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



                                   FORM 10-QSB

[X]  Quarterly  Report under Section 13 or 15(d) of The Securities  Exchange Act
     of 1934
                For the Quarterly Period Ended December 31, 2005


                          Commission File Number 0-9355



                               CUBIC ENERGY, INC.
             (Exact name of registrant as specified in its charter)

                   Texas                                   87-0352095
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)

                                 9870 Plano Road
                                Dallas, TX 75238
                    (Address of principal executive offices)

                                 (972) 686-0369
                (Issuer's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange  Act during the  preceding 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.

                                 Yes [X] No [ ]



State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

        Common Stock                            Outstanding at December 31, 2005
        ------------                            --------------------------------
       $.05 par value                                      37,700,626



    Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]


<PAGE>

                               CUBIC ENERGY, INC.


                                TABLE OF CONTENTS


                         PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

        Independent Accountant's Report .....................................  1

        Condensed Balance Sheets
        As of December 31, 2005 (unaudited) and June 30, 2005................  2

        Condensed Statements of Operations, (unaudited)
        For the three months ended December 31, 2005 and 2004................  4

        Condensed Statement of Operations, (unaudited)
        For the six months ended December 31, 2005 and 2004..................  5

        Condensed Statements of Cash Flows, (unaudited)
        For the six months ended December 31, 2005 and 2004..................  6

        Notes to Condensed Financial Statements..............................  7

Item 2. Management's Discussion and Analysis................................. 12

Item 3. Control and Procedures............................................... 13


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.................................................... 13

Item 2. Unregistered Sales of Equity Securities And Use of Proceeds.......... 13

Item 4. Submission of Matters to a Vote of Security Holders.................. 13

Item 6. Exhibits and Reports on Form 8-K..................................... 14

Signatures................................................................... 16

Certifications............................................................... 18







<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                         INDEPENDENT ACCOUNTANT'S REPORT


The Stockholders and Board of Directors
Cubic Energy, Inc.


We have reviewed the  accompanying  condensed  balance sheets as of December 31,
2005, and the related condensed  statements of operations,  and of cash flows of
Cubic Energy,  Inc. for the three-month and six-month periods ended December 31,
2005  and  2004.  These  financial  statements  are  the  responsibility  of the
Company's management.

We conducted our reviews in accordance  with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  A review of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with the  standards  of the  Public  Company  Accounting  Oversight  Board,  the
objective  of which is the  expression  of an opinion  regarding  the  financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the  accompanying  financial  statements for them to be in conformity
with accounting principles generally accepted in the United States of America.

We have  previously  audited,  in  accordance  with the  standards of the Public
Company Accounting  Oversight Board (United States),  the balance sheet of Cubic
Energy,  Inc. as of June 30, 2005,  and the related  statements  of  operations,
stockholders'  equity and cash flows for the year then ended;  and in our report
dated  September  23,  2005,  we  expressed  an  unqualified  opinion  on  those
statements.




                                                    PHILIP VOGEL & CO., PC

                                                     /s/ Philip Vogel & Co., PC
                                                    ---------------------------


                                                    Certified Public Accountants


Dallas, Texas
February 13, 2006





                                      -1-
<PAGE>

                               CUBIC ENERGY, INC.
                            CONDENSED BALANCE SHEETS

                                     ASSETS

                                                    (Unaudited)
                                                   Dec. 31, 2005   June 30, 2005
                                                   -------------   -------------

Current assets:
  Cash and cash equivalents                        $   1,124,188   $     257,253
  Accounts receivable                                     65,607          34,354
    Prepaid drilling costs                               991,371         303,666
    Prepaid and other assets                              55,300               0
                                                   -------------   -------------
    Total current assets                           $   2,236,466   $     595,273

Property and equipment (at cost):
  Oil and gas properties, full cost method:
    Proved properties (including wells and
    related equipment and facilities)              $   4,121,027   $   4,098,571
    Unproven properties                                1,076,835       1,053,000
  Office and other equipment                               7,876           4,873
                                                   -------------   -------------
                                                   $   5,205,738   $   5,156,444
Less accumulated depreciation, depletion
  and amortization                                     1,610,185       1,469,345
                                                   -------------   -------------
                                                   $   3,595,553   $   3,687,099
                                                   -------------   -------------
Other Assets:
    Deferred loan costs - net                      $     117,035   $     132,639
                                                   -------------   -------------

TOTAL ASSETS                                       $   5,949,054   $   4,415,011
                                                   =============   =============



























            See accompanying notes to condensed financial statements.


