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** **

 

**UNITED STATES**

# **SECURITIES ANDEXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

##### **FORM 10-Q**

##### ** **

| **x**                                                       | **QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**  |
|-------------------------------------------------------------|----------------------------------------------------------------------------------------------------|
|                                                        |                                                                                               |
| **for the quarterly period ended September 30,  2009** |
|                                                        |                                                                                               |
| **OR**                                                      |
|                                                        |                                                                                               |
| **o**                                                       | **TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934** |

 

**for the transition period from              to              **

 

**Commission File Number****0-9355**

 

**CUBICENERGY, INC.**

(Exact name of registrant as specified in its charter)

 

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

 

###### **9870 PlanoRoad**

**Dallas, TX 75238**

(Address of principal executive offices)

 

**(972) 686-0369**

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  Yes xNo o

 

Indicate by check mark whether the registrant has submittedelectronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (232.405 of this chapter) during the preceding 12 months (or forsuch shorter period that the registrant was required to submit and post suchfiles). Yes o  No o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinition of “large accelerated filer”, “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act.

 

| Large  accelerated filer o |   | Accelerated  filer o         |
|----------------------------|--------|------------------------------|
|                       |   |                         |
| Non-accelerated  filer o   |   | Smaller  reporting company x |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  Yes o  No x

 

As of October 30,2009, the registrant had 64,674,565 shares of common stock, $0.05 par value,outstanding.

 

 

 

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**Specialnote regarding forward-looking statements**

 

Thisquarterly report on Form 10-Q contains forward-looking statements, asdefined in Section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended. All statements, other thanstatements of historical facts, are forward-looking statements. Theseforward-looking statements relate to, among other things, the following: ourfuture financial and operating performance and results; our business strategy;market prices; and our plans and forecasts.

 

Forward-lookingstatements are identified by use of terms and phrases such as “may,” “expect,” “estimate,”“project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,”“potential,” “should,” “could” and similar words and phrases. Although webelieve that the expectations reflected in these forward-looking statements arereasonable, they do involve certain assumptions, risks and uncertainties. Ouractual results could differ materially from those anticipated in theseforward-looking statements. You should consider carefully the statements in the“Risk Factors” section of this report and our Annual Report on Form 10-Kfor the fiscal year ended June 30, 2009, as well as  other sections of this report, which describefactors that could cause our actual results to differ from those set forth inthe forward-looking statements, including, but not limited to, the followingfactors:

 
| · |   | our  ability to generate sufficient cash flow from operations, borrowings or other  sources to enable us to service our debt and fully develop our undeveloped  acreage positions;                                                                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | the  volatility in commodity prices for oil and natural gas;                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | the  possibility that the industry may be subject to future regulatory or  legislative actions (including any additional taxes);                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | the  presence or recoverability of estimated oil and natural gas reserves and the  actual future production rates and associated costs;                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | the  ability to replace oil and natural gas reserves;                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | lease  or title issues or defects to our oil and gas properties;                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | environmental  risks;                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | drilling  and operating risks;                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | exploration  and development risks;                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | competition,  including competition for acreage in natural gas producing areas;                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | management’s  ability to execute our plans to meet our goals;                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | our  ability to retain key members of senior management;                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | our  ability to obtain goods and services, such as drilling rigs and other  oilfield equipment, and access to adequate gathering systems and pipeline  take-away capacity, to execute our drilling program;                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | general  economic conditions, whether internationally, nationally or in the regional  and local market areas in which we do business, may be less favorable than  expected, including that the United States economic slow-down might continue  to negatively affect the demand for natural gas, oil and natural gas liquids; |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | continued  hostilities in the Middle East and other sustained military campaigns or acts  of terrorism or sabotage;                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | our  ability to market oil and natural gas due to pipeline capacity; and                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                          |
| · |   | other  economic, competitive, governmental, legislative, regulatory, geopolitical  and technological factors that may negatively impact our business, operations  or pricing.                                                                                                                                                 |

 

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Allforward-looking statements are expressly qualified in their entirety by thecautionary statements in this paragraph and elsewhere in this document. Otherthan as required under the securities laws, we do not assume a duty to updatethese forward-looking statements, whether as a result of new information,subsequent events or circumstances, changes in expectations or otherwise.

 

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**CUBIC ENERGY, INC.**

 

**TABLE OF CONTENTS**

 

| ** **                                                                                                   | ** ** | **Page**   |
|--------------------------------------------------------------------------------------------------------------|------------|------------|
| ** **                                                                                                   | ** ** | ** ** |
| **PART I — FINANCIAL INFORMATION**                                                                 |       |       |
|                                                                                                         |       |       |
| Item  1. Financial Statements                                                                                |       |       |
|                                                                                                         |       |       |
| Independent Accountant’s Report                                                                         |       | 1          |
|                                                                                                         |       |       |
| Condensed  Balance Sheets  As of September 30, 2009 (unaudited) and June 30, 2009                            |       | 2          |
|                                                                                                         |       |       |
| Condensed Statements of Operations, (unaudited)  For the three months ended September 30, 2009 and 2008 |       | 3          |
|                                                                                                         |       |       |
| Condensed Statements of Cash Flows, (unaudited)  For the three months ended September 30, 2009 and 2008 |       | 4          |
|                                                                                                         |       |       |
| Notes to Condensed Financial Statements                                                                      |       | 5          |
|                                                                                                         |       |       |
| Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations          |       | 10         |
|                                                                                                         |       |       |
| Item 3. Quantitative and Qualitative Disclosures About  Market Risk                                          |       | 15         |
|                                                                                                         |       |       |
| Item 4. Controls and Procedures                                                                              |       | 15         |
|                                                                                                         |       |       |
| **PART II  — OTHER INFORMATION**                                                                   |       |       |
|                                                                                                         |       |       |
| Item  1. Legal Proceedings                                                                                   |       | 16         |
|                                                                                                         |       |       |
| Item  1A. Risk Factors                                                                                       |       | 16         |
|                                                                                                         |       |       |
| Item 2. Unregistered  Sales of Equity Securities and Use of Proceeds                                         |       | 16         |
|                                                                                                         |       |       |
| Item 3. Defaults  Upon Senior Securities                                                                     |       | 16         |
|                                                                                                         |       |       |
| Item 4. Submission  of Matters to a Vote of Security Holders                                                 |       | 16         |
|                                                                                                         |       |       |
| Item  5. Other Information                                                                                   |       | 16         |
|                                                                                                         |       |       |
| Item 6. Exhibits                                                                                             |       | 16         |
|                                                                                                         |       |       |
| Signatures                                                                                                   |       | 17         |
|                                                                                                         |       |       |
| Certifications                                                                                               |       |       |

 

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# **Table of Contents**

 

# **PART I - FINANCIAL INFORMATION**

# ** **

**REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

TheStockholders and Board of Directors

CubicEnergy, Inc.

