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 March 31, 2006


                          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 incorporation) (IRS Employer Identification No.)

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

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



Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 (as defined in
Rule 12b-2 of the Exchange Act). 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:

     Common Stock                             Outstanding at March 31, 2006
     ------------                             -----------------------------
    $.05 par value                                      42,271,771



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

<PAGE>

                               CUBIC ENERGY, INC.


                                TABLE OF CONTENTS


                         PART 1 - FINANCIAL INFORMATION

Item 1.  Financial Statements

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

           Condensed Balance Sheets
           As of March 31, 2006 (unaudited) and June 30, 2005................. 2

           Condensed Statements of Operations, (unaudited)
           For the three months ended March 31, 2006 and March 31, 2005....... 4

           Condensed Statements of Operations, (unaudited)
           For the nine months ended March 31, 2006 and March 31, 2005........ 5

           Condensed Statements of Cash Flows, (unaudited)
           For the nine months ended March 31, 2006 and March 31, 2005........ 6

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

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

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


                           PART II - OTHER INFORMATION

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

Item 6.  Exhibits and Reports on Form 8-K.....................................13

Signatures....................................................................15

Certifications................................................................16




<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 March 31, 2006,
and the related condensed  statements of operations,  and of cash flows of Cubic
Energy, Inc. for the three-month and nine-month periods ended March 31, 2006 and
2005.  These  financial  statements  are  the  responsibility  of the  Company's
management.

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

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

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




                                                    PHILIP VOGEL & CO., PC

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

                                                    Certified Public Accountants


Dallas, Texas
May 12, 2006



                                      -1-
<PAGE>

                               CUBIC ENERGY, INC.
                            CONDENSED BALANCE SHEETS

                                     ASSETS

                                                (Unaudited)
                                              March 31, 2006   June 30, 2005
                                              --------------   --------------
Current assets:
  Cash and cash equivalents                   $      341,235   $      257,253
  Accounts receivable                                 26,546           34,354
  Prepaid drilling costs                             327,495          303,666
  Prepaid and other assets                           364,650                0
                                              --------------   --------------
Total current assets                          $    1,059,926   $      595,273
                                              --------------   --------------

Property and equipment (at cost):
  Oil and gas properties, full cost method:
    Proved properties (including wells and
    related equipment and facilities)         $    4,120,625   $    4,098,571
    Unproven properties                            7,996,973        1,053,000
  Office and other equipment                           7,876            4,873
                                              --------------   --------------
                                              $   12,125,474   $    5,156,444
Less accumulated depreciation, depletion
  and amortization                                 1,655,639        1,469,345
                                              --------------   --------------
                                              $   10,469,835   $    3,687,099
                                              --------------   --------------
Other Assets:
  Deferred loan costs - net                   $      349,491   $      132,639
  Restricted Cash                                    400,822                0
  Other                                               25,000                0
                                              --------------   --------------
                                              $      775,313   $      132,639
                                              --------------   --------------

TOTAL ASSETS                                  $   12,305,074   $    4,415,011
                                              ==============   ==============











            See accompanying notes to condensed financial statements.


                                      -2-
<PAGE>

                               CUBIC ENERGY, INC.
                            CONDENSED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                             (Unaudited)
                                           March 31, 2006    June 30, 2005
                                           --------------    --------------
Current liabilities:
  Current portion of long-term debt        $      250,000    $            0
  Accounts payable and accrued expenses           134,187            11,261
  Due to affiliates                                90,493             7,717
                                           --------------    --------------
Total current liabilities                  $      474,680    $       18,978
                                           --------------    --------------

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

Long-Term Liabilities:
  Long-term debt                           $    3,995,158    $    1,611,866
  Note payable to affiliate                $    1,300,000    $            0
                                           --------------    --------------
Total long-term liabilities                $    5,295,158    $    1,611,886
                                           --------------    --------------

Commitments and contingencies

Stockholders' equity:
  Preferred stock - $.01 par value,
    authorized 10,000,000 shares,
    issued: none                           $            0    $            0
                                           --------------    --------------
  Common stock - $.05 par value,
    Authorized 100,000,000 shares,
    issued 42,271,771 shares at
    March 31, 2006 and 35,161,963
    shares at June 30, 2005                $    2,113,590    $    1,758,100
  Additional paid-in capital                   17,311,373        11,778,915
     Accumulated deficit                      (12,889,727)      (10,752,868)
                                           --------------    --------------
Total stockholders' equity                 $    6,535,236    $    2,784,147
                                           --------------    --------------

                                           $   12,305,074    $    4,415,011
                                           ==============    ==============




            See accompanying notes to condensed financial statements.


