UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _________.

Commission file number 000-25753

NUSTATE ENERGY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Florida	87-0449667
(State of Incorporation)	(IRS Employer Identification No.)

401 E. LAS OLAS BOULEVARD, SUITE 1400

FORT LAUDERDALE, FL 33301

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (954) 712-7487

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [  ] No [X]

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]
(Do not check if smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

The number of shares outstanding of the registrant’s Common Stock, $0.0001 par value per share, as of November 14, 2017, was 2,346,756,170.

When used in this quarterly report, the terms “Nustate,” “the Company,” “we,” “our,” and “us” refer to NuState Energy Holdings, Inc., a Nevada corporation.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This quarterly report on Form 10-Q contains certain forward-looking statements. Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plans, including product and service developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other comparable terminology. These statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. These factors include, but are not limited to, our ability to implement our strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. The business and operations of NuState Energy Holdings, Inc. are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under “Item 1A. Risk Factors” in our registration statement on Form 10 as filed with the Securities and Exchange Commission, or the SEC, on May 8, 2013. Readers are also urged to carefully review and consider the various disclosures we have made in this report and in our registration statement on Form 10.

NUSTATE ENERGY HOLDINGS, INC.

INDEX

PART I - FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Balance Sheets – September 30, 2017 (unaudited) and June 30, 2017	3
Statements of Operations - Three Months ended September 30, 2017 and 2016 (unaudited)	4
Statements of Cash Flows - Three months Ended September 30, 2017 and 2016 (unaudited)	5
Notes to Unaudited Financial Statements	6
Item 2. Management’s Discussion and Analysis and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	18
Item 4. Controls and Procedures	18
PART II - OTHER INFORMATION	18
Item 1. Legal Proceedings.	19
Item 1A. Risk Factors.	19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	19
Item 3. Defaults Upon Senior Securities.	19
Item 4. Mine Safety Disclosures.	19
Item 5. Other Information.	19
Item 6. Exhibits	19
SIGNATURES	20

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

NuState Energy Holdings, Inc.

BALANCE SHEETS

	September 30, 2017			June 30, 2017 (1)
	(Unaudited)
ASSETS
Current assets:
Cash	$	325		$	2,313
Total current assets		325			2,313
Total assets	$	325		$	2,313
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	587,968		$	565,468
Accrued compensation		338,125			280,125
Accrued interest		1,566,885			1,493,014
Convertible notes payable to ASC Recap LLC		147,965			147,965
Convertible notes payable, net of discount of $542 and $84,583		2,198,842			2,174,831
Notes payable		270,241			270,241
Total current liabilities		5,110,026			4,931,643
Stockholders’ deficit:
Preferred stock, $0.001 par value, 100,000,000 shares authorized
Series A (20,000,000 shares designated, 13,992,340 shares issued and outstanding as of September 30, 2017 and June 30, 2017)		13,992			13,992
Series B (30,000,000 shares designated, 1,327,640 shares issued and outstanding as of September 30, 2017 and June 30, 2017)		1,328			1,328
Common stock, $0.0001 par value, 10,000,000,000 shares authorized: 2,108,756,170 shares issued and outstanding as of September 30, 2017 and 1,497,455,835 June 30, 2017 (See Note 6)		210,876			149,746
Additional paid in capital		38,185,359			38,206,460
Accumulated deficit		(43,521,256	)		(43,300,856	)
Total stockholders’ deficit		(5,109,701	)		(4,929,330	)
Total liabilities and stockholders’ deficit	$	325		$	2,313

(1) Derived from audited financial statements

See Notes to Unaudited Financial Statements.

3

NuState Energy Holdings, Inc.

STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,
	2017			2016
Net revenues	$	-		$	-
Operating expenses:
Selling, general and administrative		119,987			853,311
Total Operating Expenses		119,987			853,311
Loss from Operations		(119,987	)		(853,311	)
Other income (expenses):
Gain on change in fair value of derivative liabilities		-			250,548
Interest expense		(100,413	)		(84,200	)
Loss on debt settlement		-			-
Total other income (expenses)		(100,413	)		166,348
Net loss	$	(220,400	)	$	(686,964	)
Loss per common share basic and diluted	$	(0.00	)	$	(0.04	)
Weighted average common shares outstanding - basic and diluted		1,908,223,525			19,509,598

See Notes to Unaudited Financial Statements.