                                      -2-
<PAGE>

                               CUBIC ENERGY, INC.
                            CONDENSED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                  (Unaudited)
                                                 Dec. 31, 2005    June 30, 2005
                                                 -------------    -------------

Current liabilities:
  Accounts payable and accrued expenses          $     112,126    $      11,261
  Due to affiliates                                     11,284            7,717
                                                 -------------    -------------
Total current liabilities                        $     123,410    $      18,978
                                                 -------------    -------------

Non-current liabilities:
  Deferred income taxes                          $           0    $           0
                                                 -------------    -------------

Long-Term Liabilities
  Debentures payable - net of discounts          $   1,649,311    $   1,611,886
                                                 -------------    -------------

Commitments and contingencies

Stockholders' equity:

  Preferred stock - $.01 par value,
    authorized 10,000,000 shares,
    issued: none                                 $           0    $           0
                                                 -------------    -------------

  Common stock - $.05 par value,
    Authorized 50,000,000 shares,
    issued 37,700,626 shares at
    December 31, 2005 and 35,161,963
    shares at June 30, 2005                      $   1,914,883    $   1,758,100

  Additional paid-in capital                        13,910,652       11,778,915

  Accumulated deficit                              (11,649,202)     (10,752,868)
                                                 -------------    -------------

Stockholders' equity                             $   4,176,333    $   2,784,147
                                                 -------------    -------------

                                                 $   5,949,054    $   4,415,011
                                                 =============    =============















            See accompanying notes to condensed financial statements.

                                      -3-
<PAGE>

                               CUBIC ENERGY, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                 For the Three    For the Three
                                                 Months Ended     Months Ended
                                                 Dec. 31, 2005    Dec. 31, 2004
                                                 -------------    -------------

Revenue:
  Oil and gas sales                              $     163,851    $     110,249
                                                 -------------    -------------

Total revenue                                    $     163,851    $     110,249
                                                 -------------    -------------

Costs and expenses:
  Oil and gas production, operating and
    development costs                            $      90,235    $      64,521
     General and administrative expenses               665,670           50,059
  Depreciation, depletion and amortization              70,110           22,468
                                                 -------------    -------------

Total costs and expenses                         $     826,015    $     137,048
                                                 -------------    -------------

Operating income (loss)                          $    (662,164)   $     (26,799)
                                                 -------------    -------------

Non-operating income (expense):
  Gain (loss) on sales of securities             $           0    $           0
  Other income                                               0                0
  Interest expense                                     (53,274)         (72,084)
  Amortization of loan costs                            (7,799)         (13,215)
                                                 -------------    -------------

Total non-operating income (expense)             $     (61,073)   $     (85,299)
                                                 -------------    -------------

Income (loss) before taxes:                      $    (723,237)   $    (112,098)
                                                 -------------    -------------

Provision for (benefit of) income taxes                      0                0
                                                 -------------    -------------

Net income (loss)                                $    (723,237)   $    (112,098)
                                                 =============    =============

Net gain (loss) per common share
  - basic and diluted                            $      (0.020)   $      (0.004)
                                                 =============    =============

Weighted average common shares outstanding
  - basic and diluted                               35,635,409       31,565,560
                                                 =============    =============








            See accompanying notes to condensed financial statements.

