets and liabilities:Decrease
                (increase) in prepaid expense
            
            
            -
            
            
            (2,950
            )Increase
                (decrease) in payables, and accrued liabilities
            
            
            19,008
            
            
            (167,373
            )Increase
                (decrease) in other current assets
            
            
            -
            
            
            801Increase
                (decrease) in accrued interest payable
            
            
            219,807
            
            
            200,016Net
                Cash (Used in) Operating Activities
            
            
            (397
            )
            
            (74,764
            )**Cash
                Flow From (Used in) Financing Activities:**Proceeds
                from issuance of convertible debt
            
            
            -
            
            
            72,000Proceeds
                from issuance of notes payable
            
            
            -
            
            
            7,640Net
                Cash (Used in) Financing Activities
            
            
            -
            
            
            79,640Increase
                (Decrease) in Cash
            
            
            (397
            )
            
            4,876Cash
                - Beginning of Period
            
            
            969
            
            
            563Cash
                - End of Period
            
            $
            572
            
            $
            5,439**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 September 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 can be no assurance 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 issued a Convertible
      note in the principal amount of $50,000with interest at 6% payable monthly.
      The
      note was due in 2001 and is unsecured. At September 30, 2008, principal of
      $50,000 and accrued interest of $20,752 were due. The Note is convertible into
      shares of common stock of the Company at $.50 per share. The note and interest
      are in default.





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





The
      Company issued a Note
      in
      the principal amount of $25,000 with interest at 6% payable monthly. The Note
      was due in 2001 and is unsecured. At September 30, 2008, principal of $25,000
      and accrued interest of $10,376 were due. Warrants were also issued to the
      note
      holder to purchase 18,750 shares of common stock of the Company for a period
      of
      five years from the date of issuance at $.50 per share. The note and interest
      are in default.





The
      Company issued a Note to an unrelated individual in the principal amount of
      $25,000 with and interest at 12%. The Note was due on October 15, 2006. At
      September 30, 2008, principal of $25,000 and unpaid interest of $6,502 are
      due.
      The note and interest are default.





The
      Company issued a Note in the principal amount of $172,000 with interest at
      15%
      payable monthly. The Note was due on December 18, 2003. At September 30, 2008,
      principal of $172,000 and unpaid interest of $74,193 were due. The note and
      interest are in default.





The
      Company issued a note in the principal amount of $110,000, with interest at
      10%.
      Principal and interest thereon was due on January 17, 2003 and subsequently
      extended to December 17, 2003. At September 30, 2008, principal of $110,000
      and
      unpaid interest of $46,644 (with interest increased to 18% and due monthly
      beginning February 17, 2003) were due. The note and interest are in
      default.


6





The
      Company issued a note in the principal amount of $40,000 and interest at 15%
      payable monthly. The Note was due on December 18, 2003. At September 30, 2008,
      principal of $40,000 and unpaid interest of $17,254 were due. The note and
      interest are in default.





The
      Company issued a note in the principal amount of $50,000 and a
      stated
      interest rate of 10%. The Note was due in June 2003 and subsequently 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. At September 30, 2008, principal of $52,483 and unpaid
      interest of $13,142 were due. This note and interest are in
      default.





The
      Company issued a note in the principal amount of $250,000 and interest at 10%
      due monthly commencing August 8, 2003. 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. At September 30, 2008, principal of $262,631 and
      unpaid interest of $67,766 were due. This note and interest are in
      default.





The
      Company issued a an unsecured note in the principal amount of
      $20,000 and
      interest at 9.2% which was due on December 4, 2002 and subsequently extended
      to
      May 1, 2003. At September 30, 2008, principal of $20,000 and unpaid interest
      of
      $12,599 were due. The note and interest are in default .





The
      Company issued a note in the principal amount of $25,000 to YA
      Global with interest at 10% which was due on August 1, 2005. At September 30,
      2008, principal of $25,000 and unpaid interest of $8,158 were due. The note
      and
      interest are in default.





The
      Company issued a note in the principal amount of $7,640 to YA Global with
      interest at 14%, which was due on October 1, 2007. At September 30, 2008,
      principal of $7,640 and unpaid interest of $1,323 were due.





The
      Company issued a note to YA Global\with interest at 12% which was due on August
      1, 2005. At September 30, 2008, principal (of $100,000 and unpaid interest
      of
      $41,392 were due. The note and interest are in default.





**NOTE
      4. CONVERTIBLE DEBENTURES**





The
      Company issued a Convertible debenture to YA Global with interest at 12%, which
      was due on November 1, 2008. The debenture is secured by 225,000,000 shares
      of
      common stock of the Company and 7,000,000 warrants. Principal and accrued
      interest are convertible into shares of 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 September 30, 2008 was
      $849,250.