4

NuState Energy Holdings, Inc.

STATEMENTS OF CASH FLOWS

(Unaudited)

	Three-months ended
	September 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(220,400	)	$	(686,964	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation		-			750,000
Gain on change in fair value of derivative liability		-			(250,548	)
Amortization of debt discount		26,541			24,167
Changes in operating assets and liabilities:
Accounts payable		22,500			16,705
Accrued interest		73,871			60,033
Accrued compensation		58,000			44,800
Net cash used in operating activities		(39,488	)		(42,313	)
Cash flows from financing activities:
Proceeds from issuance of short term notes payable		37,500			40,000
Net cash provided by financing activities		37,500			40,000
Net increase (decrease) in cash		(1,988	)		(2,313	)
Cash, beginning of period		2,313			1,806
Cash, end of period	$	325		$	-
Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities:
Issuance of common stock for conversion of notes payable	$	40,030		$	18,597
Issuance of common stock for accrued compensation	$	-		$	80,000

See Notes to Unaudited Financial Statements.

5

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 1: ORGANIZATION, DESCRIPTION OF BUSINESS, GOING CONCERN AND BASIS OF PRESENTATION

NuState Energy Holdings, Inc., or the Company, currently is a Florida corporation that was incorporated in Nevada in October 1987. It was formerly known as Jaguar Investments, Inc. between October 1987 and May 2003, Power2Ship, Inc. between May 2003 and November 2006, and Fittipaldi Logistics, Inc. between November 2006 and December 2007.

Our software technology provides validation and verification of fuel cost consumption reporting and fuel tax credits to logistics companies. The software also is designed to document the exact amount of reduction of harmful emissions that results from the alternative energy products. This data will enable users in certain countries to generate emissions credits that are tradable under the protocol of the Kyoto Treaty.

We are considered to be in the development stage as defined in the accounting standards since we have not commenced planned principal operations.  Our activities since inception include devoting substantially all of our efforts to business planning and development. Additionally, we have allocated a substantial portion of our time and investment to the completion of our development activities to launch our marketing plan and generate revenues and to raising capital.  We have generated minimal revenue from operations. The Company’s activities during the development stage are subject to significant risks and uncertainties.

 The accompanying financial statements have been prepared on a going concern basis. For the three months ended September 30, 2017 the Company had a net loss of $220,400 and had net cash used in operating activities of $39,487. In addition, the Company had an accumulated deficit and a working capital deficit of approximately $43.5 million and $5.1 million, respectively, at September 30, 2017. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future. Management plans to provide for the Company’s capital requirements by continuing to issue additional equity and debt securities. The outcome of these matters cannot be predicted at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis of Presentation

The unaudited interim financial information furnished herein reflects all adjustments, consisting only of normal recurring items, which in the opinion of management are necessary to fairly state NuState Energy Holdings, Inc.’s (the “Company” or “we”, “us” or “our”) financial position, results of operations and cash flows for the dates and periods presented and to make such information not misleading. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”), nevertheless, management of the Company believes that the disclosures herein are adequate to make the information presented not misleading.

These unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended June 30, 2017, contained in the Company’s Annual Report on Form 10-K filed with the SEC on September 28, 2017. The results of operations for the three months ended September 30, 2017, are not necessarily indicative of results to be expected for any other interim period or the fiscal year ending June 30, 2018.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reporting amounts of revenues and expenses during the reported period. Actual results will differ from those estimates. Included in these estimates are the valuation of derivative liabilities, stock-based compensation, and deferred tax asset valuation allowance.

Cash and Cash Equivalents

The Company considers all highly liquid, temporary, cash equivalents with an original maturity of three months or less when purchased, to be cash equivalents. The Company had no cash equivalents during the three months ended September 30, 2017 and 2016.

Concentration of Credit Risks

The Company is subject to a concentration of credit risk from cash.

The Company’s cash account is held at a financial institution and is insured by the Federal Deposit Insurance Corporation, or FDIC, up to $250,000. During the three months ended September 30, 2017 and 2016, the Company had not reached a bank balance exceeding the FDIC insurance limit.