                                      -4-
<PAGE>

                               CUBIC ENERGY, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                  For the Six      For the Six
                                                 Months Ended     Months Ended
                                                 Dec. 31, 2005    Dec. 31, 2004
                                                 -------------    -------------

Revenue:
  Oil and gas sales                              $     310,033    $     215,512
                                                 -------------    -------------

Total revenue                                    $     310,033    $     215,512
                                                 -------------    -------------

Costs and expenses:
  Oil and gas production, operating and
    development costs                            $     168,728    $     106,502
    General and administrative expenses                774,567          120,641
  Depreciation, depletion and amortization             140,840           40,968
                                                 -------------    -------------

Total costs and expenses                         $   1,084,135    $     268,111
                                                 -------------    -------------

Operating income (loss)                          $    (774,102)   $     (52,599)
                                                 -------------    -------------

Non-operating income (expense):
  Gain (loss) on sales of securities             $           0    $           0
  Other income                                               0                0
  Interest expense                                    (106,627)         (72,084)
  Amortization of loan costs                           (15,604)         (13,215)
                                                 -------------    -------------

Total non-operating income (expense)             $    (122,231)   $     (85,299)
                                                 -------------    -------------

Income (loss) before taxes:                      $    (896,333)   $    (137,898)

Provision for (benefit of) income taxes                      0                0
                                                 -------------    -------------

Net income (loss)                                $    (896,333)   $    (137,898)
                                                 =============    =============

Net gain (loss) per common share
  - basic and diluted                            $      (0.025)   $      (0.004)
                                                 =============    =============

Weighted average common shares outstanding
  - basic and diluted                               35,398,896       31,508,695
                                                 =============    =============








            See accompanying notes to condensed financial statements.

                                      -5-
<PAGE>
<TABLE>
<CAPTION>

                               CUBIC ENERGY, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                      For the Six      For the Six
                                                     Months Ended     Months Ended
                                                     Dec. 31, 2005    Dec. 31, 2004
                                                     -------------    -------------
<S>                                                  <C>              <C>
Cash flows from operating activities:
Net income (loss)                                    $    (896,333)   $    (137,898)
Adjustments to reconcile net income (loss)
  to cash provided (used) by operating activities:
  Depreciation, depletion and amortization                 193,869           79,731
  Stock grant expense                                      483,570           39,524
  Stock issued for interest                                 34,525           46,536
Net change in assets and liabilities:
  (Increase) decrease in accounts receivable               (31,253)          25,561
  (Increase) decrease in prepaid and other                 (55,300)               0
  Increase (decrease) in loan from affiliate                 3,567            1,783
  Increase (decrease) in accounts payable and
    accrued liabilities                                    100,865            2,452
                                                     -------------    -------------
Net cash provided (used) by operating activities     $    (166,490)   $      57,689
                                                     -------------    -------------


Cash flows from investing activities:
  Acquisition of oil & gas properties                $     (46,291)   $  (1,418,994)
  Purchase of office equipment                              (3,003)               0
  Payments from advances on development costs             (687,705)        (361,497)
                                                     -------------    -------------
Net cash provided (used) by investing activities     $    (736,999)   $  (1,780,491)
                                                     -------------    -------------


Cash flows from financing activities:
  Issuance of common stock, net                      $   1,770,424                0
  Issuance of convertible debt and warrants                      0        2,635,000
  Loan costs incurred                                            0         (264,300)
                                                     -------------    -------------
                                                     $   1,770,424    $   2,370,700
                                                     -------------    -------------
Net increase (decrease) in cash and
  cash equivalents                                   $     866,935    $     647,898
                                                     -------------    -------------

Cash at beginning of period                                257,253          193,213
                                                     -------------    -------------
Cash at end of period                                $   1,124,188    $     841,111
                                                     =============    =============
</TABLE>








            See accompanying notes to condensed financial statements.

                                      -6-
<PAGE>

                               CUBIC ENERGY, INC.

