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

                     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, 2006

                                       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 or other jurisdiction of                       (IRS Employer ID #)
 incorporation or organization)

                              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 15, 2006: 49,518,268

    Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
================================================================================
<PAGE>

                                CorVu Corporation
                              Index to Form 10-QSB

PART I FINANCIAL INFORMATION

    Item 1.  Financial Statements

        Consolidated Balance Sheets September 30, 2006 (Unaudited)
          and June 30, 2006

        Consolidated Statements of Cash Flows (Unaudited) Three Month Periods
          Ended September 30, 2006 and 2005

        Consolidated Statements of Operations (Unaudited) Three Month Periods
          Ended September 30, 2006 and 2005

        Notes to Unaudited Consolidated Financial Statements For the Three
          Month Periods Ended September 30, 2006 and 2005

    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.  Defaults 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,     June 30,
                                                                                                 2006            2006
                                                                                             ------------    ------------
                                                                                             (Unaudited)       (Audited)
<S>                                                                                          <C>                <C>
                                          Assets
Current assets:
   Cash and cash equivalents                                                                 $  3,384,665       3,104,504
   Trade accounts receivable, net of allowance for doubtful accounts of $68,000 and
     $69,000, respectively                                                                      1,747,816       3,807,362
   Prepaid expenses and other                                                                     412,802         313,861
                                                                                             ------------    ------------
        Total current assets                                                                    5,545,283       7,225,727
Furniture, fixtures and equipment, net                                                            221,286         221,876
                                                                                             ------------    ------------
        Total assets                                                                         $  5,766,569       7,447,603
                                                                                             ============    ============

                           Liabilities and Stockholders' Deficit

Current liabilities:
   Accounts payable                                                                          $    642,403         814,020
   Accrued compensation and related costs                                                       1,704,545       2,241,334
   Deferred revenue                                                                             4,893,618       5,330,222
   Accrued interest                                                                                78,750          78,657
   Other accrued expenses                                                                         707,567         899,987
                                                                                             ------------    ------------
        Total current liabilities                                                               8,026,883       9,364,220
                                                                                             ------------    ------------

Long-term debt                                                                                  1,500,000       1,500,000
                                                                                             ------------    ------------
        Total liabilities                                                                       9,526,883      10,864,220
                                                                                             ------------    ------------

Stockholders' deficit:
   Undesignated capital stock, 23,383,000 shares authorized at September 30, 2006 and June
     30, 2006; none issued and outstanding                                                             --              --
   Series C convertible preferred stock, par value $100 per share; 17,000 shares
     authorized; 17,000 outstanding at September 30, 2006 and June 30, 2006, respectively,
     liquidation preference of $2,550,000 at September 30, 2006                                 1,709,900       1,717,200
   Series B convertible preferred stock, par value $0.01 per share; 600,000 shares
     authorized; 360,000 outstanding at September 30, 2006 and June 30, 2006,
     respectively, liquidation preference of $360,000 at September 30, 2006                         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, 2006 and June 30, 2006,
     respectively                                                                                      --              --
   Common stock, $0.01 par value; 75,000,000 shares authorized; 49,518,268 and 49,498,268
     shares issued and outstanding at September 30, 2006 and June 30, 2006, respectively          495,183         494,983
   Additional paid-in capital                                                                  22,123,854      22,238,620
   Accumulated deficit                                                                        (27,031,309)    (26,634,092)
   Deferred compensation                                                                               --        (208,933)
   Accumulated other comprehensive loss                                                        (1,061,542)     (1,027,995)
                                                                                             ------------    ------------
        Total stockholders' deficit                                                            (3,760,314)     (3,416,617)
                                                                                             ------------    ------------
        Total liabilities and stockholders' deficit                                          $  5,766,569       7,447,603
                                                                                             ============    ============
</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, 2006 and 2005

