**U.S. Securities and Exchange Commission**

** **

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 

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

 

**For the quarterly period ended December 31, 2001**

 

**OR**

 

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

 

**For thetransition period from                  to                  .**

 

**Commission File No. 000-29299**

 

**CorVu Corporation**

(Exact name of registrantas 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 theExchange Act during the past 12 months (or such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

Yes ý     No o

 

State the number ofshares outstanding of each of the issuer’s classes of common equity as of thelatest practicable date.

 

**Class:  Common Stock,par value $.01 per share**

**Outstanding shares as of January 31, 2002:  20,442,651**

 

 

**CorVu Corporation**

**Index to Form 10-QSB**

 
| PART  I FINANCIAL INFORMATION |
|-------------------------------|
|                          |
|                          | Item 1.Financial Statements |
|                          |   |
|                          | Consolidated Balance  Sheets December 31, 2001 (Unaudited) and June 30, 2001 |
|                          |   |
|                          | Consolidated  Statements of Cash Flows (Unaudited) Six Month Periods Ended December 31,  2001 and 2000 |
|                          |   |
|                          | Consolidated  Statements of Operations (Unaudited) Three and Six Month Periods Ended  December 31, 2001 and 2000 |
|                          |   |
|                          | Notes  to Unaudited Consolidated Financial Statements For the Three and Six Month  Periods Ended December 31, 2001 and 2000 |
|                          |   |
|                          | Item  2.Management’s  Discussion and Analysis of Financial Condition and Results of Operations |
|                          |   |
| PART  II OTHER INFORMATION    |
|                          |
|                          | Item 1.Legal Proceedings |
|                          |   |
|                          | Item  2.Changes  in 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 and  Reports on Form 8-K |
|                          |   |
| SIGNATURES                    |
|                               |  |  |  |

 

1

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**PART I**

**FINANCIALINFORMATION**

 

**Item1.            Financial Statements**

 

**CORVU CORPORATIONAND SUBSIDIARIES**

 

Consolidated Balance Sheets

 

December 31, 2001 (Unaudited) and June 30, 2001

 

 
|                                                                                                                            |   | **December 31,** |       | **June 30,** |       |
|---------------------------------------------------------------------------------------------------------------------------------|--------|------------------|------------|--------------|------------|
| **Assets**                                                                                                                      |   | **2001**         |       | **2001**     | ** ** |
|                                                                                                                            |   | **(Unaudited)**  | ** ** |         | ** ** |
| Current assets:                                                                                                                 |   |             |       |         |       |
| Cash and cash equivalents                                                                                                       |   | $                | 56,913     |         | 77,409     |   |
| Trade accounts receivable, net of  allowance for doubtful accounts of $105,000 and $145,000, respectively                       |   | 2,289,104        |       | 2,668,802    |       |
| Prepaid expenses and other                                                                                                      |   | 131,144          |       | 145,403      |       |
| Total current assets                                                                                                            |   | 2,477,161        |       | 2,891,614    |       |
| Property and equipment, net                                                                                                     |   | 121,888          |       | 105,073      |       |
|                                                                                                                            |   | $                | 2,599,049  |         | 2,996,687  |   |
|                                                                                                                            |   |             |       |         |       |
| **Liabilities and Stockholders’ Deficit**                                                                                  |   |             |       |         |       |
|                                                                                                                            |   |             | ** ** |         | ** ** |
| Current liabilities:                                                                                                            |   |             |       |         |       |
| Accounts payable                                                                                                                |   | $                | 3,068,130  |         | 2,951,684  |   |
| Accrued compensation and related costs                                                                                          |   | 2,530,144        |       | 2,600,675    |       |
| Deferred revenue                                                                                                                |   | 2,267,775        |       | 2,120,172    |       |
| Accrued interest                                                                                                                |   | 43,565           |       | 23,663       |       |
| Other accrued expenses                                                                                                          |   | 396,810          |       | 741,816      |       |
| Notes payable                                                                                                                   |   | —           |       | 188,123      |       |
| Notes payable – stockholder                                                                                                |   | 665,326          |       | 562,345      |       |
| Total current liabilities                                                                                                       |   | 8,971,750        |       | 9,188,478    |       |
|                                                                                                                            |   |             |       |         |       |
| Stockholders’ deficit:                                                                                                     |   |             |       |         |       |
| Undesignated, 24,000,000 shares                                                                                                 |   | —           |       | —       |       |
| Series A convertible preferred stock, par  value $10 per share; 1,000,000 shares authorized; 200 shares issued and  outstanding |   | 2,000            |       | 2,000        |       |
| Common stock, $0.01 par value; 75,000,000  shares authorized; 20,442,651 and 20,157,781 shares issued and outstanding           |   | 204,370          |       | 201,522      |       |
| Additional paid-in capital                                                                                                      |   | 16,189,698       |       | 16,159,995   |       |
| Accumulated deficit                                                                                                             |   | (23,112,432      | )          | (22,641,345  | )          |
| Deferred compensation                                                                                                           |   | (10,000          | )          | (318,100     | )          |
| Foreign currency translation adjustment                                                                                         |   | 353,663          |       | 404,137      |       |
| Total stockholders’ deficit                                                                                                |   | (6,372,701       | )          | (6,191,791   | )          |
| Total liabilities and stockholders’  deficit                                                                               |   | $                | 2,599,049  |         | 2,996,687  |   |

