UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

         FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2007

[ ] 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 0-25753

                        --------------------------------

                          NUSTATE ENERGY HOLDINGS, INC.
                          -----------------------------
        (Exact name of small business issuer as specified in its charter)

              Nevada                                   87-04496677
              ------                                   -----------
 (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

         902 Clint Moore Road, Suite 204, Boca Raton, Florida 33487-2802
         ---------------------------------------------------------------
                    (Address of principal executive offices)

                                 (561) 998-7557
                                 --------------
                           (Issuer's telephone number)

                                 not applicable
                                 --------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

                        --------------------------------

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X] No [ ]

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of February 19, 2008, the number
of outstanding shares of the issuer's common stock was 232,218,155.

     Transitional Small Business Disclosure Format (check one): Yes [  ] No [X]
 ------------------------------------------------------------------------------
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                                TABLE OF CONTENTS
                                -----------------
                                                                                                       Page
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<S>      <C>                                                                                           <C>
PART I.  FINANCIAL INFORMATION
-------  ---------------------

Item 1.  Financial Statements:

         Consolidated Balance Sheet, December 31, 2007 (Unaudited)                                       3

         Consolidated Statements of Operations, Three and Six Months Ended
            December 31, 2007 and 2006 (Unaudited)                                                       4

         Consolidated Statements of Cash Flows, Six Months Ended
            December 31, 2007 and 2006 (Unaudited)                                                       5

         Notes to Consolidated Financial Statements (Unaudited)                                          6

Item 2.  Management's Discussion and Analysis or Plan of Operation                                      22

Item 3.  Controls and Procedures                                                                        30

PART II. OTHER INFORMATION
-------- -----------------

Item 1.  Legal Proceedings                                                                              31

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                    31

Item 3.  Defaults Upon Senior Securities                                                                32

Item 4.  Submission of Matters to a Vote of Security Holders                                            32

Item 5.  Other Information                                                                              32

Item 6.  Exhibits                                                                                       32
</TABLE>
When used in this quarterly report, the terms the "Company," "NuState Energy
Holdings," "we," "our," and "us" refers to NuState Energy Holdings, Inc., a
Nevada corporation and our subsidiaries. The information which appears on our
web site at www.emmologic.com is not part of this annual report.

           Cautionary Statements Regarding Forward Looking Information

         Certain statements in this quarterly report contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to implement our business
model, raise sufficient capital to fund our operating losses and pay our ongoing
obligations, economic and market conditions and fluctuations, government and
industry regulation, 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. Readers are cautioned not to place undue
reliance on these forward-looking statements and readers should carefully review
this quarterly report in its entirety. Except for our ongoing obligations to
disclose material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this quarterly report,
and you should not rely on these statements without also considering the risks
and uncertainties associated with these statements and our business.
                                       -2-
<PAGE>
<TABLE>
<CAPTION>
                         PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                 NUSTATE ENERGY HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               December 31, 2007
                                   (Unaudited)
<S>                                                                     <C>
     ASSETS
     Current assets:
        Cash and cash equivalents                                       $     90,336
        Restricted cash                                                      144,861
        Accounts receivable, net of allowance of $199,095                  2,647,233
        Other receivables                                                      6,838
        Prepaid expenses                                                     296,602
                                                                        ------------
             Total current assets                                          3,185,870

     Property and equipment                                                1,198,772
          Less: accumulated depreciation                                    (488,706)
                                                                        ------------
             Net property and equipment                                      710,066
     Software development costs, net of
          accumulated amortization of $234,478                             1,424,458
     Deferred financing costs                                                  6,944
     Intangible asset, net of accumulated amortization of $27,028             18,898
     Other assets                                                            209,160
                                                                        ------------
     Total assets                                                       $  5,555,396
                                                                        ============
     LIABILITIES AND STOCKHOLDERS' DEFICIT
     Current liabilities:
        Notes payable - short term                                      $  1,942,965
        Convertible notes payable less discount of $50,441                 1,810,407
        Lines of credit                                                    1,710,507
        Accounts payable                                                   1,812,891
        Accrued expenses                                                   1,053,035
        Accrued salaries                                                     327,919
                                                                        ------------
            Total current liabilities                                      8,657,724

     Long term debt:
        Long term notes payable                                              124,805
                                                                        ------------
            Total liabilities                                              8,782,529

     Stockholders' deficit :
     Preferred stock, $.01 par value, 1,000,000 shares authorized:
        Series B convertible preferred stock, $.01 par value, 200,000
           shares authorized; 149,600 shares issued and outstanding            1,496
        Series C convertible preferred stock, $.01 par value, 20,000
           shares authorized; 832 shares issued and outstanding                    8
        Series D convertible preferred stock, $.01 par value, 40
           shares authorized; 32 shares issued and outstanding                    --
        Series E convertible preferred stock, $.01 par value, 1,600
           shares authorized; 0 shares issued and outstanding                     --
        Series F convertible preferred stock, $.01 par value, 500,000
           shares authorized; 153 shares issued and outstanding                    2
        Series G convertible preferred stock, $.01 par value, 6
           shares authorized; 2 shares issued and outstanding                     --
        Series H convertible preferred stock, $.01 par value, 1,600
           shares authorized; 70 shares issued and outstanding                     1
        Series I convertible preferred stock, $.01 par value, 100,000
           shares authorized; 100,000 shares issued and outstanding            1,000
        Series Y convertible preferred stock, $.01 par value, 87,000
           shares authorized; 87,000 shares issued and outstanding               870
        Common stock, $.001 par value, 750,000,000 shares
           authorized; 221,535,823 issued and outstanding                    221,535
        Additional paid-in capital                                        31,486,879
        Accumulated deficit                                              (34,938,924)
                                                                        ------------
            Total stockholders' deficit                                   (3,227,133)
                                                                        ------------
     Total liabilities and stockholders' deficit                        $  5,555,396
                                                                        ============
</TABLE>
          See notes to unaudited consolidated financial statements
                                      -3-
<PAGE>
                 NUSTATE ENERGY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                      For the Three Months Ended        For the Six Months Ended
                                                              December 31,                     December 31,
                                                    -----------------------------     ------------------------------
                                                          2007            2006              2007            2006
                                                    -------------   -------------     --------------  --------------
<S>                                                 <C>              <C>              <C>              <C>
Revenue:
Freight transportation                              $   6,446,998    $   4,772,053    $  12,550,221    $  11,159,749
Other revenues                                             18,728               --           48,197               --
                                                    -------------    -------------    -------------    -------------

       Total revenue                                    6,465,726        4,772,053       12,598,418       11,159,749

Operating expenses:
   Freight transportation                               5,886,010        4,529,845       11,444,987       10,292,369
   Selling, general and administrative:
        Salaries, benefits and consulting fees            780,103          950,819        1,444,301        1,695,788
        Other selling, general and administrative         495,911          544,263          960,407        1,068,036
                                                    -------------    -------------    -------------    -------------

       Total operating expenses                         7,162,024        6,024,927       13,849,695       13,056,193
                                                    -------------    -------------    -------------    -------------

       Loss from operations                              (696,298)      (1,252,874)      (1,251,277)      (1,896,444)
                                                    -------------    -------------    -------------    -------------

Other expense:
   Loss on asset disposal                                      --          (23,649)              --          (23,649)
   Forgiveness of debt                                         --               --               --          (94,864)
   Interest expense, net                                 (410,364)        (323,444)      (2,076,753)      (1,096,103)
   Other income (expense)                                 (55,773)          19,590          (55,773)          19,590
                                                    -------------    -------------    -------------    -------------

       Total other expense                               (466,137)        (327,503)      (2,132,526)      (1,195,026)
                                                    -------------    -------------    -------------    -------------

Net loss                                            $  (1,162,435)   $  (1,580,377)   $  (3,383,803)   $  (3,091,470)
                                                    =============    =============    =============    =============

Preferred stock dividend                                       --               --          (75,800)              --
                                                    -------------    -------------    -------------    -------------

Net loss available to common shareholders           $  (1,162,435)   $  (1,580,377)   $  (3,459,603)   $  (3,091,470)
                                                    =============    =============    =============    =============

Loss per share-basic and diluted                    $       (0.01)   $       (0.02)   $       (0.02)   $       (0.03)
                                                    =============    =============    =============    =============

Weighted average shares outstanding
      - basic and diluted                             210,329,274       99,152,180      198,345,943       95,864,208
                                                    =============    =============    =============    =============
</TABLE>












            See notes to unaudited consolidated financial statements
                                       -4-
<PAGE>
                 NUSTATE ENERGY HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                    For the Six Months Ended
                                                                            December 31,
                                                                       2007            2006
                                                                   -------------    -----------
<S>                                                                <C>              <C>
Cash flows from operating activities:
   Net loss                                                        $ (3,383,803)    $(3,091,470)
  Non- cash adjustments to reconcile net loss to
      net cash used in operating activities:
        Depreciation                                                    105,765         61,024
        Amortization of software development costs                       27,046         27,046
        Amortization of intangible asset                                  4,593         31,115
        Amortization of deferred compensation                            29,529        264,574
        Amortization of deferred financing costs                         20,834         69,475
        Amortization of discount on notes payable                       240,291        737,857
        Loss on asset disposal                                                -         23,649
        Loss on settlement of debt                                       45,773         94,864
        Fair value of stock options issued to employees                 557,025              -
        Issuance of stock warrants for services                         115,172        361,160
        Interest expense in connection with the conversion
           of notes payable into preferred stock                        140,361              -
        Interest expense in connection with the
           assignment of convertible notes                              703,397              -
        Interest expense in connection with the line of credit           55,578         51,180
        Issuance of common stock for services, interest and
           litigation settlements                                             -         11,699
        Issuance of common stock and warrants for interest and
           debt settlements                                             594,789              -
        Issuance of common stock for services                            61,400              -
        Changes in operating assets and liabilities:
            Decrease (increase) in restricted cash                       (4,400)             -
            Decrease (increase) in accounts receivable                 (615,841)     1,255,990
            Decrease in prepaid expenses                                (61,967)        49,941
            Decrease (increase) in other assets                         (17,605)       128,382
           (Decrease) increase in accounts payable
              and accrued expenses                                      493,022     (1,078,036)
                                                                   -------------    -----------
               Net cash used in operating activities                   (889,041)    (1,001,550)
                                                                   -------------    -----------
Cash flows from investing activities:
   Purchases of property and equipment                                 (140,684)       (15,399)
   Capitalized costs of software development                           (161,050)      (149,971)
                                                                   -------------    -----------
               Net cash used in investing activities                   (301,734)      (165,370)
                                                                   -------------    -----------
Cash flows from financing activities:
   Proceeds from convertible promissory notes                           550,000              -
   Repayments of convertible promissory notes                        (1,800,000)             -
   Proceeds from promissory notes                                             -        176,000
   Repayments of  loans payable                                         (56,925)             -
   Proceeds from notes payable                                        1,730,000              -
   Proceeds from exercise of stock options                                    -         12,500
   Proceeds from line of credit                                       5,940,403      3,888,809
   Repayments of notes payable                                          (79,213)             -
   Repayments of line of credit                                      (5,047,310)    (4,144,085)
   Proceeds from sale of preferred stock and
      warrants net of costs of $0 and $0, respectively                        -      1,333,500
                                                                   -------------    -----------
               Net cash provided by financing activities              1,236,955      1,266,724
                                                                   -------------    -----------