<TABLE>
<CAPTION>
                                                                             2006           2005
                                                                         -----------    -----------
<S>                                                                      <C>               <C>
Cash flows from operating activities:
   Net loss                                                              $  (360,867)      (235,919)
   Adjustments to reconcile net loss to net cash provided by (used in)
     operating activities:
     Depreciation                                                             27,038         39,202
     Warrants and stock options vested                                        74,542         14,000
     Changes in operating assets and liabilities:
        Trade accounts receivable, net                                     2,059,546      1,340,422
        Prepaid expenses and other                                           (98,941)        16,828
        Accounts payable                                                    (171,617)      (253,742)
        Accrued compensation and related costs                              (552,789)      (291,125)
        Deferred revenue                                                    (452,604)      (609,414)
        Accrued interest                                                          93         11,497
        Other accrued expenses                                              (175,929)      (245,357)
                                                                         -----------    -----------
          Net cash provided by (used in) operating activities                348,472       (213,608)
                                                                         -----------    -----------

Cash flows from investing activities:
   Capital expenditures                                                      (26,448)       (28,505)
                                                                         -----------    -----------
          Net cash used in investing activities                              (26,448)       (28,505)
                                                                         -----------    -----------

Cash flows used in financing activities:
   Payment of preferred stock dividends                                      (43,650)       (30,900)
   Proceeds from exercise of stock options                                     2,400             --
                                                                         -----------    -----------
          Net cash used in financing activities                              (41,250)       (30,900)
Effect of exchange rate changes on cash                                         (613)            44
                                                                         -----------    -----------
          Net increase (decrease) in cash and cash equivalents               280,161       (272,969)
Cash and cash equivalents at beginning of period                           3,104,504      2,162,866
                                                                         -----------    -----------
Cash and cash equivalents at end of period                               $ 3,384,665      1,889,897
                                                                         ===========    ===========

Supplemental cash flow disclosures:
Cash paid during the period for interest                                 $    33,657         22,515
Cash paid during the period for income taxes                                      --             --
Non-cash investing and financing activities:
Preferred stock dividends included in other accrued expenses                   7,300         15,000
                                                                         ===========    ===========
</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, 2006 and 2005

                                                       2006            2005
                                                   ------------    ------------
Revenues:
   Software and license fees                       $    654,780       1,156,777
   Maintenance fees                                   1,544,835       1,431,006
   Consulting and other                                 717,963         705,097
                                                   ------------    ------------

     Total revenues                                   2,917,578       3,292,880
                                                   ------------    ------------
Operating costs and expenses:
   Cost of consulting and other services                703,684         736,500
   Product development                                  524,665         507,912
   Sales and marketing                                1,000,683       1,117,521
   General and administrative                         1,048,144       1,144,384
                                                   ------------    ------------
     Total operating costs and expenses               3,277,176       3,506,317
                                                   ------------    ------------

     Operating loss                                    (359,598)       (213,437)

Interest expense, net                                    (1,269)        (22,482)
                                                   ------------    ------------

     Loss before income taxes                          (360,867)       (235,919)

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

     Net loss                                          (360,867)       (235,919)

Preferred stock dividends                               (36,350)        (15,900)
                                                   ------------    ------------

Net loss attributable to common stockholders       $   (397,217)       (251,819)
                                                   ============    ============

Net loss attributable to common stockholders per
   common share-basic                              $      (0.01)          (0.01)
Weighted average shares outstanding--basic           49,517,181      49,483,268
Net loss attributable to common stockholders per
   common share-diluted                            $      (0.01)          (0.01)
Weighted average shares outstanding--diluted         49,517,181      49,483,268

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, 2006 and 2005

(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, 2006 are not
      necessarily indicative of the results that may be expected for the year
      ending June 30, 2007. 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, 2006.

(2)   Summary of Significant Accounting Policies

      (a)   Revenue Recognition

      The Company recognizes 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. (SAB)
      101, "Revenue Recognition in Financial Statements", as amended by SAB 104.

      Software license revenues 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 twelve months, collection is
      deemed probable and product returns are reasonably estimable. 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. The Company sells its products
      directly to end users and indirectly using resellers and distributors.

