Is it better to say that I am unemployed or employed?

I am heavily debating whether or not I should present myself as currently employed on job applications/in interviews. I quit my job in January and had a new one lined up. In the beginning of February, after I had signed the offer letter and completed all onboarding steps, I got word that the job was put on hold due to funding issues but that the process would resume. A couple days ago, I got an email that they never regained funding and that they had to eliminate the position entirely. Now I’m totally stumped. Do I say that I am still employed or be honest that I quit in January? If I am honest, how do I explain this whole situation without sounding like I am making things up?