               Net increase in cash and cash equivalents                 46,180         99,804

Cash and cash equivalents, beginning of year                       $     44,156     $  223,525
                                                                   -------------    -----------
Cash and cash equivalents, end of period                           $     90,336     $  323,329
                                                                   =============    ===========
</TABLE>
            See notes to unaudited consolidated financial statements
                                       -5-
<PAGE>
                 NuSTATE ENERGY HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 1 - DESCRIPTION OF BUSINESS

Organization
------------
NuState Energy Holdings, Inc. (the "Company") is a Nevada corporation that was
incorporated on October 28, 1987 as Jaguar Investments, Inc. On March 11, 2003,
a wholly owned subsidiary of the Company merged with Freight Rate, Inc., a
development stage company in the logistics software business. On May 8, 2003,
the Company changed its name to Power2Ship, Inc. On October 11, 2006, the
Company merged with a newly formed, wholly-owned subsidiary, Fittipaldi
Logistics, Inc., a Nevada corporation, with the Company surviving but its name
being changed to Fittipaldi Logistics, Inc. effective November 9, 2006. On
December 10, 2007, the Company merged with a newly formed, wholly-owned
subsidiary, NuState Energy Holdings, Inc., a Nevada corporation, with the
Company surviving but renamed NuState Energy Holdings, Inc. effective December
20, 2007.

The Company is a third party logistics services provider and a developer of
web-based applications that provide pertinent, real-time information to the
worldwide transportation and security industries. These applications rely on
telematics to collect various pieces of vehicle and container-based data and
integrate it with information gathered from various disparate legacy systems
across the supply chain. The data is then synthesized and reformatted into
valuable, actionable information, and delivered to appropriate end-users across
the logistics value chain through secure web-based applications. Among the many
capabilities of these telematics solutions are on-demand live diagnostics,
two-way communication, temperature alerts, electronic fuel tax payment,
inventory/asset visibility, secure trucking and matching of available freight
with available trucks. In August 2007, the Company launched My Driver SeatTM,
its proprietary software application that provides critical information that may
be used to validate nearly any products designed to improve fuel efficiency or
reduce harmful gas emissions more accurately and quickly than any other method.
At the same time, My Driver SeatTM is a fuel management tool that provides
real-time information, such as vehicle speeds, idling times, out-of-route
notifications, and unauthorized use, which translates to significant fuel
savings.

On February 25, 2005, the Company formed a wholly owned subsidiary, Fittipaldi
Carriers, Inc., formerly P2S Holdings, Inc., a Florida corporation. Then, on
March 21, 2005, a wholly owned subsidiary of Fittipaldi Carriers, Inc.,
Commodity Express Transportation, Inc. ("CXT"), a Delaware corporation formed on
March 21, 2002, acquired certain assets and liabilities of Commodity Express
Transportation, Inc., a South Carolina corporation (see Note 4 "Intangible
Assets" for further details). CXT is licensed by the United States Department of
Transportation as a motor carrier and a broker, arranging for transportation of
freight (except household goods) by motor carriers. CXT is engaged in the
business of motor carriage specializing in full truckload transportation
services primarily using dry vans. CXT presently serves the southeastern United
States from its South Carolina base with a fleet, as of December 31, 2007, of
101 tractors comprised of 81 CXT-owned or leased units and 20 owner-operator
units with which it has independent contractor lease agreements and 494
trailers. In addition, CXT rents a 137,000 square foot warehouse facility in
South Carolina to service its largest customer and provides freight
transportation brokerage services through a wholly owned subsidiary of CXT,
Commodity Express Brokerage, Inc., a Florida corporation formed on March 3,
2005.
                                      -6-
<PAGE>
Also, on March 21, 2005, Power2Ship Intermodal, Inc. ("P2SI"), a wholly owned
subsidiary of CXT formed as a Delaware corporation on March 21, 2002, acquired
certain assets and liabilities representing the business of GFC, Inc. It was a
New Jersey based company in the business of motor carriage specializing in
intermodal drayage transportation services. The operations of P2SI ceased
effective June 30, 2006 (see Note 4 "Intangible Assets" for further details).

The accompanying unaudited financial statements for the period ended December
31, 2007 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles as would be included in
audited financial statements and should be read in conjunction with the audited
financial statements and notes contained in the Company's Annual Report on Form
10-KSB for the year ended June 30, 2007. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. The results of operations for the
six-month period ended December 31, 2007 is not necessarily indicative of the
results to be expected for the fiscal year ending on June 30, 2008.

The Company has experienced losses and negative cash flows from operations since
its inception. As of December 31, 2007, it had a working capital deficit of
$5,471,854, an accumulated deficit of $31,486,879, a stockholders' deficit of
$3,227,133, and its independent auditors' report on its financial statements for
fiscal year 2007 contained an explanatory paragraph regarding its ability to
continue as a going concern. Its ability to continue as a going concern is
dependent upon its ability to obtain the necessary financing to pay its past due
debt obligations, and accrued interest thereon, and repay its current debt and
other liabilities when they become due and to increase its revenue and generate
profitable operations in the future. The Company plans to continue to provide
for its capital requirements through the sale of equity or debt securities;
however, it has no firm commitments from any third parties to provide this
financing and no assurance can be provided that it will be successful in raising
working capital as needed. There are no assurances that it will have sufficient
funds to execute its business plan, pay its obligations as they become due or
generate positive operating results. If the Company is unable to raise
additional capital, it may be required to reduce or eliminate some or all of its
operations.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS

Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All material intercompany transactions have been
eliminated.

Reclassifications
-----------------
Certain prior period balances have been reclassified to conform to the current
year's presentation. These reclassifications had no impact on previously
reported results of operations or stockholders' deficit.

Cash and Cash Equivalents
-------------------------
The Company considers all unrestricted deposits and highly liquid investments,
                                      -7-

<PAGE>
readily convertible to known amounts, with an original maturity of three months
or less, to be cash equivalents.

Property and Equipment
----------------------
Property and equipment is stated at cost. Depreciation on property and equipment
is calculated using the straight-line method over the estimated useful lives of
the assets. Expenditures for major renewals and betterments that extend the
useful lives of the assets are capitalized. Expenditures for maintenance and
repairs of the assets are charged to expense as incurred.

Income Taxes
------------
Under the asset and liability method of FASB Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities, and their respective tax bases and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Deferred
tax assets are reduced by a valuation allowance, when in the Company's opinion
it is likely that some portion or the entire deferred tax asset will not be
realized.

Revenue Recognition
-------------------
The Company follows the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, the Company
records revenue when persuasive evidence of an arrangement exists, services have
been rendered or product delivery has occurred, the sales price to the customer
is fixed or determinable, and collectability is reasonably assured. The
following policies reflect specific criteria for the reported revenue streams of
the Company:

         Freight transportation revenue consists of the total dollar value of
         services purchased from us by our customers. The Company recognizes
         freight transportation revenue when shipments of goods reach their
         destinations and the receiver of the goods acknowledges their receipt
         by signing a bill of lading which, for the vast majority of the
         Company's shipments, occurs on the same day as the goods are picked up.
         At that time, our obligations to the customer are completed and
         collection of receivables is reasonably assured. Emerging Issues Task
         Force Issue No. 99-19, "Reporting Revenue Gross as a Principal versus
         Net as an Agent", establishes the criteria for recognizing revenues on
         a gross or net basis. When we provide these freight transportation
         services, we are the primary obligor, we are a principal to the
         transaction not an agent, we have the risk of loss for collection, we
         have discretion to select the supplier when we do not supply the
         services and we have latitude in pricing decisions.

Stock-Based Compensation
------------------------
Effective March 31, 2006, the Company adopted Statement of Financial Accounting
Standards No. 123 (revised 2004), Share Based Payment ("SFAS No. 123R"). SFAS
No. 123R establishes the financial accounting and reporting standards for
stock-based compensation plans. As required by SFAS No. 123R, the Company
                                      -8-
<PAGE>
recognized the cost resulting from all stock-based payment transactions
including shares issued under its stock option plans in the financial
statements.

Prior to March 31, 2006, the Company accounted for stock-based employee
compensation plans (including shares issued under its stock option plans) in
accordance with APB Opinion No. 25 and followed the pro forma net income, pro
forma income per share, and stock-based compensation plan disclosure
requirements set forth in the Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation ("SFAS No. 123"). For the six
months ended December 31, 2007, the Company granted stock options to purchase
5,000,000 shares of its common stock for $0.025 per share that expire on
November 5, 2012 (see Note 6).

Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles 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 reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Impairment of Long-Lived Assets
-------------------------------
The Company evaluates the recoverability and carrying value of its long-lived
assets at each balance sheet date, based on guidance issued in SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." Among other
factors considered in such evaluation is the historical and projected operating
performance of business operations, the operating environment and business
strategy, competitive information and market trends. At December 31, 2007, the
Company had no assets which were considered to be impaired.

Research and Development
------------------------
Research and development costs are expensed as incurred. No research and
development expenses were incurred for the six months ended December 31, 2007
and 2006.

Computer Software and Web Site Development Costs
------------------------------------------------
The Company has adopted the provisions of AICPA Statement of Position ("SOP")
98-1, Accounting for the Costs of Software Developed or Obtained for Internal
Use, and Emerging Issues Task Force ("EITF") Consensus #00-2, Accounting for Web
Site Development Costs. The type of costs incurred by the Company in developing
its internal use software and Web site include, but are not limited to, payroll
and payroll-related costs (e.g. fringe benefits) for employees who devote time
to the internal use computer software or Web site project, consulting fees, the
price of computer software purchased from third parties and travel expenses
incurred by employees or consultants in their duties directly associated with
developing the software. These costs are either expensed or capitalized
depending on the type of cost and the stage of development of the software and
Web site. SOP 98-1 and EITF #00-2 define three stages of development:

       - the preliminary or planning stage includes all activities related to
         conceptualizing, evaluating and selecting the alternatives for
                                      -9-
<PAGE>
         implementing the project including, but not limited to, developing a
         project plan, determining desired functionalities and content,
         identifying required hardware and software tools and selecting external
         vendors and consultants. All internal and external costs during the
         preliminary project stage are expensed as incurred.

       - the application and infrastructure development stage begins immediately
         upon conclusion of the preliminary or planning stage and includes, but
         is not limited to, all activities related to designing the software
         configuration and software interfaces, acquiring or customizing the
         software necessary to build the application, coding, hardware
         installation and testing, including parallel processing. Generally, any
         internal and external costs incurred during the application and
         infrastructure development stage are capitalized and amortized on a
         straight-line basis over the estimated economic life of the software of
         three to five years. General and administrative costs and overhead
         costs are not capitalized. Amortization for each module or component of
         software begins after all substantial testing is completed and it is
         deemed to be ready for its intended use. The only exception to
         beginning amortization at that time would be if the functionality of
         that module or component is entirely dependent on the completion of
         other modules or component in which case the amortization would begin
         when both the module and the other modules upon which it is
         functionally dependent are ready for their intended use.

       - the post-implementation/operation stage includes, but is not limited
         to, activities related to training, user administration, application
         maintenance, system backups, routine security reviews, the costs of
         which are expensed as incurred. Also, upgrades and enhancements that
         result in additional functionality may occur during this stage, the
         costs of which are amortized on a straight-line basis over the
         estimated economic life of the upgrade or enhancement of three to five
         years.

At December 31, 2007, the net book value of capitalized software was $1,424,458.
Amortization expense was $27,046 for the six months ended December 31, 2007 and
2006.

The Company makes ongoing evaluations of the recoverability of its capitalized
internal use software and Web site by comparing the amount capitalized for each
module or component of software to their estimated net realizable values. If
such evaluations indicate that the unamortized costs exceed the net realizable
values, the Company writes off the amount by which the unamortized costs exceed
the net realizable values.

Concentrations of Credit Risk and Accounts Receivable
-----------------------------------------------------
Financial assets that potentially subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents and
accounts receivable. The Company's investment policy is to invest in low risk,
highly liquid investments. The Company does not believe it is exposed to any
significant credit risk in its cash investments.

The Company maintains its cash balances at financial institutions that are
insured by the Federal Deposit Insurance Corporation or the Securities Investor
Protection Corporation up to $100,000 per institution. At December 31, 2007, the
                                      -10-
<PAGE>
Company's restricted cash balance in one account exceeded the insured limits by
approximately $45,000. The Company has not experienced any losses in such
accounts and believes it is not exposed to any significant credit risk on cash
on deposit.

The Company performs on-going credit evaluations of its customer base including
those that represent its accounts receivable at December 31, 2007. The Company
maintains reserves for potential credit losses and such losses historically have
been within management's expectations.

NOTE 3 - CONCENTRATIONS

During the six months ended December 31, 2007, two customers accounted for
$8,302,946 or approximately 65.9% of the Company's revenue and those same two
customers accounted for $1,390,111 or approximately 52.5% of accounts
receivable, net of allowance for doubtful accounts, as of December 31, 2007.
During this period, no other customer accounted for more than 10% of revenue or
accounts receivable.

NOTE 4 - INTANGIBLE ASSETS

In October 2006, the Company entered into an Amendment to a License Agreement
dated March 1, 2005 with EF Marketing, LLC and Emerson Fittipaldi. The Amendment
included provisions providing the Company with the exclusive right to use the
property licensed from EF Marketing globally rather than solely in the United
States and its territories and the right to change its corporate name to include
the name Fittipaldi. Also, the term of the License Agreement was extended
indefinitely. In consideration for these and other amendments, the Company
agreed to provide EF Marketing with a percentage of the net operating cash (as
defined in the Amendment) generated by the Company's operations, a five-year
warrant to purchase 8,000,000 shares of its common stock at an exercise price of
$0.025 per share. The Company valued the warrant utilizing the Black-Scholes
options pricing model at approximately $0.049 per share or $393,097 and,
accordingly, recorded an intangible asset of $393,097 that was being amortized
over its useful life assumed to be 5 years. At June 30, 2007, the Company
recorded an impairment expense of $337,408 to recognize management's assessment
that there was no continuing value associated with the License Agreement.

In March 2005, the Company allocated $89,874 of the purchase price for certain
assets of Commodity Express Transportation, Inc. These intangible assets are
being amortized over their estimated useful lives of 5 years. In March 2006, the
Company determined that the net realizable value of the intangible assets of
Commodity Express Transportation, Inc. should be reduced to $45,925 and recorded
$43,949 of impairments to intangible assets.

Also, in March 2005, the Company allocated $334,600 of the purchase price for
certain assets of GFC, Inc. to intangible assets attributable to the customer
lists of these businesses. These intangible assets were being amortized over
their estimated useful lives of 5 years. In March 2006, the Company entered into
a settlement agreement and mutual release with the parties that sold it the GFC
assets in which the Company agreed to issue the seller 300,000 shares of its
common stock valued at $38,700 and to pay the seller a total of $36,000 over two
years in full settlement of the $191,667 outstanding balance of the purchase
price. Based on this settlement, the Company determined that the net realizable
value of the intangible assets purchased from GFC should be reduced to $220,933
and recorded $113,667 of impairments to intangible assets. Power2Ship Intermodal
                                      -11-
<PAGE>
ceased operations effective June 30, 2006 and the Company recorded $185,578 of
impairment to reduce the intangible assets to $0.

In July and August, 2004, the Company entered into Intellectual Property
Assignment Agreements with three of its executives pursuant to which each of
them assigned to the Company all of their right, title and interest in and to
all the intellectual property which they had contributed to the Company in the
past in consideration for an aggregate of 600,000 shares of the Company's common
stock that was issued in January 2005. The Company believes that there are no
other parties with any claims to any right, title and interest in and to any of
the Company's intellectual property. The shares issued in this transaction were
valued at their fair market value of $226,000 and recorded as an intangible
asset which was amortized over its estimated useful life of 24 months from the
effective dates of the Intellectual Property Assignment Agreements which ended
in the quarter ended September 30, 2006.

The Company recorded amortization expense for all of its intangible assets for
the six months ended December 31, 2007 and 2006 of $4,593 and $31,115,
respectively. At December 31, 2007, future amortization expense for the
remaining intangible assets is as follows:

                                                2008            $  9,185
                                                2009               9,185
                                                2010                 528
                                                                --------
                                                                $ 18,898
                                                                ========

NOTE 5 - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

As of December 31, 2007, the balance on the Company's revolving line of credit
with Branch Banking and Trust Company was $1,710,507. This line of credit has a
borrowing limit of $3,000,000, has a floating rate of interest equal to the
prime rate plus one percent and a maturity date of April 5, 2008.

As of December 31, 2007, the Company had short term notes payable of $1,942,964
which consisted of:

     -   $1,250,000 of a 16% secured promissory note due February 8, 2008 issued
         to one investor. The investor also was assigned $400,000 principal
         amount of an amended version of 5% Series B secured convertible
         debentures, recorded as interest expense, which the investor
         immediately converted into 16,000,000 shares of common stock at $0.025
         per share. The note is secured by a primary or secondary lien in the
         Company's assets excluding those assets owned by its subsidiary
         Fittipaldi Carriers, Inc. and 100,000 shares of Series I preferred
         stock convertible into 50,000,000 shares of common stock of the Company
         that are being held in an escrow account. The financing agreement with
         the investor specifies that 50,000 shares of the Series I preferred
         stock are to be released to the Company from escrow upon issuance of
         the 16,000,000 shares underlying the Series B debentures although, as
         of the date of filing this Form 10-QSB, none of the Series I preferred
         shares have been released to the Company. The remaining 50,000 shares
         of Series I preferred stock are to be released to the Company upon full
         repayment of the note and interest within 15 days of its maturity date

                                      -12-
<PAGE>
         or, if not repaid by then, 5,000 shares are to be released to the
         investor commencing 15 days after the maturity date and on each of the
         next nine monthly anniversary dates thereafter as long as the note and
         accrued interest have not been repaid in full by such dates. Also, the
         interest rate of this note increases to 32% or the maximum rate
         permitted by applicable law commencing 15 days after the maturity date
         if the note and accrued interest have not been repaid in full by then.
         This note was not repaid by its maturity date or by the filing date of
         this quarterly report. Unless the Company receives a waiver from the
         note holder within the next few days, it will be in default under its
         agreement and obligations to the note holder. Such a default could
         accelerate the Company's other obligations owed to other parties. No
         assurance can be provided that the Company would be in a position to
         arrange alternative financing to satisfy these obligations in the event
         of a default.