Derivative Liabilities

The Company assessed the potential classification of its derivative financial instruments as of September 30, 2017 and June 30, 2016, which consist of convertible instruments and rights to shares of the Company’s common stock, and determined that such derivatives meet the criteria for liability classification under ASC 815.

ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described.

During the year ended June 30, 2017, the Company determined that there was no active market for the Company’s common stock, and because of this lack of liquidity and market value, there was no derivative liability associated with these convertible notes. The Company uses judgment in determining the fair value of derivative liabilities at the date of issuance and at every balance sheet thereafter and in determining which valuation method is most appropriate for the instrument (e.g., Black-Scholes-Merton), the expected volatility, the implied risk-free interest rate, as well as the expected dividend rate, if any. The derivate liability that had previously been recognized was recorded as a gain through the change in fair value of derivative liability on the statement of operations as of June 30, 2017, and there was no derivative liability recorded as of September 30, 2017.

6

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Fair Value of Financial Instruments

The Company accounts, for assets and liabilities measured at fair value on a recurring basis, in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities.
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

Additional Disclosures Regarding Fair Value Measurements

The carrying value of cash and cash equivalents, accounts payable and accrued expenses, accrued compensation, note and convertible promissory notes payable approximate their fair value due to the short maturity of these items.

Convertible Instruments

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with ASC 470-20, Debt with Conversion and Other Options. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40, Contracts in Entity’s own Equity, generally provides that, among other things, if an event is not within the entity’s control, such contract could require net cash settlement and shall be classified as an asset or a liability.

Income Taxes

The Company accounts for income taxes pursuant to the provisions of ASC 740-10, “Accounting for Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions”. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

7

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Income Taxes, continued

The Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. As of September 30, 2017, the Company had not filed tax returns for the tax years ending June 30, 2008 through 2017 and such returns, when filed, potentially will be subject to audit by the taxing authorities for a minimum of three years beyond the filing date under the three-year statute of limitations. The Company has not accrued any potential tax penalties associated with not filing these tax returns. Due to recurring losses, management believes such potential tax penalties, in any, would not be material in amount.

Share-Based Payment

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

The Company has elected to use the Black-Scholes-Merton, or BSM, option-pricing model to estimate the fair value of its options, which incorporates various subjective assumptions including volatility, risk-free interest rate, expected life, and dividend yield to calculate the fair value of stock option awards. Compensation expense recognized in the statements of operations is based on awards ultimately expected to vest and reflects estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Segment Reporting

The Company operates in one segment, which is to search for possible acquisition targets and merge with an operating company. The Company’s chief operating decision-maker evaluates the performance of the Company based upon expenses by functional areas as disclosed in the Company’s statements of operations.

Recent Accounting Pronouncements

Recent accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.

8

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Basic and Diluted Earnings Per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of shares of Common Stock outstanding during each period. Diluted earnings per share are computed using the weighted average number of shares of Common Stock and dilutive Common Stock share equivalents outstanding during the period. Dilutive Common Stock share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method), and shares underlying convertible promissory notes and convertible preferred stock. Potential common shares includable in the computation of fully-diluted per-share results are not presented in the financial statements as their affect would be anti-dilutive.

	For the Three Months ended September 30,
	2017			2016
Numerator:
Loss from operations	$	(119,987	)	$	(853,311	)
Interest expense		(100,413	)		(84,200	)
Gain on change in fair value of derivative liability		-			250,548
Numerator for basic earnings per share- net loss from continuing operations attributable to common stockholders-as adjusted	$	(220,400	)	$	(686,964	)
Denominator:
Denominator for basic earnings per share-weighted average shares		1,908,223,525			19,509,598
Effect of dilutive securities-when applicable:
Convertible promissory notes		6,946,712,499			49,837,385
Preferred Stock		13,754			13,754
Denominator for diluted earnings per share—adjusted weighted-average shares and assumed conversions		8,854,949,778			69,360,742

The weighted-average potentially dilutive common share equivalents outstanding for the three months ended September 30, 2017 and 2016 are as follows:

	September 30,
	2017		2016
Series A Preferred Stock		9,324		9,324
Series B Preferred Stock		4,430		4,430
Convertible notes payable		6,946,712,499		49,837,385
Total		6,946,726,253		49,851,144

9

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 3: DERIVATIVE LIABILITY

The Company accounts for the embedded conversion features included in its convertible instruments as derivative liabilities. The aggregate fair value of derivative liabilities at September 30, 2017 and June 30, 2017 amounted to $0 and $0, respectively. For the three months ended September 30, 2017 and 2016, the Company recorded a gain related to the change in fair value of the derivative liability amounting to $0 and $250,548, respectively. Management had a change in accounting estimate during the year ended June 30, 2017. The Company determined that all of the underlying convertible notes were past due and in default, and that there was no active market for the Company’s common stock. Because of this lack of liquidity and market value, there was no derivative liability associated with these convertible notes. At each measurement date, the fair value of the embedded conversion features was based on the Black-Scholes-Merton method using the following assumptions:

	Three Months Ended September 30,
	2017		2016
Effective Exercise price		-	$	.00015
Effective Market price		-	$	.0014
Volatility		-		503	%
Risk-free interest		-		0.1	%
Terms		-		365 days
Expected dividend rate				0	%

Changes in the derivative liabilities during the three months ended September 30, 2017 is follows:

Derivative liability at June 30, 2017	$	-
Gain on change in fair value of derivative liability, recognized as other income		-
Derivative liability at September 30, 2017	$	-

NOTE 4: ACCRUED INTEREST PAYABLE

Changes in accrued interest payable during the three months ended September 30, is as follows:

Accrued interest payable at June 30, 2017	$	1,493,014
Interest expense for the three months ended September 30, 2017, net of amortization of debt discount of $26,541		73,871
Accrued interest payable at September 30, 2017	$	1,566,885

NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE

Convertible Notes Payable

The Company had convertible promissory notes aggregating approximately $2.2 million and $2.2 million at September 30, 2017 and June 30, 2017, respectively. The related accrued interest amounted to approximately $1,339,000 and $1,271,000 million at September 30, 2017 and June 30, 2017, respectively. The convertible notes payable bear interest at rates ranging from 0% to 18% per annum. The convertible notes are generally convertible, at the holders’ option, at rates ranging from $0.00005 to $0.0267 per share. At September 30, 2017, approximately $1.7 million of convertible promissory notes had matured, are in default, and remain unpaid.

On July 22, 2013 and May 6, 2014, the Company issued to ASC Recap LLC (“ASC”), in connection with the Company’s settlement with ASC of up to approximately $2.5 million in liabilities of the Company, two convertible promissory notes with principal amounts of $25,000 and $125,000, respectively. The July 22, 2013 note matured on March 31, 2014 and remains unpaid and in default. The May 6, 2014 note matured on May 6, 2016, is in default, and remains unpaid. The notes are convertible into the common stock of the Company at any time at a conversion price equal to 50% of the lowest closing bid price of our common stock for the twenty days prior to conversion.

At September 30, 2017 and June 30, 2017 convertible debentures consisted of the following:

	September 30, 2017			June 30, 2017
Convertible notes payable	$	2,199,384		$	2,201,914
Unamortized debt discount		(542	)		(27,083	)
Total	$	2,198,842		$	2,174,831

10

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 5: CONVERTIBLE NOTES PAYABLE AND NOTE PAYABLE, continued

Notes Payable

The Company had promissory notes aggregating $270,241 at September 30, 2017 and June 30, 2017, respectively. The related accrued interest amounted to approximately $228,000 and $222,000 at September 30, 2017 and June 30, 2017, respectively. The notes payable bear interest at rates ranging from 12.5% to 16% per annum which is payable monthly. All promissory notes outstanding as of September 30, 2017 have matured, are in default, and remain unpaid.

Transactions

During the three months ended September 30, 2017 we issued convertible notes to three investors, totaling $37,500. The notes bear interest at 0% and have a term of sixty days.

The Company recognized interest expense of $100,412 and $78,584 during the three-month periods ended September 30, 2017 and 2016, respectively which included debt discount amortization of $24,167 and $0 during the three-month period ended September 30, 2017 and 2016, respectively.