                                      -3-
<PAGE>

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

                                             For the Three     For the Three
                                              Months Ended      Months Ended
                                             March 31, 2006    March 31, 2005
                                             --------------    --------------
Revenue:
  Oil and gas sales                          $       82,450    $      126,449
                                             --------------    --------------
Total revenue                                $       82,450    $      126,449
                                             --------------    --------------

Costs and expenses:
  Oil and gas production, operating and
  development costs                          $       73,143    $       88,707
  General and administrative expenses               313,527           115,272
  Depreciation, depletion and amortization           45,454           157,790
                                             --------------    --------------
Total costs and expenses                     $      432,124    $      361,769
                                             --------------    --------------

Operating income (loss):                     $     (349,674)   $     (253,320)
                                             --------------    --------------

Non-operating income (expense):
  Interest expense                           $     (210,254)   $      (68,405)
  Amortization of loan costs                        (21,103)           (7,234)
  Other income                                          836                 0
                                             --------------    --------------
Total non-operating income (expense)         $     (230,521)   $      (75,639)
                                             --------------    --------------

Gain (loss) on debt extinguishment:          $     (660,330)   $            0
                                             --------------    --------------

Income (loss) before taxes:                  $   (1,240,525)   $     (310,959)
                                             --------------    --------------

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

Net income (loss)                            $   (1,240,525)   $     (310,959)
                                             ==============    ==============

Net gain (loss) per common share
  - basic and diluted:                       $       (0.030)   $       (0.009)
                                             ==============    ==============

Weighted average common shares outstanding
  - basic and diluted:                       $   40,932,522        34,319,736
                                             ==============    ==============




            See accompanying notes to condensed financial statements.


                                      -4-
<PAGE>

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

                                              For the Nine      For the Nine
                                              Months Ended      Months Ended
                                             March 31, 2006    March 31, 2005
                                             --------------    --------------
Revenue:
  Oil and gas sales                          $      392,483    $      341,961
                                             --------------    --------------
Total revenue                                $      392,483    $      341,961
                                             --------------    --------------

Costs and expenses:
  Oil and gas production, operating and
    development costs                        $      241,871    $      195,209
  General and administrative expenses             1,088,094           235,913
  Depreciation, depletion and amortization          186,294           198,758
                                             --------------    --------------
Total costs and expenses                     $    1,516,259    $      629,880
                                             --------------    --------------

Operating income (loss)                      $   (1,123,776)   $     (287,919)
                                             --------------    --------------

Non-operating income (expense):
  Interest expense                           $     (316,881)   $     (140,489)
  Amortization of loan costs                        (36,707)          (20,449)
  Other income                                          835                 0
                                             --------------    --------------
Total non-operating income (expense)         $     (352,753)   $     (160,938)
                                             --------------    --------------

Gain (loss) on debt extinguishment:          $     (660,330)   $            0
                                             --------------    --------------

Income (loss) before taxes:                  $   (2,136,859)   $     (448,857)

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

Net income (loss)                            $   (2,136,859)   $     (448,857)
                                             ==============    ==============

Net gain (loss) per common share
  - basic and diluted:                       $       (0.057)   $       (0.014)
                                             ==============    ==============

Weighted average common shares outstanding
  - basic and diluted:                       $   37,216,510        32,432,029
                                             ==============    ==============




            See accompanying notes to condensed financial statements.


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

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

                                                      For the Nine      For the Nine
                                                      Months Ended      Months Ended
                                                     March 31, 2006    March 31, 2005
                                                     --------------    --------------
<S>                                                  <C>               <C>
Cash flows from operating activities:
Net income (loss)                                    $   (2,136,859)   $     (448,857)
Adjustments to reconcile net income (loss)
  to cash provided (used) by operating activities:
  Depreciation, depletion and amortization                  332,601           268,253
  Stock grant expense                                       605,120            59,288
  Stock issued for interest                                  36,042            91,289
  Write-off of deferred loan costs                           99,204                 0
  Write-off of note payable discount                        237,931                 0
Net change in assets and liabilities:
  (Increase) decrease in accounts receivable                  7,808            40,424
  Increase (decrease) in loan from affiliate                 82,776            44,140
  Increase (decrease) in accounts payable and
    accrued liabilities                                     122,926           (99,708)
                                                     --------------    --------------
Net cash provided (used) by operating activities     $     (612,451)   $      (45,171)
                                                     --------------    --------------


Cash flows from investing activities:
  Acquisition of oil & gas properties                $   (5,666,027)   $   (1,793,646)
  Purchase of office equipment                               (3,003)                0
  Payments from advances on development costs               (23,829)         (345,420)
                                                     --------------    --------------
Net cash provided (used) by investing activities     $   (5,692,859)   $   (2,139,066)
                                                     --------------    --------------


