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 September 30, 2007

                          Commission File Number 0-9355



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

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

                                 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 [  ]

Indicate by check mark whether the registrant is a shell company.

Yes [  ]   No [X]

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

As of October 31, 2007, the Company had 56,405,896 shares of common stock, $0.05
par value, outstanding.

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


<PAGE>


                               CUBIC ENERGY, INC.


                                TABLE OF CONTENTS


                         PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

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

                Condensed Balance Sheets
                As of September 30, 2007 (unaudited) and June 30, 2007.........2

                Condensed Statements of Operations, (unaudited)
                For the three months ended September 30, 2007
                 and September 30, 2006........................................3

                Condensed Statements of Cash Flows, (unaudited)
                For the three months ended September 30, 2007
                 and September 30, 2006........................................4

                Notes to Condensed Financial Statements......................5-8

Item 2.     Management's Discussion and Analysis or Plan of Operation.......9-10

Item 3.     Controls and Procedures...........................................11


                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings.................................................12

Item 6.     Exhibits..........................................................12

Signatures....................................................................13

Certifications



                                       i
<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 September 30,
2007,  and the related  condensed  statements of operations and of cash flows of
Cubic Energy,  Inc. for the  three-month  periods  ended  September 30, 2007 and
2006.  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, 2007,  and the related  statements  of  operations,
stockholders'  equity and cash flows for the year then ended;  and in our report
dated  September  26,  2007,  we  expressed  an  unqualified  opinion  on  those
statements.




                                                    PHILIP VOGEL & CO., PC

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

                                                    Certified Public Accountants


Dallas, Texas
November 9, 2007



                                       1
<PAGE>
<TABLE>
<CAPTION>

                               CUBIC ENERGY, INC.

                                 BALANCE SHEETS

                                                                 September 30,
                                                                2007 (unaudited)    June 30, 2007
                                                                  ------------      ------------
<S>                                                               <C>               <C>

Assets
Current assets:
     Cash and cash equivalents                                    $  1,860,887      $  3,122,273
     Accounts receivable - trade                                       402,723           218,874
     Prepaid drilling costs                                            954,843           721,136
     Other prepaid expenses                                            215,699           231,232
                                                                  ------------      ------------
            Total current assets                                     3,434,152         4,293,515
Property and equipment (at cost):
     Oil and gas properties, full cost method:
         Proved properties (including wells and related
            equipment and facilities)                                9,487,660         8,836,790
         Unproven properties                                        10,573,221         6,827,341
     Office and other equipment                                         14,672            12,886
                                                                  ------------      ------------
                                                                    20,075,553        15,677,017
Less accumulated depreciation, depletion and amortization            2,293,020         2,011,015
                                                                  ------------      ------------
            Property and equipment, net                             17,782,533        13,666,002
Other assets:
     Deferred loan costs, net                                          134,676           148,724
                                                                  ------------      ------------
            Total other assets                                         134,676           148,724
                                                                  ------------      ------------
                                                                  $ 21,351,361      $ 18,108,241
                                                                  ============      ============
Liabilities and stockholders' equity
Current liabilities:
     Accounts payable and accrued expenses                        $     79,784      $     51,664
     Due to affiliates                                               1,302,987         1,635,055
                                                                  ------------      ------------
            Total current liabilities                                1,382,771         1,686,719
Long-term liabilities:
     Long-term debt, net of discounts                               11,793,851         7,626,739
                                                                  ------------      ------------
            Total long-term liabilities                             11,793,851         7,626,739
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 56,155,896 shares at September 30, 2007 and
     55,840,896 shares at June 30, 2007                              2,807,796         2,792,046
Additional paid-in capital                                          25,530,679        25,325,429
Accumulated deficit                                                (20,163,736)      (19,322,692)
                                                                  ------------      ------------
            Stockholders' equity                                     8,174,739         8,794,783
                                                                  ------------      ------------
                                                                  $ 21,351,361      $ 18,108,241
                                                                  ============      ============

</TABLE>

        The accompanying notes are an integral part of these statements.




                                       2
<PAGE>
<TABLE>
<CAPTION>

                               CUBIC ENERGY, INC.