The
      Company issued a Convertible
      debenture to YA Global with interest at 12%, payable on December 21, 2008.
      Principal and accrued interest are convertible into shares of common stock
      of
      the Company 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 September
      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 with interest at 12%, payable on April 13, 2009.
      Principal and accrued interest are convertible into shares of common stock
      of
      the Company 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 September 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 with interest at 15% which was payable on
      November 9, 2008. Principal and accrued interest are convertible into 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 September
      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***




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





**Financial
      Condition**




There
      is
      substantial doubt about the ability of ETLS to continue as a going concern
      as
      disclosed in Note 1 to the financial statements for the nine months ended
      September 30, 2008 included 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
      $299,401 for the nine months ended September 30, 2008. Additionally, as of
      September 30, 2008, current liabilities exceed current assets by approximately
      $4,555,925.




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.


8




**Going
      Concern Uncertainty**




The
      Company has incurred losses from operations for the three months ended September
      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 September 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 SEPTEMBER 30, 2008, COMPARED TO THREE
      MONTHS ENDED SEPTEMBER 30, 20** **07.**





***Revenues***


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





***General
      & Administrative Expenses***


Operating
      expenses for the three months ended September 30, 2008 were $5,574 as compared
      to $9,940 for the comparable period in 2007, a decrease of $4,366. This decrease
      was primarily due to the cease in operations of the Company.





***Interest
      Expense***


Interest
      expense for the three months ended September 30, 2008 was $98,209 as compared
      to
      $94,284 for the comparable period in 2007, an increase of $3,925. Interest
      is
      expected to continue to increase as the Company currently has no operations
      and
      has to borrow funds for expenses.





***Other
      Income/(Expense)***


Other
      income (expense) for the three month period ended September 30, 2008 was ($944)
      as compared to $170,250 for the comparable period in 2007, a decrease of
      $171,194. This decrease was attributed to accrued compensation to an officer
      of
      the Company that was forgiven in the three months ending September 30,
      2007.





***Net(
      Loss)/Net Income***


Net
      loss
      for the three months ended September 30, 2008 was $104,727 as compared to a
      net
      income of $66,026 for the comparable period in 2007, a decrease of $170,753.
      This decrease was
      attributed to accrued compensation to an officer of the Company that was
      forgiven in the three months ending September 30, 2007.





**RESULTS
      OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008, COMPARED TO NINE
      MONTHS ENDED SEPTEMBER 30, 2007.**





***Revenues***


Revenues
      for the nine months ended September 30, 2008 and 2007 were $0.





***General
      & Administrative Expenses***


Operating
      expenses for the nine months ended September 30, 2008 were $19,406 as compared
      to $131,288 for the comparable period in 2007, a decrease of $111,882. This
      decrease was primarily due to the cease in operations of the
      Company.





***Interest
      Expense***


Interest
      expense for the nine months ended September 30, 2008 was $277,183 as compared
      to
      $274,162 for the comparable period in 2007, an increase of $3,021. Interest
      is
      expected to continue to increase as the Company currently has no operations
      and
      has to borrow funds for expenses.




9




***Other
      Income/(Expense)***


Other
      income (expense) for the nine month period ended September 30, 2008 was ($2,812)
      as compared to $170,250 for the comparable period in 2007, a decrease of
      $173,062. This increase was attributed to accrued compensation to an officer
      of
      the Company that was forgiven during the nine months ended September 30,
      2007.





***Net
      Loss***


Net
      loss
      for the nine months ended September 30, 2008 was $299,401 as compared to a
      net
      loss of $235,200 for the comparable period in 2007, an increase of $64,201. This
      increase was attributed to accrued compensation to an officer of the Company
      that was forgiven during the nine months ended September 30, 2007.





**Liquidity
      & Capital Resources**




At
      September 30, 2008, the Company 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 the Company will be able to pursue its business plan or
      fully exploit business opportunities that management may identify. Accordingly,
      the Company 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. The
      Company presently has no sources of capital. The Company 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, 2009. 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
      September 30, 2008, the following obligations were outstanding:





**Contractual Obligations**
            
            **Less than 1 year**Judgments payable
            
            $
            471,729Short Term
                note payables
            
            
            897,246Convertible
                debentures
            
            
            898,070Other
                current liabilities
            
            
            2,292,402Total
                contractual cash obligations
            
            $
            4,559,447




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 September 30, 2008 and (ii) no change in
      internal controls over financial reporting occurred during the quarter ended
      September 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 the Company 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
      September 30, 2008, the Company is in default under the following notes payable:





The
      Company issued a Convertible
      note in the principal amount of $50,000with interest at 6% payable monthly.
      The
      note was due in 2001 and is unsecured. At September 30, 2008, principal of
      $50,000 and accrued interest of $20,752 were due. The Note is convertible into
      shares of common stock of the Company at $.50 per share. The note and interest
      are in default.