 

We have reviewed theaccompanying condensed balance sheet as of September 30, 2009, and therelated condensed statements of operations, and of cash flows of Cubic Energy, Inc.(Company) for the three-month month periods ended September 30, 2009 and2008.  These financial statements are the responsibility of the Company’smanagement.

 

We conducted our reviewsin accordance with the standards of the Public Company Accounting OversightBoard (United States).  A review of interim financial information consistsprincipally of applying analytical procedures to financial data and makinginquiries of persons responsible for financial and accounting matters.  Itis substantially less in scope than an audit conducted in accordance with thestandards of the Public Company Accounting Oversight Board, the objective ofwhich is the expression of an opinion regarding the financial statements takenas a whole.  Accordingly, we do not express such an opinion.

 

Based on our reviews, weare not aware of any material modifications that should be made to theaccompanying financial statements for them to be in conformity with accountingprinciples generally accepted in the United States of America.

 

The accompanying interimfinancial statements have been prepared assuming that the Company will continueas a going concern.  As discussed in Note F to the interim financialstatements, the Company has experienced recurring net losses from operations,has accumulated substantial deficits in working capital and stockholders’equity, and has uncertainty regarding its ability to meet its loanobligations.  These factors raise substantial doubt about its ability tocontinue as a going concern. The accompanying interim financial statements donot include any adjustments that might result from the outcome of thisuncertainty.

 

We have previouslyaudited, in accordance with the standards of the Public Company AccountingOversight Board (United States), the balance sheet of Cubic Energy, Inc.as of June 30, 2009, and the related statements of operations,stockholders’ equity and cash flows for the year then ended (not presentedherein); and in our report dated September 24, 2009, we expressed anunqualified opinion on those statements and included an explanatory paragraphregarding the Company’s ability to continue as a going concern.  In ouropinion, the information set forth in the accompanying condensed balance sheetas of June 30, 2009, is fairly stated, in all material respects, inrelation to the balance sheet from which it has been derived.

 
|                    |                                |
|-------------------------|-------------------------------------|
|                    | PHILIP  VOGEL & CO., PC    |
|                    |
|                    | /s/ Philip Vogel & Co., PC |
|                    |                                |
|                    |                                |
|                    | Certified Public Accountants        |
|                    |                                |
| Dallas,  Texas          |                                |
| November 16,  2009 |                                |

 

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**CUBIC ENERGY, INC.**

 

**CONDENSED BALANCE SHEETS**

** **

**Item 1. Financial Statements**

** **
| ** **                                                                                                                                                      | ** ** | **September 30,** | ** ** | ** **             | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                                                                                                                                      | ** ** | **2009 (unaudited)**   | ** ** | **June 30, 2009** | ** ** |
| **Assets**                                                                                                                                                      |       |                   |       |                   |       |
| Current  assets:                                                                                                                                                |       |                   |       |                   |       |
| Cash  and cash equivalents                                                                                                                                      |       | $                      | 377,412    |                   | $          | 71,050 |   |
| Accounts  receivable - trade                                                                                                                                    |       | 319,410                |       | 200,950                |       |
| Prepaid  drilling costs                                                                                                                                         |       | 978,890                |       | —                 |       |
| Current  loan costs, net                                                                                                                                        |       | 55,739                 |       |                   |       |
| Other  prepaid expenses                                                                                                                                         |       | 47,777                 |       | 55,063                 |       |
| Total  current assets                                                                                                                                           |       | 1,779,228              |       | 327,063                |       |
| Property  and equipment:                                                                                                                                        |       |                   |       |                   |       |
| Oil  and gas properties, full cost method:                                                                                                                      |       |                   |       |                   |       |
| Proved  properties (including wells and related equipment and facilities)                                                                                       |       | 15,766,188             |       | 15,725,709             |       |
| Unproven  properties                                                                                                                                            |       | 939,596                |       | 890,715                |       |
| Office  and other equipment                                                                                                                                     |       | 28,420                 |       | 28,420                 |       |
| Property  and equipment, at cost                                                                                                                                |       | 16,734,204             |       | 16,644,844             |       |
| Less  accumulated depreciation, depletion and amortization                                                                                                      |       | 5,167,569              |       | 4,934,973              |       |
| Property  and equipment, net                                                                                                                                    |       | 11,566,635             |       | 11,709,871             |       |
| Other  assets:                                                                                                                                                  |       |                   |       |                   |       |
| Deferred  loan costs, net                                                                                                                                       |       | —                 |       | 89,700                 |       |
| Total  other assets                                                                                                                                             |       | —                 |       | 89,700                 |       |
|                                                                                                                                                            |       | $                      | 13,345,863 |                   | $          | 12,126,634 |   |
| **Liabilities and stockholders’ equity**                                                                                                                   |       |                   |       |                   |       |
| Current  liabilities:                                                                                                                                           |       |                   |       |                   |       |
| Current  portion of long term debt                                                                                                                              |       | $                      | 26,787,102 |                   | $          | 26,657,390 |   |
| Accounts  payable and accrued expenses                                                                                                                          |       | 1,001,659              |       | 299,381                |       |
| Due  to affiliates                                                                                                                                              |       | 921,520                |       | 1,192,828              |       |
| Total  current liabilities                                                                                                                                      |       | 28,710,281             |       | 28,149,599             |       |
| Commitments  and contingencies                                                                                                                                  |       | —                 |       | —                 |       |
| Stockholders’  equity:                                                                                                                                     |       |                   |       |                   |       |
| Preferred  stock - $.01 par value, authorized 10,000,000 shares, issued none                                                                                    |       | —                 |       | —                 |       |
| Common  stock - $.05 par value, authorized 100,000,000 shares, issued 64,674,565  shares at September 30, 2009 and 62,570,564 shares at June 30, 2009 |       | 3,233,728              |       | 3,128,529              |       |
| Additional  paid-in capital                                                                                                                                     |       | 31,745,368             |       | 30,062,167             |       |
| Accumulated  deficit                                                                                                                                            |       | (50,343,514            | )          | (49,213,661            | )          |
| Stockholders’  equity                                                                                                                                      |       | (15,364,418            | )          | (16,022,965            | )          |
|                                                                                                                                                            |       | $                      | 13,345,863 |                   | $          | 12,126,634 |   |