     -   $400,000 of 16% secured promissory notes due January 15, 2008 issued to
         three investors. These investors also were assigned an aggregate of
         $160,000 principal amount of an amended version of 5% Series B secured
         convertible debentures which were recorded as interest expense. These
         investors immediately converted the debentures into 6,400,000 shares of
         common stock at $0.025 per share. These notes were not repaid by their
         maturity date or by the filing date of this quarterly report.

     -   $125,000 of 16% unsecured promissory notes due March 4, 2008 issued to
         one investor. The investor also received 5,000,000 shares of common
         stock valued at $140,000 that were recorded as interest expense.

     -   $42,500 of 8% unsecured short-term promissory notes to two investors;

     -   $31,500 owed to the seller of the business which became Power2Ship
         Intermodal, Inc. payable $1,500 per month for 24 months commencing in
         March 2006. No payments have been demanded by seller or made as the
         Company believes the seller induced the Company to purchase the
         business by providing materially misleading information; and

     -   $93,964 which was the short-term portion of three secured promissory
         notes issued by CXT in fiscal year 2007 related to the purchase of
         twelve used trucks. Two of these notes have interest rates of
         approximately 11%, are being repaid in 42 equal monthly payments
         totaling $6,880 including interest and have maturity dates in the first
         and second quarters of fiscal year 2011. The third note has a variable
         interest rate equal to the prime rate plus 1% and is being repaid in 17
         equal monthly payments of $2,787 with a final payment of all remaining
         principal and accrued interest due on December 5, 2008. As of December
         31, 2007, the outstanding balance of these notes was $218,770 of which
         $124,806 was recorded as long term notes payable.

As of December 31, 2007, the Company had convertible notes payable of
$1,810,406, net of discounts on notes payable of $50,442, which consisted of:

     -   $785,000 of 14.25% secured convertible debentures of which $680,000 was
         past due and the maturity date for the remaining $105,000 became due on
         December 31, 2007 which were not repaid by their maturity date nor by
         the filing date of this quarterly report. If the Company receives

                                      -13-
<PAGE>
         notice of noncompliance and potential default from any of its holders
         of past due debentures, the Company would have an obligation to rectify
         or otherwise receive a waiver from them. While the Company currently
         does not have any such notices, it is possible that notice could be
         provided at any time in the future, which would likely cause the
         Company to be in default under its agreement and obligations to the
         debenture holder. Any default could accelerate the Company's
         obligations to repay all debenture holders, including all accrued and
         unpaid interest thereon, and perhaps other obligations owed to other
         parties. We cannot assure you that we would be in a position to arrange
         alternative financing to satisfy these obligations in the event of a
         default.

     -   $296,498, net of the $6,899 remaining discount on notes payable
         recorded due to the beneficial conversion provision associated with the
         issuances of $303,397 of Series B secured convertible debentures to
         three investors. The debentures were amended upon their issuance to
         these investors to increase the interest rate to 16%, extend the
         maturity date to January 15, 2008, fix the conversion price at $0.025
         per share and provide the Company with a right of redemption at any
         time without penalty subject to the investors' conversion rights. These
         notes were not repaid by their maturity date or by the filing date of
         this quarterly report.

     -   $397,451 of 16% secured convertible promissory notes with a maturity
         date of January 15, 2008 to two investors for $300,000 and the exchange
         of $97,451 of unsecured promissory notes and accrued interest thereon.
         One note for $350,000 and accrued interest thereon is convertible into
         common stock at approximately $0.0307 per share and the other note for
         $47,451 and accrued interest thereon is convertible into common stock
         at $0.025 per share. The notes are secured by a lien on the Company's
         assets excluding the assets of Fittipaldi Carriers, Inc. The investor
         that holds the $350,000 note also was assigned $140,000 principal
         amount of an amended version of 5% Series B secured convertible
         debentures which was recorded as interest expense. The investor
         immediately converted the debenture into 5,600,000 shares of common
         stock at $0.025 per share. These notes were not repaid by their
         maturity date or by the filing date of this quarterly report.

     -   $85,082, net of the $14,918 remaining discount on notes payable
         recorded due to the beneficial conversion provision associated with the
         issuance of an 8% $100,000 unsecured convertible promissory note to an
         unaffiliated private company. The note has a maturity date of September
         27, 2008, provides the lender with the right to convert principal and
         accrued interest into shares of the Company's common stock at $0.025
         per share, provides the Company with a right of redemption to prepay
         the note and accrued interest at any time without penalty subject to
         lender's conversion right, provides the lender with a right of first
         refusal to purchase CXT on the same terms and conditions as may be
         offered by any other party. The conversion price resulted in a
         beneficial conversion provision due to the conversion being less than
         the market price of the common stock at the time of the issuance which
         was recorded as additional interest expense of $20,000 that is being
         amortized over the term of the note.

     -   $175,000 of 8% unsecured convertible promissory notes, and accrued

                                      -14-
<PAGE>
         interest thereon, due on June 30, 2006. The note holder has notified
         the Company that it is seeking to accelerate full repayment of the note
         and accrued interest and, if not repaid, may pursue all available
         remedies. This acceleration request and certain actions that may be
         taken by the note holder may result in acceleration of other Company
         obligations to other parties. We are seeking to negotiate a settlement
         with the note holder but cannot assure you that we will be able to do
         so and, may not be in a position to arrange alternative financing to
         satisfy this note and obligations to other parties that may become
         accelerated.

     -   $71,375, net of the $28,625 remaining discount on notes payable
         recorded due to the beneficial conversion provision associated with the
         issuance of $100,000 of our Series D 8% unsecured convertible
         debenture.

During the six months ended December 31, 2007, the Company recognized debt
discounts of $240,679 due to the beneficial conversion features in convertible
notes payable issued during the period and in Series B secured convertible
debentures assigned during the period. Amortization of debt discounts was
$218,862 during the six months ended December 31, 2007 and was included in
interest expense.

As of December 31, 2007, the Company had long term debt of $124,805 from two
secured promissory notes issued by CXT in January and March 2007 for $154,518
and $134,442, respectively, related to the purchase of seven used trucks. These
notes have interest rates of approximately 11% and are to be repaid in 42 equal
monthly payments of $6,880 plus interest. As of December 31, 2007, the
outstanding balance of these notes was $218,770 of which $93,965 was recorded as
short-term notes payable.

NOTE 6 - STOCKHOLDERS' DEFICIT

Preferred Stock
---------------
During the six months ended December 31, 2007, five investors converted
approximately 6 shares of Series D convertible preferred stock into 6,000,000
shares of common stock.

During the six months ended December 31, 2007, the Company issued six investors
approximately 27 shares of Series F convertible preferred stock upon conversions
of $112,000 of the Company's 14.25% convertible notes payable and $18,958 of
accrued interest thereon and a $2,500 short-term 12% promissory note. Also,
during this six-month period, nine investors converted approximately 42 shares
of Series F convertible preferred stock into 8,338,345 shares of common stock.
The Company recognized a beneficial conversion in connection with the conversion
of the 14.25% secured convertible debentures into shares of Series F preferred
stock of $140,359 that was recorded as interest expense.

Common Stock
------------
During the six months ended December 31, 2007, the Company issued an aggregate
of 71,678,430 shares of its common stock consisting of:

                                      -15-
<PAGE>
     -   32,151,399 shares issued to six investors upon their conversion of
         $800,000 of Series B secured convertible debentures, as amended, and
         $3,785 of accrued interest thereon;

     -   13,000,000 shares valued at $390,000, in addition to a payment of
         $1,800,000 and the issuance of a warrant to purchase 5,000,000 shares
         of common stock with an exercise price of $0.03 per share and an
         expiration date of July 31, 2011 valued at approximately $138,000 in
         full satisfaction of all obligations to the holder of $1,750,000 of
         Series B secured convertible debentures and $110,000 of 14.25% secured
         convertible debentures and accrued interest of $13,178. The Company
         recorded an additional interest expense of $454,789 in connection with
         this transaction;

     -   8,338,345 shares issued to nine investors upon their conversion of
         approximately 41.7 shares of Series F convertible preferred stock;

     -   6,000,000 shares issued to five investors upon their conversion of
         $150,000 of Series D secured convertible debentures, as amended;

     -   5,000,000 shares issued to one investor in conjunction with a $125,000
         loan from the investor that was recorded as $140,000 of interest
         expense;

     -   2,659,653 shares valued at $75,800 issued as a dividend to the holders
         of Series B convertible preferred stock;

     -   2,204,123 shares issued to one investor upon the conversion of $50,000
         of convertible debentures and $5,103 of accrued interest thereon;

     -   1,870,000 shares issued to eight consultants recorded as $56,400 of
         consulting expense;

     -   254,910 shares valued at $8,833 issued as an interest payment to one
         holder of $100,000 of 8% Series D convertible debentures; and

     -   200,000 shares issued for accounting services provided during the six
         months ended December 31, 2007 valued at the fair market value of the
         shares on the date issued of $0.025 per shares or $5,000.

Options and Warrants
--------------------
The Company's board of directors has the authority to determine when and to whom
it grants options and warrants to purchase shares of the Company's common stock.
In addition, the board determines the number of options and warrants to be
granted and all other terms and conditions related to these securities such as
the recipients' vesting schedules, expiration dates, exercise prices and
restrictions.

Stock Options
-------------
The Company adopted SFAS 123(R), "Accounting for Stock-Based Compensation",
effective March 31, 2006. Accordingly, the Company now measures the cost of
employee services received in exchange for stock options based on the grant-date
fair value of the options. This cost is recognized over the vesting period, if
any, specified in the stock option agreement. Prior to adopting SFAS 123(R), the
                                      -16-
<PAGE>
Company had chosen to account for stock-based compensation using the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25 in which
the cost of employee stock options was measured as the excess, if any, of the
estimated fair value of the Company's stock on the grant date over the exercise
price of the stock options.