 

See accompanying notesto unaudited consolidated financial statements.

 

2

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**CORVU CORPORATIONAND SUBSIDIARIES**

 

Consolidated Statements of Cash Flows (Unaudited)

 

Six Month Periods Ended December 31, 2001 and 2000

 

 
|                                                                         |   | **2001** |     | **2000**  |       |
|------------------------------------------------------------------------------|--------|----------|----------|-----------|------------|
|                                                                         |   |     |     |      |       |
| Cash flows from operating activities:                                        |   |     |     |      |       |
| Net loss                                                                     |   | $        | (471,022 | )         | (2,780,958 | ) |
| Adjustments to reconcile net loss to net  cash used in operating activities: |   |     |     |      |       |
| Depreciation                                                                 |   | 29,264   |     | 26,349    |       |
| Warrants and stock options vested                                            |   | 309,646  |     | 483,761   |       |
| Salary forgiven by executive                                                 |   | —   |     | 241,586   |       |
| Changes in operating assets and  liabilities:                                |   |     |     |      |       |
| Trade accounts receivable, net                                               |   | 293,889  |     | 1,650,901 |       |
| Other current assets                                                         |   | 14,259   |     | (62,599   | )          |
| Accounts payable                                                             |   | 90,065   |     | 344,824   |       |
| Accrued compensation and related costs                                       |   | (54,591  | )        | (271,436  | )          |
| Deferred revenue                                                             |   | 114,246  |     | 14,458    |       |
| Accrued interest                                                             |   | 19,902   |     | (63       | )          |
| Other accrued expenses                                                       |   | (267,038 | )        | 367,092   |       |
| Due to affiliates                                                            |   | —   |     | (17,500   | )          |
| Net cash provided (used) in operating  activities                            |   | 78,620   |     | (3,585    | )          |
|                                                                         |   |     |     |      |       |
| Cash flows from investing activities:                                        |   |     |     |      |       |
| Capital expenditures                                                         |   | (46,079  | )        | —    |       |
| Net cash used in investing activities                                        |   | (46,079  | )        | —    |       |
|                                                                         |   |     |     |      |       |
| Cash flows from financing activities:                                        |   |     |     |      |       |
| Proceeds from sale of common stock, net of  costs                            |   | 19,005   |     | 39,728    |       |
| Repayment of notes payable                                                   |   | (188,123 | )        | (69,081   | )          |
| Borrowings  on notes payable - stockholder                              |   | 161,381  |     | 212,657   |       |
| Repayment on notes payable - stockholder                                     |   | (46,400  | )        | (50,000   | )          |
| Other                                                                        |   | —   |     | 1,994     |       |
| Net cash provided (used) by financing  activities                            |   | (54,137  | )        | 135,298   |       |
| Effect of exchange rate changes on cash                                      |   | 1,100    |     | (3,378    | )          |
| Net increase (decrease) in cash and cash  equivalents                        |   | (20,496  | )        | 128,335   |       |
| Cash and cash equivalents at beginning of  period                            |   | 77,409   |     | 46,745    |       |
| Cash and cash equivalents at end of period                                   |   | $        | 56,913   |      | 175,080    |   |
|                                                                         |   |     |     |      |       |
| Conversion of director advance into common  stock                            |   | $        | 12,000   |      | —     |   |