                            STATEMENTS OF OPERATIONS
                                   (unaudited)


                                                              Three months ended
                                                                September 30,
                                                        ----------------------------
                                                            2007            2006
                                                        ------------    ------------
<S>                                                     <C>             <C>

Revenues:
     Oil and gas sales                                  $    447,988    $    132,106
                                                        ------------    ------------
         Total revenues                                 $    447,988    $    132,106
Costs and expenses:
     Oil and gas production, operating and
         development costs                                   240,190          99,631
     Selling, general and administrative expenses            373,493         259,680
     Depreciation, depletion and non-loan-related
         amortization                                        282,005          51,387
                                                        ------------    ------------
         Total costs and expenses                            895,688         410,698
                                                        ------------    ------------
Operating income (loss)                                     (447,700)       (278,592)
                                                        ------------    ------------
Non-operating income (expense):
     Other income                                             17,870           1,747
     Interest expense, including amortization of loan
         discount                                           (397,166)       (323,556)
     Amortization of loan costs                              (14,048)        (30,827)
                                                        ------------    ------------
Total non-operating income (expense)                        (393,344)       (352,636)
                                                        ------------    ------------
Loss from operations before income taxes                    (841,044)       (631,228)
Provision for income taxes                                      --              --
                                                        ------------    ------------
Net loss                                                $   (841,044)   $   (631,228)
                                                        ============    ============
Net loss per common share - basic and diluted           $      (0.02)   $      (0.01)
                                                        ============    ============
Weighted average common shares outstanding                55,957,472      44,660,007

</TABLE>



        The accompanying notes are an integral part of these statements.











                                       3
<PAGE>
<TABLE>
<CAPTION>


                               CUBIC ENERGY, INC.

                            STATEMENTS OF CASH FLOWS

                                                                            Three months ended
                                                                               September 30,
                                                                      -----------------------------
                                                                          2007              2006
                                                                      -----------       -----------
<S>                                                                   <C>               <C>

Cash flows from operating activities:
Net (loss)                                                           $  (841,044)      $  (631,228)
Adjustments to reconcile net (loss) to cash provided
     (used) by operating activities:
         Depreciation, depletion and amortization                        425,765           192,902
         Stock issued for compensation                                   106,337           121,550
         Change in assets and liabilities:
            (Increase) decrease in accounts receivable - trade          (183,849)           (7,141)
            (Increase) decrease in other prepaid expenses                 12,696              --
            Increase (decrease) in due to affiliates                     (50,467)         (100,408)
            Increase (decrease) in accounts payable and
                accrued expenses                                          28,120            15,479
                                                                     -----------       -----------
     Net cash provided (used) by operating activities                   (502,442)         (408,846)
                                                                     -----------       -----------
Cash flows from investing activities:
Acquisition and development of oil and gas properties                 (4,678,351)         (437,932)
Purchase of office equipment                                              (1,786)           (1,029)
Advances on development costs                                           (233,707)       (1,165,916)
Cash restricted by debt                                                     --              (1,653)
                                                                     -----------       -----------
     Net cash provided (used) by investing activities                 (4,913,844)       (1,606,530)
                                                                     -----------       -----------
Cash flows from financing activities:
Proceeds from credit facility                                          4,037,400              --
Issuance of common stock, net                                            117,500         2,100,000
Repayment of advances                                                       --            (100,000)
                                                                     -----------       -----------
     Net cash provided (used) by financing activities                  4,154,900         2,000,000
                                                                     -----------       -----------
Net increase (decrease) in cash and cash equivalents                 $(1,261,386)      $   (15,376)
Cash and cash equivalents:
     Beginning of period                                               3,122,273           259,157
                                                                     -----------       -----------
     End of period                                                   $ 1,860,887       $   243,781
                                                                     ===========       ===========
Other information:
     Interest paid                                                   $   267,454       $   212,870

</TABLE>



        The accompanying notes are an integral part of these statements.











                                       4
<PAGE>

                               CUBIC ENERGY, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2007
                                   (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,  2007 Form  10-KSB and should be read in  conjunction
with the financial statements contained herein.

The financial  information included herein as of September 30, 2007, and for the
three-month  periods ended  September 30, 2007,  and 2006,  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.

Stock issuance:

On August 27, 2007, two warrant holders of the Company exercised warrants for an
aggregate  of 200,000  shares of Company  common  stock,  through the payment of
$100,000 to the  Company.  On  September  17,  2007,  one warrant  holder of the
Company  exercised  warrants for 25,000 shares of Company common stock,  through
the payment of $17,500 to the Company.

Stock grants:

On December 29, 2005, the  stockholders  of the Company  approved the 2005 Stock
Option Plan (the "Plan") and 3,750,000 shares of common stock were reserved,  of
which 1,801,000 shares have been issued through September 30, 2007.