 

*Theaccompanying notes are an integral part of these statements.*

 

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**CUBICENERGY, INC.**

 

**CONDENSED STATEMENTS OF OPERATIONS**

**(unaudited)**

** **
| ** **                                                 | ** ** | **Three months ended  September 30,** | ** ** |
|------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                 | ** ** | **2009**                                   | ** ** | **2008** | ** ** |
| Revenues:                                                  |       |                                       |       |   |   |
| Oil  and gas sales                                         |       | $                                          | 359,901    |   | $ | 674,971 |   |
| Total  revenues                                            |       | $                                          | 359,901    |   | $ | 674,971 |   |
| Costs  and expenses:                                       |       |                                       |       |   |   |
| Oil  and gas production, operating and development costs   |       | 291,337                                    |       | 364,356 |   |
| General  and administrative expenses                       |       | 444,923                                    |       | 451,299 |   |
| Depreciation,  depletion and non-loan-related amortization |       | 232,597                                    |       | 263,757 |   |
| Total  costs and expenses                                  |       | 968,857                                    |       | 1,079,412 |   |
| Operating  income (loss)                                   |       | (608,956                                   | )          | (404,441 | ) |
| Non-operating  income (expense):                           |       |                                       |       |   |   |
| Other  income                                              |       | 452                                        |       | 18,105 |   |
| Interest  expense, including amortization of loan discount |       | (487,389                                   | )          | (545,275 | ) |
| Amortization  of loan costs                                |       | (33,960                                    | )          | (33,961 | ) |
| Total  non-operating income (expense)                      |       | (520,897                                   | )          | (561,131 | ) |
| Loss  from operations before income taxes                  |       | (1,129,853                                 | )          | (965,572 | ) |
| Provision  for income taxes                                |       | —                                     |       | — |   |
| Net  loss                                                  |       | $                                          | (1,129,853 | ) | $ | (965,572 | ) |
| Net  loss per common share - basic and diluted             |       | $                                          | (0.02      | ) | $ | (0.02 | ) |
| Weighted  average common shares outstanding                |       | 63,551,697                                 |       | 60,286,271 |   |

 

*Theaccompanying notes are an integral part of these statements.*

 

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**CUBIC ENERGY, INC.**

 

**CONDENSEDSTATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
| ** **                                                                            | ** ** | **Three months ended  September 30,** | ** ** |
|---------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                            | ** ** | **2009**                                   | ** ** | **2008** | ** ** |
| **Cash flows from operating activities:**                                             |       |                                       |       |   |   |
| Net  (loss)                                                                           |       | $                                          | (1,129,853 | ) | $ | (965,572 | ) |
| Adjustments  to reconcile net (loss) to cash provided (used) by operating activities: |       |                                       |       |   |   |
| Depreciation,  depletion and amortization                                             |       | 396,270                                    |       | 427,431 |   |
| Stock  issued for compensation                                                        |       | —                                     |       | 3,308 |   |
| Change  in assets and liabilities:                                                    |       |                                       |       |   |   |
| (Increase)  decrease in accounts receivable - trade                                   |       | (118,460                                   | )          | (41,466 | ) |
| (Increase)  decrease in other prepaid expenses                                        |       | 7,286                                      |       | 19,419 |   |
| Increase  (decrease) in accounts payable and accrued liabilities                      |       | 702,278                                    |       | 86,233 |   |
| Increase  (decrease) in due to affiliates                                             |       | 121,649                                    |       | 45,990 |   |
| Net  cash provided (used) by operating activities                                     |       | (20,830                                    | )          | (424,657 | ) |
| **Cash flows from investing activities:**                                             |       |                                       |       |   |   |
| Acquisition  and development of oil and gas properties                                |       | (89,361                                    | )          | (2,960,079 | ) |
| Increase  (decrease) in capital portion of due to affiliates                          |       | (392,957                                   | )          | 1,937,533 |   |
| Purchase  of office equipment                                                         |       | —                                     |       | (13,748 | ) |
| (Increase)  decrease in advances on development costs                                 |       | (978,890                                   | )          | 33,399 |   |
| Net  cash provided (used) by investing activities                                     |       | (1,461,208                                 | )          | (1,002,895 | ) |
| **Cash flows from financing activities:**                                             |       |                                       |       |   |   |
| Proceeds  from credit facility                                                        |       | —                                     |       | 3,172,200 |   |
| Issuance  of common stock, net                                                        |       | 1,788,400                                  |       | 1,095,952 |   |
| Net  cash provided (used) by financing activities                                     |       | 1,788,400                                  |       | 4,268,152 |   |
| **Net increase (decrease) in cash and cash equivalents**                              |       | $                                          | 306,362    |   | $ | 2,840,600 |   |
| **Cash and cash equivalents:**                                                        |       |                                       |       |   |   |
| Beginning  of period                                                                  |       | 71,050                                     |       | 2,144,002 |   |
| End  of period                                                                        |       | $                                          | 377,412    |   | $ | 4,984,602 |   |
| Other  information:                                                                   |       |                                       |       |   |   |
| Cash  interest paid on debt                                                           |       | $                                          | 474,282    |   | $ | 445,333 |   |

 

*Theaccompanying notes are an integral part of these statements.*

 

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**CUBIC ENERGY, INC.**

 

**NOTESTO CONDENSED FINANCIAL STATEMENTS**

**AS OF SEPTEMBER 30, 2009**

**(Unaudited)**

 

**Note A — Summary of Significant Account 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’sfinancial statements that are a part of its Annual Report on Form 10-K forthe fiscal year ended June 30, 2009 and should be read in conjunction withthe financial statements contained herein.