 

See accompanyingnotes to unaudited consolidated financial statements.

 

3

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**CORVU CORPORATIONAND SUBSIDIARIES**

 

Consolidated Statements of Operations (Unaudited)

 

Three and Six Month Periods Ended December 31, 2001 and2000

 
|                                                   |   | **Three Months Ended** |      | **Six Months Ended** |       |
|--------------------------------------------------------|--------|------------------------|-----------|----------------------|------------|
|                                                   |   | **December 31,**       |      | **December 31,**     |       | **December 31,** |   | **December 31,** |   |
|                                                   |   | **2001**               |      | **2000**             | ** ** | **2001** | ** ** | **2000** | ** ** |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Revenues:                                              |   |                   |      |                 |       |   |   |   |   |
| Software and license fees                              |   | $                      | 1,602,874 |                 | 1,191,693  |   | 2,532,998 |   | 2,101,156 |   |
| Maintenance, consulting, and other                     |   | 1,383,364              |      | 2,015,414            |       | 2,652,480 |   | 3,553,180 |   |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Total revenues                                         |   | 2,986,238              |      | 3,207,107            |       | 5,185,478 |   | 5,654,336 |   |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Operating costs and expenses:                          |   |                   |      |                 |       |   |   |   |   |
| Cost of maintenance, consulting, and other             |   | 728,963                |      | 799,475              |       | 1,338,379 |   | 1,698,251 |   |
| Product development                                    |   | 285,222                |      | 301,317              |       | 555,140 |   | 596,693 |   |
| Sales and marketing                                    |   | 986,947                |      | 1,232,366            |       | 1,893,813 |   | 3,056,053 |   |
| General and administrative                             |   | 724,513                |      | 1,347,279            |       | 1,796,307 |   | 3,029,257 |   |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Total operating costs and expenses                     |   | 2,725,645              |      | 3,680,437            |       | 5,583,639 |   | 8,380,254 |   |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Operating income (loss)                                |   | 260,593                |      | (473,330             | )          | (398,161 | ) | (2,725,918 | ) |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Interest expense, net                                  |   | (50,188                | )         | (26,386              | )          | (72,861 | ) | (55,040 | ) |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Net income (loss)                                      |   | $                      | 210,405   |                 | (499,716   | ) | (471,022 | ) | (2,780,958 | ) |
|                                                   |   |                   |      |                 |       |   |   |   |   |
| Net Income (loss) per common share—basic          |   | $                      | .01       |                 | (0.03      | ) | (0.02 | ) | (0.14 | ) |
| Weighted average shares—basic                     |   | 20,367,280             |      | 19,567,864           |       | 20,262,531 |   | 19,541,742 |   |
| Net Income (loss) per common share—fully  diluted |   | $                      | .01       |                 | (0.03      | ) | (0.02 | ) | (0.14 | ) |
| Weighted average shares—fully diluted             |   | 20,833,342             |      | 19,567,864           |       | 20,262,531 |   | 19,541,742 |   |

 

See accompanyingnotes to unaudited consolidated financial statements.