During the six months ended December 31, 2007, the Company granted stock options
to purchase an aggregate of 5,000,000 shares of its common stock at an exercise
price of $.025 per share to the Company's Chief Executive Officer. The Company
accounts for stock options issued to employees in accordance with the provisions
of SFAS 123R and related interpretations. The fair value of this option grant
was estimated on the date of grant using the Black-Scholes option-pricing model
with the following weighted-average assumptions: dividend yield of 0%; expected
volatility of 102%; risk-free interest rate of 3.96% and an expected holding
period of five years. In connection with these options, the Company recorded
stock-based compensation expense of $132,315 for the six months ended December
31, 2007.

For the six months ended December 31, 2007, the Company recorded stock-based
compensation expense of $424,710 related to stock options granted in fiscal
2007, which is being amortized over the remaining service period.

A summary of the stock option activity is as follows:
<TABLE>
<CAPTION>
                                                                         Weighted
                                                                         Average
                                                                         Exercise      Number      Exercise Price
                                                                          Price      of Options       Per Option
                                                                          -----      ----------       ----------
<S>                                                                       <C>         <C>           <C>      <C>
       Outstanding options at June 30, 2007                               $0.03       44,749,076    $0.025 - $0.38
       Granted..............................................              $0.03        5,000,000    $0.025
       Expired..............................................              $0.03      (18,916,663)   $0.025 - $0.38
       Cancelled............................................                  -      (         -)          -
                                                                                     -----------
       Outstanding options at December 31, 2007                           $0.03       30,832,413    $0.025 - $0.38
                                                                                     ===========
       Exercisable options at December 31, 2007                           $0.03       27,311,584    $0.025 - $0.38
                                                                                     ===========
</TABLE>
















                                      -17-
<PAGE>
The following table summarizes information concerning stock options outstanding
and exercisable at December 31, 2007:
<TABLE>
<CAPTION>
                                 Options Outstanding                                   Options Exercisable
     ---------------------------------------------------------------------------------------------------------
                                                                      Weighted                       Weighted
           Range of                           Weighted Average        Average                         Average
           Exercise           Number             Remaining            Exercise         Number        Exercise
             Price          Outstanding       Contractual Life         Price       Exercisable         Price
          ------------     --------------    -------------------    ----------------------------    ----------
<S>       <C>                 <C>                <C>                <C>               <C>            <C>
          $     0.025         30,450,000         4.00 Years         $     0.025       26,929,167     $   0.025
          $0.25 -0.38            382,413         0.43 Years         $      0.33          382,417     $    0.33
                           -------------                            ----------------------------    ----------
                              30,832,413                            $      0.03       27,311,584     $    0.03
                           =============                            ============================    ==========
</TABLE>
Warrants
--------
In July 2007, the Company reduced the exercise price of warrants to purchase an
aggregate of 3,000,000 shares of common stock to $0.025 per share and changed
their expiration dates to April 10, 2010. The Company valued the re-priced
warrants utilizing the Black-Scholes option pricing model using the following
assumptions: estimated volatility of 170%, risk-free interest rate of 5%, no
dividend yield, and an expected life of 5 years, and recorded approximately
$14,000 as consulting fees during the six months ended December 31, 2007.

In July 2007, the Company granted a three-year warrant to purchase 500,000
shares of common stock to a consultant at an exercise price of $.05 per share
for services rendered. The Company valued these warrants utilizing the
Black-Scholes options pricing model at approximately $0.025 or $12,563 and
recorded a stock-based consulting expense of $12,563 for the six months ended
December 31, 2007.

In November 2007, the Company reduced the exercise price of warrants to purchase
an aggregate of 9,469,999 shares of common stock to $0.025 per share. The
Company valued the re-priced warrants utilizing the Black-Scholes option pricing
model using the following assumptions: estimated volatility of 102%, risk-free
interest rate of 3.71%, no dividend yield, and an expected life of 3 years, and
recorded approximately $69,000 as consulting fees during the six months ended
December 31, 2007.

In November 2007, the Company granted a three-year warrant to purchase 1,150,000
shares of common stock to a consultant at an exercise price of $.06 per share
for services rendered. The Company valued the warrant utilizing the
Black-Scholes options pricing model at approximately $20,000 that was recorded
as stock-based consulting expense.









                                      -18-
<PAGE>
Stock warrant activity for the period ended December 31, 2007 is summarized as
follows:
<TABLE>
<CAPTION>
   ----------------------------------------------------------------------------
                                                                    Weighted
                                                                     Average
                                               Number of            Exercise
                                               Warrants               Price
   ----------------------------------------------------------------------------
<S>                                             <C>             <C>
   Balance at beginning of year                 76,566,312      $         0.11
   ----------------------------------------------------------------------------
   Granted                                       9,150,000                0.03
   ----------------------------------------------------------------------------
   Exercised                                   (         -)                  -
   ----------------------------------------------------------------------------
   Cancelled                                   (   916,667)                .16
   ----------------------------------------------------------------------------
   Expired                                     (         -)                  -
   ----------------------------------------------------------------------------
   Balance at end of period                     84,799,645      $         0.07
   ----------------------------------------------------------------------------
   Warrants exercisable at end of period        84,088,534      $         0.07
   ----------------------------------------------------------------------------
   Weighted average fair value of
   warrants granted during the period                           $        0.025
   ----------------------------------------------------------------------------
</TABLE>
The following table summarizes information concerning warrants outstanding and
exercisable at December 31, 2007:
<TABLE>
<CAPTION>
     ---------------------------------------------------------------------       ------------------------------
                            Warrants Outstanding                                     Warrants Exercisable
     ---------------------------------------------------------------------       ------------------------------
                                             Weighted
                                             Average           Weighted                             Weighted
        Range of          Number of         Remaining          Average              Number           Average
     Exercise Price       Warrants        Life in Years     Exercise Price       Exercisable     Exercise Price
     --------------       --------        -------------     --------------       -----------     --------------
<S> <C>       <C>          <C>                 <C>              <C>                <C>             <C>
    $ 0.025 - $0.15        82,712,960          1.72             $ 0.06             82,601,849      $  0.06
     $ 0.20 - $0.50         1,786,685          1.28             $ 0.43              1,186,685      $  0.39
         $ 0.75               300,000          1.17             $ 0.75                300,000      $  0.75
                          -----------                                              ----------
                           84,799,645                                              84,088,534
                          ===========                                              ==========
</TABLE>
NOTE 7 - RELATED PARTY TRANSACTIONS

In November 2007, the Company granted common stock options to Frank P. Reilly
and Richard Hersh, its Chief Executive Officer and Chairman of the Board of
Directors, respectively, that provided each of them with the right to purchase
5% of the issued and outstanding shares of My Driver Seat, Inc., a wholly-owned
subsidiary of the Company, for $0.001 per share and to make such options fully






                                      -19-
<PAGE>
vested upon their issuance and expire on the five-year anniversary of their
issuance. No value was recorded for these options since no value could be
attributed to My Driver Seat, Inc. since it is not publicly traded and, as of
the date the option was granted, had no assets or liabilities.

In November 2007, the Company granted Frank P. Reilly, its Chief Executive
Officer, an option to purchase 5,000,000 shares of common stock for $0.025 per
share that expires five years from its grant date valued at $132,315 as an
incentive to Mr. Reilly for assuming the positions of Chief Executive Officer,
President, Treasurer and Secretary of the Company.

In September 2006, Richard Hersh resigned as Chief Executive Officer of the
Company and entered into a separation and severance agreement in which he agreed
to the cancellation of all his outstanding options, including options to
purchase an aggregate of 6,182,642 shares of the Company's common stock
exercisable at prices ranging from $0.25 to $0.38 per share and an option to
purchase 10% of the common stock of the Company's subsidiary Commodity Express
Transportation, Inc. for $60,000, to forgive a convertible promissory note with
a principal balance of $115,000 and accrued interest of $32,241, to forego
$313,201 in accrued compensation, and to settle any other claims with, or
obligations by, the Company, in consideration for $20,000 and a warrant to
purchase 11,000,000 shares of common stock for $0.025 per share that expires in
five years. In addition, Mr. Hersh entered into a consulting agreement with the
Company that has a term of five years and a monthly consulting fee of $10,000.
He will advise the Company's management and board of directors on various
business matters including identifying and introducing the Company to
prospective investors, lenders, strategic partners, acquisition and merger
candidates and joint venture partners.

In September 2006, the Company's Board of Directors elected David S. Brooks
Chief Executive Officer of the Company. Mr. Brooks entered into an employment
agreement with the Company having a term of two years with one-year renewals
thereafter unless terminated by either party prior thereto. Mr. Brooks' annual
base salary of $150,000 may be deferred until the Company has raised an
aggregate of $3,000,000 and he received an option to purchase 9,000,000 shares
of common stock for $0.025 per share that expires in five years. In August 2006,
Mr. Brooks purchased one share of the Company's Series D convertible preferred
stock for $25,000 in a private transaction and in October 2006 purchased five
shares of the Company's Series F convertible preferred stock for $25,000 in a
private transaction. In June 2007, Mr. Brooks resigned as an officer and a
director of the Company and its subsidiaries and entered into a consulting
agreement with the Company pursuant to which the Company agreed to compensate
him an aggregate of $75,000 which only would be payable if certain funding was
obtained by the Company. As of December 31, 2007, accrued salary recorded for
Mr. Brooks was $73,750. The option granted to Mr. Brooks in August 2006 expired
unexercised in July 2007.

