================================================================================

                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-QSB

   |X| QUARTERLY REPORT UNDER SECTION 13 OF 15 (D) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                For the quarterly period ended September 30, 2005

                                       OR

 |_| TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT

                       For the transition period from________ to________.

                          Commission File No. 000-29299

                                CorVu Corporation
             (Exact name of registrant as specified in its charter)

              Minnesota                                         41-1457090
      (State of Incorporation)                             (IRS Employer ID#)


                              3400 West 66th Street
                             Edina, Minnesota 55435
                    (Address of Principal Executive Offices)


                                  952-944-7777
                (Issuer's Telephone Number, Including Area Code)

Check whether the issuer (1) filed all reports required to be filed by Sections
13 or 15(d) of the Exchange Act during the past 12 months (or 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.

                  Class: Common Stock, par value $.01 per share
              Outstanding shares as of October 27, 2005: 49,483,268

================================================================================

<PAGE>

                                CorVu Corporation
                              Index to Form 10-QSB

PART I FINANCIAL INFORMATION

  Item 1. Financial Statements

      Consolidated Balance Sheets September 30, 2005 (Unaudited) and
      June 30, 2005

      Consolidated Statements of Cash Flows (Unaudited) Three Month Periods
      Ended September 30, 2005 and 2004

      Consolidated Statements of Operations (Unaudited) Three Month Periods
      Ended September 30, 2005 and 2004

      Notes to Unaudited Consolidated Financial Statements For the Three Month
      Periods Ended September 30, 2005 and 2004

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

  Item 3.  Controls and Procedures

PART II OTHER INFORMATION

  Item 1. Legal Proceedings

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

  Item 3.  Default Upon Senior Securities

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

  Item 5.  Other Information

  Item 6.  Exhibits

SIGNATURES

EXHIBITS

                                       2
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

Item 1.       Financial Statements

                       CORVU CORPORATION AND SUBSIDIARIES

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                  September 30, 2005    June 30, 2005
                                                                                  ------------------    -------------
                                                                                         (Unaudited)      (Audited)
                                        Assets

Current assets:

<S>                                                                                              <C>             <C>
   Cash and cash equivalents                                                            $  1,889,897       2,162,866
   Trade accounts receivable, net of allowance for doubtful accounts of $68,000 and
     $65,000, respectively                                                                 2,859,188       4,199,610
   Prepaid expenses and other                                                                473,645         490,473
                                                                                        ------------    ------------
      Total current assets                                                                 5,222,730       6,582,949
Furniture, fixtures and equipment, net                                                       275,674         286,371
                                                                                        ------------    ------------
                                                                                        $  5,498,404       7,139,320
                                                                                        ============    ============

                        Liabilities and Stockholders' Deficit

Current liabilities:
   Accounts payable                                                                     $    959,590       1,213,332
   Accrued compensation and related costs                                                  1,577,752       1,868,877
   Deferred revenue                                                                        5,581,076       6,190,490
   Accrued interest                                                                           51,195          39,698
   Other accrued expenses                                                                    490,558         761,236
                                                                                        ------------    ------------
      Total current liabilities                                                            8,660,171      10,073,633

Long-term debt                                                                             1,500,000       1,500,000
                                                                                        ------------    ------------
       Total Liabilities                                                                  10,160,171      11,573,633
                                                                                        ------------    ------------
Stockholders' deficit:
   Undesignated capital stock, 23,383,000 shares authorized at September 30, 2005 and
     June 30, 2005; none issued and outstanding                                                   --              --
   Series C convertible preferred stock, par value $100 per share; 17,000 shares
     authorized; 17,000 outstanding at September 30, 2005 and June 30, 2005,
     liquidation preference of $2,550,000 at September 30, 2005                            1,752,500       1,767,500
   Series B convertible preferred stock, par value $0.01 per share; 600,000 shares
     authorized; 360,000 outstanding at September 30, 2005 and June 30, 2005,
     liquidation preference of $360,000 at September 30, 2005                                  3,600           3,600
   Series A convertible preferred stock, par value $10 per share; 1,000,000 shares
     authorized; none issued and outstanding at September 30, 2005 and June 30, 2005,
     respectively                                                                                 --              --
   Common stock, $0.01 par value; 75,000,000 shares authorized; 49,483,268 shares
     issued and outstanding at September 30, 2005 and June 30, 2005                          494,833         494,833
   Additional paid-in capital                                                             22,026,720      22,012,720
   Accumulated deficit                                                                   (27,989,862)    (27,738,043)
   Deferred compensation                                                                     (17,900)        (17,900)
   Accumulated other comprehensive loss                                                     (931,658)       (957,023)
                                                                                        ------------    ------------
        Total stockholders' deficit                                                       (4,661,767)     (4,434,313)
                                                                                        ------------    ------------
        Total liabilities and stockholders' deficit                                     $  5,498,404       7,139,320
                                                                                        ============    ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>


                       CORVU CORPORATION AND SUBSIDIARIES

                Consolidated Statements of Cash Flows (Unaudited)