 

4

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**CORVU CORPORATION AND SUBSIDIARIES**

 

**Notes to Unaudited Consolidated Financial Statements For theThree and Six**

**Month Periods Ended December 31, 2001and 2000**

 

**(1)           Unaudited Financial Statements**

 

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

 

**(2)           Summary of Significant AccountingPolicies**

 

***(a)           RevenueRecognition***

 

Software license revenue is recognized when all of thefollowing criteria have been met: there is an executed license agreement,software has been delivered to the customer, the license fee is fixed andpayable within twelve months, collection is deemed probable and product returnsare reasonably estimable.  Revenuesrelated to multiple element arrangements are allocated to each element of thearrangement based on the fair values of elements such as license fees,maintenance, and professional services. Fair value is determined based on vendor specific objectiveevidence.  Maintenance revenues arerecognized ratably over the term of the maintenance contract, typically 12 to36 months.  Consulting and otherrevenues are recognized when services are performed.

 

Deferred revenue represents payment received oramounts billed in advance of services to be performed.  Billing occurs within 30 days of scheduledperformance of services.

 

***(b)           NetIncome (Loss) per Common Share***

 

Basic income (loss) per common share is computed bydividing net income (loss) by the weighted average number of common sharesoutstanding during the period.  Dilutedincome (loss) per common share is computed by dividing net income (loss) by theweighted average number of common shares outstanding during the period assumingthe exercise of dilutive stock options and warrants.  The dilutive effect of stock options and warrants is computedusing the average market price of the Company’s stock during each period underthe treasury stock method.  In periodswhere losses have occurred, options and warrants are considered anti-dilutiveand thus have not been included in the diluted income (loss) per common sharecalculations.

 

5

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**(3)           Comprehensive Income (Loss)**

 

Comprehensive income (loss) and its components,including all changes in equity during a period except those resulting frominvestments by owners or distributions to owners are as follows:

 
|                                     |   | **Three  Months Ended**     |    | **Six Months  Ended**      |       |
|------------------------------------------|--------|-----------------------------|---------|----------------------------|------------|
|                                     |   | **December  31,**

**2001** |    | **December 31,**

**2000** | ** ** | **December 31,**

**2001** | ** ** | **December 31,**

**2000** |   |
| Net Income (Loss)                        |   | $                           | 210,405 |                       | $          | (499,716 | ) | $ | (471,022 | ) | $ | (2,780,958 | ) |
| Other  comprehensive income (loss):      |   |                        |    |                       |       |   |   |   |   |
| Foreign currency  translation adjustment |   | (67,943                     | )       | (52,555                    | )          | (50,474 | ) | 72,734 |   |
| Total  comprehensive income (loss)       |   | $                           | 142,462 |                       | $          | (552,271 | ) | $ | (521,496 | ) | $ | (2,708,224 | ) |

 

**(4)           Liquidity**

 

The accompanying interim consolidated financialstatements are prepared assuming the Company will continue as a goingconcern.  During the year ended June 30,2001, the Company incurred an operating loss of $3,168,265.  Subsequently, for the six-month period endedDecember 31, 2001, the Company incurred an operating loss of $398,161.  As of December 31, 2001, the Company had anaccumulated deficit of $23,112,432, total stockholders’ deficit of $6,372,701,and negative working capital of $6,494,589. In addition, as of February 14, 2002, due to inadequate funds, theCompany has not remitted approximately $442,000 of employee and employerpayroll taxes, including penalties and interest.

 

Going forward the Company must generate additionalcash through profits from operations or otherwise. Management anticipates thatthe impact of the actions listed below will generate sufficient cash flows topay past due debts and fund the Company’s future operations.

 

1.                                       Continueto increase the Company’s revenues from software licenses and other revenuesources.

2.                                       Reduceoperating costs, as deemed necessary.

 

6

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**(5)           Note Payable**

 

In February 1998, the Company entered into a loanagreement in the amount of approximately $927,000 with a third partylender.  During fiscal 1999, the Companyborrowed an additional $480,000.  Thenote was secured by substantially all of the assets of the Company.  The interest rate on the outstandingprincipal balance was based on an index defined in the loan agreement plus 7%,with interest due monthly.  The balanceon this note was paid in full during the period ended December 31, 2001.

 

**(6)           Notes Payable- Stockholder**

 

The Company has received interest-bearing advancesfrom a stockholder under term notes. The notes bear interest at 8.5%, are dueon demand and expire December 31, 2006. The notes are secured by substantiallyall of the assets of the Company. These amounts are classified as currentliabilities in the accompanying balance sheets.