      The Company sells perpetual licenses to use their software in exchange for
      a one-time licensing fee. The software is generally priced on a per user
      basis, which represents an arrangement to use multiple single licenses of
      the same software. The licensing fee recognized is a function of the
      number of copies delivered to the customer. In accordance with SOP 97-2,
      revenue is recognized as those licenses are delivered, provided all other
      revenue recognition criteria have been met. In certain situations, the
      Company licenses their software under site, or unlimited user, licenses.
      Under these arrangements, the Company is obligated to furnish an unlimited
      and unspecified number of licenses of the software, but only if the
      licenses are requested by the customer. The licensing fee is payable in
      full, whether or not the customer requests any additional licenses under
      the agreement. Accordingly, assuming all other criteria of revenue
      recognition are met, the Company recognizes license revenue upon delivery
      of the first copy of the software.

      When software revenues are generated by our resellers and distributors, as
      evidenced by a purchase order, the Company generally delivers the product
      directly to the end user customer and recognizes revenue in accordance
      with SOP 97-2. In certain cases, the Company receives cash for prepayment
      of software license fees from resellers and distributors. Accordingly,
      revenue is recognized upon the delivery and acceptance of the product,
      when title to the product has passed to the reseller or distributor and
      there is no right of return or refund. To date, the Company has not
      refunded any prepayments made by resellers or distributors.

      Agreements with resellers and distributors contain contract termination
      language. Upon termination of a contract, any amounts due as a result of
      sales to end users which occurred up to the date of termination remain due
      and payable. To date, the Company has successfully collected all amounts
      due under these contractual provisions.

      Maintenance revenues are recognized in accordance with SOP 97-2. Upon
      collection of the funds from the customer, revenue is recognized ratably
      over the term of the maintenance contract, typically 12 months, beginning
      with the first month of the maintenance contract period. Maintenance
      contracts are renewable at the same rates as originally contracted.
      Customers covered under current maintenance contracts receive the right to
      receive unspecified upgrades/enhancements of the products they have
      purchased on a when-and-if-available basis.


                                       6
<PAGE>

      Many of our software arrangements include consulting implementation
      services sold separately under consulting engagement contracts. Consulting
      revenues from these arrangements are generally accounted for separately
      from new software license revenues because the arrangements qualify as
      service transactions as defined in SOP 97-2. The more significant factors
      considered in determining whether the revenue should be accounted for
      separately include the nature of services (i.e., consideration of whether
      the services are essential to the functionality of the licensed product),
      degree of risk, availability of services from other vendors, timing of
      payments and impact of milestones or acceptance criteria on the
      realizability of the software license fee. Revenues for consulting
      services are generally recognized as the services are performed. If there
      is a significant uncertainty about the project completion or receipt of
      payment for the consulting services, revenue is deferred until the
      uncertainty is sufficiently resolved. Contracts with fixed or "not to
      exceed" fees are recognized on a proportional performance basis.

      Deferred revenue represents payment received or amounts billed in advance
      of services to be performed. The amounts included in deferred revenue are
      recognized as revenue in accordance with the policies discussed above.
      Deferred revenue consists of the following for the periods ended:

                                   September 30,        June 30,
                                        2006              2006
                                  ---------------   ---------------
            Maintenance revenue   $     4,661,279         5,040,712
            Services revenue              232,339           289,510
                                  ---------------   ---------------
            Total                 $     4,893,618         5,330,222
                                  ---------------   ---------------

      As of September 30, 2006 and June 30, 2006, the balance of accounts
      receivable represented by unpaid maintenance contracts (which is included
      in deferred revenues) was $988,977 and $1,732,519, respectively.

      (b)   Loss per Common Share

      Basic loss attributable to common stockholders per common share is
      computed by dividing loss attributable to common stockholders by the
      weighted average number of common shares outstanding during the period.
      Diluted loss attributable to common stockholders per common share is
      computed by dividing 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.
      Dilutive common equivalent shares have not been included in the
      computation of basic or diluted loss attributable to common stockholders
      per share for the periods ended September 30, 2006 and 2005 because their
      inclusion would be anti-dilutive due to the loss from operations.

