**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON      D.C. 20549**

**FORM      10-QSB**

**For      the Quarterly Period Ended March 31, 2007**

**_________________________________**

**Commission      File No. 33-49797**

**_________________________________**

**ETOTALSOURCE,      INC.**

| **Colorado**                                                                                | **84-1066959**                                      |
|---------------------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or Other Jurisdiction of Incorporationor                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)        |

----

**ETOTALSOURCE,      INC.**

**FORM      10-QSB**

**TABLE      OF CONTENTS**

| PART                  I. - FINANCIAL INFORMATION                                                        |   |
|---------------------------------------------------------------------------------------------------------|--------|
| ITEM                  1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                                    | 3      |
| Balance                  Sheets - March 31, 2007 and December 31, 2005                                  | 3      |
| Statements                  of Operations - Three Months Ended March 31, 2007 and                  2006 | 4      |
| Statements                  of Cash Flows - Three Months Ended March 31, 2007 and                  2006 | 5      |
| Notes                  to Financial Statements                                                          | 6      |
| ITEM                  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF                  OPERATION     | 11     |
| ITEM                  3. CONTROLS AND PROCEDURES                                                        | 15     |
|                                                                                                    |   |
| PART                  II. - OTHER INFORMATION                                                           |   |
| ITEM                  1. LEGAL PROCEEDINGS                                                              | 16     |
| ITEM                  2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF                  PROCEEDS   | 16     |
| ITEM                  3. DEFAULTS UPON SENIOR SECURITIES                                                | 16     |
| ITEM                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                            | 16     |
| ITEM                  5. OTHER INFORMATION                                                              | 16     |
| ITEM                  6. EXHIBITS AND REPORTS ON FORM 8-K                                               | 17     |

----

**PART      I**

**FINANCIAL      INFORMATION**

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

| **eTotalSource,                Inc.**                                                                                                   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|
| **Consolidated                Balance Sheet**                                                                                           |   |
|                                                                                                                                    |   |
|                                                                                                                                    |   |
|                                                                                                                                    |   | UnauditedMarch                31,2007 |   |  December                31, 2006 |   |
| ***Current                Assets***                                                                                                     |   |   |   |   |   |
| Cash                                                                                                                                    |   | $ | 126 |   | $ | 563 |   |
| *Total                Current Assets*                                                                                                   |   |   | 126 |   |   | 563 |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| ***Other                Assets***                                                                                                       |   |   |   |   |   |   |   |
| Deposits                                                                                                                                |   |   | 801 |   |   | 801 |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| ***Total                Assets***                                                                                                       |   | $ | 927 |   | $ | 1,364 |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY (DEFICIT)**                                                                       |   |   |   |   |   |   |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| ***Current                Liabilities***                                                                                                |   |   |   |   |   |   |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| Convertible                notes payable                                                                                                |   | $ | 250,000 |   | $ | 250,000 |   |
| Other                notes payable                                                                                                      |   |   | 797,114 |   |   | 797,114 |   |
| Judgments                payable                                                                                                        |   |   | 204,788 |   |   | 204,788 |   |
| Accounts                payable and other accrued liabilities (Including $84,158 owed to                related                parties) |   |   | 363,953 |   |   | 337,593 |   |
| Accrued                compensation payable                                                                                             |   |   | 1,262,453 |   |   | 1,249,203 |   |
| Accrued                interest payable                                                                                                 |   |   | 540,230 |   |   | 505,555 |   |
| *Total                Current Liabilities*                                                                                              |   |   | 3,418.539 |   |   | 3,344,253 |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| **Convertible                Notes Payable, less current                maturities**** ****and $155,582                discount**  |   |   | 773,560 |   |   | 761,666 |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| **Total                Liabilities**                                                                                                    |   |   | 4,192,098 |   |   | 4,105,919 |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| **Commitments                and Contingencies**                                                                                        |   |   |   |   |   |   |   |
|                                                                                                                                    |   |   |   |   |   |   |   |
| ***Stockholders'                Equity (Deficit)***                                                                                     |   |   |   |   |   |   |   |
| Common                stock; no par value; 300 million shares authorized,                                                               |   |   |   |   |   |   |   |
| 87,239,448                shares issued and outstanding                                                                                 |   |   | 6,473,522 |   |   | 6,467,521 |   |
| Accumulated                (deficit)                                                                                                    |   |   | (10,664,693 | ) |   | (10,572,076 | ) |
| *Total                Stockholders' Equity (Deficit)*                                                                                   |   |   | (4,191,171 | ) |   | (4,104,555 | ) |
|                                                                                                                                    |   |   |   |   |   |   |   |
| ***Total                Liabilities and Stockholders' Equity                (Deficit)***                                                |   | $ | 927 |   | $ | 1,364 |   |