                          NOTES TO FINANCIAL STATEMENTS
                             AS OF DECEMBER 31, 2005
                                   (Unaudited)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:

The accounting policies followed by Cubic Energy, Inc., a Texas corporation (the
"Company" or "Cubic"),  are set forth in the Company's financial statements that
are a part of its June 30, 2005,  Form 10-KSB and should be read in  conjunction
with the financial statements contained herein.

The financial  information  included herein as of December 31, 2005, and for the
three-month  and six- month periods ended December 31, 2005, and 2004, have been
presented  without an audit,  pursuant  to  accounting  principles  for  interim
financial  information  generally accepted in the United States of America,  and
the rules of the Securities and Exchange Commission.

The Company  believes that the  disclosures are adequate to make the information
presented not  misleading.  The information  presented  reflects all adjustments
(consisting solely of normal recurring  adjustments),  which are, in the opinion
of management, necessary for a fair statement of results for the periods.

Earnings per share:

The Company has adopted the  provisions  of Statement  of  Financial  Accounting
Standards  (SFAS)  No.  128,   Earnings  per  Share.   SFAS  No.  128  reporting
requirements  replace  primary and  fully-diluted  earnings per share (EPS) with
basic and diluted EPS. Basic EPS is calculated by dividing net income (available
to  common  stockholders)  by the  weighted  average  number  of  common  shares
outstanding  for the period.  Diluted EPS reflects the  potential  dilution that
could  occur  if  securities  or other  contracts  to issue  common  stock  were
exercised or converted into common stock.









                                      -7-
<PAGE>

Stock Grants:

On December 29, 2005, the  shareholders of the Company approved the Director and
Officer  Compensation  Plan (the  "Plan").  Accordingly,  previously  authorized
conditional stock grants aggregating 597,000  un-registered shares were approved
for issuance to the officers and directors of the Company.  As of such date, the
aggregate  market  value of the common stock  granted was $483,570  based on the
last sale price on the OTC Bulletin  Board of the Company's  common stock.  Such
amount has been recorded as compensation  expense and is included in general and
administrative expense for the quarter ended December 31, 2005.



Convertible debt and warrants

On October 6, 2004,  Cubic closed a  Securities  Purchase  Agreement  and issued
$2,635,000 in principal amount of 7% Senior Secured  Convertible  Debentures due
September 30, 2009 (the "Debentures"),  to a group of institutional and high net
worth  investors.  The Debentures are secured by the collateral set forth in the
Deed of Trust,  Security Agreement,  Assignment of Production and Fixture Filing
attached  to Form 8K filed  October,  12,  2004.  The  Debentures  pay an annual
interest rate of 7% on a quarterly basis and are convertible  into shares of the
Company's  common stock at a price of $.50 per share. The Company has the option
to pay the  interest on the  Debentures  in common  stock.  The  investors  also
received  warrants to purchase an  additional  2,635,000  shares of common stock
with an exercise price of $1.00 per share. As of December 31, 2005, an aggregate
of $705,000 of debt had been converted  into  1,410,000  shares of common stock.
None of the warrants have been exercised and all remain  outstanding at December
31, 2005.  During the three months ended  December 31, 2005,  none of Debentures
were converted to common stock. During the three months ended December 31, 2005,
the company paid interest of $ 34,526 on the Debentures.

The Company  allocated the proceeds  from the issuance of the  Debentures to the
warrants and the  Debentures  based on their  relative fair market values at the
date of issuance. The value assigned to the warrants of $510,961 was recorded as
an increase in  additional  paid in capital.  The  assignment  of a value to the
warrants  results in a loan  discount  being  recorded for the same amount.  The
discount is being  amortized  over the original five year term of the Debentures
as additional interest expense. Amortization for the three months ended December
31, 2005, was $ 18,713.

Cubic  incurred  loan costs of $264,300 on the  issuance of the  Debentures  and
Warrants.   The  amount  allocable  to  the  Debentures  of  $213,049  has  been
capitalized and is being amortized over the term of the Debentures. Amortization
of loan costs was $ 7,799 for the three months ended December 31, 2005.