 

The financial information included herein asof September 30, 2009, and for the three-month periods ended September 30,2009, and 2008, have been presented without an audit, pursuant to accountingprinciples for interim financial information generally accepted in the UnitedStates of America, and the rules of the Securities and ExchangeCommission.

 

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

 

**Earnings per share**

 

The Company has adopted the provisions ofFinancial Accounting Standards Board, Accounting Standards Codification (“FASBASC”) 260, “*Earnings per Share”*.FASB ASC 260 reporting requirements replace primary and fully-diluted earningsper share (“EPS”) with basic and diluted EPS. Basic EPS is calculated bydividing net income (available to common stockholders) by the weighted averagenumber of common shares outstanding for the period. Diluted EPS reflects thepotential dilution that could occur if securities or other contracts to issuecommon stock were exercised or converted into common stock.

 

Potential dilutive securities (e.g., stock warrants and convertibledebt) have not been considered because the Company reported net losses in thethree-month periods ended September 30, 2009, and 2008, and, accordingly,their effects would be anti-dilutive. The weighted average number of common andcommon equivalent shares outstanding was 63,551,697 and 60,286,271 for thequarters ended September 30, 2009 and 2008, respectively.

 

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**CUBIC ENERGY, INC.**

 

**NOTES TO CONDENSED FINANCIALSTATEMENTS**

**AS OF SEPTEMBER 30, 2009**

**(Unaudited)**

 

**NoteB — Stockholders’ Equity:**

** **

**Stock issuance**

 

In connection with the following common stockissuances, the Company entered into Subscription and Registration RightsAgreements (“Subscription Agreements”) with certain investors. Pursuant to theSubscription Agreements, the Company issued an aggregate of 2,104,001 shares ofcommon stock and warrants exercisable into 1,052,000 shares of common stock.

 

On August 18, 2009, four investors acquired804,000 shares of common stock and warrants exercisable into 402,000 shares ofcommon stock, through the payment of $683,400. The warrants are exercisablethrough July 31, 2014, at $0.85 per share.

 

On August 26, 2009, six investors acquired1,300,001 shares of common stock and warrants exercisable into 650,000 sharesof common stock, through the payment of $1,105,001. The warrants areexercisable through July 31, 2014, at $0.85 per share.

 

With respect to certain of such issuances, theCompany paid broker-dealer commissions in the aggregate amount of $59,500 toAvalon Group, Ltd.

 

Pursuant to the Subscription Agreements, theinvestors paid aggregate consideration of approximately $1,788,400, all ofwhich has been or will be used for working capital purposes.  The aforementioned issuances were made inreliance upon an exemption from registration set forth in Section 4(2) ofthe Securities Act of 1993, as amended, which exempts transactions by an issuernot involving a public offering.

 

**Stock grants**

 

On August 20, 2007, the Company issued90,000 unregistered shares to Scott D. Guffey, a former Chief Financial Officerof the Company, pursuant to Company’s 2005 Stock Option Plan (“the Plan”), withsuch grant subject to vesting in quarterly installments over the following fourquarters. On August 20, 2008, the remaining 33,750 shares of Mr. Guffey’sAugust 20, 2007 restricted stock grant vested. As of the date of thegrant, the aggregate market value of the common stock granted was $103,500based on the then market price on the OTCBB of the Company’s common stock. Suchamount was amortized to compensation expense on a quarterly basis during fiscalyears 2008 and 2009. Accordingly, $12,937, $25,875, $25,875, $25,875 and$12,938 was recorded as compensation expense and included in general andadministrative expenses for the quarters ended September 30, 2007, December 31,2007, March 31, 2008, June 30, 2008 and September 30, 2008,respectively.

 

On January 31 and February 4, 2008,the Company issued 555,000 and 52,500 unregistered shares respectively, to theofficers, directors, and key employees of the Company pursuant to the Plan. Asof such dates, the aggregate market value of the common stock granted was$893,550 and $84,525, (a total of $978,075) respectively, based on the lastsale price on the OTCBB of theCompany’s common stock. SEC guidance now requires that immediately-vestingcommon stock grants with no forfeiture provisions be expensed at the time ofgrant rather than amortized over the four quarters of the service period.Accordingly,

 

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**CUBIC ENERGY, INC.**

 

**NOTES TO CONDENSED FINANCIALSTATEMENTS**

**AS OF SEPTEMBER 30, 2009**

**(Unaudited)**

 

the full $978,075 was recorded as compensationexpense and included in general and administrative expenses for the fiscal yearended June 30, 2008.

 

On January 12, 2009, the Company issued 235,000unregistered shares to three directors of the Company pursuant to thePlan.  As of such dates, the aggregatemarket value of the common stock granted was $385,400 based on the last saleprice ($1.64/share) on the aforementioned date, on the NYSE — Amex of theCompany’s common stock. Such amounts were expensed upon issuance tocompensation expense.

 

**NoteC — Long-term debt:**

 

**March 2007 debt issue**

 

On March 5, 2007, Cubicentered into a Credit Agreement with Wells Fargo Energy Capital, Inc. (“WellsFargo”) providing for a revolving credit facility of $20,000,000 (the “RevolvingNote”) and a convertible term loan of $5,000,000 (the “Term Loan”; and togetherwith the Revolving Note, the “Credit Facility”). The indebtedness bearsinterest at a fluctuating rate equal to the sum of the Wells Fargo Bank prime rateplus two percent (2%) per annum, matures on March 1, 2010, and is securedby substantially all of the assets of the Company. Approximately $5,000,000 ofthe funded amount was used, together with cash on hand, to retire the Company’spreviously outstanding senior debt that was due February 6, 2009.