On  January 5, 2006,  the  Company  issued  572,000  unregistered  shares to the
officers and directors of the Company pursuant to the Plan. As of such date, the
aggregate  market  value of the common stock  granted was $486,200  based on the
last sale price on the OTC Bulletin  Board of the Company's  common stock.  Such
amount was  amortized  to  compensation  expense  on a  quarterly  basis  during
calendar year 2006.  Accordingly,  $121,550 was recorded as compensation expense
and  included  in general and  administrative  expenses  for the  quarter  ended
September 30, 2006.




                                       5
<PAGE>

                               CUBIC ENERGY, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2007
                                   (Unaudited)

On January 10 and  January  18,  2007,  the  Company  issued  489,500 and 52,500
unregistered shares, respectively, to the officers, directors, and key employees
of the Company  pursuant to the Plan.  As of such dates,  the  aggregate  market
value of the common stock granted was $391,600 and $42,000, respectively,  based
on the last sale price on the OTC Bulletin Board of the Company's  common stock.
Such amounts are being  amortized to  compensation  expense on a quarterly basis
during  calendar year 2007.  An additional  $30,000 was recorded when our former
Chief  Financial   Officer   resigned  during  fiscal  2007,  with  such  amount
representing  the  remaining  unamortized  portion of his January 10, 2007 stock
grant.  Accordingly,  a total  amount of $93,400 was  recorded  as  compensation
expense  and  included in general and  administrative  expenses  for the quarter
ended September 30, 2007.

On August 20, 2007, the Company issued 90,000  unregistered shares to an officer
of the  Company  pursuant  to the Plan,  with such  grant  subject  to a vesting
schedule over the  following 12 months.  As of such date,  the aggregate  market
value of the common stock granted was $103,500 based on the then market price on
the OTC  Bulletin  Board of the  Company's  common  stock.  Such amount is being
amortized to compensation  expense on a quarterly basis during fiscal year 2008.
Accordingly,  $12,937 was  recorded  as  compensation  expense  and  included in
general and administrative expenses for the quarter ended September 30, 2007.

Long-term debt:

February 2006 debt issue
------------------------

On February 6, 2006, Cubic entered into a Credit Agreement with Petro Capital V,
L.P.  (Petro  Capital)  pursuant to which Petro Capital  advanced to the Company
$5,500,000.  The  indebtedness  bore interest at a rate of 12.5% per annum,  was
scheduled to mature on February 6, 2009, and was secured by substantially all of
the assets of the Company.  $1,800,000  of the funded  amount was used to retire
the then  outstanding 7% Senior  Secured  Convertible  Debentures  that were due
September 30, 2009. In connection  with the funding under the Credit  Agreement,
the Company issued to Petro Capital 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.

The Company  allocated  the proceeds from the issuance of the senior debt to the
warrants and the senior debt based on their  relative  fair market values at the
date of issuance.  The value assigned to the warrants of $1,203,752 was recorded
as an increase in additional  paid in capital.  The assignment of a value to the
warrants  resulted in a loan  discount  being  recorded.  The discount was being
amortized  over the original  three-year  term of the senior debt as  additional
interest  expense.  Amortization  for the quarter  ended  September 30, 2006 was
$110,686.

Cubic  incurred  loan costs of $483,643  on the  issuance of the senior debt and
warrants.  The amount  allocable to the senior debt of $367,586 was  capitalized
and was being  amortized over the term of the senior debt.  Amortization of loan
costs for the senior debt was $30,827 for the quarter ended September 30, 2006.

The senior debt was retired on March 5, 2007,  with  proceeds  from a new senior
debt issue, as set forth below.




                                       6
<PAGE>

                               CUBIC ENERGY, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2007
                                   (Unaudited)

March 2007 debt issue
---------------------

On March 5, 2007,  Cubic entered into a Credit Agreement with Wells Fargo Energy
Capital,  Inc.  ("Wells  Fargo")  providing for a revolving  credit  facility of
$20,000,000 and a convertible  term loan of $5,000,000 (the "Credit  Facility").
The  indebtedness  bears interest at a fluctuating  rate equal to the sum of the
Wells Fargo Bank prime rate plus two percent (2%) per annum, matures on March 1,
2010,  and  is  secured  by  substantially  all of the  assets  of the  Company.
Approximately  $5,000,000 of the funded  amount was used,  together with cash on
hand, to retire the Company's  previously  outstanding  senior debt that was due
February 6, 2009, described above.

