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, 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                   (IRS Employer Identification No.)
    of 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:

             Common Stock                 Outstanding at May 1, 2007
            $.05 par value                         55,082,768



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, 2007 (unaudited) and June 30, 2006................2

             Condensed Statements of Operations, (unaudited)
             For the three months ended March 31, 2007 and March 31, 2006......4

             Condensed Statements of Operations, (unaudited)
             For the nine months ended March 31, 2007 and March 31, 2006.......5

             Condensed Statements of Cash Flows, (unaudited)
             For the nine months ended March 31, 2007 and March 31, 2006.......6

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

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

Item 3.     Control and Procedures............................................14


                           PART II - OTHER INFORMATION

Item 1.     Legal Proceedings.................................................14

Item 6.     Exhibits .........................................................14

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

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 March 31, 2007,
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, 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, 2006,  and the related  statements  of  operations,
stockholders'  equity and cash flows for the year then ended;  and in our report
dated  September  8,  2006,  we  expressed  an  unqualified   opinion  on  those
statements.




                                                    PHILIP VOGEL & CO., PC

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

                                                    Certified Public Accountants


Dallas, Texas
May 11, 2007



                                      -1-
<PAGE>



                               CUBIC ENERGY, INC.
                            CONDENSED BALANCE SHEETS

                                     ASSETS

                                                 (Unaudited)
                                               March 31, 2007  June 30, 2006
                                               --------------  -------------
Current assets:
  Cash and cash equivalents                      $ 1,186,211   $   259,157
  Accounts receivable                                 48,370        41,680
  Prepaid drilling costs                             472,697       264,223
  Prepaid and other assets                           325,200       243,100
                                                 -----------   -----------
Total current assets                             $ 2,032,478   $   808,160
                                                 -----------   -----------

Property and equipment (at cost):
 Oil and gas properties, full cost method:
    Proved properties (including wells and
    related equipment and facilities)            $ 7,392,355   $ 6,679,730
    Unproven properties                            7,191,377     6,780,530
  Office and other equipment                           8,905         7,876
                                                 -----------   -----------
                                                 $14,592,637   $13,468,136
Less accumulated depreciation, depletion
  and amortization                                 1,764,716     1,648,581
                                                 -----------   -----------
                                                 $12,827,921   $11,819,555
Other Assets:
    Deferred loan costs - net                    $   162,619   $   318,999
    Restricted Cash                                        0       401,723
    Other                                                  0        25,000
                                                 -----------   -----------
                                                 $   162,619   $   745,722
                                                 -----------   -----------

TOTAL ASSETS                                     $15,023,018   $13,373,437
                                                 ===========   ===========










            See accompanying notes to condensed financial statements.



                                      -2-
<PAGE>



                               CUBIC ENERGY, INC.
                            CONDENSED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                (Unaudited)
                                              March 31, 2007  June 30, 2006
                                              -------------   -------------

Current liabilities:
  Current portion of long-term debt           $          0    $    500,000
  Accounts payable and accrued expenses             85,747         165,628
  Due to affiliates                                480,809       1,499,762
                                              ------------    ------------
Total current liabilities                     $    566,556    $  2,165,390
                                              ------------    ------------

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

Long-Term Liabilities:
  Long-term debt-net of discounts             $  3,498,436    $  3,854,641
  Note payable to affiliate                   $          0    $  1,300,000
                                              ------------    ------------
Total long-term liabilities                   $  3,498,436    $  5,154,641
                                              ------------    ------------

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 54,872,768 shares at
    March 31, 2007 and 42,450,768
    shares at June 30, 2006                   $  2,743,640    $  2,122,540
  Additional paid-in capital                    24,981,334      17,452,784
     Accumulated deficit                       (16,766,948)    (13,521,918)
                                              ------------    ------------
Total stockholders' equity                    $ 10,958,026    $  6,053,406
                                              ------------    ------------

                                              $ 15,023,018    $ 13,373,437
                                              ============    ============












            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, 2007   March 31, 2006
                                             --------------   --------------
Revenue:
  Oil and gas sales                          $     77,601    $     82,450
                                             ------------    ------------
Total revenue                                $     77,601    $     82,450
                                             ------------    ------------

Costs and expenses:
  Oil and gas production, operating and
  development costs                          $    176,427    $     73,143
     General and administrative expenses          315,794         313,527
  Depreciation, depletion and amortization         27,649          45,454
                                             ------------    ------------
Total costs and expenses                     $    519,870    $    432,124
                                             ------------    ------------

Operating income (loss):                     $   (442,269)   $   (349,674)
                                             ------------    ------------