NOTE 6: STOCKHOLDERS’ DEFICIT

Common Stock

At September 30, 2017, the Company had 10,000,000,000 authorized common shares.

During the three months ended September 30, 2017 the Company issued 611,300,335 shares of its common stock related to the conversion of $40,030 of principal of its convertible notes payable, at an average contract conversion price of $0.000065.

11

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 6: STOCKHOLDERS’ DEFICIT, continued

Preferred Stock

Series A and B issued and outstanding shares of the Company’s preferred stock have a par value of $0.001. All classes rank(ed) prior to any class or series of the Company’s common stock as to the distribution of assets upon liquidation, dissolution or winding up of the Company or as to the payment of dividends. All preferred stock shall have no voting rights except if the subject of such vote would reduce the amount payable to the holders of preferred stock upon liquidation or dissolution of the company and cancel and modify the conversion rights of the holders of preferred stock as defined in the certificate of designations of the respective series of preferred stock.

Series A Preferred Stock

The Series A Preferred Stock has a stated value of $0.25 per share. Each one share of Series A Preferred Stock is convertible into one (1) share of Common Stock. In the event the Common Stock price per share is lower than $0.10 (ten cents) per share then the Conversion shall be set at $0.035 per share. The Common Stock shares are governed by Lock-Up/Leak-Out Agreements.

12

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 6: STOCKHOLDERS’ DEFICIT, continued

Series B Preferred Stock

Prior to cancellation, the Series B Preferred Stock had a stated value of $5.00 per share. Each share of Series B Preferred Stock was convertible into 20 shares of the Company’s common stock. In addition, the holders of the preferred stock were entitled to receive annual cumulative dividends of 10% payable in cash or shares of the Company’s common stock, at the Company’s option. At June 30, 2017, the Company had not declared the payment of cumulative dividends aggregating approximately $673,200.

Thirty million (30,000,000) shares of preferred stock were designated as a new Series B Preferred stock in April, 2016. This new Series B Preferred Stock has a $0.001 par value, and each 300 shares is convertible into one share of the Company’s common stock, with a stated value of $375 per share.

NOTE 7: RELATED PARTY TRANSACTIONS

The Company has entered into a consulting agreement with an entity owned by our Chairman of the Board and Chief Executive Officer. During the three months ended September 30, 2017 and 2016 the Company had incurred consulting fees and related expense reimbursements of $1,500 and $55,000, respectively.

13

NUSTATE ENERGY HOLDINGS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

NOTE 8: SUBSEQUENT EVENTS

During October, 2017 the Company issued 238,000,000 shares of its common stock related to the conversion of $11,900 of principal of its convertible notes payable, at an average contract conversion price of $0.00005.

14

ITEM 2. Management’s Discussion and Analysis and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included elsewhere in this report. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements. See ‘‘Cautionary Statement Regarding Forward Looking Information’’ elsewhere in this report. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

NuState Energy Holdings, Inc. is a technology company specializing in providing pertinent, real-time information to the worldwide transportation and security industries. NuState’s proprietary software, GPSTrax, is built on an Open Architecture platform for the logistics and telematics industries.

We believe there are many opportunities to leverage and monetize our software technology by licensing it to companies that provide green technology solutions to medium and large logistics companies.

NuState is launching a new GPSTrax Value-Added Reseller (VAR) Program, focusing on opportunities in consumer-based solutions such as asset tracking. The VAR Program will increase awareness, availability and support of the GPSTrax solution at a time when a growing number of companies are looking to update and optimize their solutions. We expect to generate revenues from this Program during fiscal 2018.

Our software technology provides validation and verification of fuel cost consumption reporting and fuel tax credits to logistics companies. The software also is designed to document the exact amount of reduction of harmful emissions that results from the alternative energy products. This data will enable users in certain countries to generate emissions credits that are tradable under the protocol of the Kyoto Treaty.

Through our existing relationships in the country of Suriname, NuState is evaluating several projects in the alternative renewable energy market in Suriname. NuState has been in discussions with AMPS, NV (“AMPS”), based in Paramaribo, Suriname, to enter into a license agreement in relation to the purchase of GPSTrax© for their multi-million-dollar alternative energy projects. AMPS focuses on providing engineering, procurement and construction management (EPC) services, Power Transmission & Distribution, Renewable and Conventional Energy as well as Power Management Systems to Suriname and its fellow Caribbean Community members.