 

Therevolving credit facility is subject to a borrowing base, initially set at$4,000,000, and is subject to periodic review. The convertible term loan of$5,000,000 is convertible into 5,000,000 shares of Cubic common stock at aconversion price of $1.00 per share.

 

Inconnection with entering into the Credit Facility, the Company issued to WellsFargo warrants, with five-year expirations, for the purchase of up to 2,500,000shares of Company common stock at an exercise price of $1.00 per share.

 

TheCompany allocated the proceeds from the issuance of the debt to the warrants,the debt and net profits interest (see below) based on their relative fairmarket values at the date of issuance. The value assigned to the warrants of$1,314,289 was recorded as an increase in additional paid-in capital and thevalue assigned to the net profits interest of $213,148 was recorded as a creditto the full cost pool for oil and gas properties. The assignment of a value to thewarrants and net profits interest resulted in a loan discount being recorded.The discount is being amortized over the original three-year term of the debtas additional interest expense. Amortization for the quarters ended September 30,2009 and 2008 was $129,713. Amortization for the fiscal year ended June 30,2009 was $514,620 and is expected to be approximately $342,610 for fiscal 2010.

 

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**CUBIC ENERGY, INC.**

 

**NOTES TO CONDENSED FINANCIALSTATEMENTS**

**AS OF SEPTEMBER 30, 2009**

**(Unaudited)**

 

Cubic incurred loan costsof $240,613 on the issuance of the debt and warrants. The amount allocable tothe debt of $166,590 has been capitalized and is being amortized over the termof the debt. Amortization for thequarters ended September 30, 2009 and 2008 was $14,048.Amortization for the fiscal year ended June 30, 2009 was $55,733 and isexpected to be approximately $37,105 for fiscal 2010. Cubic also incurred commitment fees of$170,000 related to subsequent increases in the Credit Facility’s borrowingbase; such amount was capitalized in fiscal 2008 and is being amortized overthe remaining term of the loan. Amortization for the quarters ended September 30,2009 and 2008 was $19,913 and $0, respectively. Amortization for the fiscalyear ended June 30, 2009 was $79,001 and is expected to be approximately$52,595 forfiscal 2010.

 

**May 2008subordinated debt issue**

 

On May 6, 2008, theCompany issued a subordinated promissory note in the amount of $2,000,000 (the “SubordinatedNote”) to Diversified Dynamics Corporation (the “Lender”), an entity controlledby William Bruggeman, who beneficially owns more than 5% of the common stock ofthe Company. The Subordinated Note bears interest at a fluctuating rate equalto the sum of the prime rate plus two percent (2%) per annum, and matures on April 30,2010. As consideration for the loan made by Lender pursuant to the SubordinatedNote, the Company agreed to convey to Lender, upon the repayment in full of theindebtedness evidenced by the Subordinated Note and the repayment in full ofthe senior indebtedness evidenced by the Credit Facility with Wells Fargo, anundivided 0.375% net profits interest in the future production of hydrocarbonsfrom or attributable to Cubic’s net interest in its Louisiana properties. Theproceeds of the Subordinated Note were used for general corporate and workingcapital purposes.

 

Issuing the Subordinated Note required theconsent of the holder of the Company’s senior indebtedness, Wells Fargo, whichconsent it granted on May 5, 2008. Subsequently, on May 8, 2008, theCredit Facility with Wells Fargo was amended by the First Amendment to theCredit Agreement (the “First Amendment”). Material provisions of the FirstAmendment included the following: (i) the Company may not prepay all orany part of the principal balance outstanding on the Term Loan prior to itsmaturity on March 1, 2010; and (ii) the amount of the Borrowing Basewas increased to $20,000,000, which amount was fully drawn upon, on August 20,2008.

 

**Note D — Related partytransactions:**

 

An affiliated company,Tauren Exploration, Inc. (“Tauren”), which is owned 100% by the Company’sPresident and Chief Executive Officer, Calvin Wallen III, owns a workinginterest in the wells in which the Company owns a working interest. As of September 30,2009 and June 30, 2009, the Company owed Tauren $599,141 and $649,205,respectively for miscellaneous capital expenditures and general andadministrative expenses paid by Tauren on the Company’s behalf.

 

Inaddition, all but three wells in which the Company owns a working interest areoperated by an affiliated company, Fossil Operating, Inc. (“Fossil”),which is owned 100% by the Company’s President and Chief Executive Officer,Calvin Wallen III. As of September 30, 2009 and June 30, 2009, theCompany owed Fossil $641,709 and $815,238, respectively, for drilling costs andlease and operating expenses, and was owed by Fossil $319,330 and $271,615,respectively, for oil and gas sales.

 

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**CUBIC ENERGY, INC.**

 

**NOTES TO CONDENSED FINANCIALSTATEMENTS**

**AS OF SEPTEMBER 30, 2009**

**(Unaudited)**

 

**Note E — Subsequent Events**

 

InMay 2009, the FASB ASC 855 *Subsequent Events*issued new authoritative guidance for subsequent events. Such authoritativeguidance establishes general standards of accounting for, and disclosure of,events that occur after the balance sheet date but before financial statementsare issued or are available to be issued.  In particular, thisstatement sets forth: (1) the period after the balance sheet date duringwhich management of a reporting entity should evaluate events or transactionsthat may occur for potential recognition or disclosure in the financialstatements, (2) the circumstances under which an entity should recognizeevents or transactions occurring after the balance sheet date in its financialstatements and (3) the disclosures that an entity should make about eventsor transactions that occurred after the balance sheet date.  Adoptionof this authoritative position did not have a material impact on the Company’scondensed consolidated financial statements.  The Company evaluatedsubsequent events through the date the accompanying financial statements wereissued, which was November 16, 2009.