      Following is a reconciliation of basic and diluted loss attributable to
      common stockholders per common share for the three months ended September
      30, 2006 and 2005, respectively:

                                                      Three Months Ended
                                                         September 30,
                                                 ----------------------------
                                                     2006            2005
                                                 ------------    ------------

      Loss attributable to common stockholders   $   (397,217)       (251,819)

      Weighted average shares outstanding          49,517,181      49,483,268

      Loss attributable to common stockholders
         per common share -- basic               $      (0.01)          (0.01)

      Loss per common share -- diluted:
      Loss attributable to common stockholders   $   (397,217)       (251,819)

      Weighted average shares outstanding          49,517,181      49,483,268

      Common stock equivalents                              0               0

      Convertible preferred stock                           0               0

      Weighted average shares and potential
         diluted shares outstanding                49,517,181      49,483,268

      Loss attributable to common stockholders
         per common share -- diluted             $      (0.01)          (0.01)


                                       7
<PAGE>

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

      Options, warrants and convertible preferred stock outstanding totaling
      13,021,441 and 22,753,026, respectively, were excluded from the
      computation of common share equivalents for the three months ended
      September 30, 2006 and 2005, as they were anti-dilutive.

      (c)   Stock-Based Compensation

      On December 16, 2004, the Financial Accounting Standards Board, or FASB,
      issued Statement of Financial Accounting Standards (SFAS) No. 123 (R),
      "Share-Based Payment", which is a revision of SFAS No. 123 and supersedes
      APB Opinion No. 25. SFAS No. 123 (R) requires all share-based payments to
      employees, including grants of employee stock options, to be valued at
      fair value on the date of grant, and to be expensed over the applicable
      vesting period. Pro forma disclosure of the income statement effects of
      share-based payments is no longer an alternative. SFAS No. 123(R) is
      effective for all share-based awards granted on or after July 1, 2006. In
      addition, companies must recognize compensation expense related to any
      awards that are not fully vested as of the effective date. Compensation
      expense for the unvested awards will be measured based on the fair value
      of the awards previously calculated in developing the pro forma
      disclosures in accordance with the provisions of SFAS No. 123. We
      implemented SFAS No. 123 (R) on July 1, 2006 using the modified
      prospective method.

      As more fully described in our Annual Report on Form 10-KSB for the year
      ended June 30, 2006, the Company has granted stock options over the years
      to employees and directors under various stockholder approved stock option
      plans. At July 1, 2006, options to purchase up to 8,250,126 shares of
      common stock were outstanding under these plans. The fair value of each
      option grant was determined as of the grant date, utilizing the
      Black-Scholes option pricing model. Based on these valuations, we
      recognized compensation expense of $45,342 ($0.00 per share) for the three
      months ended September 30, 2006 related to the amortization of the
      unvested portion of these options as of July 1, 2006. The amortization of
      each option grant will continue over the remainder of the vesting period
      of each option grant. As of September 30, 2006, $524,242 remains to be
      amortized to operations.

      During the three month period September 30, 2006, the Company granted five
      and seven year, fully vested stock options to directors, in exchange for
      services, to purchase up to 95,000 shares of common stock, at exercise
      prices ranging from $0.30-0.40 per share. In accordance with SFAS 123 (R),
      these options were valued at fair value on the date of grant. Based on
      these valuations, we recognized compensation expense of $29,200 ($0.00 per
      share) for the three months ended September 30, 2006 in the accompanying
      statement of operations.

      In prior years, in accordance with Accounting Principles Board (APB)
      Opinion No. 25 and related interpretations, the Company used the intrinsic
      value-based method for measuring stock-based compensation cost which
      measured 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 had to pay for the stock. The Company's general policy was to
      grant stock options at fair value at the date of grant. Options and
      warrants issued to non-employees were 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 had adopted the disclosure-only provisions of SFAS No. 148,
      "Accounting for Stock-Based Compensation".