Non-operating income (expense):
  Interest expense                           $   (339,710)   $   (210,254)
  Amortization of loan costs                      (25,416)        (21,103)
  Other income                                     21,064             836
                                             ------------    ------------
Total non-operating income (expense)         $   (344,062)   $   (230,521)
                                             ------------    ------------

Gain (loss) on debt extinguishment:          $ (1,082,887)   $   (660,330)
                                             ------------    ------------

Income (loss) before taxes:                  $ (1,869,218)   $ (1,240,525)
                                             ------------    ------------

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

Net income (loss)                            $ (1,869,218)   $ (1,240,525)
                                             ============    ============

Net gain (loss) per common share
  - basic and diluted:                       $     (0.034)   $     (0.030)
                                             ============    ============

Weighted average common shares outstanding
  - basic and diluted:                         54,474,168      40,932,522
                                             ============    ============









            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, 2007   March 31, 2006
                                             --------------   --------------

Revenue:
  Oil and gas sales                          $    295,970    $    392,483
                                             ------------    ------------
Total revenue                                $    295,970    $    392,483
                                             ------------    ------------

Costs and expenses:
  Oil and gas production, operating and
    development costs                        $    365,002    $    241,871
     General and administrative expenses          928,647       1,088,094
  Depreciation, depletion and amortization        116,135         186,294
                                             ------------    ------------
Total costs and expenses                     $  1,409,784    $  1,516,259
                                             ------------    ------------

Operating income (loss)                      $ (1,113,814)   $ (1,123,776)
                                             ------------    ------------

Non-operating income (expense):
  Interest expense                           $   (986,854)   $   (316,881)
  Amortization of loan costs                      (87,071)        (36,707)
  Other income                                     25,595             835
                                             ------------    ------------
Total non-operating income (expense)         $ (1,048,330)   $   (352,753)
                                             ------------    ------------

Gain (loss) on debt extinguishment:          $ (1,082,887)   $   (660,330)
                                             ------------    ------------

Income (loss) before taxes:                  $ (3,245,031)   $ (2,136,859)

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

Net income (loss)                            $ (3,245,031)   $ (2,136,859)
                                             ============    ============

Net gain (loss) per common share
  - basic and diluted:                       $     (0.067)   $     (0.057)
                                             ============    ============

Weighted average common shares outstanding
  - basic and diluted:                         48,658,491      37,216,510
                                             ============    ============








            See accompanying notes to condensed financial statements.



                                      -5-
<PAGE>



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

                                                   For the Nine    For the Nine
                                                   Months Ended    Months Ended
                                                  March 31, 2007  March 31, 2006
                                                  --------------  --------------
Cash flows from operating activities:
Net income (loss)                                    $(3,245,031)   $(2,136,859)
Adjustments to reconcile net income (loss)
  to cash provided (used) by operating activities:
  Depreciation, depletion and amortization               156,764        332,601
  Stock grant expense                                    351,500        605,120
  Stock issued for interest                                    0         36,042
  Write-off of deferred loan costs                       318,999         99,204
  Write-off of note payable discount                   1,145,359        237,931
Net change in assets and liabilities:
  (Increase) decrease in accounts receivable              (6,689)         7,808
  Increase (decrease) in loan from affiliate              45,153         82,776
  Increase (decrease) in accounts payable and
    accrued liabilities                                  (79,881)       122,926
                                                     -----------    -----------
Net cash provided (used) by operating activities     $(1,313,826)   $  (612,451)
                                                     -----------    -----------


Cash flows from investing activities:
  Acquisition of oil & gas properties                $(1,336,621)   $(5,666,027)
  Purchase of office equipment                            (1,029)        (3,003)
  Decrease (increase) in restricted cash                 401,723       (400,822)
Payments from advances on development costs           (1,147,580)       (23,829)
                                                     -----------    -----------
Net cash provided (used) by investing activities     $(2,083,507)   $(6,093,681)
                                                     -----------    -----------


Cash flows from financing activities:
  Issuance of common stock, net                      $ 6,465,000      1,770,424
  Repayment of debt                                   (5,500,000)    (1,480,000)
  Issuance of convertible debt and warrants            5,000,000      5,500,000
  Issuance (repayment)of note payable to affiliate    (1,300,000)     1,300,000
  Loan costs incurred and other                         (340,613)      (300,310)
                                                     -----------    -----------
Net cash provided (used) by financing activities     $ 4,324,387    $ 6,790,114
                                                     -----------    -----------

Net increase (decrease) in cash and
  cash equivalents                                   $   927,054    $    83,982
                                                     -----------    -----------

Cash at beginning of period                              259,157        257,253
                                                     -----------    -----------
Cash at end of period                                $ 1,186,211    $   341,235
                                                     ===========    ===========




            See accompanying notes to condensed financial statements




                                      -6-
<PAGE>



                               CUBIC ENERGY, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                              AS OF MARCH 31, 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, 2006,  Form 10-KSB and should be read in  conjunction
with the financial statements contained herein.