              Three Month Periods Ended September 30, 2005 and 2004
<TABLE>
<CAPTION>

                                                                                                      2005           2004
                                                                                               -----------    -----------
Cash flows provided by (used in) operating activities:
<S>                                                                                                    <C>            <C>
   Net loss                                                                                    $  (235,919)    (1,550,985)
   Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
     Depreciation                                                                                   39,202         36,233
     Warrants and stock options vested                                                              14,000          5,349
     Changes in operating assets and liabilities:
        Trade accounts receivable, net                                                           1,340,422      1,566,446
        Prepaid expenses and other                                                                  16,828        (62,952)
        Accounts payable                                                                          (253,742)       475,164
        Accrued compensation and related costs                                                    (291,125)        50,503
        Deferred revenue                                                                          (609,414)       140,289
        Accrued interest                                                                            11,497         (6,403)
        Other accrued expenses                                                                    (276,257)      (145,632)
                                                                                               -----------    -----------
          Net cash provided by (used in) operating activities                                     (244,508)       508,012
                                                                                               -----------    -----------

Cash flows used in investing activities:
   Capital expenditures                                                                            (28,505)       (26,387)
                                                                                               -----------    -----------
          Net cash used in investing activities                                                    (28,505)       (26,387)
                                                                                               -----------    -----------

Cash flows used in financing activities:
   Net decrease in line of credit                                                                       --       (181,235)
                                                                                               -----------    -----------
          Net cash used in financing activities                                                         --       (181,235)
Effect of exchange rate changes on cash                                                                 44          6,727
                                                                                               -----------    -----------
          Net increase (decrease) in cash and cash equivalents                                    (272,969)       307,117
Cash and cash equivalents at beginning of period                                                 2,162,866        148,475
                                                                                               -----------    -----------
Cash and cash equivalents at end of period                                                     $ 1,889,897        455,592
                                                                                               ===========    ===========

Supplemental cash flow disclosures:
Cash paid during the period for interest                                                       $    22,515         23,829
Cash paid during the period for income taxes                                                        13,895         17,594
                                                                                               ===========    ===========
Non-cash investing and financing activities:
Cancellation of stock subscription receivable                                                           --       (324,000)
                                                                                               ===========    ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>


                       CORVU CORPORATION AND SUBSIDIARIES

                Consolidated Statements of Operations (Unaudited)

              Three Month Periods Ended September 30, 2005 and 2004

                                                           2005            2004
                                                   ------------    ------------
Revenues:
   Software and license fees                       $  1,156,777       1,038,246
   Maintenance fees                                   1,431,006       1,202,344
   Consulting and other                                 705,097         804,702
                                                   ------------    ------------

     Total revenues                                   3,292,880       3,045,292
                                                   ------------    ------------
Operating costs and expenses:
   Cost of consulting and other services                736,500         951,700
   Product development                                  507,912         527,925
   Sales and marketing                                1,117,521       1,964,285
   General and administrative                         1,144,384       1,129,950
                                                   ------------    ------------
     Total operating costs and expenses               3,506,317       4,573,860
                                                   ------------    ------------

     Operating loss                                    (213,437)     (1,528,568)

Interest expense, net                                   (22,482)        (22,417)
                                                   ------------    ------------

     Loss before income taxes                          (235,919)     (1,550,985)

Provision for income taxes                                   --              --
                                                   ------------    ------------

     Net loss                                          (235,919)     (1,550,985)

Preferred stock dividends                               (15,900)             --
                                                   ------------    ------------

Net loss attributable to common stockholders       $   (251,819)     (1,550,985)
                                                   ============    ============

Net loss per common share--basic                   $         --           (0.06)
Net loss attributable to common stockholders
   per common share-basic                                 (0.01)          (0.06)
Weighted average shares outstanding--basic           49,483,268      23,970,268
Net loss per common share--diluted                 $         --           (0.06)
Net loss attributable to common stockholders
   per common share-diluted                               (0.01)          (0.06)
Weighted average shares outstanding--diluted         49,483,268      23,970,268



See accompanying notes to unaudited consolidated financial statements.

                                       5
<PAGE>


                       CORVU CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements for the Three Month Periods
Ended September 30, 2005 and 2004

(1)   Unaudited Financial Statements

      The accompanying unaudited consolidated financial statements of CorVu
      Corporation and Subsidiaries (the Company) have been prepared by the
      Company in accordance with accounting principles generally accepted in the
      United States of America for interim financial information, pursuant to
      the rules and regulations of the Securities and Exchange Commission.
      Pursuant to such rules and regulations, certain financial information and
      footnote disclosures normally included in the consolidated financial
      statements have been condensed or omitted. The results for the periods
      indicated are unaudited, but reflect all adjustments (consisting only of
      normal recurring adjustments) which management considers necessary for a
      fair presentation of operating results.

      Operating results for the three months ended September 30, 2005 are not
      necessarily indicative of the results that may be expected for the year
      ending June 30, 2006. These unaudited consolidated financial statements
      should be read in conjunction with the consolidated financial statements
      and footnotes thereto included in the Company's Annual Report on Form
      10-KSB for the year ended June 30, 2005.

(2)   Summary of Significant Accounting Policies

      (a)   Revenue Recognition

      Software license revenue is recognized when all of the following criteria
      have been met: there is an executed license agreement, software has been
      delivered to the customer, the license fee is fixed and payable within
      twelve months, collection is deemed probable and product returns are
      reasonably estimable. Prepaid software license fee revenues from resellers
      and distributors are only recognized upon receipt of cash and upon
      delivery and acceptance of the product and when title to the product has
      passed to the reseller or distributor. Revenues related to multiple
      element arrangements are allocated to each element of the arrangement
      based on the fair values of elements such as license fees, maintenance,
      and professional services. Fair value is determined based on vendor
      specific objective evidence. Maintenance revenues are recognized ratably,
      upon collection of the funds from the customer, over the term of the
      maintenance contract, typically 12 to 36 months. Consulting and other
      revenues are recognized when services are performed.