 

**Note F —Going Concern**

 

Asreported in the Company’s Form 10-K the Company incurred a net loss of$24,762,516 during the year ended June 30, 2009, and as of that date, theCompany’s current liabilities exceeded its current assets by $26,931,053 andits total liabilities exceeded its total assets by $15,364,418. Those factors,as well as the uncertain conditions that the Company faces regarding its loanagreements, create an uncertainty about the Company’s ability to continue as agoing concern. Management of the Company is developing a plan to reduce itscurrent liabilities through this expanded credit facility and issuance ofadditional stock to shareholders. The ability of the Company to continue as agoing concern is dependent on acceptance of the plan by the Company’s bankcreditors and the plan’s success. The financial statements do not include anyadjustments that might be necessary if the Company is unable to continue as agoing concern.

 

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** **

**Item 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

 

Thefollowing discussion of operations for the three months ended September 30,2009 and 2008 should be read in conjunction with our condensed financialstatements and the notes thereto included in this Form 10-Q and with thefinancial statements, notes and management’s discussion and analysis includedin our Annual Report on Form 10-K for the year ended June 30, 2009.

 

**Overview**

 

CubicEnergy, Inc. is an independent upstream energy company engaged in thedevelopment and production of, and exploration for, crude oil and natural gas.Our oil and gas assets and activities are concentrated exclusively in Louisianaand Texas.

 

Ourcorporate strategy with respect to our asset acquisition and developmentefforts was to position the Company in a low risk opportunity while buildingmain stream high yield reserves.  The acquisition of our Cotton Valleyacreage in DeSoto and Caddo Parishes, Louisiana, puts us in a reservoir richenvironment both in the Cotton Valley and Bossier/Haynesville Shale formations,which we believe gives us the potential to discover additional commercial horizonsthat can add value to the bottom line. We have had success on our acreage withwells drilled by achieving production from not only the Cotton Valley andBossier/Haynesville Shale formations, but also the Hosston formations.

 

Ourfinancial results depend upon many factors, but are largely driven by thevolume of our natural gas production and the price that we receive for thatproduction. Our production volumes will decline as reserves are depleted unlesswe obtain and expend capital in successful development and explorationactivities or acquire properties with existing production. The amount werealize for our production depends predominantly upon commodity prices, whichare affected by changes in market demand and supply, as impacted by overalleconomic activity, weather, pipeline capacity constraints, inventory storagelevels, basis differentials and other factors. Accordingly, finding anddeveloping oil and natural gas reserves at economical costs is critical to ourlong-term success.

 

TheCompany remains diligent in its pursuit of our strategic plan to restructureour debt and raise additional operating capital, during the second quarter offiscal 2010. Wells Fargo gave the Company, a third extension until December 1,2009, to meet its borrowing base requirements under the Credit Facility. Foradditional discussion see below under “Capital Resources and Liquidity”.

 

Managementcontinues to believe in the value of its assets and will continue to exploreways that allow the Company to leverage those assets to gain full shareholdervalue.

 

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**Results of Operations**

** **
| ** **                                | ** ** | **Three months ended** | ** ** | ** ** | ** ** | ** ** | ** ** |
|-------------------------------------------|------------|------------------------|------------|------------|------------|------------|------------|
| ** **                                | ** ** | **September 30,** | ** ** | **Change** | ** ** |
| ** **                                | ** ** | **2009**               | ** ** | **2008**   | ** ** | **Amount** | ** ** | **%** | ** ** |
| **Production Volumes:**                   |       |                   |       |       |       |       |       |   |   |
| Oil  (Bbl)                                |       | 201                    |       | 266        |       | (65        | )          | -24 | % |
| Natural  gas liquids (gallons)            |       | 8,927                  |       | 19,320     |       | (10,393    | )          | -54 | % |
| Natural  gas (Mcf)                        |       | 95,553                 |       | 64,027     |       | 31,526     |       | 49 | % |
| Total  (Mcfe)                             |       | 98,035                 |       | 68,381     |       | 29,654     |       | 43 | % |
|                                      |       |                   |       |       |       |       |       |   |   |
| **Weighted Average Sales Prices:**        |       |                   |       |       |       |       |       |   |   |
| Oil  (per Bbl)                            |       | $                      | 67.95      |       | $          | 124.69     |       | $ | (56.74 | ) | -46 | % |
| Natural  gas liquids (per gallon)         |       | $                      | 1.09       |       | $          | 2.04       |       | $ | (0.95 | ) | -47 | % |
| Natural  gas (per Mcf)                    |       | $                      | 3.52       |       | $          | 9.41       |       | $ | (5.89 | ) | -63 | % |
|                                      |       |                   |       |       |       |       |       |   |   |
| **Selected Expenses per Mcfe:**           |       |                   |       |       |       |       |       |   |   |
| Production  costs                         |       | $                      | 2.59       |       | $          | 4.73       |       | $ | (2.14 | ) | -45 | % |
| Workover  expenses (non-recurring)        |       | $                      | —     |       | $          | —     |       | $ | — |   | — |   |
| Severance  taxes                          |       | $                      | 0.22       |       | $          | 0.26       |       | $ | (0.04 | ) | -16 | % |
| Other  revenue deductions                 |       | $                      | 0.16       |       | $          | 0.33       |       | $ | (0.17 | ) | -52 | % |
| Total  lease operating expenses           |       | $                      | 2.97       |       | $          | 5.33       |       | $ | (2.36 | ) | -44 | % |
| General  and administrative expenses      |       | $                      | 4.54       |       | $          | 6.60       |       | $ | (2.06 | ) | -31 | % |
| Depreciation,  depletion and amortization |       | $                      | 2.37       |       | $          | 3.86       |       | $ | (1.48 | ) | -38 | % |

 

**Revenues**

 

OILAND GAS SALES decreased 47% to $359,901 for the quarter ended September 30,2009 from $674,971 for the quarter ended September 30, 2008 primarily dueto lower natural gas prices during the 2009 quarter. The weighted averagenatural gas price we received in the 2009 quarter was $3.13 per Mcf versus$9.41 per Mcf in the 2008 quarter.