----

| **eTotalSource,                Inc.**                                           |   |
|---------------------------------------------------------------------------------|--------|
| **Condensed                Consolidated Statements of Operations****Unaudited** |   |
|                                                                            |   | **Three                Months Ended****March                31** |   |
|                                                                            |   | **2007** |   | **2006** |   |
|                                                                            |   |   |   |   |   |
| **Revenues**                                                                    |   | $ | - |   | $ | 12,819 |   |
|                                                                            |   |   |   |   |   |   |   |
| **General                and Administrative Expenses**                          |   |   | 16,222 |   |   | 216,201 |   |
|                                                                            |   |   |   |   |   |   |   |
| **Operating                Income (Loss)**                                      |   |   | (16,222 | ) |   | (203,382 | ) |
|                                                                            |   |   |   |   |   |   |   |
| **Other                Income (Expense)**                                       |   |   |   |   |   |   |   |
| Interest                expense                                                 |   |   | (76,394 | ) |   | (94,405 | ) |
| Other                income (expense), net                                      |   |   | - |   |   | - |   |
| **Total                Other Income (Expense)**                                 |   |   | (76,394 | ) |   | (94,405 | ) |
|                                                                            |   |   |   |   |   |   |   |
| **Net                (Loss)**                                                   |   | $ | (92,616 | ) | $ | (297,787 | ) |
|                                                                            |   |   |   |   |   |   |   |
| **Basic                and Diluted (Loss) per Share**                           |   | $ | (.001 | ) | $ | (0.01 | ) |
|                                                                            |   |   |   |   |   |   |   |
| **Weighted                Average Common Shares Outstanding**                   |   |   | 83,670,427 |   |   | 47,428,413 |   |