On February 6, 2006, the remaining  Debentures were retired with proceeds from a
new debt issue. See Subsequent Event contained elsewhere herein.






                                      -8-
<PAGE>
<TABLE>
<CAPTION>

Issuance of Common Stock

On December 16, 2005, the Company entered into a Securities  Purchase  Agreement
and  issued  2,500,000  common  shares at a price of $ 0.80 per share and issued
warrants, with five year expiration,  for the purchase of up to 1,000,000 shares
of Company common stock at an exercise price of $1.00 per share.


Pro forma information related to stock options:

The Company accounts for its stock-based  employee  compensation plans under the
recognition  and  measurement  principles of APB Opinion No. 25,  Accounting for
Stock Issued to Employees, and related interpretations.  No stock-based employee
compensation cost is reflected in net income, as all options granted under those
plans had an  exercise  price at least  equal to the  market  of the  underlying
common  stock on the date of the grant.  The  following  table  illustrates  the
effect on net income and  earnings per share if the company had applied the fair
value  recognition   provisions  of  FASB  Statement  No.  123,  Accounting  for
Stock-Based Compensation, to stock-based employee compensation.


                                          3 Months Ended            6 Months Ended
                                            December 31,              December 31,
                                         2005         2004         2005         2004
                                      ---------    ---------    ---------    ---------
<S>                                   <C>          <C>          <C>          <C>

Net earnings (loss), as reported      $(723,237)   $(112,098)   $(896,333)   $(137,898)

Deduct: Total stock-based employee
  Compensation expense determined
  under fair value based method
  for all awards, net of tax effect   $       0    $  (4,375)   $       0    $  (8,750)
                                      ---------    ---------    ---------    ---------



Pro forma net income (loss)           $(723,237)   $(116,473)   $(896,333)   $(146,648)
                                      ---------    ---------    ---------    ---------

Earnings (loss) per common share:
   Basic - as reported                $  (0.020)   $  (0.004)   $  (0.025)   $  (0.004)
   Basic - pro forma                  $  (0.020)   $  (0.004)   $  (0.025)   $  (0.005)
   Diluted - as reported              $    n/a     $    n/a     $    n/a     $    n/a
   Diluted - pro forma                $    n/a     $    n/a     $    n/a     $    n/a
</TABLE>











                                      -9-
<PAGE>

SUBSEQUENT EVENT

On February 6, 2006, Cubic entered into a Credit Agreement with Petro Capital V,
L.P.  (the  "Lender")  pursuant  to which the  Lender  advanced  to the  Company
$5,500,000.  The  indebtedness  bears  interest  at a rate of 12.5%  per  annum,
matures on February 6, 2009 and is secured by substantially all of the assets of
the Company.  Approximately $1.8 million of the funded amount was used to retire
the Company's previously outstanding senior debt. In connection with the funding
under the Credit  Agreement,  the Company issued to the Lender and Petro Capital
Securities, LLC, warrants, with five-year expirations, for the purchase of up to
1,833,334  and  250,000  shares,  respectively,  of Company  common  stock at an
exercise price of $1.00 per share.

Also on February 6, 2006,  the Company  entered into a Purchase  Agreement  with
Tauren  Exploration,  Inc.,  an entity  wholly  owned by Calvin  Wallen III, the
Company's Chairman of the Board and Chief Executive Officer, with respect to the
purchase  by  the  Company  of  certain   Cotton  Valley   leasehold   interests
(approximately 11,000 gross acres; 5,000 net acres) held by Tauren.  Pursuant to
the Purchase Agreement,  the Company acquired from Tauren a 35% working interest
in approximately  2,400 acres and a 49% working interest in approximately  8,500
acres located in DeSoto and Caddo Parishes,  Louisiana, along with an associated
Area of Mutual  Interest  ("AMI") and the right to acquire at "cost" (as defined
in the  Purchase  Agreement) a seventy  percent  (70%)  working  interest in all
additional  mineral  leases  obtained by Tauren in the AMI, in exchange  for (a)
$3,500,000 in cash, (b) 2,500,000  unregistered  shares of Company common stock,
(c) a  short-term  promissory  note in the amount of  $1,300,000,  which note is
convertible into Company common stock at a conversion price of $0.80/share,  and
(d) a drilling  credit of  $2,100,000.  The Company  also  received an exclusive
60-day option to purchase a working interest in an additional 2,160 net acres in
the  aforementioned  leasehold for the  consideration  described in the Purchase
Agreement.  The cash  portion  of the  purchase  price was funded  with  amounts
advanced under the Credit Agreement.