      Deferred revenue represents payment received or amounts billed in advance
      of services to be performed.

                                       6
<PAGE>


      (b)   Net Loss Attributable to Common Stockholders per Common Share

      Basic net loss attributable to common stockholders per common share is
      computed by dividing net loss attributable to common stockholders by the
      weighted average number of common shares outstanding during the period.
      Diluted net loss attributable to common stockholders per common share is
      computed by dividing net loss attributable to common stockholders by the
      weighted average number of common shares outstanding plus all additional
      common stock that would have been outstanding if potentially dilutive
      common stock related to stock options and warrants had been issued.

      Following is a reconciliation of basic and diluted net loss attributable
      to common stockholders per common share for the three months ended
      September 30, 2005 and 2004, respectively:

                                                 Three Months Ended
                                                   September 30,
                                           ----------------------------
                                                   2005            2004
                                           ------------    ------------

Net loss attributable to common
   stockholders                            $   (251,819)     (1,550,985)

Weighted average shares outstanding          49,483,268      23,970,268

Net loss attributable to common
   stockholders per common share-- basic   $      (0.01)          (0.06)

Net loss per common share -- diluted:
Net loss attributable to common
   stockholders                            $   (251,819)     (1,550,985)

Weighted average shares outstanding          49,483,268      23,970,268

Common stock equivalents                              0               0

Weighted average shares and potential
   diluted shares outstanding                49,483,268      23,970,268

Net loss attributable to common
   stockholders per common share --
   Diluted                                 $      (0.01)          (0.06)

The Company uses the treasury method for calculating the dilutive effect of the
stock options and warrants (using the average market price).

Options and warrants outstanding at September 30, 2005 and 2004 totaling
18,153,026 and 8,056,340, respectively, were excluded from the computation of
common share equivalents for the three months ended September 30, 2005 and 2004
as they were anti-dilutive.

                                       7
<PAGE>


      (c)   Stock-Based Compensation

      In accordance with Accounting Principles Board (APB) Opinion No. 25 and
      related interpretations, the Company uses the intrinsic value-based method
      for measuring stock-based compensation cost which measures compensation
      cost as the excess, if any, of quoted market price of the Company's common
      stock at the grant date over the amount the employee must pay for the
      stock. The Company's general policy is to grant stock options at fair
      value at the date of grant. Options and warrants issued to non-employees
      are recorded at fair value, as required by Statement of Financial
      Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
      Compensation", using the Black Scholes pricing method. The Company has
      adopted the disclosure only provisions of SFAS No. 148, "Accounting for
      Stock-Based Compensation".

      In December 2004, the Financial Accounting Standards Board (FASB) issued
      Statement of Financial Accounting Standards (SFAS) No. 123R which requires
      companies to recognize in the income statement the grant-date fair value
      of stock options and other equity-based compensation issued to employees,
      but expressed no preference for the valuation model. SFAS No. 123R is
      effective for small business issuers as of the beginning of annual
      reporting periods that begin after December 15, 2005. The Company will
      adopt SFAS No. 123R in its first fiscal 2007 quarter. The Company has not
      evaluated the impact, if any, of the adoption of SFAS No. 123R on its
      consolidated financial statements.

      Had compensation cost been recognized based on the fair value of options
      at the grant dates consistent with the provisions of SFAS No. 123, the
      Company's loss attributable to common stockholders and basic and diluted
      net loss attributable to common stockholders per common share would have
      been changed to the following pro forma amounts:

                                                      Three Months Ended
                                                        September 30,
                                                --------------------------------
                                                           2005             2004
                                                ---------------  ---------------
    Net loss attributable to common stockholders:
       As reported                              $     (251,819)      (1,550,985)
       Pro forma                                      (251,819)      (1,687,997)
    Basic net loss attributable to common stockholders per
       common share:
       As reported                                       (0.01)           (0.06)
       Pro forma                                         (0.01)           (0.07)
    Diluted net loss attributable to common stockholders
       per common share:
       As reported                                       (0.01)           (0.06)
       Pro forma                                         (0.01)           (0.07)
    Stock based compensation:
       As reported                                      14,000               --
       Pro forma                                            --          147,012

      In determining the compensation cost of options granted during the three
      months ended September 30, 2005 and 2004, as specified by SFAS No. 123,
      the fair value of each option grant has been estimated on the date of
      grant using the Black-Scholes pricing model and the weighted average
      assumptions used in these calculations are summarized as follows:

                                                      Three Months Ended
                                                         September 30,
                                                --------------------------------
                                                           2005             2004
                                                ---------------  ---------------

    Risk-free interest rate                              3.875%     3.375-3.625%
    Expected life of options granted                 5-7 years          7 years
    Expected volatility                                    152%             122%
    Expected dividend yield                                  0%               0%

      In September 2005, the Company issued five year stock options to
      non-management directors in exchange for services, valued at $14,000 using
      the Black Scholes pricing model, to purchase up to an aggregate of 50,000
      shares of common stock at an exercise price of $0.31 per share, which has
      been recorded in the accompanying consolidated statement of operations for
      the three month period ended September 30, 2005.