The convertible  term loan of $5,000,000 is convertible into 5,000,000 shares of
Cubic  common  stock at a  conversion  price of $1.00 per share.  The  revolving
credit facility is subject to a borrowing base, initially set at $4,000,000, and
is subject to periodic  review.  On September 7, 2007, Wells Fargo increased the
Company's  borrowing  base to  $8,600,000  in order to fund the  drilling of new
wells.

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

The terms of the Credit Facility,  among other things, prohibit the Company from
merging  with  another  company  or  paying  dividends,   and  limit  additional
indebtedness,  sales of certain  assets and  investments.  Upon the repayment in
full of the Credit Facility,  and with respect to certain  properties,  upon the
occurrence of the conditions set forth in Section 2.14 of the Credit  Agreement,
the Company  agreed to convey a net profits  interest to Wells Fargo equal up to
5% of Cubic's net interest in certain of its Louisiana properties.

The  Company  allocated  the  proceeds  from  the  issuance  of the  debt to the
warrants,  the debt and net profits interest (see above) based on their relative
fair market 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 the
value assigned to the net profits  interest of $213,148 was recorded as a credit
to the full cost pool for oil and gas  properties.  The assignment of a value to
the warrants and net profit interest resulted in a loan discount being recorded.
The discount is being amortized over the original three-year term of the debt as
additional  interest  expense.  Amortization for the quarter ended September 30,
2007 was $129,713.  Amortization  for the years ending June 30, 2008 and 2009 is
expected to be $516,030, and $514,620, respectively.

Cubic  incurred loan costs of $240,613 on the issuance of the debt and warrants.
The amount  allocable to the debt of $166,590 has been  capitalized and is being
amortized  over  the  term  of the  debt.  Amortization  for the  quarter  ended
September 30, 2007 was $14,048.  Amortization for the years ending June 30, 2008
and 2009 is expected to be $55,886, and $55,733, respectively.



                                       7
<PAGE>


                               CUBIC ENERGY, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2007
                                   (Unaudited)

Related-party transactions:

An affiliated  company,  Tauren  Exploration,  Inc.  ("Tauren"),  owns a working
interest  in the  wells in which the  Company  owns a  working  interest.  As of
September 30, 2007 and June 30, 2007, the Company owed Tauren $9,205 and $3,715,
respectively,  for  miscellaneous  general and  administrative  expenses paid by
Tauren on the Company's behalf.

In addition, the wells in which the Company owns a working interest are operated
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 and  June  30,  2007,  the  Company  owed  Fossil  $1,366,206  and
$1,659,786,  respectively,  for drilling costs and lease and operating expenses,
and was owed by Fossil $72,425 and $28,446, respectively, for oil and gas sales.

Subsequent event:

On October 22, 2007, two warrant holders of the Company  exercised  warrants for
an aggregate of 250,000 shares of Company  common stock,  through the payment of
$125,000 to the Company.

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 on Form 10-KSB
for the fiscal year ended June 30, 2007.



                                        8
<PAGE>


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

RESULTS OF OPERATIONS

Three Months Ended September 30, 2007 Compared To Three Months
Ended September 30, 2006:

Revenues

OIL AND GAS SALES increased 239% to $447,988 for the quarter ended September 30,
2007 from  $132,106 for the quarter ended  September  30, 2006  primarily due to
higher gas volumes  resulting from seven wells being on-line in Louisiana in the
2007 period versus three in the 2006 period.

Costs and Expenses

OIL AND GAS  PRODUCTION,  OPERATING AND  DEVELOPMENT  COSTS (also referred to as
"LEASE OPERATING  EXPENSES" elsewhere herein) increased 141% to $240,190 (54% of
oil and gas  sales)  for 2007 from  $99,631  (75% of oil and gas sales) for 2006
primarily due to more wells being on-line in Louisiana.

SELLING,  GENERAL AND ADMINISTRATIVE  EXPENSES ("G&A") increased 44% to $373,493
for 2007 from  $259,680  in 2006 as a result  of:  $51,000  in  commitment  fees
related to borrowings on the Company's Credit  Facility,  which was not in place
in the 2006 period;  a $25,988  increase in reserve report  expenses;  a $15,696
increase  in  compensation-related  expenses  resulting  from an increase in the
number of  employees;  and,  $12,696  in  expense  for  directors  and  officers
insurance, which was not in place in the 2006 period.