We are unable to determine at this time whether we will be successful in capitalizing on the aforementioned opportunities in our business environment without proper funding.

15

NUSTATE ENERGY HOLDINGS, INC.

RESULTS OF OPERATIONS

Discussion of Results for Three Month Period Ended September 30, 2017 and 2016

							Increase/			Increase/
	Three-month period ended						(Decrease)			(Decrease)
	September 30,						in $ 2017			in % 2017
	2017			2016			vs 2016			vs 2016
Operating expenses:
Selling, general and administrative	$	119,987		$	853,311		$	(733,324	)		85.9	%
Total operating expenses		119,987			853,311			(733,324	)		85.9	%
Operating loss		(119,987	)		(853,311	)		(733,324	)		85.9	%
Other expense:
Gain on change in fair value of derivative liabilities		-			250,548						N/A
Interest expense		(100,413	)		(84,200	)		(16,213	)		(19.3	)%
		(100,413	)		166,348			(266,761	)		(160.4	)%
Net (loss) income	$	(220,400	)		(686,964	)	$	466,564			(67.9	)%

Selling, General, and Administrative Expenses

For the three months ended September 30, 2017, selling, general and administrative expenses were $119,987 as compared to $853,311 for the three months ended September 30, 2016, a decrease of $733,324 or approximately 86%. For the three months ended September 30, 2017 and 2016 selling, general and administrative expenses consisted of the following:

	Three months ended
	September 30,				Increase/			%
	2017		2016		(Decrease)			Change
Accounting expense	$	12,500	$	24,900	$	(12,400	)		(50	)%
Consulting fees		43,500		17,500		26,000			149	%
Salaries		60,000		60,000		-			-
Stock based compensation		-		750,000		(750,000	)		(100	)%
Other		3,987		911		3,076			338	%
	$	119,987	$	853,311	$	(733,324	)		(86	)%

The decrease in selling, general and administrative expenses during fiscal Q1 of 2018, when compared with the prior year, is primarily due to a decrease in stock based compensation of $750,000 and accounting expense of $12,400, related to decreased activity, offset by an increase in consulting fees of $26,000 and other of $3,076.

We believe that our selling, general, and administrative expenses will continue at their current rate as we continue to focus our resources on the search for a business opportunity for the remainder of 2018.

Fair Value of Derivative Liabilities

	Three-Months Ended
	September 30,				%
	2017		2016		Change
Gain on change in fair value of derivative liabilities	$	-	$	250,548		(100	)%

The change in fair value of derivative liabilities results from the changes in the fair value of the derivative liability due to the application of ASC 815, resulting in either income or expense, depending on the difference in fair value of the derivative liabilities between their measurement dates driven by the change in the per share price of the Company’s common stock.

Interest Expense

	Three-Months Ended
	September 30,				%
	2017		2016		Change
Interest expense	$	100,413	$	84,200	$	19	%

Interest expense represents stated interest of notes and convertible notes payable, along with the amortization of debt discount. The increase in interest expense during the three-month period ended September 30, 2017 is primarily due to the increase in interest bearing promissory notes during the three-month period ending September 30, 2017 when compared to the prior year period.

16

Liquidity and Capital Resources

	Balance at
	September 30, 2017		June 30, 2017
Cash	$	325	$	2,313
Accounts payable and accrued expenses		587,968		565,468
Accrued compensation		338,125		280,125
Notes, convertible notes, and accrued interest payable		4,183,933		4,086,051

At September 30, 2017 and June 30, 2017, our total assets consisted of cash.

We do not have any material commitments for capital expenditures.

The objective of liquidity management is to ensure that we have ready access to sufficient funds to meet commitments and effectively implement our growth strategy. Our primary sources are financing activities such as the issuance of notes payable and convertible notes payable. In the past, we have mostly relied on debt and equity financing to provide for our operating needs.

We cannot ascertain that we have sufficient funds from operations to fund our ongoing operating requirements through June 30, 2018. We may need to raise funds to enhance our working capital and use them for strategic purposes. If such need arises, we intend to generate proceeds from either debt or equity financing.