----

|                                                                                                |   | **eTotalSource,                Inc.**                                 |   |
|-----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                                                                                |   | **Consolidated                Statements of Cash Flows****Unaudited** |   |
|                                                                                                |   |                                                                  |   | **Three                Months Ended****March                31,** |   |
|                                                                                                |   |                                                                  |   | **2007** |   | **2006** |   |
| **Cash                Flows From (Used in) Operating Activities:**                                  |   |                                                                  |   |   |   |
| Net                (loss)                                                                           | $      | (92,616                                                               | )      | $ | (297,787 | ) |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| Depreciation                                                                                        |   |                                                                  |   |   |   | - |   |   | 2,832 |   |
| Amortization                of discounted notes payable                                             |   |                                                                  |   |   |   | 17,894 |   |   | 26,365 |   |
| Stock                options and warrant expense                                                    |   |                                                                  |   |   |   | - |   |   | 25,060 |   |
| Changes                in assets and liabilities:                                                   |   |                                                                  |   |   |   |   |   |   |   |   |
| Decrease                (increase) in other current assets                                          |   |                                                                  |   |   |   | - |   |   | 2 |   |
| Decrease                (increase) in deposits                                                      |   |                                                                  |   |   |   | - |   |   | (80 | ) |
| Increase                (decrease) in payables, credit cards and accrued                liabilities |   |                                                                  |   |   |   | 74,285 |   |   | 142,179 |   |
| Increase                (decrease) in deferred revenue                                              |   |                                                                  |   |   |   | - |   |   | (11,250 | ) |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| Net                Cash (Used in) Operating Activities                                              |   |                                                                  |   |   |   | (437 | ) |   | (112,682 | ) |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows From (Used in) Investing Activities:**                                  |   |                                                                  |   |   |   |   |   |   |   |   |
| Purchase                of equipment                                                                |   |                                                                  |   |   |   | - |   |   | - |   |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| Net                Cash (Used in) Investing Activities                                              |   |                                                                  |   |   |   | - |   |   | - |   |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| **Cash                Flows From (Used in) Financing Activities:**                                  |   |                                                                  |   |   |   |   |   |   |   |   |
| Proceeds                from notes payable                                                          |   |                                                                  |   |   |   | - |   |   | - |   |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| Net                Cash From Financing Activities                                                   |   |                                                                  |   |   |   | - |   |   | - |   |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| Increase                (Decrease) in Cash and Cash Equivalents                                     |   |                                                                  |   |   |   | (437 | ) |   | (112,682 | ) |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| Cash                and Cash Equivalents - Beginning of Period                                      |   |                                                                  |   |   |   | 563 |   |   | 118,958 |   |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| Cash                and Cash Equivalents - End of Period                                            |   |                                                                  |   |   | $ | 126 |   | $ | 6,276 |   |
|                                                                                                |   |                                                                  |   |   |   |   |   |   |   |   |
| **Supplemental                Disclosures:**                                                        |   |                                                                  |   |   |   |   |   |   |   |   |
| Interest                paid                                                                        |   |                                                                  |   |   | $ | - |   | $ | 20,613 |   |
| Income                taxes paid                                                                    |   |                                                                  |   |   |   | - |   |   | 800 |   |
| Non-cash                investing and financing transactions:                                       |   |                                                                  |   |   |   |   |   |   |   |   |
| Conversion                of debt to equity                                                         |   |                                                                  |   |   |   | - |   |   | 10,000 |   |
| Conversion                of convertible debenture                                                  |   |                                                                  |   |   |   | 6,000 |   |   | - |   |
| Discount                on convertible debentures                                                   |   |                                                                  |   |   |   | 1,200 |   |   | - |   |

----

**eTotalSource,      Inc.**

**Notes      to Consolidated Condensed Financial Statements as of March 31,      2007**

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

*Description      of Business*

*Reorganization      in 2002*

*Going      Concern Uncertainty*

*Use      of Estimates*

* *

*Principles      of Consolidation*

*Cash      Equivalents*

*Earnings      (Loss) Per Share *

----

*Beneficial      Conversion Feature of Debt*

*Recent      Accounting Pronouncements *

*The      Fair Value Option for Financial Assets and Financial Liabilities - Including      an      Amendment of FASB Statement No. 115. *
**.**

**NOTE      2. NOTES PAYABLE**

| Note                payable to a trust; interest at 15% payable monthly through December                18,                2003 when principal and unpaid interest are due. The note is in                default.                                                                                                                                                                                                                                                                                                                                                                                    |   | $      | 172,000 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Note                payable to a trust; interest at 10% and principal due January 17,                2003,                extended to December 17, 2003 (with interest increased to 18% and                due                monthly beginning February 17, 2003). The note is in default.                                                                                                                                                                                                                                                                                                           |   |   | 110,000 |   |
| Note                payable to a trust; interest at 15% payable monthly through December                18,                2003 when principal and unpaid interest are due. The note is in                default.                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 40,000  |   |
| Promissory                notes payable; interest at 6% payable monthly, due in 2001, unsecured.                Principal and accrued interest ($36,701 at December 31, 2006) are                convertible to common stock at $.50 per share. Warrants also issued                to two                note holders to purchase 37,500 shares of common stock for five years                at                $.50 per share. The notes are in default.                                                                                                                                            |   |   | 150,000 |   |
| Promissory                note payable; principal and accrued interest at 8% payable in 2002,                extended to May 15, 2003, unsecured. Principal and accrued interest                ($18,868 at December 31, 2006) convertible to Company common stock                at $.50                per share. Warrants also issued to the note holder to purchase 55,248                shares of common stock for five years at $.50 per share. The note                is in                default.                                                                                          |   |   | 100,000 |   |
| Note                payable to an unrelated trust; 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. Accrued unpaid                interest                of $2,483 was added to the principal in 2005. * |   |   | 52,483  |   |
| Note                payable to an unrelated trust; principal and interest at 10% due                monthly.                This note is a revolving credit obligation and eTotalSource 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. Accrued unpaid interest of $12,631 was added to the principal                in                2005. *                                                              |   |   | 262,631 |   |