The consideration described above was determined based upon negotiations between
Tauren and a Special Committee of the Company's directors, excluding Mr. Wallen.
The Special Committee obtained an opinion from its independent financial advisor
with  respect to the  fairness,  from a financial  point of view,  to the public
stockholders of the Company, of such transactions.

The shares and warrants were issued by the Company in reliance upon an exemption
from  registration  set  forth  in  Regulation  D  and/or  Section  4(2)  of the
Securities Act of 1933, as amended,  which exempts transactions by an issuer not
involving a public offering.












                                      -10-
<PAGE>

SAFE HARBOR  STATEMENTS UNDER THE PRIVATE  SECURITIES  LITIGATION  REFORM ACT OF
1995:

This report contains "forward-looking  statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.  Such forward-looking  statements are based on
current expectations that involve a number of risks and uncertainties that could
cause  actual  results to differ  materially  from the results  discussed in the
forward-looking statements. Generally,  forward-looking statements include words
or phrases  such as  "management  anticipates,"  "the  Company  believes,"  "the
Company   anticipates,"   and  words  and   phrases  of  similar   impact.   The
forward-looking  statements  are made pursuant to safe harbor  provisions of the
Private Securities Litigation's Reform Act of 1995.

The  factors  that could  cause  actual  results to differ  materially  from the
forward-looking  statements  include,  but  are not  limited  to:  (i)  industry
conditions  and  competition  (ii) the cyclical  nature of the  industry,  (iii)
domestic and  worldwide  supplies and demand for oil and gas,  (iv)  operational
risks and insurance, (v) environmental liabilities which may arise in the future
which are not covered by insurance or indemnity,  (vi) the impact of current and
future laws and government  regulations,  as well as repeal or  modification  of
same,  affecting  the oil and gas  industry  and  the  Company's  operations  in
particular,  (vii) production  levels and other activities of OPEC and other oil
and gas  producers,  and the impact that the above factors and other events have
on the current and  expected  future  pricing of oil and natural gas, and (viii)
the risks described from time to time in the Company's reports to the Securities
and Exchange  Commission,  including the Company's Annual Report Form 10-KSB for
the fiscal year ended June 30, 2005.


















                                      -11-
<PAGE>

Item 2. Management's Discussion and Analysis

Results of Operations:

Three Months Ended December 31, 2005 Compared To Three Months Ended December 31,
2004:

Gross  Revenues  for the three months ended  December  31, 2005  increased  from
$110,249 at December  31, 2004 to $163,851 at December 31, 2005 due to increased
gas production from the completion of additional wells.

Oil and Gas Production,  Operating and Development  Costs increased from $64,521
(58.52% of oil and gas sales) at December 31, 2004 to $90,235 (55.07% of oil and
gas sales) at December 31, 2005 due to more wells being brought online.

Operating  loss  increased from a loss of $26,799 at December 31, 2004 to a loss
of $662,164 at December 31, 2005 due to  increases  in general &  administrative
costs and depreciation,  depletion and amortization.  General and administrative
cost increased  primarily as a result of a $483,570 charge on December 29, 2005,
relating to stock grants to officers and directors.  (See stock grants contained
elsewhere herein.)