                                       8
<PAGE>


(3)   Liquidity

      The accompanying consolidated financial statements are prepared assuming
      the Company will continue as a going concern. During the year ended June
      30, 2005, the Company generated an operating loss of $3,872,825. For the
      ensuing three month period ended September 30, 2005, an additional
      operating loss of $213,437 occurred. As of September 30, 2005, the Company
      had an accumulated deficit of $27,989,862 and total stockholders' deficit
      of $4,661,767.

      During the year ended June 30, 2005, the Company raised approximately $6.5
      million in debt and equity financing, net of expenses. Proceeds of the
      financing are being used to fund current operating losses. During the past
      twelve months, the Company has reduced operating expenses in all areas,
      primarily sales and marketing expenses, to bring them in line with
      expected revenue. In addition, new management has been brought in (see
      Note 8) and initiatives have been implemented to (1) focus sales efforts
      on targeted markets, (2) improve cash flow and expense management and (3)
      improve operational execution. All these initiatives have been implemented
      in an effort to improve on the Company's past performance. If revenues do
      not improve, additional expense reductions can be expected to occur in
      future periods until profitable operations are achieved. If management is
      not successful in achieving this, the Company may seek additional
      financing through private equity or debt placements. There can be no
      assurance that the Company will be successful in achieving these
      objectives. The Company's ability to continue as a going concern is
      dependent on it achieving profitability and generating cash flow to fund
      operations.

(4)   Comprehensive Loss

      Comprehensive loss represents the change in stockholders' deficit
      resulting from other than stockholder investments and distributions.
      Accumulated other comprehensive loss in the consolidated statements of
      stockholders' deficit is solely comprised of the accumulated foreign
      currency translation adjustment.

      Comprehensive loss and its components consist of the following:

                                             Three Months Ended September 30,
                                            -----------------------------------
                                                         2005              2004
                                            ----------------- -----------------
      Net loss                              $       (235,919)       (1,550,985)
      Other comprehensive loss:
      Foreign currency translation
         adjustment                                   25,365           (13,679)
                                            ----------------- -----------------
      Comprehensive loss                    $       (210,554) $     (1,564,664)
                                            ================= =================

(5)   Income Taxes

      Through September 30, 2005, the Company has U.S. Federal and State
      operating loss carryforwards of approximately $9 million and $3 million,
      respectively. The net operating loss carryforwards expire in the years
      2010 through 2024.

      As of June 30, 2003, the Company had recorded a deferred tax asset of
      $2,615,000. A valuation allowance had been provided for the remaining
      deferred tax assets related to certain foreign net operating loss
      carryforwards. As of June 30, 2005, due to operating losses that were
      incurred for the fiscal years ended June 30, 2005 and 2004, management
      felt it was prudent to write-off the previously recorded deferred tax
      asset as of June 30, 2005.

      Federal tax laws impose significant restrictions on the utilization of net
      operating loss carryforwards in the event of a change in ownership of the
      Company which constitutes an "ownership change," as defined by the
      Internal Revenue Code, Section 382. The Company's net operating loss
      carryforward may be subject to the above limitations.

                                       9
<PAGE>


(6)   Series B Convertible Preferred Stock

      During year ended June 30, 2005, the Company authorized and sold 600,000
      shares of Series B Convertible Preferred Stock at a par value of $0.01 per
      share. A total of 360,000 shares were sold at a price of $1.00 per share,
      resulting in proceeds to the Company of $360,000. The Company incurred
      $15,417 of financing costs associated with the preferred stock offering.
      The remaining 240,000 shares were issued as a result of the conversion of
      an existing note payable-stockholder. Subsequently, in February 2005,
      these 240,000 shares were converted into 800,000 shares of the Company's
      common stock at a price of $0.30 per share.

      Under the terms of these shares, holders of the Series B Convertible
      Preferred Stock (1) are entitled to a liquidation preference equal to
      $1.00 per share in the event of any liquidation or dissolution of the
      Company, (2) are entitled to receive a dividend of 6% per annum, payable
      quarterly in either cash or common stock, at the option of the Company and
      (3) received piggyback registration rights. Shares of the Series B
      Convertible Preferred Stock are convertible into shares of the Company's
      common stock, at the option of the holder, at a rate of $0.30 per share,
      or a total of 1,200,000 shares. The conversion price is subject to
      adjustment under certain conditions such as stock dividends, stock splits
      and reclassifications. In addition, shares of the Series B Convertible
      Preferred Stock participate on an as-if converted basis in any dividends
      paid of common stock and are entitled to voting rights together with the
      common stock, on an as-if converted basis. In addition, the investors also
      received five-year warrants to purchase up to 1,400,001 shares of the
      Company's common stock at an exercise price of $0.20 per share. The fair
      value of the warrants at the date of grant was estimated to be
      approximately $360,000 using the Black-Scholes pricing model. The
      following assumptions were used to calculate the fair value of the
      warrants: dividend yield of 0%; expected volatility of 122%; risk-free
      interest rate of 3.375%; and an expected life of five years.