                                       8
<PAGE>

      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
      loss attributable to common stockholders per common share would have been
      changed to the following pro forma amounts:

<TABLE>
<CAPTION>
                                                               --------------------
                                                                Three Months Ended
                                                                September 30, 2005
                                                               --------------------
<S>                                                                  <C>
      Net loss attributable to common stockholders:
         As reported                                                 $   (251,819)
         Pro forma                                                       (251,819)
      Basic net loss attributable to common stockholders per
         common share:
         As reported                                                        (0.01)
         Pro forma                                                          (0.01)
      Diluted net loss attributable to common stockholders
         per common share:
         As reported                                                        (0.01)
         Pro forma                                                          (0.01)
      Stock based compensation:
         As reported                                                       14,000
         Pro forma                                                             --
</TABLE>

      In determining the compensation cost of options granted during the three
      months ended September 30, 2005, 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,
                                            --------------------------
                                                2006           2005
                                            -----------    -----------

         Risk-free interest rate                  4.875%         3.875%
         Expected life of options granted     5-7 years      5-7 years
         Expected volatility                         89%           152%
         Expected dividend yield                      0%             0%

(3)   Comprehensive Loss

      Comprehensive loss and its components consist of the following:

                                             Three Months Ended September 30,
                                           ---------------    ----------------
                                                 2006               2005
                                           ---------------    ----------------
      Net loss                             $      (360,867)           (235,919)
      Other comprehensive income (loss):
      Foreign currency translation
         adjustment                                (33,547)             25,365
                                           ---------------    ----------------
      Comprehensive loss                   $      (394,414)   $       (210,554)
                                           ===============    ================

(4)   Income Taxes

      Through September 30, 2006, the Company has U.S. Federal and State
      operating loss carryforwards of approximately $8.7 million and $3.1
      million, respectively. In addition, the Company has foreign net operating
      loss carryforwards of approximately $8.9 million. The U.S. net operating
      loss carryforwards expire in the years 2010 through 2024. The Company has
      recorded a valuation allowance at September 30, 2006 and June 30, 2006 due
      to the uncertainties related to the ability to utilize certain Federal and
      State net operating loss carryforwards as determined in accordance with
      accounting principles generally accepted in the United States of America.

      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>

(5)   Preferred Stock

      Holders of the Series B Convertible Preferred Stock are entitled to
      receive a dividend of 6% per annum, payable quarterly in either cash or
      common stock, at the option of the Company. For the three month periods
      ended September 30, 2006 and 2005, the Company has recorded additional
      dividends of $5,400 in each period.

      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. 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
      tose periods. For the three month periods ended September 30, 2006 and
      2005, the Company amortized $7,300 and $15,000, respectively, of the
      effective dividend discussed above. In addition, the Company has recorded
      additional dividends of $38,250 and $25,500 for the three month periods
      ended September 30, 2006 and 2005, respectively.

(6)   Long-term Debt

      The Company has a $1.5 million loan which 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
      2005), (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 $33,750 and $33,935, which is included in interest expense in the
      accompanying statements of operations, for the three month periods ended
      September 30, 2006 and 2005, respectively. The collateralized loan balance
      in the amount of $1.5 million is included as long-term debt in the
      accompanying balance sheets as of September 30, 2006 and June 30, 2006.

(7)   Recently Issued Accounting Pronouncements

      The FASB has issued SFAS No. 157 (SFAS No. 157), Fair Value Measurements,
      to eliminate the diversity in practice that exists due to the different
      definitions of fair value and the limited guidance for applying those
      definitions in GAAP that are dispersed among the many accounting
      pronouncements that require fair value measurements. SFAS No. 157 retains
      the exchange price notion in earlier definitions of fair value, but
      clarifies that the exchange price is the price in an orderly transaction
      between market participants to sell an asset or liability in the principal
      or most advantageous market for the asset or liability. Moreover, the SFAS
      states that the transaction is hypothetical at the measurement date,
      considered from the perspective of the market participant who holds the
      asset or liability. Consequently, fair value is defined as the price that
      would be received to sell an asset or paid to transfer a liability in an
      orderly transaction between market participants at the measurement date
      (an exit price), as opposed to the price that would be paid to acquire the
      asset or received to assume the liability at the measurement date (an
      entry price).