DEPRECIATION,  DEPLETION AND AMORTIZATION ("DD&A") increased 449% to $282,005 in
fiscal 2007 from $51,387 in fiscal 2006.  The  increase was  primarily  due to a
$6,168,457,  or 44%, increase in "Property and equipment (at cost)" at September
30, 2007 as compared to September 30, 2006. Such increase was primarily  related
to capital  expenditures  for the  acquisition  and  development  of oil and gas
properties.

INTEREST  EXPENSE  increased  23% to  $397,166  in 2007  from  $323,556  in 2006
primarily due to an increase in debt to  $13,037,400  at September 30, 2007 from
$6,800,000 at September 30, 2006. This increase resulted from the repayment of a
$1,300,000  note held by  Tauren on  February  2,  2007 from the  proceeds  of a
December 2006 equity offering,  and the retirement of $5,500,000 of indebtedness
held by Petro  Capital V. L.P. on March 5, 2007 via the  borrowing of $5,000,000
pursuant to the  aforementioned  Credit  Facility  with Wells Fargo's new senior
convertible  term loan and  subsequent  draws of  approximately  $8,037,400 on a
related  revolving  line of credit.  The Credit  Facility  with Wells Fargo also
resulted in a loan discount being recorded. The discount is being amortized over
the original  three-year  term of the debt as additional  interest  expense with
$129,713 being recorded in the quarter ended September 30, 2007.

Liquidity and Capital Resources:

During the three months ended  September  30, 2007,  the Company used cash flows
from operating activities of $502,442. Cash flow from operations is dependent on
our  ability to increase  production  through our  development  and  exploratory
activities and the price received for oil and natural gas.

The Company's working capital decreased to $2,051,381 at September 30, 2007 from
$2,606,796 at June 30, 2007, primarily due to capital expenditures of $4,678,351
in the quarter ended September 30, 2007 related to the drilling of new wells and
a $233,707  increase in prepaid drilling costs (also referred to as "advances on
development  costs" elsewhere  herein).  These increases were somewhat offset by



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<PAGE>

the borrowing of an additional  approximately  $4,037,400 on the  aforementioned
revolving line of credit with Wells Fargo.

The Company plans to fund its  development and  exploratory  activities  through
cash provided from  operations and the  utilization of the Credit  Facility (see
"Notes to Condensed Financial Statements - Long-Term Debt" elsewhere herein).

The  Company  cannot be  certain  that  adequate  funds will be  available  from
operating cash flow and the Credit Facility to fully fund the projected  capital
expenditures  for fiscal 2008.  Additionally,  because future cash flows and the
availability  of  borrowings  are  subject  to a number  of  variables,  such as
prevailing   prices  of  oil  and  gas,  actual  production  from  existing  and
newly-completed  wells,  the Company's  success in developing  and producing new
reserves,  and the  uncertainty  with  respect to the amount of funds  which may
ultimately  be required to finance the  Company's  development  and  exploration
program,  there can be no assurance that the Company's capital resources will be
sufficient to sustain the Company's development and exploratory activities.

Although the Company  believes it will be able to obtain  funds  pursuant to the
above-mentioned  alternatives,  management  cannot be assured  that such capital
resources  will be  available  to the  Company.  If we are unable to obtain such
capital  resources  on a timely  basis,  the  Company  may  curtail  its planned
development and exploratory activities.





























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<PAGE>

Item 3. Controls and Procedures

Our principal  executive and financial  officers have concluded,  based on their
evaluation  as of the  end of the  period  covered  by  this  report,  that  our
disclosure  controls  and  procedures  under  Exchange  Act Rules 13a -15(e) and
15d-15(e) 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.  There were
no changes in internal  controls or other factors that could materially  affect,
or are reasonably likely to materially affect, these internal controls.


































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<PAGE>

                           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 6.  Exhibits

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


































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<PAGE>



                                   SIGNATURES

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


                                 CUBIC ENERGY, INC.
                                 ------------------
                                 (Registrant)


Date:  November 13, 2007         By:  /s/ Calvin A. Wallen, III
                                      ------------------------------------------
                                      Calvin A. Wallen, III, President and
                                      Chief Executive Officer


Date:  November 13, 2007         By: /s/ Scott D. Guffey
                                     -------------------------------------------
                                     Scott D. Guffey,  Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


















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