Six Months  Ended  December 31, 2005  Compared to Six Months Ended  December 31,
2004:

Gross  Revenues  for the six months  ended  December  31,  2005  increased  from
$215,512 at December  31, 2004 to $310,033 at December 31, 2005 due to increased
gas production from the completion of additional wells.

Oil and Gas Production,  Operating and Development Costs increased from $106,502
(49.42% of oil and gas sales) at December  31,  2004 to $168,728  (54.42% of oil
and gas sales) at December 31, 2005 due to more wells being brought online.

Operating  loss  increased from a loss of $52,599 at December 31, 2004 to a loss
of $774,102 at December 31, 2005 due to  increases  in general &  administrative
costs and depreciation,  depletion and amortization.  General and administrative
cost increased  primarily as a result of a $483,570 charge on December 29, 2005,
relating to stock grants to officers and directors.  (See stock grants contained
elsewhere herein.)

Liquidity and Capital Resources:

Long-term  debt of the company was  $1,930,000 on December 31, 2005;  and net of
discounts,  was  $1,649,311  on December 31, 2005,  under the  convertible  debt
financing obtained by the Company as mentioned in the preceding paragraphs.







                                      -12-
<PAGE>

Item 3. Controls and Procedures

Our principal  executive and financial  officers have concluded,  based on their
evaluation  as of a date within 90 days  before the filing of this Form  10-QSB,
that our disclosure  controls and procedures under Rule 13a-14 of the Securities
Exchange Act of 1934 are effective to ensure that information we are required to
disclose in the reports we file or submit  under the  Exchange  Act is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
SEC's rules and forms,  and include  controls and procedures  designed to ensure
that  information we are required to disclose in such reports is accumulated and
communicated  to  management,  including our  principle  executive and financial
officers,   as  appropriate  to  allow  timely  decisions   regarding   required
disclosure.  Subsequent to our evaluation,  there were no significant changes in
internal  controls  or other  factors  that  could  significantly  affect  these
internal controls.


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There are no legal  proceedings  to which the Company is a party or to which its
properties are subject which are in the opinion of management,  likely to have a
material  adverse  effect on the  Company's  results of  operations or financial
condition.

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

The  information  required is set forth in the Company's Form 8-K filed December
12, 2005.

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

On December 29, 2005, the Company held its Annual Shareholder  Meeting. The four
items of business  before the  Shareholders  at this Annual Meeting was: (i) the
election of Directors to serve for the following year, or until  successors were
duly  elected and sworn,  (ii) the  approval of  amendments  to the  Articles of
Incorporation to increase the authorized  shares of common stock from 50,000,000
to  100,000,000  shares,  (iii) the approval of the 2005 Stock Option Plan,  and
(iv) the ratification of the auditor for the Company.

A vote was then held on the election of each of Calvin  Wallen III, Gene Howard,
Bob Clements, Herb Bayer and Jon S. Ross to hold the position of Director of the
Corporation  until  successors  were duly elected and sworn.  Of the  24,111,856
votes, the vote of the Shareholders was as follows:

NAME                          VOTES FOR          VOTES AGAINST           ABSTAIN
----                          ----------          -------------          -------
Calvin Wallen III             24,032,286                 74,170            5,400
Gene Howard                   13,415,837             10,690,619            5,400
Bob Clements                  24,102,278                  4,178            5,400
Herb Bayer                    24,102,286                  4,170            5,400
Jon S. Ross                   14,304,845              9,801,611            5,400





                                      -13-
<PAGE>

A vote was taken on the approval of amendments to the Articles of  Incorporation
to increase the authorized shares of common stock from 50,000,000 to 100,000,000
shares. The vote was as follows:

                               VOTES FOR          VOTES AGAINST          ABSTAIN
                              ----------          -------------          -------
                              24,022,545                 87,710            1,601

A vote was taken on the approval of the 2005 Stock Option Plan.  The vote was as
follows:

                               VOTES FOR          VOTES AGAINST          ABSTAIN
                              ----------          -------------          -------
                              14,038,069             10,072,061            1,726