      SFAS No. 157 also stipulates that, as a market-based measurement, fair
      value measurement should be determined based on the assumptions that
      market participants would use in pricing the asset or liability, and
      establishes a fair value hierarchy that distinguishes between (a) market
      participant assumptions developed based on market data obtained from
      sources independent of the reporting entity (observable inputs) and (b)
      the reporting entity's own assumptions about market participant
      assumptions developed based on the best information available in the
      circumstances (unobservable inputs). Finally, SFAS No. 157 expands
      disclosures about the use of fair value to measure assets and liabilities
      in interim and annual periods subsequent to initial recognition. Entities
      are encouraged to combine the fair value information disclosed under SFAS
      No. 157 with the fair value information disclosed under other accounting
      pronouncements, including SFAS No. 107, Disclosures about Fair Value of
      Financial Instruments, where practicable. The guidance in this Statement
      applies for derivatives and other financial instruments measured at fair
      value under SFAS No. 133 "Accounting for Derivative Instruments and
      Hedging Activities" at initial recognition and in all subsequent periods.

      SFAS No. 157 is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years, although earlier application is encouraged. Additionally,
      prospective application of the provisions of SFAS No. 157 is required as
      of the beginning of the fiscal year in which it is initially applied,
      except when certain circumstances require retrospective application.

      The Company is currently evaluating the effect of adopting SFAS No. 157 on
      their consolidated financial statements.


                                       10
<PAGE>

      The FASB has issued SFAS No. 158 (SFAS No. 158), Employers' Accounting for
      Defined Benefit Pension and Other Postretirement Plans, to require an
      employer to fully recognize the obligations associated with
      single-employer defined benefit pension, retiree healthcare, and other
      postretirement plans in their financial statements. Previous standards
      required an employer to disclose the complete funded status of its plan
      only in the notes to the financial statements. Moreover, because those
      standards allowed an employer to delay recognition of certain changes in
      plan assets and obligations that affected the costs of providing benefits,
      employers reported an asset or liability that almost always differed from
      the plan's funded status. Under SFAS No. 158, a defined benefit
      postretirement plan sponsor that is a public or private company or a
      nongovernmental not-for-profit organization must (a) recognize in its
      statement of financial position an asset for a plan's overfunded status or
      a liability for the plan's underfunded status, (b) measure the plan's
      assets and its obligations that determine its funded status as of the end
      of the employer's fiscal year (with limited exceptions), and (c)
      recognize, as a component of other comprehensive income, the changes in
      the funded status of the plan that arise during the year but are not
      recognized as components of net periodic benefit cost pursuant to SFAS No.
      87, Employers' Accounting for Pensions, or SFAS No. 106, Employers'
      Accounting for Postretirement Benefits Other Than Pensions. SFAS No. 158
      also requires an employer to disclose in the notes to financial statements
      additional information on how delayed recognition of certain changes in
      the funded status of a defined benefit postretirement plan affects net
      periodic benefit cost for the next fiscal year. The Company is evaluating
      the effect of adopting SFAS No. 158 on their consolidated financial
      statements.


                                       11
<PAGE>

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

              For the Three Month Periods Ended September 30, 2006
                            versus September 30, 2005

REVENUES:

Total revenues for the three month period ended September 30, 2006 decreased
11%, compared to the same period a year ago.

Software and license fee revenues decreased $501,997 (43%) for the three-month
period ended September 30, 2006 from the same period last year. Two factors had
an impact on the September quarter results. First, the first quarter is usually
our weakest quarter of the year, with new license sales traditionally slow in
our two largest markets, the U.S. and Europe. Secondly, the completion of a
larger than usual number of license sales were delayed to the second quarter. We
believe that software and license fee revenue will increase in future quarters.