Cash flows from financing activities:
  Issuance of common stock, net                      $    1,770,424                 0
  Repayment of debentures                                (1,480,000)                0
  Issuance of convertible debt and warrants               5,500,000         2,635,000
  Issuance of note payable to affiliate                   1,300,000                 0
  Escrow account for debt service                          (400,822)                0
  Loan costs incurred and other                            (300,310)         (264,300)
                                                     --------------    --------------
Net cash provided (used) by financing activities     $    6,389,292    $    2,370,700
                                                     --------------    --------------

Net increase (decrease) in cash and
  cash equivalents                                   $       83,982    $      186,463
                                                     --------------    --------------

Cash at beginning of period                                 257,253           193,213
                                                     --------------    --------------
Cash at end of period                                $      341,235    $      379,676
                                                     ==============    ==============
</TABLE>


            See accompanying notes to condensed financial statements


                                      -6-
<PAGE>

                               CUBIC ENERGY, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                              AS OF MARCH 31, 2006
                                   (Unaudited)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation:

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

The  financial  information  included  herein as of March 31, 2006,  and for the
three-month  and nine- month periods ended March 31, 2006,  and 2005,  have been
presented  without an audit,  pursuant  to  accounting  principles  for  interim
financial  information  generally accepted in the United States of America,  and
the rules of the Securities and Exchange Commission.

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

Earnings per share:

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












                                      -7-
<PAGE>

Stock Grants

On January 5, 2006,  the  Company  issued  572,000  un-registered  shares to the
officers  and  directors  of the Company  pursuant to the  Director  and Officer
Compensation  Plan (the "Plan")  which was approved by the  Shareholders  of the
Company on December 29, 2005. 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 is being amortized to
compensation   expense  on  a  quarterly   basis  during   calendar  year  2006.
Accordingly,  $121,550 has been recorded as compensation expense and is included
in general and administrative expense for the quarter ended March 31, 2006.


Convertible Debt and Warrants

On October 6, 2004,  Cubic closed a  Securities  Purchase  Agreement  and issued
$2,635,000 in principal amount of 7% Senior Secured  Convertible  Debentures due
September 30, 2009 (the "Debentures"),  to a group of institutional and high net
worth investors.  The Debentures were secured by the collateral set forth in the
Deed of Trust,  Security Agreement,  Assignment of Production and Fixture Filing
attached to Form 8-K filed  October,  12, 2004.  The  Debentures  paid an annual
interest rate of 7% on a quarterly basis and were convertible into shares of the
Company's  common stock at a price of $.50 per share. The Company had the option
to pay the  interest on the  Debentures  in common  stock.  The  investors  also
received  warrants to purchase an  additional  2,635,000  shares of common stock
with an  exercise  price of $1.00  per  share.  None of the  warrants  have been
exercised and all remain outstanding at March 31, 2006.

On February 6, 2006, the remaining  Debentures were retired with proceeds from a
new senior debt issue. In connection with this retirement,  the Company recorded
a loss on extinguishment of debt in the amount of $660,330. Such amount includes
the write-off of deferred loan costs  ($99,204),  the write-off of the remaining
loan discount  ($237,931),  and a prepayment  penalty and associated  legal fees
($323,195). See "Issuance of Senior Debt" contained elsewhere herein.


Issuance of Senior Debt

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

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 $1,319,810 was recorded
as an increase in additional  paid in capital.  The assignment of a value to the
warrants  results in a loan  discount  being  recorded for the same amount.  The
discount is being amortized over the original three-year term of the senior debt
as additional  interest  expense.  Amortization for the three months ended March
31, 2006 was $64,968.



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

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  has  been
capitalized   and  is  being  amortized  over  the  term  of  the  senior  debt.
Amortization  of loan costs for the new senior  debt was  $18,094  for the three
months ended March 31, 2006.