 

**Costs and Expenses**

 

OIL AND GAS PRODUCTION, OPERATING ANDDEVELOPMENT COSTS (also referred to as “LEASE OPERATING EXPENSES” elsewhereherein) decreased 20% to $291,337 (81% of oil and gas sales) for the 2009quarter from $364,356 (54% of oil and gas sales) for the 2008 quarter primarilydue to lack of cash on hand to do well workover, which resulted in: a $31,953decrease in the cost of chemicals; a $38,029 decrease in salt water hauling anddisposal costs; and a $21,782 decrease in common facility expenses forproduction.

 

GENERAL AND ADMINISTRATIVE EXPENSES (“G&A”)decreased 1.4% to $444,923 for the 2009 quarter from $451,299 in the 2008quarter as a result of: not adding any new employees or salaries and a lack ofincrease in business activities primarily due to the downturn in the economy.

 

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DEPRECIATION,DEPLETION AND AMORTIZATION (“DD&A”) decreased 12% to $232,597 in the 2009quarter from $263,757 in the 2008 quarter primarily due in part to our lack ofcash on hand needed to bring new wells on line. An excess of capitalized costsover the full costs ceiling test limitation at September 30, 2009, was notcharged against earnings because of an increase in oil and gas pricessubsequent to quarter end, as prescribed in Rule 4-10(c) (4) ofRegulation S-X.

 

INTEREST EXPENSE decreased 20% to $487,389 inthe 2009 quarter from $545,275 in the 2008 quarter primarily due to a decreasein interest rate 5.25% on debt (before discounts) of $27,000,000 at September 30,2009, which includes $20,000,000 on therevolving line of credit with Wells Fargo, $5,000,000 term loan and theborrowing of $2,000,000 under the terms of the May 6, 2008, subordinatednote with Diversified Dynamics. The weighted average debt balance (beforediscounts) for the 2009 quarter was $27,000,000 as compared to $25,275,978 inthe 2008 quarter. The Credit Facility with Wells Fargo also resulted ina loan discount being recorded. The discount is being amortized over theoriginal three-year term of the debt as additional interest expense, with$129,713 being recorded in each of the 2009 and 2008 quarters.

 

**Capital Resources andLiquidity**

 

**Working Capital**

 

TheCompany’s working capital increased to ($26,931,053) at September 30, 2009from ($27,822,536)  at June 30,2009, primarily due to cash flows provided by financing activities of$1,788,000 resulting from the sale of common stock and warrants.  These cash inflows were partially offset bythe $1,461,208 use of cash from investing activities related to non-operatedwell expense and the $20,830 use of cash from operating activities related tothe payment of past due accounts payable in the quarter ended September 30,2009.

 

**Cash Flow**

 

Ournet (decrease) increase in cash and cash equivalents is summarized as follows:

 
| ** **                                            | ** ** | **Three months ended** | ** ** |
|-------------------------------------------------------|------------|------------------------|------------|
| ** **                                            | ** ** | **September 30,** | ** ** |
| ** **                                            | ** ** | **2009**               | ** ** | **2008** | ** ** |
| Net  cash provided (used) by operating activities     |       | $                      | (20,830    | ) | $ | (424,657 | ) |
| Net  cash provided (used) by investing activities     |       | (1,461,208             | )          | (1,002,895 | ) |
| Net  cash provided (used) by financing activities     |       | 1,788,400              |       | 4,268,152 |   |
| Net  increase (decrease) in cash and cash equivalents |       | $                      | 306,362    |   | $ | 2,840,600 |   |

 

***OperatingActivities*****—**Duringthe quarter ended September 30, 2009, the Company used cash flows fromoperating activities of $20,830 as compared to $424,657 in the prior yearperiod. Cash flow from operations is dependent on our ability to increaseproduction through our development and exploratory activities and the pricereceived for oil and natural gas.

 

***Investing Activities*********—**The primary driver of cash used in investingactivities is capital expenditures related to the drilling and completion ofnew wells and the acquisition and development of additional oil and gasproperties. In the quarter ended September 30, 2009, we had capitalspending of $392,957 for non-operated 

 

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well expenseand used net cash of $1,461,208 in investing activities. For the quarter ended September 30,2008, we had capital spending of $2,960,079 and used net cash of $1,002,895 ininvesting activities.

 

***Financing Activities*********—**Net cash flows provided by financing activitieswere $1,788,000 and $4,268,152 in the quarters ended September 30, 2009and 2008, respectively.

 

During the 2009quarter, we received an aggregate of $1,788,000 in proceeds from the issuance ofstock and warrants. During the 2008 quarter, we received an aggregate of$1,095,952 in proceeds from the issuance of stock (resulting from the exerciseof warrants) and drew $3,172,200 from the Revolving Note of our CreditFacility.

 

**NYSE Amex Compliance/CreditFacility**

 

On Friday, June 26, 2009, theCompany received a letter from NYSE Amex, LLC (the “Exchange”) stating that theExchange believes that the Company is not in compliance with Section 1003(a)(iv) ofthe Exchange’s Company Guide as the Company has sustained losses or itsfinancial condition has become impaired to the extent that it appearsquestionable, in the opinion of the Exchange, as to whether the Company will beable to continue operations and/or meets its obligations as they mature. On Monday,July 27, 2009, the Company submitted its compliance plan to the Exchangedetailing how the Company intends to regain compliance. On September 15,2009, the Exchange notified the Company that the Exchange has accepted thecompliance plan, and granted the Company an extension until December 28,2009 to evidence its compliance with the Exchange’s continued listingstandards.

 

The Company’s limit of $20,000,000available under the Credit Facility’s Revolving Note (and an aggregate of$25,000,000 under the Credit Facility) has been fully utilized.