      The proceeds of the Series B Convertible Preferred Stock of $360,000 and
      the conversion of the note payable-stockholder of $240,000 were allocated
      between preferred stock, the fair value of the warrants based on using
      Black-Scholes pricing model and the beneficial conversion of the preferred
      stock. As defined in Emerging Issues Task Force (EITF) 00-27 "Application
      of Issue No. 98-5 to Certain Convertible Instruments", the resulting
      beneficial conversion of the Series B Convertible Preferred Stock of
      approximately $225,000 was accounted for as preferred stock dividends
      during the year ended June 30, 2005. For the three month period ended
      September 30, 2005, the Company has recorded accrued dividends of $5,400.
      These dividends were paid to the holders of the Series B Convertible
      Preferred Stock subsequent to September 30 2005.

      For their efforts in securing this financing, the Company's placement
      agent received a five-year warrant to purchase up to 100,000 shares of the
      Company's common stock at an exercise price of $0.20 per share.

                                       10
<PAGE>

(7)   Debt and Equity Financing Transaction

      In February 2005, the Company and ComVest Investment Partners LLC
      (ComVest) completed a debt and equity financing which included: (1) an
      equity investment of $3,300,000 in exchange for 22,000,000 shares of the
      Company's common stock at a price of $0.15 per share; (2) a preferred
      stock and warrant investment of $1,700,000 in exchange for 17,000 shares
      of a Series C Convertible Preferred Stock ("Series C Preferred Stock"),
      plus five-year warrants to purchase up to 3,400,000 shares of the
      Company's common stock at an exercise price of $0.50 per share, and (3) a
      collateralized loan in the principal amount of $1,500,000.

      Each share of Series C Convertible Preferred Stock has a par value of $100
      and is convertible into 200 shares of the Company's common stock, subject
      to customary anti-dilution provisions. In addition, holders of the Series
      C Convertible Preferred Stock are entitled to voting rights together with
      the common stock, on an as-if converted basis. The Series C Convertible
      Preferred Stock accrues cumulative quarterly dividends of $1.50 per share
      during the first year after issuance, $2.25 per share during the second
      year after issuance, and $3.00 per share during the third year after
      issuance. The Company has the right to redeem Series C Convertible
      Preferred Stock at any time upon 10 business days prior written notice
      upon payment of $100 per share plus accumulated but unpaid dividends;
      holders of Series C Convertible Preferred Stock may elect to convert the
      stock at any time. The fair value of the warrants at the date of grant was
      estimated to be approximately $748,000 using the Black-Scholes pricing
      model. The following assumptions were used to calculate the fair value of
      the warrants: dividend yield of 0%; expected volatility of 122%; risk-free
      interest rate of 3.375%; and an expected life of five years. As defined in
      Emerging Issues Task Force (EITF) 00-27 "Application of Issue No. 98-5 to
      Certain Convertible Instruments", it was determined that there was no
      resulting beneficial conversion of the Series C Convertible Preferred
      Stock. Upon liquidation of the Company, each share of Series C Convertible
      Preferred Stock entitles its holder to receive an amount of $150, prior
      and in preference to holders of common stock and any other preferred
      stock. In accordance with Staff Accounting Bulletin Topic 5, "Increasing
      Rate Preferred Stock", the Company has increased the carrying value of the
      Series C Convertible Preferred stock by $90,000, represented as the net
      present value of the difference between the actual stated value of
      dividends payable in the first two years after issuance and the effective
      dividends based on a 12% market rate during those periods. As of September
      30, 2005, the Company has amortized $15,000 of the effective dividend
      discussed above. In addition, the Company has recorded accrued dividends
      of $25,500 as of September 30, 2005, which have been paid subsequent to
      September 30, 2005.

      The loan is collateralized by substantially all of the assets of the
      Company and ranks senior to any existing or future indebtedness of the
      Company. The interest rate for the loan is 6% during the first year of the
      loan, 9% during the second year and 12% for the third year. The loan
      becomes immediately due and payable upon the earlier of (i) 36 months from
      the date of issuance (February 2008), (ii) a merger or combination of the
      Company or a sale of all or substantially all of the assets of the
      Company, or (iii) the acquisition of more than 50% of the voting power or
      interest in the Company by a single entity or person. The Company has
      recorded interest in the amount of $33,935, which is included in interest
      expense in the accompanying statement of operations for the year ended
      September 30, 2005. The collateralized loan balance in the amount of
      $1,500,000 is included as long-term debt in the accompanying balance
      sheets as of September 30, 2005 and June 30, 2005, respectively.

      The Company has agreed for a period equal to the shorter of (i) three
      years from the closing or (ii) such time as ComVest owns less than
      5,000,000 shares of the Company's common stock, not to issue any shares of
      common stock, or any securities convertible into common stock for an
      effective per share price of less than $0.25 per share, without the
      approval of ComVest. The Company also has agreed not to incur any
      indebtedness for borrowed money other than an asset-based senior line of
      credit without the prior approval of ComVest. The Company is obligated to
      use 50% of any proceeds it may receive in the future upon the sale of
      certain equity or debt securities to redeem outstanding Series C
      Convertible Preferred Stock or to retire the loan.

      At the closing of the transaction, ComVest also received warrants to
      purchase another 2,000,000 shares at $0.50; however, these warrants will
      become exercisable only if less than two ComVest designees are members of
      the Company's Board of Directors while ComVest owns more than 5,000,000
      shares of the Company's common stock.

      All warrants will be subject to anti-dilution protection and contain
      cashless exercise provisions.

      At closing, the Company paid ComVest a cash fee of $240,000, which was
      offset against the gross proceeds of the preferred and common stock.