The  financial  information  included  herein as of March 31, 2007,  and for the
three-month  and nine-month  periods ended March 31, 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 July 28, 2006,  Cubic entered into and consummated  transactions  pursuant to
subscription and registration  rights agreements with certain investors that are
unaffiliated  with the Company.  Pursuant to the  subscription  agreements,  the
investors  paid  aggregate  consideration  of  $2,100,000  to  the  Company  for
3,000,000  shares of the Company's  common stock and warrants  exercisable  into
1,500,000 shares of common stock. The warrants are exercisable  through July 31,
2011,  at $.70 per share.  In  addition  to  reimbursement  of certain  expenses
incurred in connection  with this offering,  the Company agreed to pay 2% of the
aggregate consideration,  in cash, plus 150,000 shares of common stock valued at
$.70 per share, to a placement agent.

On December 15, 2006, the Company entered into  Subscription  and  Registrations
Rights  Agreements (the  "Subscription  Agreements") with certain investors (the


                                      -7-
<PAGE>

"Investors").  One of the Investors,  William Bruggeman (and entities affiliated
with him), was the beneficial owner, prior to this transaction, of approximately
23.0% of the common stock of the Company.  Another Investor,  Bob Clements, is a
director of the Company.  The remaining  Investors had no material  relationship
with Company.

Pursuant  to  the   Subscription   Agreements,   the  Investors  paid  aggregate
consideration of $3,940,000 to the Company for 7,880,000 shares of the Company's
common stock and warrants exercisable into 3,940,000 shares of common stock. The
warrants are exercisable through November 30, 2011, at $0.70 per share.

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.

During the  three-month  period  ended  March 31,  2007,  the  Company  received
$425,000  relating to the exercise of warrants  representing  850,000  shares of
common stock.

Stock Grants:

On December 29, 2005, the  shareholders  of the Company  approved the 2005 Stock
Option Plan (the "Plan") and 3,750,000 shares of common stock were reserved,  of
which 1,711,000 shares have been issued through March 31, 2007.

On January 5, 2006,  the  Company  issued  572,000  un-registered  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 is included in general and  administrative  expense for the  quarters  ended
September 30 and December 31, 2006.

On January 10 and  January  18,  2007,  the  Company  issued  489,500 and 52,500
un-registered  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  based on the
last sale price on the OTC Bulletin  Board of the Company's  common stock.  Such
amounts will be amortized to  compensation  expense on a quarterly  basis during
calendar  year 2007.  Accordingly,  $108,400 has been  recorded as  compensation
expense and is included  in general and  administrative  expense for the quarter
ended March 31, 2007.

Long-Term Debt:

February 2006 debt issue

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  paid 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.  Approximately  $1.8 million of the funded amount was
used to  retire  the 7%  Senior  Secured  Convertible  Debentures  that were due
September 30, 2009. In connection  with the funding under the Credit  Agreement,



                                      -8-
<PAGE>

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 $1,203,752 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.

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.

The senior debt was retired on March 5, 2007,  with  proceeds  from a new senior
debt issue, as set forth below. In connection with this retirement,  the Company
recorded a loss on  extinguishment  of debt in the amount of $(1,082,887).  Such
amount  includes  the  write-off  of  deferred  loan costs  ($235,898),  and the
write-off of the remaining loan discount ($846,989).

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
million and a convertible term loan of $5 million (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 million 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 revolving  credit facility is subject to a borrowing base,  initially set at
$4 million,  and is subject to review on a semi-annual basis beginning September
1, 2007. The convertible  term loan of $5 million is convertible  into 5 million
shares of Cubic common stock at a conversion price of $1 per share.

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  Company  allocated  the  proceeds  from  the  issuance  of the  debt to the
warrants,  the debt and net profits interest (see below) 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 March 31, 2007
was $36,658.  Amortization  for the years ending June 30, 2007, 2008 and 2009 is
expected to be $164,961, $516,030, and $514,620, respectively.



                                      -9-
<PAGE>

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 of loan costs for the new debt
was $3,970 for the quarter  ended  March 31,  2007.  Amortization  for the years
ending June 30,  2007,  2008 and 2009 is expected  to be $17,865,  $55,886,  and
$55,733, respectively.

The terms of the Credit Facility,  among other things, prohibit the Company from
merging with another company or paying dividends, limit additional indebtedness,
sales of 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.