 

On Monday, June 29, 2009, theCompany announced it received a letter from Wells Fargo informing the Companythat Wells Fargo has made a redetermination of the Borrowing Base under theCredit Facility, which reduced the Borrowing Base from $20.0 million to $7.5million, requiring a payment of $12.5 million from the Company to Wells Fargo.Through waivers, Wells Fargo has extended the due date for the payment until December 1,2009, and the Company has the right to pay the deficiency in five monthlyinstallments as provided in the Credit Facility.

 

The Company is focused on obtainingadditional capital, restructuring the Credit Facility and regaining fullcompliance on the Exchange. Additional capital is intended to support capitalexpenditures for non-operated working interests, to fund horizontal drilling,to fracture stimulate additional zones of certain Johnson Branch wells and totest the Bossier shale. Obtaining additional capital is an integral part of theCompany’s strategic plan to regain full compliance on the Exchange.

 

**Contractual Obligations**

 

We have no material changes in our long-termcommitments associated with our capital expenditure plans or operatingagreements other than those described above. Our level of capital expenditureswill vary in future periods depending on: the success we experience in ouracquisition, developmental and exploration activities; oil and natural gasprice conditions; and other related economic factors. Currently, no sources ofliquidity or financing are provided by off-balance sheet arrangements ortransactions with unconsolidated, limited-purpose entities. We have nocontractual commitments pertaining to exploration, development and productionactivities.

 

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**Critical Accounting Policies and Estimates**

 

Our discussion and analysis of our financialcondition and results of operation are based upon the condensed financialstatements, which have been prepared in accordance with accounting principlesgenerally accepted in the United States of America. Preparation of thesefinancial statements requires us to make estimates and judgments that affectthe reported amounts of assets, liabilities, revenues and expenses. There havebeen no changes to our critical accounting policies from those described in ourAnnual Report on Form 10-K for the year ended June 30, 2009.

 

**SubsequentEvents**

 

On October 29, 2009, the Company received anadditional extension of time until December 1, 2009 from Wells FargoEnergy Capital, Inc. to comply with the terms of that letter dated June 30,2009. That June 30, 2009 letter informed the Company that the Lender madea borrowing base redetermination and waived any failure of the Company tocomply with its obligations under the Credit Agreement as a result of suchredetermination until September 1, 2009, first extended to October 1,2009 and extended thereafter to November 1, 2009.

 

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**Item 3. Quantitative andQualitative Disclosures About Market Risk.**

** **

**Commodity Price Risk**

** **

**We are subject to price fluctuations for natural gas andcrude oil. Prices received for natural gas sold on the spot market are volatiledue primarily to seasonality of demand and other factors beyond our control.Reductions in crude oil, natural gas and natural gas liquids prices could havea material adverse effect on our financial position, results of operations andquantities of reserves recoverable on an economic basis. Any reduction inreserves, including reductions due to price fluctuations, can adversely affectour liquidity and our ability to obtain capital for our acquisition anddevelopment activities. To date, we have not entered into futures contracts orother hedging agreements to manage the commodity price risk for a portion ofour production.**

** **

**Interest Rate Risk**

** **

**As of September 30, 2009, we had $27,000,000 oflong-term debt outstanding under our Credit Facility and the Subordinated Note,each of which matures in fiscal 2010 and bears interest at the prime rate plus2.0%. As a result, our interest costs fluctuate based on short-term interestrates. Based on the aforementioned borrowings outstanding at September 30,2009, a 100 basis point change in interest rates would change our annualinterest expense by approximately $270,000. We had no interest rate derivativesduring the first quarter of fiscal 2010.**

** **

**Item 4. Controls andProcedures**

 

Ourprincipal executive and financial officers have concluded, based on theirevaluation as of the end of the period covered by this report, that ourdisclosure controls and procedures under Exchange Act Rules 13a -15(e) and15d-15(e) are effective to ensure thatinformation we are required to disclose in the reports we file or submit underthe Exchange Act is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms. Our disclosurecontrols and procedures include controls and procedures designed to ensure thatinformation we are required to disclose in such reports is accumulated andcommunicated to management, including our principal executive and financialofficers, as appropriate to allow timely decisions regarding requireddisclosure.

 

Therewere no changes in the Company’s internal controls over financial reportingduring the most recent fiscal quarter that have materially affected, or arereasonably likely to materially affect, these internal controls.

 

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**PART ****II — OTHER INFORMATION**

 

**Item 1. LegalProceedings**

 

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

 

**Item 1A. Risk Factors**

 

Therehave been no material changes in the risk factors applicable to us from thosedisclosed in our Fiscal 2009 Form 10-K.

 

**Item 2.****Unregistered Sales ofEquity Securities and Use of Proceeds**

 

Adescription of our stock issuances during the quarter ended September 30,2009 is included in “Item 1. Notesto Condensed Financial Statements — Note B — Stockholders’ Equity”elsewhere herein and is incorporated herein by reference.

 

**Item 3. Defaults Upon Senior Securitie****s**

 

None.

 

**Item 4. Submission of Matters toa Vote of Security Holders**

 

None.

 

**Item 5. Other Information**

 

None.

 

**Item 6. Exhibits**

 
| **No.** | ** ** | **Description**                                                              |
|---------|------------|------------------------------------------------------------------------------|
|    |       |                                                                         |
| 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 Chief Financial Officer |
|    |       |                                                                         |
| 32.1*   |       | Certification  of Chief Executive Officer pursuant to 18 U.S.C. § 1350  |
|    |       |                                                                         |
| 32.2*   |       | Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350   |

 

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* Filed herewith.

 

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**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.

 
|                          | **CUBIC ENERGY, INC.** |
|-------------------------------|------------------------|
|                          | (Registrant)           |
|                          |                   |   |
|                          |                   |   |
| Date: November 16, 2009  | By:                    | /s/  Calvin A. Wallen, III |
|                          |                   | Calvin  A. Wallen, III, President and Chief Executive Officer |
|                          |                   |   |
|                          |                   |   |
| Date:  November 16, 2009 | By:                    | /s/  Larry G. Badgley |
|                          |                   | Larry  G. Badgley, Chief Financial Officer (Principal Financial and Accounting  Officer) |

 

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