      Subject to waiver by the unanimous consent of the Company's Board of
      Directors, the Company has agreed to maintain a minimum cash balance of
      $750,000. This cash is available for the Company to use but, in the event
      of its use, an event of default under the debt instrument would be
      triggered which, if left uncured, could result in the debt being declared
      immediately due and payable. As of September 30, 2005, the Company is in
      compliance with all covenants contained in the debt agreement.

      Upon the closing of the financing transaction with ComVest, Delia
      MacIntosh, the spouse of the Company's former Chief Executive Officer,
      converted the remaining outstanding debt of the Company due to her under a
      note payable-stockholder in the aggregate amount of approximately $400,000
      into 2,704,000 shares of Common Stock at the same terms as the equity
      financing.

                                       11
<PAGE>

(8)   Employment Agreement

      On August 1, 2005, the Company entered into an employment agreement with
      an individual to serve as the Company's Chief Executive Officer. The
      agreement has a term of two years and will be automatically renewed for
      additional two-year periods unless terminated earlier by either party.
      Under this agreement, the individual will receive a base salary of
      $250,000 per year plus, in accordance with criteria established by the
      Company's Board of Directors, a performance bonus of up to 80% of base
      salary. Upon termination of the agreement due to change in control, the
      individual will receive a payment equal to eighteen months of his
      then-current salary plus any bonus he is otherwise entitled to. In
      connection with this agreement, the Company granted, under its Stock
      Option Plan, a seven-year option to purchase up to 2,850,000 shares of the
      Company's common stock at a price of $0.265 per share. Twenty-five percent
      of the options will vest on the first anniversary of the date of grant,
      with the remainder vesting in thirty-six equal monthly installments
      beginning on the fifteenth of the month immediately following the
      anniversary date, subject to continued employment. The fair value of the
      options at the date of grant was estimated to be approximately $682,000
      using the Black-Scholes pricing model. Starting with the first quarter of
      fiscal year 2007, the amount will be charged to operations over the
      vesting period. The following assumptions were used to calculate the fair
      value of the options: dividend yield of 0%; expected volatility of 152%;
      risk-free interest rate of 3.875%; and an expected life of seven years.

(9)   Contingencies

      The Company is involved in a dispute with a customer involving software,
      support and services that were purchased from the Company in February
      2001. In accordance with the contractual terms, the matter was brought to
      arbitration in November 2003. In December 2004, the arbitrator terminated
      the case and awarded the Company recovery of legal fees in the amount of
      approximately $90,000. During April 2005, the customer appealed the
      arbitrator's findings with the High Court of New Zealand and, in August
      2006, the court ruled that the matter should be returned to arbitration.
      The Company is unable to estimate the exact amount of the loss, if any,
      but believes the loss may be in the range of $0 to $350,000. The Company
      intends to defend this action vigorously as it believes it has adequate
      defenses against this claim and that the claim is without merit. Based on
      the information available and discussions with legal counsel, we believe
      that the likelihood of loss is remote. Therefore, the Company has not
      accrued any liability related to this matter as of September 30, 2005.

                                       12
<PAGE>

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

              For the Three Month Periods Ended September 30, 2005
                            versus September 30, 2004

REVENUES:

Total revenues for the three month period ended September 30, 2005 increased 8%,
compared to the same period a year ago.

Software and license fee revenues increased $118,531 (11%) for the three-month
period ended September 30, 2005 from the same period last year. Results on a
regional basis were: Americas- $358,402 (a decrease of 14% from the same period
last year), Asia-Pacific- $317,900 (a decrease of 18% from the same period last
year) and UK/Europe- $480,475 (an increase of 107% from the same period last
year). This increase was achieved in spite of a significant decrease in the
number of sales personnel due to a workforce reduction. As of September 30,
2005, we had a total of 27 employees in sales and marketing, a 36% decline over
the same period last year. As a result, the average software and license fee
revenue per salesperson increased to $43,000 during the three month period ended
September 30, 2005 from $25,000 during the comparable three month period in
2004, an increase of 72%. Additionally, new sales management has been brought in
during the quarter. This management team is focusing the sales organization on
specific targeted markets, as opposed to a broader market approach. We expect
the trend of improved results in this area to continue throughout the fiscal
year as a result of this approach.

Maintenance fee revenues increased $228,662 (19%) for the three-month period
ended September 30, 2005 from the same period last year. Results are indicative
of the continued high level of maintenance contract renewals and collections,
and to contracts sold to new customers at the current rate of 20% of the
software license fee paid. We expect maintenance fee revenues to continue to be
higher than last year.

Consulting and other revenues decreased $99,605 (12%) for the three-month period
ended September 30, 2005 from the same period last year. Similar to software and
license fee revenues, results in this area were achieved with significantly
fewer personnel in 2005 than 2004. Overall, staffing levels totaled 25 at the
end of September, 2005, a reduction of 22% over the same period last year. As
software and license fee revenues improve, we would expect to see improvement in
this area as well, as the number of new software implementations increases.

OPERATING COSTS AND EXPENSES:

Operating expenses decreased $1,067,543 (23%) for the three-month period ended
September 30, 2005 from the same period last year.