We intend to finance our operations using a mix of equity and debt financing. We do not anticipate incurring capital expenditures for the foreseeable future. We anticipate that we will need to raise approximately $180,000 per year in the near term to finance the recurring costs of being a publicly-traded company. In the long-term, we anticipate we will need to raise a substantial amount of capital to complete an acquisition. We are unable to quantify the resources we will need to successfully complete an acquisition. If these funds cannot be obtained, we may not be able to consummate an acquisition or merger, and our business may fail as a result.

Going Concern

The accompanying financial statements have been prepared on a going concern basis. The Company has used net cash in its operating activities of approximately $39,487 and $42,313 during the thee-month periods ended September 30, 2017 and 2016, respectively, and has a working capital deficit of approximately $5.1 million and $4.9 million at September 30, 2017 and June 30, 2017, respectively. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future, once a merger with an operating company is consummated. Management plans may continue to provide for its capital requirements by issuing additional equity securities and debt and the Company will continue to find possible acquisition targets. The outcome of these matters cannot be predicted at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results.

	Three-Months Ended
	September 30,
	2017			2016
Cash flows from operating activities:
Net loss	$	(220,400	)	$	(686,964	)
Non-cash adjustments
Stock based compensation		-			750,000
Amortization of debt discount		26,541			24,167
Gain on change in fair value of derivative liability		-			(250,548	)
Changes in assets and liabilities
Accounts payable and accrued liabilities		22,500			16,705
Accrued interest		73,871			60,033
Accrued compensation		58,000			44,800
Net cash (used in) operations		(39,488	)		(42,313	)
Cash flows from investing activities
Proceeds from issuance of convertible notes payable		37,500			40,000
		37,500			40,000
Net change in cash	$	(1,988	)	$	(2,313	)

17

Three months ended September 30, 2017

Net cash used in operations during the three months ended September 30, 2017 decreased by $2,826 or 6.7% over the same period during fiscal year 2015. This cash was obtained through the sale of $37,500 of convertible promissory notes.

Cash generated from financing activities consists of proceeds of $37,500 from the issuance of convertible notes during the three-month period.

Three months ended September 30, 2016

Net cash used in operations during the three months ended September 30, 2016 totaled 41,806. This cash was obtained through the sale of $40,000 of convertible promissory notes.

Capital Raising Transactions

During the three months ended September 30, 2017 we issued convertible notes to three investors, totaling $37,500. The notes bear interest at 0% and have a term of two months.

Other outstanding obligations at September 30, 2017

Convertible Notes Payable

The Company had convertible promissory notes aggregating $2.2 million outstanding at September 30, 2017. The accrued interest amounted to approximately $1.34 million as of September 30, 2017. The Convertible Notes Payable bear interest at rates ranging between 0% and 18% per annum. Interest is generally payable monthly. The Convertible Notes Payable are generally convertible at rates ranging between $0.00005 and $0.30 per share, at the holders’ option. At September 30, 2017, all convertible promissory notes have matured.

Notes Payable

The Company had promissory notes aggregating $270,241 at September 30, 2017. The related accrued interest amounted to approximately $228,000 at September 30, 2017. The Notes Payable bear interest at rates ranging between 8% and 16% per annum. Interest is generally payable monthly. All promissory notes have matured as of September 30, 2017.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer, who is also our principal executive and financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our Chief Executive Officer concluded that, as of September 30, 2017, our disclosure controls and procedures were not effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our Chief Executive Officer to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2017, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

18

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

At September 30, 2017 the Company is not the subject of, or party to, any pending or threatened, legal actions.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K filed on September 28, 2017, which could materially affect our business operations, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business operations and/or financial condition. There have been no material changes to our risk factors since the filing of our Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended September 30, 2017 the Company issued 611,300,335 shares of its common stock related to the conversion of $40,030 of principal of its convertible notes payable, at an average contract conversion price of $0.000065.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not applicable to our operations.

Item 5. Other Information.

None

Item 6. Exhibits

31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

* Filed herein

19

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NUSTATE ENERGY HOLDINGS, INC.
	By:	/S/ Kevin Yates
November 14, 2017		Kevin Yates
		CEO, principal executive officer and principal accounting officer

20