Maintenance fee revenues increased $113,829 (8%) for the three-month period
ended September 30, 2006 from the same period last year. The results reflect the
continued high level of maintenance contract renewals and collections and to new
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 increased $12,866 (2%) for the three-month period
ended September 30, 2006 from the same period last year. As software and license
fee revenues improve, we expect to see improvement in this area as well, as the
number of new software implementations increases.

OPERATING COSTS AND EXPENSES:

Operating expenses decreased $229,142 (7%) for the three-month period ended
September 30, 2006 from the same period last year. Operating expenses for the
three month period ended September 30, 2006 includes a non-cash charge of
$45,342, resulting from the adoption of SAFS 123 (R), "Share-Based Payment" (see
Note 2(c)).

Cost of maintenance, consulting and other expenses decreased $32,816 (4%) for
the three-month period ended September 30, 2006 from the same period last year.
Until demand for implementation services increases, we expect expenses in this
area to be stable and to continue to be at levels similar to last year.

Product development costs increased $16,753 (3%) for the three-month period
ended September 30, 2006 from the same period last year. We expect expenses in
this area to continue to be similar to amounts incurred last year.

Sales and marketing expenses decreased $116,838 (10%) for the three-month period
ended September 30, 2006 from the same period last year. Lower revenues have
resulted in lower sales commissions and bonuses. In addition, due to the
shortfall in revenue we experienced during the quarter, we have slowed marketing
and certain selling expenses, especially travel, until revenues improve.

General and administrative expenses decreased $96,240 (8%) for the three-month
period ended September 30, 2006 from the same period last year. The decrease was
caused primarily by a decrease in staffing levels in the administration and help
desk functions. We expect the level of expenditure in this area to be consistent
throughout the fiscal year and comparable to last year's level of expenditure.

OPERATING LOSS:

Operating loss totaled $359,598 for the three month period ended September 30,
2006 compared to $213,438 for the three month period ended September 30, 2005.

INTEREST EXPENSE, NET:

Interest expense, net decreased $21,213 (94%) for the three-month period ended
September 30, 2006 compared to the same period last year because of interest
income earned on excess cash balances.

NET LOSS:

CorVu Corporation reported net losses of $360,867 and $235,919 for the
three-month periods ended September 30, 2006 and 2005, respectively.

PREFERRED STOCK DIVIDENDS:

The Company recorded preferred stock dividends of $36,350 and $15,900 for the
three-month periods ended September 30, 2006 and 2005, respectively.

LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS:

CorVu Corporation incurred losses attributable to common stockholders of
$397,217 and $251,919 for the three-month periods ended September 30, 2006 and
2005, respectively.


                                       12
<PAGE>

Liquidity and Capital Resources

Total cash and cash equivalents increased by $280,161 during the three month
period ended September 30, 2006 from $3,104,504 as of June 30, 2006 to
$3,384,665 as of September 30, 2006. Net cash provided by operating activities
was $348,472 for the three month period ended September 30, 2006 fueled by the
collection of receivables during the three month period. Net cash used in
investing activities was $26,448, reflecting the acquisition of capital assets
during the period. Net cash used in financing activities was $41,250, reflecting
the payment of preferred stock dividends of $43,650, partially offset by
proceeds from the exercise of stock options ($2,400).

Our plan is to continue to manage our operating expenses to keep them in line
with revenues we generate. Management expects revenues to continue to improve as
initiatives implemented take effect. We believe that we will generate sufficient
cash flow from operations to meet our operating cash requirements for the next
12 months.


