The authors conducted a qualitative interview-based study to reveal students' misconceptions about state in sequential circuits. This paper documents 16 misconceptions of state, how students' conceptions of state shift and change, and students' methodological weaknesses. These misconceptions can be used to inform and direct instruction. This study revealed a need for the development and adoption of standard terminology and a need to focus digital logic instruction upon a central concept of information encoding. In addition, these misconceptions will serve as the basis for the creation of standard assessments called concept inventories. A concept inventory will provide rigorous and quantitative metrics to assess the effectiveness of new teaching methods. (Contains 2 tables and 4 figures.)