In September 2006, the Company's Board of Directors elected S. Kevin Yates Chief
Operating Officer of the Company. Mr. Yates entered into an employment agreement
with the Company having a term of two years with one-year renewals thereafter
unless terminated by either party prior thereto. Mr. Yates' annual base salary
of $150,000 may be deferred until the Company has raised an aggregate of
$3,000,000 and he received an option to purchase 9,000,000 shares of common
stock for $0.025 per share that expires in five years. In June 2007, Mr. Yates
resigned as an officer and a director of the Company and its subsidiaries and
entered into a consulting agreement with the Company pursuant to which the
Company agreed to compensate him an aggregate of $75,000 which only would be

                                      -20-
<PAGE>
payable if certain funding was obtained by the Company. As of December 31, 2007,
accrued salary recorded for Mr. Yates was $63,750. The option granted to Mr.
Yates in August 2006 expired unexercised in July 2007.

In September 2006, the Company terminated its employment agreement with Michael
Darden, its former President. Thereafter, Mr. Darden resigned as a Director of
the Company and its subsidiaries. In October 2006, Mr. Darden filed a lawsuit in
Broward County, Florida naming as defendant Freight Rate, Inc., d/b/a
Power2Ship, Inc. and alleging breach of his employment agreement. Pursuant to a
mediation held in May 2007, the litigation between former employee Darden and
the Company was amicably settled. The case has been dismissed and all
allegations of wrongdoing by Darden as set forth in the Company's previous
filings and counterclaim have been withdrawn. The parties provided each other
with mutual releases of all claims with the exception of the agreed upon
payments totaling $65,000 the Company agreed to pay Mr. Darden in three
installments within 90 days of the mediation agreement. In addition to the
aforementioned payments, the Company forgave $50,000 in accounts receivable from
Mr. Darden that was recorded as a reduction to other receivables and wrote off
$92,726 in accrued salary to Mr. Darden that was recorded as other income during
fiscal year 2007. As of December 31, 2007, the Company owed Mr. Darden $20,000.

In August 2006, prior to joining the Company as executive officers and
employees, David S. Brooks and Kevin Yates, the Company's former Chief Executive
Officer and Chief Operating Officer, respectively, entered into a consulting
agreement to provide the Company with business advisory services including
strategic evaluation, planning and advice, fund-raising support, sales and
marketing support, contract negotiation and business development. The term of
the agreement was 12 months with an optional six-month extension. Subject to the
successful completion of various financing activities the Company is pursuing,
the Company agreed to pay each of them a fee of $100,000.

NOTE 8 - SUBSEQUENT EVENTS

Since January 1, 2008, the Company:

     -   filed a certificate of amendment with the Nevada Secretary of State
         increasing its number of authorized shares of common stock from
         250,000,000 to 750,000,000;

     -   issued one investor 4,432,333 shares of common stock upon conversion of
         $102,000 of Series B secured convertible debentures and $8,808 of
         accrued interest thereon;

     -   issued one investor 50,000 shares of common stock upon conversion of
         500 shares of Series B convertible preferred stock;

     -   issued eight investors an aggregate of 4,200,000 shares of common stock
         upon conversion of 21 shares of Series F convertible preferred stock;
         and

     -   issued one investor a $200,000 14.25% unsecured convertible promissory
         note due on May 12, 2008 upon their investment of $200,000. The
         promissory note is convertible into shares of the Company's common
         stock at $0.02 per share, subject to a reduction to $0.01 per share
         under certain circumstances. In addition, upon the investment, the
         investor received 2,000,000 shares of the Company's common stock valued
         at $30,000 and a three-year warrant to purchase 2,000,000 shares for
         $0.02 per share valued utilizing the Black-Scholes options pricing
         model at approximately $15,000. The Company recognized a total debt
         discount of approximately $45,000 in connection with the issuance of
         the promissory note that will be amortized over its term.

                                      -21-
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis of financial condition and results of our
operations should be read in conjunction with the unaudited consolidated
financial statements and the notes to those statements included elsewhere in
this report.

Critical Accounting Policies

         Financial Reporting Release No. 60, which was released by the SEC,
requires all companies to include a discussion of critical accounting policies
or methods used in the preparation of financial statements. Note 1 to our
consolidated financial statements appearing elsewhere herein includes a summary
of the significant accounting policies and methods used in the preparation of
our consolidated financial statements. The following is a brief discussion of
the more significant accounting policies and methods used by us:

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.

         We follow the guidance of the Securities and Exchange Commission's
Staff Accounting Bulletin 104 for revenue recognition. In general, we record
revenue when persuasive evidence of an arrangement exists, services have been
rendered or product delivery has occurred, the sales price to the customer is
fixed or determinable, and collectability is reasonably assured. The following
policies reflect specific criteria for the reported revenue streams of our
company:

         Freight transportation revenue consists of the total dollar value of
services purchased from us by our customers. We recognize freight transportation
revenue when shipments of goods reach their destinations and the receiver of the
goods acknowledges their receipt by signing a bill of lading which for the vast
majority of the Company's shipments occurs on the same day as the goods are
picked up. At that time, our obligations to the customer are completed and
collection of receivables is reasonably assured. Emerging Issues Task Force
Issue No. 99-19, "Reporting Revenue Gross as a Principal Versus Net as an
Agent", establishes the criteria for recognizing revenues on a gross or net
basis. When we provide these freight transportation services, we are the primary
obligor, we are a principal to the transaction not an agent, we have the risk of
loss for collection, we have discretion to select the supplier when we do not
supply the services and we have latitude in pricing decisions.

         Other revenue, generated from providing various services including
software development, system integration, consulting, training, implementation
and access to our proprietary software applications, generally is recognized in
the month that such services are provided to customers. However, in those
instances when we provide equipment to customers, in conjunction with providing
any of the aforementioned services, on any basis in which ownership is retained

                                      -22-
<PAGE>
by our company, then we recognize the revenue generated from such equipment
ratably over the term of the agreement providing for the use of such equipment.
Also, in some cases, revenue generated pursuant to software development
contracts with customers may be recognized on the percentage of completion basis
for each deliverable in the contract. Other revenue is expected to remain less
than 10% of total revenue in the foreseeable future.

         Effective March 31, 2006, the Company adopted Statement of Financial
Accounting Standards No. 123 (revised 2004), Share Based Payment ("SFAS No.
123R"). SFAS No. 123R establishes the financial accounting and reporting
standards for stock-based compensation plans. As required by SFAS No. 123R, the
Company recognizes the cost resulting from all stock-based payment transactions
including shares issued under its stock option plans in the financial
statements.

         Based on the guidance in SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets", we evaluate long-lived assets, such as property
and equipment and intangible assets subject to amortization for impairment at
each balance sheet date. Among the factors considered in such evaluations is the
occurrence of a significant event, a significant change in the environment in
which the business assets operate, or if the expected future undiscounted cash
flows are determined to be less than the carrying value of the assets. If
impairment is deemed to exist, an impairment charge would be recognized equal to
the amount by which the carrying amount of the asset exceeds the fair value of
the assets. Management also evaluates events and circumstances to determine
whether revised estimates of useful lives are warranted. Assets to be disposed
of would be separately presented in the consolidated balance sheet and reported
at the lower of the carrying amount or fair value less costs to sell, and would
no longer be depreciated. The assets and liabilities of a disposed group
classified as held for sale would be presented separately in the appropriate
asset and liability sections of the consolidated balance sheet. As of December
31, 2007, management expected its long-lived assets to be fully recoverable.

OVERVIEW

         In March 2005 we acquired certain assets and liabilities from Commodity
Express Transportation, Inc., a South Carolina company. Also in the same month,
Power2Ship Intermodal, a wholly owned subsidiary of CXT, acquired certain assets
and liabilities of GFC, Inc., a New Jersey- based company in the business of
motor carriage specializing in intermodal drayage transportation services.
Following these transactions, these two businesses substantially increased our
assets, liabilities, revenue and operating expenses. Our management, however,
determined to cease the operations of Power2Ship Intermodal in June 2006 as it
had been unprofitable since its acquisition.

         For the six months ended December 31, 2007 and 2006, virtually all of
our revenue was generated by providing freight transportation services. This
revenue includes the total dollar value of services purchased from us by our
customers. In some instances, our freight transportation services are provided
to our customers using our own transportation equipment, referred to as
asset-based services. In other instances, our freight transportation services
are provided to our customers using the transportation equipment of independent
truck owner-operators under contract with CXT as well as by numerous
unaffiliated trucking companies located throughout the United States arranged by
CXT's freight transportation brokerage, referred to as non-asset based services.

         We are a principal in the transaction to transport the freight. By
accepting our customer's order, we accept certain responsibilities for
transportation of the load from its origin to its destination. In instances when
we arrange for transportation of the load by an unaffiliated independent

                                      -23-
<PAGE>
carrier, the carrier's contract is with our company, not our shipper customer,
and we are responsible for prompt payment of carrier charges but are not
responsible to our shipper customer for any claims for damage to freight while
in transit. The price we charge for these freight transportation services
depends largely upon the prices charged by our competitors as well as upon
several factors, including the distance the freight is being transported, the
type of transportation equipment required to move the freight, the distance that
equipment is from the origin of the freight and whether or not that equipment is
available in our fleet, the value of the freight and the availability of loads
near the locations where the freight is to be delivered.

         To a far lesser extent, we have generated revenues from providing
various services including software development, system integration, consulting,
training, implementation and access to our proprietary software applications.
For the six months ended December 31, 2007 and 2006, less than 1% of our total
revenue was attributable to revenue from providing these other services. While
we market these services to our existing and potential customer base, we cannot
predict if we will report significant other revenue in any future periods.

         During the six months ended December 31, 2007, revenue generated from
two customers represented approximately 65.9% of our freight transportation
revenue. During the six months ended December 31, 2006, revenue generated from
one customer represented approximately 69% of our freight transportation
revenue. Because our agreement with these customers can be terminated upon a 30
days notice to us, our dependence on revenues from these customers puts us at
risk until such time, if ever, that we can diversify our revenue base. In order
to lessen the risks to us from this dependence on two customers, we are
marketing our services to the maximum extent permitted by our limited sales and
marketing budget.