The
      Company issued Convertible
      notes with interest ranging from 6% - 8% payable monthly. The Notes are due
      at
      various times between the years of 2001 and 2003, and are unsecured. At
      September 30, 3008, principal of $175,000 and accrued interest of $91,941 were
      convertible to common stock at $.50 per share. Warrants were also issued to
      the
      note holders to purchase 73,748 shares of common stock for a term of five years
      from the issuance date 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 $266,940 for the principal and interest outstanding.





The
      Company issued a Note
      in
      the principal amount of $25,000 with interest at 6% payable monthly. The Note
      was due in 2001 and is unsecured. At September 30, 2008, principal of $25,000
      and accrued interest of $10,376 were due. Warrants were also issued to the
      note
      holder to purchase 18,750 shares of common stock of the Company for a period
      of
      five years from the date of issuance at $.50 per share. The note and interest
      are in default.





The
      Company issued a Note to an unrelated individual in the principal amount of
      $25,000 with and interest at 12%. The Note was due on October 15, 2006. At
      September 30, 2008, principal of $25,000 and unpaid interest of $6,502 are
      due.
      The note and interest are default.





The
      Company issued a Note in the principal amount of $172,000 with interest at
      15%
      payable monthly. The Note was due on December 18, 2003. At September 30, 2008,
      principal of $172,000 and unpaid interest of $74,193 were due. The note and
      interest are in default.





The
      Company issued a note in the principal amount of $110,000, with interest at
      10%.
      Principal and interest thereon was due on January 17, 2003 and subsequently
      extended to December 17, 2003. At September 30, 2008, principal of $110,000
      and
      unpaid interest of $46,644 (with interest increased to 18% and due monthly
      beginning February 17, 2003) were due. The note and interest are in
      default.





The
      Company issued a note in the principal amount of $40,000 and interest at 15%
      payable monthly. The Note was due on December 18, 2003. At September 30, 2008,
      principal of $40,000 and unpaid interest of $17,254 were due. The note and
      interest are in default.





The
      Company issued a note in the principal amount of $50,000 and a
      stated
      interest rate of 10%. The Note was due on June 2003 and subsequently 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. At September 30, 2008, principal of $52,483 and unpaid
      interest of $13,142 were due. This note and interest are in
      default.





The
      Company issued a note in the principal amount of $250,000 and interest at 10%
      due monthly commencing August 8, 2003. 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. At September 30, 2008, principal of $262,631 and
      unpaid interest of $67,766 were due. This note and interest are in
      default.


12





The
      Company issued an unsecured note in the principal amount of $20,000 and interest
      at 9.2% which was due on December 4, 2002and subsequently extended to May 1,
      2003. At September 30, 2008, principal of $20,000 and unpaid interest of $12,599
      were due. The note and interest are in default.





The
      Company issued a note in the principal amount of $25,000 to YA
      Global with interest at 10% which was due on August 1, 2005. At September 30,
      2008, principal of $25,000 and unpaid interest of $8,158 were due. The note
      and
      interest are in default.





The
      Company issued a note to YA Global\with interest at 12% which was due on August
      1, 2005. At September 30, 2008, principal of $100,000 and unpaid interest of
      $41,392 were due. The note and interest are in default.





The
      Company issued a Convertible debenture to YA Global with interest at 12%, which
      was due on November 1, 2008. The debenture is secured by 225,000,000 shares
      of
      common stock of the Company and 7,000,000 warrants. Principal and accrued
      interest are convertible into shares of 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 September 30, 2008 was
      $849,250.





The
      Company issued a Convertible
      debenture to YA Global with interest at 12%, payable on December 21, 2008.
      Principal and accrued interest are convertible into shares of common stock
      of
      the Company 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 September
      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 with interest at 12%, payable on April 13, 2009.
      Principal and accrued interest are convertible into shares of common stock
      of
      the Company 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 September 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 with interest at 15% which was payable on
      November 9, 2008. Principal and accrued interest are convertible into 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 September
      30, 2008 was $17,620.





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




None




**Item
      5. Other Information**




On
      October 13, 2008, Mr. Orlando was terminated as Chief Restructuring Officer,
      Chief Financial Officer and Secretary of the Company, and Michael D’Onofrio was
      appointed as his replacement.




**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.November
                7, 2008
            By:
            /s/
                Michael D’OnofrioMichael
                D’OnofrioChief
                Restructuring Officer andChief
                Financial Officer




14