----

| Convertible                debentures payable to an unrelated company, 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. In connection with this transaction,                the                Company recorded a discount of $320,734, for the relative value of                the                warrants; as of March 31, 2007, the debt is stated net of the unamortized                discount of $154,075. During the period ending March 31, 2007, the                holder                converted $6,000 to 7,071,429 shares of common stock. On April 26,                2007,                the holder converted $2,800 to 3,500,000 shares. |   |   | 767,425   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Convertible                debentures payable to an unrelated company, principal and interest                at 12%,                payable December 21, 2008. Principal and accrued interest ($25 at                December                31, 2006) 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. In connection with this                transaction, the Company recorded a discount of $1,528, for the relative                value of the warrants; as of March 31, 2007, the debt is stated net                of the                unamortized discount of $1,507.                                                                                                                                                                                                                                                                                                                                                                   |   |   | 6,135     |   |
| Note                payable to an unrelated individual; principal and unpaid interest                at 12%,                due October 15, 2006. The note is in default.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 25,000    |   |
| Note                payable to a director; principal and interest at 9.2%, due December                4,                2002, extended to May 1, 2003, unsecured. The note is in                default.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 10,000    |   |
| Note                payable to an unrelated company; principal and interest at 10%, due                August                1, 2005. The note is in default.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 25,000    |   |
| Note                payable to an unrelated company; principal and interest at 12%, due                August                1, 2005. The note is in default.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 100,000   |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 1,820,674 |   |
| Less:                current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 1,047,114 |   |
| Long-term                maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $      | 773,560   |   |
| *                In connection with the extension of the maturity date of these notes                to                June 2006, the Company is obligated to issue 2,000,000 shares of                its                common stock to the note-holder of both notes. The Company has accrued                this liability based on the fair market value of its common stock                as of                the date of the extension agreement and recorded the related interest                expense in the accompanying financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |      |   |

----

**NOTE      3. FAIR VALUE OF FINANCIAL INSTRUMENTS**

**NOTE      4. FINANCIAL INSTRUMENTS AND CONCENTRATIONS**

*Financial      Instruments*

**NOTE      5. COMMITMENTS AND CONTINGENCIES**

*Executive      Employment Contracts*

|  | 1. | Agreements                were executed with the Chief Executive Officer at the inception of                the                Company (February 7, 2000) which expired December 31, 2006. Annual                salary                is $150,000 and accrues a non-accountable automobile allowance of                $9,000.                The agreements also provide for an annual bonus of incentive stock                options                (covering 200,000 shares). In addition, the CEO is entitled to a                5%                referral commission on certain sales. Unpaid salary and commissions                can be                paid with warrants to purchase common stock at $1 per share. During                both                2006 and 2005, CEO compensation expensed pursuant to these arrangements                totaled $159,000 during 2006 and 2005, respectively (exclusive of                the fair                value and of incentive stock options). The CEO has elected to forego                the                2006 and 2005 annual bonus of incentive stock options. Mr. Eilers                resigned                on March 27, 2007. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | An                agreement was executed August 1, 2000 with the Chief Operating Officer                which expired December 31, 2007. Annual salary is $120,000 and a                non-accountable automobile allowance of $9,000. The agreement also                provides for an annual bonus of incentive stock options (covering                200,000                shares). Unpaid salary and commissions can be paid with warrants                to                purchase common stock at $1 per share. During 2006 and 2005, COO                compensation expensed pursuant to these arrangements was accrued                on a                “half-time” basis and totaled $69,000 and $69,000, respectively (exclusive                of the fair value of incentive stock options). The officer has elected                to                forego the 2006 and 2005 annual bonus of incentive stock options.                Mr.                Sullinger resigned on March 27,                2007. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**NOTE      6. STOCK CONVERSION**