Related Party Transaction

On February 6, 2006, the Company  entered into a Purchase  Agreement with Tauren
Exploration,  Inc. ("Tauren"),  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  held by
Tauren.  In  connection  with this  purchase,  the  Company  issued to Tauren an
unsecured  12.5%  promissory  note in the amount of  $1,300,000,  which note was
convertible  into Company common stock at a conversion  price of $0.80 per share
(the "Tauren Note").

On November 10, 2006, the maturity of the Tauren Note was extended to October 5,
2007. In connection with the extension of the Tauren Note, the Company issued to
Tauren warrants, with three-year  expirations,  for the purchase of up to 50,000
shares of Company common stock at an exercise price of $0.70 per share.

On February 2, 2007, the Tauren Note was retired  pursuant to a provision in the
note that required payment from the proceeds of an equity  offering.  The equity
offering that occurred in December 2006 (see Stock  Issuance  elsewhere  herein)
was sufficient to facilitate such repayment.

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



                                      -10-
<PAGE>

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, 2006.


















                                      -11-
<PAGE>



Item 2.  Management's Discussion and Analysis

Results of Operations:

Three Months Ended March 31, 2007 Compared To Three Months Ended March 31, 2006:

Oil and gas sales  decreased 6% to $77,601 for the quarter  ended March 31, 2007
from  $82,450 for the quarter  ended March 31, 2006  primarily  due to lower oil
volumes.

Oil and gas production,  operating and  development  costs increased to $176,427
(227% of oil and gas sales) for 2007 from $73,143 (89% of oil and gas sales) for
2006 mainly due to a increase in workover expenses.

General and  administrative  expenses  increased  1% to  $315,794  for 2007 from
$313,527 in 2006 primarily as a result of an increase in salaries.

Depreciation,  depletion,  and amortization  (DD&A) decreased 39% to $27,649 for
2007 from $45,454 for 2006. The decrease was primarily due to a reduction in the
DD&A rate per MCFE which resulted from an increase in oil and gas reserves and a
decrease in total production.

Interest expense  increased to $339,710 in 2007 from $210,254 in 2006 due to the
increase  in the  amount of  outstanding  debt as a result of the  borrowing  of
$5,500,000 pursuant to the debt issue on February 6, 2006.

Nine Months Ended March 31, 2007 Compared to Nine Months Ended March 31, 2006:

Oil and gas sales  decreased 25% to $295,970 for the nine months ended March 31,
2007 from  $392,483  for the nine months ended March 31, 2006  primarily  due to
lower gas prices and volumes.

Oil and gas production,  operating and  development  costs increased to $365,002
(123% of oil and gas  sales) for 2007 from  $241,871  (62% of oil and gas sales)
for 2006 mainly due to an increase in workover  costs and saltwater  hauling and
disposal costs.

General and  administrative  expenses  decreased  15% to $928,647  for 2007 from
$1,088,279  in  2006  primarily  due  to a  $253,620  decrease  in  stock  grant
compensation  allocation  for the  period,  partially  offset by an  increase in
salaries and compensation as a result of an increase in the number of employees.

Depreciation,  depletion,  and  amortization  decreased 38% to $116,135 for 2007
from  $186,294 for 2006.  The decrease was  primarily  due to a reduction in the
DD&A rate per MCFE which resulted from an increase in oil and gas reserves and a
decrease in total production.

Interest expense  increased to $986,854 in 2007 from $316,881 in 2006 due to the
increase  in the  amount of  outstanding  debt as a result of the  borrowing  of
$5,500,000 pursuant to the debt issue on February 6, 2006.


                                      -12-
<PAGE>

Liquidity and Capital Resources:

During the nine months  ended  March 31,  2007,  the  Company  used cash flow in
operating activities of $(1,313,826).  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  increased to $1,465,922 at March 31, 2007 from a
deficit of $(1,357,230)  at June 30, 2006,  primarily due to an increase in cash
and cash  equivalents,  and a reduction in amounts due to affiliates,  resulting
from the issuance of common  stock.  On July 28 and December 15, 2006, we raised
$2,100,000 and $3,940,000, respectively, through the private placement of common
stock.

The Company plans to fund its  development and  exploratory  activities  through
cash provided from  operations and the  utilization of the Credit  Facility (see
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 2007.  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.








                                      -13-
<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

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 14, 2007                  By:  /s/ Calvin A. Wallen, III
                                          --------------------------------------
                                          Calvin A. Wallen, III, CEO
                                          (Principal Executive Officer)


Date:  May 14, 2007                  By:  /s/ James L. Busby
                                          --------------------------------------
                                          James L. Busby, CFO
                                          (Principal Financial and
                                           Accounting Officer)






                                      -15-
<PAGE>