                                       13
<PAGE>

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,
2006. The accounting policies used in preparing our interim 2007 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 (SAB) No. 101, "Revenue
Recognition in Financial Statements", as amended by SAB 104. 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 license fees. Our specific revenue
recognition policies are as follows:

Software License Fees. Software license fee revenues from end-users, resellers
and distributors 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 twelve months, collection is deemed probable and product
returns are reasonably estimable. 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. In certain
cases, the Company receives cash for prepayment of software license fees from
resellers and distributors. Accordingly, revenue is recognized upon the delivery
and acceptance of the product, when title to the product has passed to the
reseller or distributor and there is no right of return or refund. To date, the
Company has not refunded any prepayments made by resellers or distributors.

Maintenance, Consulting and other. Revenues from training and consulting
services are recognized as services are provided to customers. Revenues from
maintenance contracts are deferred until collection has occurred and recognized
ratably over the term of the maintenance agreements, beginning with the first
month of the maintenance contract period.

Software Development Costs. Software development costs are expensed as incurred
until technological feasibility is established. Software development costs
incurred subsequent to establishing technological feasibility are capitalized
and amortized over the estimated useful lives of the software. 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. There are no pending contingencies as of September
30, 2006.

Stock Based Compensation. The Company uses guidance prescribed by SFAS No.
123(R), "Share-Based Payment," and related interpretations in accounting for
employee stock options and stock based compensation. Management's estimates of
the fair value of each option and warrant granted is calculated using the
Black-Scholes pricing model with weighted-average assumptions including risk
free interest rate, expected life of options granted, expected volatility range,
and expected dividend yield.


                                       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, 2006.

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 (1) 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 and (2) ensure that
information required to be disclosed in the reports that we file or submit under
te Exchange Act is accumulated and communicated to management, including the
Chief Executive Officer and the Chief Financial Officer, to allow timely
decisions regarding required disclosure. 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.

The Company has a limited number of employees and has determined that is not
able to have proper segregation of duties based on an analysis of the cost
versus the benefit of hiring additional employees solely to address that issue.
We have determined that the risks associated with the lack of segregation of
duties are insignificant based on the close involvement of management in
day-to-day activities (i.e. tone at the top, corporate governance, officer
oversight and involvement with daily activities, and other company controls).
The Company has limited resources available and the limited amount of
transactions and activities allow for sufficient compensating controls.


                                       15
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings.

         During the quarter ended September 30, 2006, 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.

         In reliance upon the exemption from registration provided by Section
         4(2) of the Securities Act of 1933, as amended, the Company issued to
         two of its directors non-qualified options to purchase an aggregate of
         45,000 shares of the Company's common stock at $0.30 per share. The
         options were granted at a price below fair market value and outside of
         the Company's stock option plans. In consideration of the option grant,
         the directors waived their right to receive an aggregate of $13,500 of
         cash compensation for their services on the Company's board.

         In reliance upon the exemption from registration provided by Section
         4(2) of the Securities Act of 1933, as amended, the Company issued to
         its CEO non-qualified options to purchase an aggregate of 52,500 shares
         of the Company's common stock at $0.30 per share. The options were
         granted at a price below fair market value and outside of the Company's
         stock option plans. This option grant was in consideration of an amount
         due (valued at $21,000 at the date of grant) for bonus compensation.

Item 3.  Defaults Upon Senior Securities.

         None

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

         None

Item 5.  Other Information.

         In September 2006, the Company entered into bonus compensation plans
         with its CFO and the managing director of its Asia Pacific subsidiary.
         The description of these plans is set forth on Exhibit 10.2 attached
         hereto and incorporated herein by reference.

Item 6.  Exhibits.

         (a) Exhibits: See Exhibit Index on page following 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 31, 2006                  By     /s/ David C. Carlson
                                             ----------------------------------
                                                    David C. Carlson
                                                    Chief Financial Officer


                                       17
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number      Description
-------     -----------
10.1        Amendment No. 1 to Employment Agreement for Joseph C. Caffarelli
            dated July 20, 2006

10.2        Description of Bonus Compensation Plans for Chief Financial Officer
            of CorVu Corporation and Managing Director of CorVu Australasia Pty.
            Ltd.

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