**NOTE      7. EVENTS SUBSEQUENT TO MARCH 31, 2007 **

----

**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**

**History.**

**Business.**

**Recent      Developments **

**Management      Transition **

The      new      management team will be undertaking an analysis and evaluation of the Company’s      current business model and industry, our 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 substantially reduced our production and sales      programs and certain other 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      purposes. No assurance can be given that such financing will be available on      terms acceptable to the Company. 

----

**Debenture      Financing.**

**Recent      Historical Operations.**

|   | · | Multi-panel                time synchronized presentation;   |
|--------|--------|--------------------------------------------------------------|
|   | · | Quick                content and program development;        |
|   | · | Rich                video and content experience;            |
|   | · | Still                images;                                 |
|   | · | Graphics;                                                    |
|   | · | Flash;                                                       |
|   | · | Links                to Website;                             |
|   | · | Live                Cams;                                    |
|   | · | Test                and quizzes to tract performance;        |
|   | · | Users                progress can be tracked;                |
|   | · | Diagrams;                                                    |
|   | · | Simple                server requirements;                   |
|   | · | Reduces                training and learning curve time; and |
|   | · | Easy                to implement and use.                    |

**Business      Model.**

**STRATEGY:**

**SOFTWARE      LICENSING:**

**PUBLISHING:**

|   | · | Anger                Management Facilitator Training and Certification;                |
|--------|--------|----------------------------------------------------------------------------------------|
|   | · | Domestic                Violence Facilitator Training and Certification;               |
|   | · | School                Maintenance, Cleaning Training and                Certification; |

----

|   | · | Emergency                Disaster Preparedness - Terrorist Awareness; and     |
|--------|--------|-------------------------------------------------------------------------------|
|   | · | Mandated                School Internet Acceptable Use                Policy. |

**Intellectual      Property Differentiation.**

|   | · | Multiple                screen operating environment, framework and tools for transacting                e-commerce; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | System                and method for pre-loading still imagery data in an interactive multimedia                presentation, which provides an image pre-loading system that maximizes                available network bandwidth; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | System                and method for dynamically managing web content using a browser                independent framework, which provides an interactive system for enabling                dynamic updating of web content to “live”                websites; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | System                and method for providing an interactive multimedia presentation                environment with low bandwidth capable sessions, which provides an                integrated presentation environment consisting of multi-screen clinic                logically defined within a browser application;                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Presenta                ProTM production and delivery system, which provides a multi-screen                environment for presenting multimedia presentations with video, images,                flash images and text all integrating with the                video. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Technology.**

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 March 31, 2007 and 2006. 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 - Three months ended March 31, 2007 compared to the three months      ended March 31, 2006. **