         During the second half of fiscal year 2008, our greatest challenge is
expected to continue to be raising sufficient capital to fund our ongoing
operations, repay past due debts and repay other debts as they become due. In
addition, in the event that the transaction with State Petroleum Distributors
becomes effective, we would have to address challenges related to the
integration and operations of this business. As of February 19, 2008, $785,000
of our 14.25% secured convertible debentures, $2,047,451 of our 16% secured
promissory notes, $303,397 of our Series B secured convertible debentures, as
amended, and $175,000 principal amount of 8% unsecured convertible promissory
notes, and accrued interest on the aforementioned debentures and notes, were
past due. If we are unable to secure additional capital as needed, then we may
be unable to satisfy this secured and unsecured debt which could adversely
affect our ability to continue our operations as presently conducted. In the
event we were unable to satisfy these obligations, then the holders could seek
to foreclose on our primary assets. If the holders were successful, we would be
unable to conduct our business as it is presently conducted and our ability to
generate revenue and fund our ongoing operations would be materially adversely
affected.

RESULTS OF OPERATIONS

Six Months Ended December 31, 2007 compared to the Six Months Ended December 31,
2006

Revenue

         Total revenue generated during the six months ended December 31, 2007
increased by $1,390,472 or approximately 12.5% compared with total revenue
generated during the six months ended December 31, 2006. This increase was
attributed to an increase of $1,479,063 or approximately 13.4% in freight
transportation revenue, including third party logistics services, generated by
                                      -24-
<PAGE>
CXT. Most of the increase by CXT was due to becoming the dedicated
transportation provider for a major corrugated box manufacturing plant in South
Carolina commencing in October 2007. Also, the Company's technology operations
increased revenue by $48,197 from $0 during the comparable period in fiscal year
2007. These increases partially were offset by a decrease of $88,591 or 100% in
revenue from Power2Ship Intermodal, Inc. decreased as it ceased operations prior
to the current fiscal year.

         We anticipate that total revenue from our existing operations for the
second half of fiscal year 2008 will increase by approximately 20% to 25%
compared with the same period during fiscal year 2007. Most of this revenue
growth is expected to be attributed primarily to freight transportation revenue
from CXT's corrugated box manufacturing customer which is estimated to provide
approximately $3 million in revenue during the second half of fiscal year 2008.
In addition, excluding the potential revenue attributable to the pending merger
with State Petroleum Distributors, Inc., we expect to increase revenue in fiscal
year 2008 by providing logistics consulting and implementation services related
to our telematics solutions that provide critical, real-time information. For
example, we developed a web-based, central repository of transportation
information for Averitt Express providing each of Averitt's four operational
units with visibility into the future availability of the transportation assets
from all operational units in order to maximize asset utilization. Lastly, we
are pursuing opportunities to generate revenue in fiscal year 2008 by providing
some or all of the following services:

     -   using our telematics solutions such as My Driver Seat, launched in the
         first quarter of fiscal year 2008, to provide management with critical,
         real-time information, such as vehicle locations, speeds, idling times
         and out-of-route notifications, to validate the performance of products
         designed to improve fuel efficiency or reduce harmful gas emissions
         and/or to modify certain inefficient driving habits that waste fuel;
         and

     -   acquiring one or more logistics and transportation services companies,
         subject to the availability of sufficient financing.

Operating Expenses

         Total operating expenses incurred during the six months ended December
31, 2007 increased by $793,502 or approximately 6.1% compared with the six
months ended December 31, 2006. The higher operating expenses were due to an
increase of $1,152,618 or approximately 11.2% in freight transportation expenses
that partially was offset by a decrease of $359,116 or approximately 13% in
selling, general and administrative expenses.

         The $1,152,618 increase in freight transportation expenses, which are
the direct costs associated with transporting freight either with our own trucks
or through non-affiliated trucking companies hired to move loads for shipper
customers, consisted of:

     -   an increase of $1,227,788 or approximately 12% by CXT associated with
         its increase in revenue and

     -   a decrease of $75,170 by Power2Ship Intermodal, Inc. due to it having
         ceased operations in 2006.

         Management anticipates that freight transportation expenses during the
remainder of fiscal year 2008 to increase by approximately the same percentage
as the growth in revenue during this period as CXT expects to maintain its gross
margin.
                                      -25-
<PAGE>
         The $359,116 decline in selling, general and administrative expenses
resulted from declines of $251,487 or approximately 14.8% in salaries, benefits
and consulting fees and $107,629 or approximately 10.1% in other selling,
general and administrative expenses.

         The $251,487 decline in salaries, benefits and consulting fees
consisted primarily of decreases of $82,634 or 10.7% in salaries and benefits
and $141,353 or 31.3% in consulting expenses by the Company's Florida-based
corporate operations. This decline was attributed to the Company's continued
efforts to reduce overhead expenses in light of its limited capital resources.
Management expects salaries and consulting expenses for existing operations
during the remainder of fiscal year 2008 to be comparable to those incurred
during the six months ended December 31, 2007.

         The largest contributors to the $107,629 decline in other selling,
general and administrative expenses were:

     -   the Company's corporate operations which decreased expenses by $208,526
         or approximately 40.4% primarily due to decreases of:

         -     $71,535 or approximately 79.9% in legal fees primarily due to a
               decrease in the number and complexity of legal matters addressed
               during the period; and

         -     $54,740 or approximately 62.4% in rent as a result of moving to a
               much smaller facility in December 2007;

         -     $33,971 or approximately 63.3% in travel, meals and entertainment
               as the Company's continued efforts to reduce overhead expenses in
               light of its limited capital resources; and

         -     $25,788 or 100% in amortization of intellectual property and
               license rights as the amortization periods for these intangible
               assets expired prior to the current period.

         that partially were offset by:

     -   Commodity Express Transportation, Inc. which increased expenses by
         $109,825 or approximately 20.5%. The largest contributors to this
         increase were increases of:

         -     $49,581 in depreciation expense primarily due to the purchase of
               12 used tractors and 275 trailer tracking devices assets;

         -     $71,055 in expenses incurred by the Chattanooga, Tennessee
               facility due to increased business by customers served from this
               facility and

         -     $28,540 in security expense due to customers utilizing CXT's
               Chattanooga, Tennessee facility for short-term storage of their
               products that required additional security.

         Management expects other selling, general and administrative expenses
for existing operations during the remainder of fiscal year 2008 to be
comparable to the amount incurred during the first half of fiscal year 2008.

Other Income and Expenses

         Total other expenses increased by $937,500 or approximately 78.5%
during the six months ended December 31, 2007 as compared with the six months
ended December 31, 2006 primarily due to an increase in interest expense, net of

                                      -26-
<PAGE>
interest income, of $980,650 or approximately 89.5% during the six months ended
December 31, 2006. The increase in interest expense primarily consisted of
increases of:

     -   $703,397 from the assignment of Series B secured convertible debentures
         as additional consideration to five investors that invested an
         aggregate of $2,000,000 in the Company's 16% secured promissory notes;

     -   $454,789 from the payments that were made in full satisfaction of all
         obligations to the holder of $1,750,000 of its Series B 5% secured
         convertible debentures and $110,000 of its 14.25% secured convertible
         debentures;

     -   $140,000 from the issuance of 5,000,000 shares of common stock to one
         investor in conjunction with a $125,000 loan from the investor; and

     -   $140,361 due to the reduction in the conversion price upon the
         conversions of $112,000 of the Company's 14.25% convertible notes
         payable and $18,958 of accrued interest thereon by six investors into
         approximately 27 shares of Series F convertible preferred stock.

         These increases in interest expense partially were offset by decreases
of $546,207 in amortization of discounts on notes payable and deferred financing
costs, recorded as interest expense, primarily due to accelerating the
amortization of the discounts on notes payable upon the conversions of $575,000
of the Company's Series D 8% unsecured convertible debentures during the six
months ended December 31, 2006.

         Management expects other expenses during the remainder of fiscal year
2008 to be substantially lower than during the first half of fiscal 2008
primarily since the assignment of Series B secured convertible debentures ceased
in July 2007 upon the settlement with the original holder of these debentures.
Further, we currently are negotiating with the holders of $785,000 of our 14.25%
secured convertible debentures and the holder of $175,000 principal amount of
our 8% unsecured convertible promissory note, all of which is past due, to
exchange up to all of their debentures or notes for our equity securities.
However, we cannot provide any assurance that such negotiations will be
successful and, if not, if we can raise sufficient capital to satisfy the
obligations related to these debentures and promissory note. Further, if
outstanding debt is re-structured or replaced with other debt, then interest
expense could increase as a result of costs incurred in such lending
arrangements that may include higher interest rates, penalties and other
transaction fees.

LIQUIDITY AND CAPITAL RESOURCES

         We have experienced losses and negative cash flows from operations
since our inception, and our independent auditors' report on our financial
statements for fiscal 2007 contains an explanatory paragraph regarding our
ability to continue as a going concern. As of December 31, 2007, we had an
accumulated deficit of $34,938,924, a stockholders' deficit of $3,227,133, and
unrestricted cash and cash equivalents of $90,336.

         The Company's working capital deficit increased by $688,156 or
approximately 14.4% to $5,471,854 at December 31, 2007 as compared with
$4,783,698 at June 30, 2007. This higher deficit was attributed to current
assets decreasing by $371,612 or approximately 10.4%, while current liabilities
increased by $316,544 or approximately 3.8%.

                                      -27-
<PAGE>
         The largest contributors to the decrease in current assets were a
decrease of $1,095,600 in restricted cash due to $1,100,000 held in an escrow
account on June 30, 2007 being used as part of a settlement payment to one of
our debenture holders in July 2007 that partially was offset by an increase of
$615,841 in accounts receivables, net of allowance for doubtful accounts, due to
CXT financing accounts receivables from its largest customer with its revolving
line of credit rather than the relying on the higher cost prompt payment program
offered by this customer.