Cost of maintenance, consulting and other expenses decreased $215,200 (23%) for
the three-month period ended September 30, 2005 from the same period last year.
As stated under consulting and other revenues above, the number of personnel in
this area has declined by 22%. Until demand for implementation services
increases, we expect expenses in this area to be stable and, to continue to be
at levels less than last year.

Product development costs decreased $20,013 (4%) for the three-month period
ended September 30, 2005 from the same period last year. As in other areas of
our operation, the number of personnel in this area has declined 17% since the
same period last year. Our product development staff is located in Australia.
The decrease in headcount has been offset by a strengthening in the Australian
dollar in relation to the U.S. dollar. We expect expenses in this area to
continue to be less than amounts incurred last year.

Sales and marketing expenses decreased $846,764 (43%) for the three-month period
ended September 30, 2005 from the same period last year. As discussed under
software and license fee revenue above, the number of personnel in this area has
been dramatically reduced from 42 employees as of September 30, 2004 to 25
employees as of September 30, 2005, a reduction of 36%. Along with reduced
salary and other compensation costs, other expenses like communications, travel
and general marketing costs have been reduced to bring them in line with
expected revenues. Until revenues improve, we would expect expenses in this area
to continue to be less than levels incurred last year.

General and administrative expenses increased $14,434 (1%) for the three-month
period ended September 30, 2005 from the same period last year. We expect the
level of expenditure in this area to continue throughout the fiscal year.

OPERATING LOSS:

Operating loss totaled $213,437 for the three month period ended September 30,
2005 compared to $1,528,568 for the three month period ended September 30, 2004.

INTEREST EXPENSE, NET:

Interest expense, net was essentially unchanged for the three-month period ended
September 30, 2005 compared to the same period last year.

NET LOSS:

CorVu Corporation reported net losses of $235,919 and $1,550,985 for the
three-month periods ended September 30, 2005 and 2004, respectively.

                                       13
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES:

Total cash and cash equivalents decreased by $272,969 during the three-month
period ended September 30, 2005 from $2,162,866 as of June 30, 2005 to
$1,889,897 as of September 30, 2005. Net cash used in operating activities was
$244,508 for the three-month period ended September 30, 2005. Net cash used in
investing activities was $28,505, reflecting the acquisition of capital assets
during the period.

The accompanying consolidated financial statements are prepared assuming the
Company will continue as a going concern. During the year ended June 30, 2005,
the Company generated an operating loss of $3,872,825. For the ensuing three
month period ended September 30, 2005, an additional operating loss of $213,437
occurred. As of September 30, 2005, the Company had an accumulated deficit of
$27,989,862 and total stockholders' deficit of $4,661,767.

During the year ended June 30, 2005, the Company raised approximately $6.5
million in debt and equity financing, net of expenses. Proceeds of the financing
are being used to fund current operating losses. During the past twelve months,
the Company has reduced operating expenses in all areas, primarily sales and
marketing expenses, to bring them in line with expected revenue. In addition,
new management has been brought in (see Note 8) and initiatives have been
implemented to (1) focus sales efforts on targeted markets, (2) improve cash
flow and expense management and (3) improve operational execution. All these
initiatives have been implemented in an effort to improve on the Company's past
performance. If revenues do not improve, additional expense reductions can be
expected to occur in future periods until profitable operations are achieved. If
management is not successful in achieving this, the Company may seek additional
financing through private equity or debt placements. There can be no assurance
that the Company will be successful in achieving these objectives. The Company's
ability to continue as a going concern is dependent on it achieving
profitability and generating cash flow to fund operations.

We believe that we will generate sufficient cash flow from operations to meet
our operating cash requirements for the next 12 months.

(1)   Critical Accounting Policies and Estimates-

Our significant accounting policies are described in Note 1 to the consolidated
financial statements included in our annual report for the year ended June 30,
2005. The accounting policies used in preparing our interim 2006 consolidated
financial statements are the same as those described in our annual report, and
are as follows:

We believe the critical accounting policies listed below affect significant
judgments and estimates used in the preparation of our consolidated financial
statements.

Revenue Recognition. We recognize revenues in accordance with the provisions of
the American Institute of Certified Public Accountants' Statement of Position
(SOP) 97-2, "Software Revenue Recognition," as amended by SOP 98-4 and SOP 98-9,
as well as Technical Practice Aids issued from time to time by the American
Institute of Certified Public Accountants, and in accordance with the Securities
and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue
Recognition." We license software under non-cancelable license agreements and
provide related professional services, including consulting, training, and
implementation services, as well as ongoing customer support and maintenance.
Consulting, training and implementation services are not essential to the
functionality of our software products, are sold separately and also are
available from a number of third-party service providers. Accordingly, revenues
from these services are generally recorded separately from the license fee. Our
specific revenue recognition policies are as follows:

         Software License Fees -- Software license fee revenues from end-users
         and resellers are generally recognized when there is an executed
         license agreement, software has been delivered to the customer, the
         license fee is fixed and payable within 12 months, collection is deemed
         probable and product returns are reasonably estimable. Prepaid software
         license fee revenues from resellers and distributors are only
         recognized upon receipt of cash and upon delivery and acceptance of the
         product and when title to the product has passed to the reseller or
         distributor. Revenues related to multiple element arrangements are
         allocated to each element of the arrangement based on the fair values
         of elements such as license fees, maintenance, and professional
         services. Fair value is determined based on vendor specific objective
         evidence.