***Revenues.***

***Expenses.***

----

***Gain      (Loss) From Operations.***

**Liquidity      and Capital Resources**

** **

**The      Standby Equity Distribution Agreement**
**s.**

**The      November 2005 Debentures.**

** **

**The      December 2006 Debenture.**

**The      April 2007 Debenture.**

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**Contractual      Obligations and Commercial Commitments**

| **Contractual                Obligations**                       |   | **Less                than 1 year** |      | **2-3                years** |   | **4-5                years** |   | **After                5 years** |   | **Total** |   |
|------------------------------------------------------------------|--------|-------------------------------------|-----------|------------------------------|--------|------------------------------|--------|----------------------------------|--------|-----------|--------|
| Judgments                payable                                 |   | $                                   | 204,788   |                         | $      | .00                          |   | $                                | .00    |      | $      | .00 |   | $ | 204,788 |   |
| Short                Term note payables                          |   |                                | 1,047,114 |                         |   | .00                          |   |                             | .00    |      |   | .00 |   |   | 1,047,114 |   |
| Convertible                debentures (net discounts - $155,582) |   |                                | .00       |                         |   | 773,560                      |   |                             | .00    |      |   | .00 |   |   | 773,560 |   |
| Other                current liabilities                         |   |                                | 2,166,636 |                         |   | .00                          |   |                             | .00    |      |   | .00 |   |   | 2,166,636 |   |
| Total                contractual cash obligations                |   | $                                   | 3,418,539 |                         | $      | 773,560                      |   | $                                | .00    |      | $      | .00 |   | $ | 4,192,098 |   |

**Dividends**

**Item      3. Controls and Procedures.**

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**PART      II**

**OTHER      INFORMATION**

**Item      1. Legal Proceedings.**

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

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

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

**Item      5. Other Information**

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**Item      6. Exhibits and Reports on Form 8-K**

|   | ***a.*** | ***Exhibits                pursuant to Regulation                S-K:*** |
|--------|----------|--------------------------------------------------------------------------|

| **DESIGNATION                OF EXHIBIT AS SET FORTH IN ITEM 601 OF REGULATION                S-B** |   | **DESCRIPTION**                                                                                                                                                    |   | **LOCATION**                                                                                                                                                            |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 3.1                                                                                                 |   | Articles                of Incorporation                                                                                                                           |   | Incorporated                by Reference to the Registration Statement of Form SB-2 filed on                April 21,                2005.                              |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 3.2                                                                                                 |   | Bylaws                                                                                                                                                             |   | Incorporated                by Reference to the Registration Statement of Form SB-2 filed on                April 21,                2005.                              |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 3.3                                                                                                 |   | Certificate                of Amendment of the Articles of Incorporation                                                                                           |   | Incorporated                by reference to the current report on Form 8-K dated July 14, 2003.                (File                no. 000-49797)                      |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 3.4                                                                                                 |   | Articles                of Amendment to the Articles of Incorporation                                                                                              |   | Incorporated                by reference to the current report on Form 8-K dated December 1,                2003                (File no. 000-49797)                    |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 4.1                                                                                                 |   | 2003                Stock Plan                                                                                                                                     |   | Incorporated                by reference to the current report on Form S-8 dated May 23, 2003.                (File                no. 333-105518)                      |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 4.11                                                                                                |   | 2004                Stock Plan                                                                                                                                     |   | Incorporated                by reference to the current report on Form S-8 dated July 15, 2004.                (File                no. 333-111732)                     |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 10.1                                                                                                |   | Plan                & Agreement of Reorganization dated December 18, 2002 by and between                Premium Enterprises, Inc and eTotalSource, Inc.        |   | Incorporated                by reference to the Annual Report on Form 8-K dated December 30,                2002.                (File no. 000-49797)                   |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 10.2                                                                                                |   | Employment                Agreement of Terry Eilers dated February 7, 2000                                                                                         |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786)                |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 10.3                                                                                                |   | Employment                Agreement of Virgil Baker dated February 7, 2000                                                                                         |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786)                |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 10.4                                                                                                |   | Employment                Agreement of Michael Sullinger dated August 1, 2002                                                                                      |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786)                |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 10.5                                                                                                |   | Securities                Purchase Agreement, dated October 6, 2004 by and between eTotalSource,                Inc. and Cornell Capital Partners, L.P.            |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786)                |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 10.6                                                                                                |   | Investor                Registration Rights Agreement, dated October 6, 2004, by and between                eTotalSource, Inc. and Cornell Capital Partners, L.P.  |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786)                |
|                                                                                                |   |                                                                                                                                                               |   |                                                                                                                                                                    |
| 10.7                                                                                                |   | Security                Agreement, dated October 6, 2004, by and between eTotalSource, Inc.                and                Cornell Capital Partners, L.P.  |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no.                333-120786) |