A vote  was  taken  on the  ratification  of  Philip  Vogel & Co.,  PC to be the
independent auditor for the upcoming year. The vote was as follows:

NAME                           VOTES FOR          VOTES AGAINST          ABSTAIN
----                          ----------          -------------          -------
Philip Vogel & Co., PC        24,091,411                 18,561            1,884


Item 6. Exhibits and Reports on Form 8-K

3.1      Articles of Amendment to the Articles of  Incorporation  of the Company
         dated December 30, 2005.

10.1     Securities  Purchase  Agreement,  dated as of December 12, 2005,  among
         Cubic Energy, Inc. and each purchaser identified on the signature pages
         thereto (filed as exhibit 10.1 to the Company's Form 8-K dated December
         12, 2005, and incorporated herein by reference).

10.2     Registration  Rights  Agreement,  dated as of December 12, 2005,  among
         Cubic Energy, Inc. and each purchaser identified on the signature pages
         thereto (filed as exhibit 10.2 to the Company's Form 8-K dated December
         12, 2005, and incorporated herein by reference).

10.3     Form of Common  Stock  Purchase  Warrant  (filed as exhibit 10.3 to the
         Company's Form 8-K dated December 12, 2005, and incorporated  herein by
         reference).

10.4     Credit  Agreement,  dated  February 6, 2006, by and among Cubic Energy,
         Inc. and Petro  Capital V, L.P (filed as exhibit 10.1 to the  Company's
         Form 8-K dated February 8, 2006, and incorporated herein by reference).

10.5     Promissory Note,  dated as of February 6, 2006, by Cubic Energy,  Inc.,
         payable to Petro  Capital V, L.P.  in the maximum  principal  amount of
         $7,000,000  (filed  as  exhibit  10.2 to the  Company's  Form 8-K dated
         February 8, 2006, and incorporated herein by reference).

10.6     Common Stock Purchase Warrant,  dated February 6, 2006, issued to Petro
         Capital  Securities,  LLC (filed as exhibit 10.3 to the Company's  Form
         8-K dated February 8, 2006, and incorporated herein by reference).


                                      -14-
<PAGE>

10.7     Common Stock Purchase Warrant,  dated February 6, 2006, issued to Petro
         Capital V, L.P.  (filed as exhibit 10.4 to the Company's Form 8-K dated
         February 8, 2006, and incorporated herein by reference).

10.8     Registration  Rights  Agreement,  dated as of February 6, 2006,  by and
         between  Cubic  Energy,  Inc.,  Petro Capital V, L.P. and Petro Capital
         Securities,  LLC (filed as exhibit 10.5 to the Company's Form 8-K dated
         February 8, 2006, and incorporated herein by reference).

10.9     Purchase  Agreement,  dated as of February 6, 2006,  by and among Cubic
         Energy, Inc., Calvin Wallen III, and Tauren Exploration, Inc. (filed as
         exhibit  10.6 to the  Company's  Form 8-K dated  February 8, 2006,  and
         incorporated herein by reference).

10.10    Promissory Note,  dated as of February 6, 2006, by Cubic Energy,  Inc.,
         payable  to  Tauren  Exploration,  Inc.  in  the  principal  amount  of
         $1,300,000  (filed  as  exhibit  10.7 to the  Company's  Form 8-K dated
         February 8, 2006, and incorporated herein by reference).

31.1     Rule 13a-14(a)/15d-14(a) Certification

31.2     Rule 13a-14(a)/15d-14(a) Certification

32.1     Section 1350 Certification

32.2     Section 1350 Certification





















                                      -15-
<PAGE>

                                   SIGNATURES

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


                                                      CUBIC ENERGY, INC.
                                                      (Registrant)


Date:  February 13, 2006                               /s/ Calvin A. Wallen, III
                                                      --------------------------
                                                      Calvin A. Wallen, III, CEO


Date:  February 13, 2006                               /s/ James L. Busby
                                                      --------------------------
                                                      James L. Busby, CFO

































                                      -16-