Issuance of Common Stock

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


Pro forma information Related to Stock Options

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


                                            Three Months Ended          Nine Months Ended
                                                March 31,                    March 31,
                                       --------------------------   -------------------------
                                           2006           2005          2006          2005
                                       -----------    -----------   -----------   -----------
<S>                                    <C>            <C>           <C>           <C>
Net earnings (loss), as reported       $(1,240,525)   $  (310,959)  $(2,136,859)  $  (448,857)

Deduct: Total stock-based employee
  Compensation expense determined
  under fair value based method
  for all awards, net of tax effect    $         0    $    (4,375)  $         0   $   (13,125)
                                       -----------    -----------   -----------   -----------



Pro forma net income (loss)            $(1,240,525)   $  (315,334)  $(2,136,859)  $  (461,982)
                                       -----------    -----------   -----------   -----------

Earnings (loss) per common share:
  Basic - as reported                  $    (0.030)   $     (0.01)  $    (0.057)  $     (0.01)
  Basic - pro forma                    $    (0.030)   $     (0.01)  $    (0.057)  $     (0.01)
  Diluted - as reported                $      n/a     $       n/a   $      n/a    $       n/a
  Diluted - pro forma                  $      n/a     $       n/a   $      n/a    $       n/a
</TABLE>






                                      -9-
<PAGE>

Property Acquisition

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

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

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

The  maturity  of the  above-referenced  short-term  promissory  note  has  been
extended to April 15,  2007 and the option  period to  purchase  the  additional
working interest has been extended to May 26, 2006.












                                      -10-
<PAGE>

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

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

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















                                      -11-
<PAGE>

Item 2.   Management's Discussion and Analysis

Results of Operations:

Three Months Ended March 31, 2006 Compared To Three Months Ended March 31, 2005:

Gross Revenues for the three months ended March 31, 2006 decreased from $126,449
at March 31, 2005 to $82,450 at March 31, 2006 due  primarily to  decreased  gas
production from the Texas wells as a result of normal depletion.

Oil and Gas Production,  Operating and Development  Costs decreased from $88,707
(70% of oil and gas  sales) at March  31,  2005 to  $73,143  (89% of oil and gas
sales)  at March 31,  2006 due  primarily  to a  decrease  in costs  for  rental
equipment,  swabbing services and saltwater  disposal services for the Louisiana
wells.

Operating  loss increased from a loss of $253,320 at March 31, 2005 to a loss of
$349,674  at March 31, 2006 due  primarily  to higher  general &  administrative
("G&A") costs,  partially  offset by a decrease in  depreciation,  depletion and
amortization   ("DD&A").   G&A  costs  increased  mainly  as  a  result  of  the
amortization  of stock  grants of  $121,550  to officers  and  directors  and an
overall increase in G&A as a result of increased  activity of the Company.  (See
"Stock Grants" in Notes to Condensed  Financial  Statements  elsewhere  herein.)
DD&A decreased as a result of lower production volumes.

Nine Months Ended March 31, 2006 Compared to Nine Months Ended March 31, 2005:

Gross  Revenues for the nine months ended March 31, 2006 increased from $341,961
at March 31, 2005 to $392,483 at March 31, 2006 due to increased gas  production
from the completion of additional wells.

Oil and Gas Production,  Operating and Development Costs increased from $195,209
(57% of oil and gas  sales) at March 31,  2005 to  $241,871  (62% of oil and gas
sales) at March 31, 2006 due primarily to greater  activity  resulting from more
wells being brought online.

Operating  loss increased from a loss of $287,919 at March 31, 2005 to a loss of
$1,123,776  at March 31, 2006 due to  increases  in  production,  operating  and
development costs and G&A costs. G&A costs increased primarily as a result of an
aggregate  of $605,120  in charges  relating  to stock  grants to  officers  and
directors.  (See  "Stock  Grants"  in Notes to  Condensed  Financial  Statements
elsewhere herein.)

Liquidity and Capital Resources:

Long-term  debt of the  Company was  $6,550,000  on March 31,  2006;  and net of
discounts,  was  $5,295,158  on March 31,  2006,  pursuant  to the  senior  debt
financing  and note  payable to affiliate as mentioned in the Notes to Condensed
Financial Statements. The current portion of long-term debt is $250,000 which is
due March 31, 2007.


                                      -12-
<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.

                           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 and Reports on Form 8-K

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

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

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

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

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

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


                                      -13-
<PAGE>

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

10.8      Amendment to  Promissory  Note,  dated March 30, 2006, by and between,
          Cubic Energy, Inc. and Tauren Exploration, Inc.

10.9      Amendment  to Purchase  Agreement,  dated April 3, 2006,  by and among
          Cubic Energy, Inc., Calvin Wallen III and Tauren Exploration, Inc.

10.10     Amendment to Purchase Agreement, dated May 5, 2006, by and among Cubic
          Energy, Inc., Calvin Wallen III and Tauren Exploration, Inc.

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















                                      -14-
<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:  May 15, 2006                                   /s/ Calvin A. Wallen, III
                                                      --------------------------
                                                      Calvin A. Wallen, III, CEO


Date:  May 15, 2006                                   /s/ James L. Busby
                                                      --------------------------
                                                      James L. Busby, CFO















                                      -15-