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| **DESIGNATION                OF EXHIBIT AS SET FORTH IN ITEM 601 OF REGULATION                S-B** |   | **DESCRIPTION**                                                                                                                                                                                                                                               |   | **LOCATION**                                                                                                                                             |
|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 10.8                                                                                                |   | Irrevocable                Transfer Agent Instructions, dated October 6, 2004, by and among                eTotalSource, Inc., Cornell Capital Partners, L.P., and Executive                Registrar & Transfer, Inc.                                    |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786) |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 10.9                                                                                                |   | Escrow                Agreement (SEDA), dated October 6, 2004, by and among eTotalSource,                Inc.,                Cornell Capital Partners, L.P., and David Gonzalez, Esq.                                                                        |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786) |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 10.10                                                                                               |   | Termination                Agreement, dated November 2, 2005, by and among eTotalSource, Inc.                and                Cornell Capital Partners, L.P.                                                                                                |   | Incorporated                by reference to the Current Report on Form 8-K dated November 8,                2005.                                        |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 10.11                                                                                               |   | Agreement                dated December 21, 2006 by and between eTotalSource, Inc. and Cornell                Capital Partners, L.P.                                                                                                                          |   | Incorporated                by reference to the Company’s on Form 10-QSB dated December 21,                2006.                                   |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 10.12                                                                                               |   | Secured                Convertible Debenture dated December 21, 2006 in the Principal Amount                of                $7,642 issued by eTotalSource, Inc. to Cornell Capital Partners,                L.P.                                            |   | Incorporated                by reference to the Company’s on Form 10-QSB dated December 21,                2006.                                   |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 14.1                                                                                                |   | Code                of Ethics                                                                                                                                                                                                                                 |   | Incorporated                by reference to the pending Registration Statement on Form SB-2 dated                November 24, 2004 (File no. 333-120786) |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 15.1                                                                                                |   | Letter                on Change in Certifying Accountants                                                                                                                                                                                                     |   | Incorporated                by reference to the Company’s Current Report on Form 8-K filed on August                30, 2006                       |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 16.1                                                                                                |   | Letter                on Departure of Director -Virgil Baker                                                                                                                                                                                                  |   | Incorporated                by reference to the Company’s Current Report on Form 8-K filed on August                30, 2006                       |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 16.2                                                                                                |   | Letter                on Departure of Director - John (Cody) Morrow                                                                                                                                                                                           |   | Incorporated                by reference to the Company’s Current Report on Form 8-K filed on August                30, 2006                       |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 31.1                                                                                                |   | Certification                of Chief Executive Officer and Interim Chief Financial Officer (one                person) pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange                Act                                                               |   | Filed                  herewith                                                                                                                          |
|                                                                                                |   |                                                                                                                                                                                                                                                          |   |                                                                                                                                                     |
| 32.1                                                                                                |   | Certification                of Chief Executive Officer and Interim Chief Financial Officer (one                person) pursuant to 18 U.S.C. Section 1350 as adopted pursuant to                Section                906 of the Sarbanes-Oxley Act of 2002 |   | Filed                  herewith                                                                                                                          |

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**SIGNATURES**

|                        |                                                                                                                                      |                                                               |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|
|                        | **eTotalSource,                Inc.**                                                                                                     |
|                   |                                                                                                                                 |                                                          |
| May                17, 2007 |                                                                                                                                      | By:                /s/ Frank J. Orlando   |
|                        |                                                                                                                                           |
|                        | Frank                J. OrlandoChief                Restructuring Officer, Chief Financial Officer, Secretary and                Director |

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