         The increase in current liabilities resulted from:

         -     Accounts payable and accrued expenses increasing by $354,357 or
               approximately 12.5%; and

         -     Revolving line of credit increasing by $948,671 or 124.5% due to
               CXT financing accounts receivables from its largest customer with
               its revolving line of credit rather than the relying on the
               higher cost prompt payment program offered by this customer;

         that partially were offset by a:

         -     Short term notes payable, convertible notes payable and loans
               payable decreasing by $986,484 or approximately 20.8%.

         The $46,180 increase in unrestricted cash and cash equivalents from
June 30, 2007 to December 31, 2007 resulted from:

     -   $1,236,955 provided by financing activities, a decrease of $29,769 or
         approximately 2.4% compared the six months ended December 31, 2006,
         that consisted of:

         -     $2,280,000 in proceeds from the sale of convertible promissory
               notes and notes payable; and

         -     $893,093 in net proceeds from the Company's revolving line of
               credit; less

         -     $1,936,138 in repayments of convertible promissory notes, loans
               payable and notes payable;

     -   $889,041 used in operating activities, a decrease of $112,509 or
         approximately 11.2% compared with the six months ended December 31,
         2006, that consisted of a:

         -     Net loss of $3,383,803, an increase of $292,333 or approximately
               9.5% compared with the six months ended December 31, 2006; and

         -     $206,791 used to account for changes in operating assets and
               liabilities, an increase of $563,068 or approximately 158%
               compared with the six months ended December 31, 2006;

         that partially were offset by:

     -   $2,701,553 in non-cash expenses that consisted of:

         -     Depreciation and amortization of $428,058;

         -     Issuances of our common stock and warrants as payment for
               services, interest and debt settlement of $771,361;

                                      -28-
<PAGE>
         -     Interest expense in connection with the conversion of notes
               payable and assignment of convertible debentures of $899,336;

         -     Fair value of stock options issued to employees of $557,025 and

         -     Loss on settlement of debt of $45,773.

     -   $301,734 used in investing activities, an increase of $136,364 or
         approximately 82.5% compared the six months ended December 31, 2006
         that consisted of:

         -     $140,684 in purchases of property and equipment, an increase of
               $125,285 or 813.6% versus the six months ended December 31, 2006,
               primarily due to the purchase of 275 trailer tracking devices for
               CXT; and

         -     $161,050 in capitalized costs of software development, an
               increase of $11,079 or approximately 7.4% versus the six months
               ended December 31, 2006.

         We estimate that our cash on hand on February 19, 2008 will fund our
operating activities until approximately March 31, 2008. This estimate is based
on our cash and cash equivalents of $90,336 at December 31, 2007, plus $200,000
received from January 1, 2008 to February 14, 2008. If we are unable to obtain
additional working capital before then, we will request that certain management
personnel defer some or all of their compensation and attempt to further reduce
our personnel and administrative costs so that we may continue to meet operating
obligations until such time as we can raise additional working capital. If we
are unable to raise additional working capital as needed, we may be required to
curtail or discontinue some or all of our business and operations.

         The future capital requirements for our existing operations depend
primarily on the rate at which we can increase our cash flow from operations
which will be affected by numerous known and unknown risks and uncertainties
including, but not limited to, our ability to successfully market our products
and services, the degree to which competitive products and services are
introduced to the market, and our ability to attract key personnel as we grow.
As long as our cash flow from operations remains insufficient to completely fund
operations, we will continue depleting our financial resources and seeking
additional capital through equity and/or debt financing. If we raise additional
capital through the issuance of debt, this will result in increased interest
expense. If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of our company held by
existing stockholders will be reduced and those stockholders may experience
significant dilution. In addition, new securities may contain certain rights,
preferences or privileges that are senior to those of our common stock. There
can be no assurance that acceptable financing to fund our ongoing operations and
for future acquisitions or for the integration and expansion of existing
operations can be obtained on suitable terms, if at all. Our ability to continue
our existing operations and to continue to implement our growth and acquisition
strategy could suffer if we are unable to raise the additional funds on
acceptable terms which will have the effect of adversely affecting our ongoing
operations and limiting our ability to increase our revenues or possibly attain
profitable operations in the future. If we are unable to raise sufficient
working capital as needed, our ability to continue our business and operations
will be in jeopardy. As of February 19, 2008, all of our assets served as
collateral for $785,000 of our 14.25% secured convertible debentures, all of
which were past due, and certain of our assets, excluding those held by
Fittipaldi Carriers, Inc. and its subsidiaries, served as collateral for

                                      -29-
<PAGE>
$2,172,451 of our 16% secured promissory notes of which $2,047,451 is past due,
and $303,397 of our Series B secured convertible debentures, as amended, all of
which is past due. If we default on our obligations under any of these
securities, including, but not limited to, the payment of interest when due,
then the debenture holders could foreclose on our assets and we would be unable
to continue our business and operations.

         Management expects the Company's liquidity would be improved by virtue
of the pending merger with State Petroleum Distributors. State Petroleum is a
Pennsylvania-based company primarily delivering commercial unbranded bulk fuel,
including diesel fuel, gasoline and home heating oil, to dealers, independent
operators and trucking and distribution companies in Pennsylvania and
surrounding states on a regularly scheduled or as needed basis. Management
believes that the size, at approximately $200,000,000 in annual revenue,
potential synergies and growth opportunities of the consolidated Company, will
make it more attractive to investors. An example of a potential synergy is the
marketing the Company's proprietary software solutions to State Petroleum
Distributor's customer base. The closing of the transaction is subject to a
number of conditions, including the approval by State Petroleum's stockholders,
as well as other customary terms conditions found in similar transactions. The
closing of the transaction is expected to result in a change of control of our
Company.

ITEM 3. CONTROLS AND PROCEDURES

         As required by Rule 13a-15 under the Securities Exchange Act of 1934,
as of the end of the period covered by this report, being December 31, 2007, we
have carried out an evaluation of the effectiveness of the design and operation
of our company's disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of our company's
management, including our company's Chief Executive Officer. Disclosure controls
and procedures and other procedures that are designed to ensure that information
required to be disclosed in our reports filed or submitted under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported, within the
time period specified in the Securities and Exchange Commission's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in
our reports filed under the Securities Exchange Act of 1934 is accumulated and
communicated to management including our Chief Executive Officer as appropriate,
to allow timely decisions regarding required disclosure.

         Based upon that evaluation, our company's Chief Executive Officer, who
also serves as our principal financial and accounting officer, concluded that
our company's disclosure controls and procedures are effective for timely
gathering, analyzing and disclosing the information we are required to disclose
in our reports filed under the Securities Exchange Act of 1934, as amended.
There have been no changes in our internal controls over financial reporting
that occurred during the period covered by this quarterly report that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.











                                      -30-
<PAGE>
PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

         In November 2007, we issued 100,000 shares of our common stock to a
consultant as compensation for providing various financial advisory services
valued at $3,300. The investor was granted a three-year warrant to purchase
1,150,000 shares of common stock at an exercise price of $.06 per share valued
utilizing the Black-Scholes options pricing model at approximately $23,000. The
recipient was an accredited investor. The issuance was exempt from registration
under the Securities Act in reliance on Section 4(2) thereof. The recipient
represented that it was acquiring the shares for investment purposes only, and
not with a view towards distribution or resale except in compliance with
applicable securities laws. No general solicitation or advertising was used in
connection with this transaction, and the certificate evidencing the shares that
were issued contained a legend restricting their transferability absent
registration under the Securities Act or the availability of an applicable
exemption therefrom.

         In December 2007, we issued 200,000 shares of our common stock to the
owner of a company that had provided us with various accounting services valued
at $5,000. The recipient was an accredited investor. The issuance was exempt
from registration under the Securities Act in reliance on Section 4(2) thereof.
The recipient represented that it was acquiring the shares for investment
purposes only, and not with a view towards distribution or resale except in
compliance with applicable securities laws. No general solicitation or
advertising was used in connection with this transaction, and the certificate
evidencing the shares that were issued contained a legend restricting their
transferability absent registration under the Securities Act or the availability
of an applicable exemption therefrom.

         In December 2007, we issued a $125,000 principal amount of an 16%
unsecured promissory note with a maturity date of March 4, 2008 to one investor
in a private transaction exempt from registration under the Securities Act in
reliance on an exemption provided by Section 4(2) of that act. The investor
received 5,000,000 shares of common stock valued at $140,000. We paid no sales
commissions in this offering. No general solicitation or advertising was used in
connection with this offering. The purchaser had access to business and
financial information concerning our company. The purchaser represented that it
was acquiring the securities for investment purposes only, and not with a view
towards distribution or resale except in compliance with applicable securities
laws.

         In February 2008, we issued a $200,000 14.25% unsecured convertible
promissory note due on May 12, 2008 to one investor upon a $200,000 investment
in a private transaction exempt from registration under the Securities Act in
reliance on an exemption provided by Section 4(2) of that act. The promissory
note is convertible into shares of our common stock at $0.02 per share, subject
to a reduction to $0.01 per share under certain circumstances. The investor
received 2,000,000 shares of our common stock valued at $30,000 and a three-year
warrant to purchase 2,000,000 shares for $0.02 per share valued utilizing the
Black-Scholes options pricing model at approximately $15,000. We paid no sales
commissions in this offering. No general solicitation or advertising was used in
connection with this offering. The purchaser had access to business and
financial information concerning our company. The purchaser represented that it
was acquiring the securities for investment purposes only, and not with a view

                                      -31-
<PAGE>
towards distribution or resale except in compliance with applicable securities
laws.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS

         31.1     Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
                  Officer

         31.2     Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
                  and Accounting Officer

         31.2     Certification of Chief Executive Officer and Principal
                  Financial and Accounting Officer pursuant to 18 U.S.C.
                  Section 1350


































                                      -32-
<PAGE>
                                   SIGNATURES

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

                                NuSTATE ENERGY HOLDINGS, INC.

                                By: /s/ Frank P. Reilly
                                    --------------------
                                    Frank P. Reilly
                                    Chief Executive Officer, principal executive
                                    officer and principal financial and
                                    accounting officer


February 19, 2008











































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