         Maintenance, Consulting and other - Revenues from training and
         consulting services are recognized as services are provided to
         customers. Revenues from maintenance contracts are deferred and
         recognized ratably over the term of the maintenance agreements upon
         collection of the funds from the customer.

Software Development Costs. Software development costs are expensed as incurred.
Management is required to use professional judgment in determining whether
development costs meet the criteria for immediate expense or capitalization.

Allowance for Doubtful Accounts. We maintain allowances for doubtful accounts
for estimated losses resulting from the inability of our customers to make
required payments. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required or revenue could be deferred until
collectibility becomes probable.

Contingencies. We are subject to the possibility of various loss contingencies
in the normal course of business. We accrue for loss contingencies when a loss
is estimable and probable.

                                       14
<PAGE>

Cautionary Factors That May Affect Future Results

This Quarterly Report on Form 10-QSB, including the information incorporated by
reference herein and the exhibits hereto, and other written and oral statements
made from time to time by us may include "forward-looking" statements.
Forward-looking statements broadly involve our current expectations for future
results. Any statement that is not a historical fact, including estimates,
projections, future trends and the outcome of events that have not yet occurred,
are forward-looking statements. Our forward-looking statements generally relate
to our financing plans, trends affecting our financial condition or results of
operations, our growth and operating strategy, product development, competitive
strengths, the scope of our intellectual property rights, sales efforts, and the
declaration and payment of dividends. Words such as "anticipates," "believes,"
"could" "estimates," "expects," "forecast," "intend," "may," "plan," "possible,"
"project," "should," "will" and similar expressions generally identify our
forward-looking statements. You must carefully consider forward-looking
statements and understand that such statements involve a variety of assumptions,
risks and uncertainties, known and unknown, and may be affected by a number of
factors, including, among others, the factors discussed in our Annual Report on
Form 10-KSB for the year ended June 30, 2005.

We also caution you that forward-looking statements speak only as of the date
made. We undertake no obligation to update any forward-looking statement, but
investors are advised to consult any further disclosures by us on this subject
in our filings with the Securities and Exchange Commission, especially on Forms
10-KSB, 10-QSB, and 8-K (if any), in which we discuss in more detail various
important factors that could cause actual results to differ from expected or
historic results. We intend to take advantage of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 regarding our
forward-looking statements, and are including this sentence for the express
purpose of enabling us to use the protections of the safe harbor with respect to
all forward-looking statements.

Item 3. Controls and Procedures

Management of the Company has evaluated, with the participation of the Chief
Executive Officer and Chief Financial Officer of the Company, the effectiveness
of the Company's disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the fiscal quarter covered by this
Quarterly Report on Form 10-QSB. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer of the Company have concluded that the
Company's disclosure controls and procedures as of the end of the fiscal quarter
covered by this Quarterly Report on Form 10-QSB are effective to provide
reasonable assurance that information required to be disclosed by the Company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission. Management of the
Company has also evaluated, with the participation of the Chief Executive
Officer and Chief Financial Officer of the Company, any change in the Company's
internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the fiscal quarter
covered by this Quarterly Report on Form 10-QSB. There was no change in the
Company's internal control over financial reporting identified in that
evaluation that occurred during the fiscal quarter covered by this Quarterly
Report on Form 10-QSB that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
Management is aware that there is a lack of segregation of duties due to the
small number of employees dealing with general administrative and financial
matters. However, management has decided that considering the employees involved
and the control procedures in place, risks associated with such lack of
segregation of duties are insignificant and the potential benefits of adding
employees to clearly segregate duties do not justify the expenses which would be
associated with such increases.

                                       15
<PAGE>


                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings.

      The Company is involved in a dispute with a customer involving software,
      support and services that were purchased from the Company in February
      2001. In accordance with the contractual terms, the matter was brought to
      arbitration in November 2003. In December 2004, the arbitrator terminated
      the case and awarded the Company recovery of legal fees in the amount of
      approximately $90,000. During April 2005, the customer appealed the
      arbitrator's findings with the High Court of New Zealand and, in August
      2006, the court ruled that the matter should be returned to arbitration
      The Company is unable to estimate the exact amount of the loss, if any,
      but believes the loss may be in the range of $0 to $350,000. The Company
      intends to defend this action vigorously as it believes it has adequate
      defenses against this claim and that the claim is without merit. Based on
      the information available and discussions with legal counsel, we believe
      that the likelihood of loss is remote. Therefore, the Company has not
      accrued any liability related to this matter as of September 30, 2005.

      During the quarter ended September 30, 2005, the Company did not have any
      additional legal proceedings that were outside of routine litigation
      incidental to the business.

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

      None

Item 3.  Default Upon Senior Securities.

      None

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

      None

Item 5. Other Information.

      None

Item 6. Exhibits.

      See Exhibit Index on page following Certifications the signature page of
      this Form 10-QSB.

                                       16
<PAGE>


SIGNATURES

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

                                                    CORVU CORPORATION

Date:  October 27, 2005                         By  /s/ David C. Carlson
                                                    ----------------------------
                                                    David C. Carlson
                                                    Chief Financial Officer


                                       17
<PAGE>


                                  EXHIBIT INDEX

Exhibit
Number            Description
------            -----------

31.1              Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley
                  Act of 2002

31.2              Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley
                  Act of 2002

32.1              Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley
                  Act of 2002

32.2              Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley
                  Act of 2002

                                       18