 

In December 2001, a director converted the remainingbalance under a note ($12,000) into 80,000 shares of common stock at a price of$0.15 per share, the fair market value of the stock on the date of conversion.

 

**(7)           InstallmentAgreement with Internal Revenue Service**

 

On March 29, 2001, the Company entered into aninstallment agreement with the Internal Revenue Service regarding the repaymentof past due payroll taxes, penalties and interest. As of that date, the amountdue under this agreement was approximately $931,000. The agreement called formonthly payments of $100,000 on April 15, 2001, $50,000 on May 15, 2001,$100,000 on June 15, 2001, $200,000 on July 15, 2001 and $100,000 on thefifteenth of each month thereafter, with any remaining balance being due onJanuary 15, 2002. In July 2001, the Company renegotiated the monthly paymentamounts to $50,000 per month. As of December 31, 2001, the balance due underthis agreement was approximately $524,000, including penalties and accruedinterest.  In connection with thisagreement, the Internal Revenue Service filed a federal tax lien against theCompany’s assets. This lien will be removed once all payments under theagreement are made.

 

7

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**(8)           CreditorSettlement Agreement**

 

On November 9, 2001 theCompany entered into a Stipulation of Settlement agreement with a creditorunder which the Company agreed to make payments on account as follows: $25,000on November 15, 2001, $100,000 on November 30, 2001, March 31, 2002 and June30, 2002, $125,000 on September 30, 2002, $150,000 on December 31, 2002, March31, 2003 and June 30, 2003 and $70,000 on September 30, 2003. In addition, theCompany agreed to make a final payment on December 31, 2003 of any remainingprincipal plus accrued interest on the unpaid principal balance from the dateof the agreement to December 31, 2003 at a rate of 9% per annum. In the eventof default, the obligation is accelerated, the interest rate is increased to15% and legal fees in the amount of $100,000 would become due. The Company hasalso granted a security interest in the receivables of CorVu North America,Inc. as part of this settlement. As of December 31, 2001, the balance underthis obligation, which is included in accounts payable in the accompanyingbalance sheets, was approximately $890,000, including accrued interest.

 

**(9)           Litigation**

 

In April 2001, the Company and its officers anddirectors were served a lawsuit brought by Calton, Inc. (“Calton”) and GildeaManagement Company (“Gildea”) in the Superior Court of New Jersey, MonmouthCounty. After removal to federal court, the case was transferred to the UnitedStates District Court, District of Minnesota. Calton and Gildea purchased securities from the Company in November 1999and January 2000. The lawsuit claims that Company officials knowingly providedfalse and misleading information regarding the historical and future financialperformance of the Company to the shareholders, which induced them to makethese investments, which totaled approximately $1.5 million. Calton and Gildeaare seeking damages in an unspecified amount or, in the alternative, rescissionof the stock purchase agreements. The case is being handled by the Company’sattorney and its insurance carrier. The Company believes it has meritoriousdefenses against these claims.

 

8

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**Item 2.****                                   Management’sDiscussion and Analysis of Financial Condition and Results of Operations**

 

**For theThree and Six Month Periods Ended December 31, 2001 versus December 31, 2000**

 

REVENUES:

 

Total revenue for the three and six-month periods ended December 31,2001 decreased 7% and 8%, respectively, compared to the same periods a yearago.

 

Software revenues increased $411,181 (35%) and $431,842 (21%) for thethree and six-month periods ended December 31, 2001, respectively, from thesame periods last year. These increases reflect an improvement in new licensesales and the signing of new customers in spite of current economic times and a34% reduction in sales staff since the same period last year (see discussion ofSales and Marketing expenses below).

 

Maintenance, consulting and other revenuesdecreased $632,050 (61%) and $900,700 (45%), for the three and six-monthperiods ended December 31, 2001, respectively, from the same periods last year.These decreases were caused by (1) a 38% reduction in professional servicespersonnel in the North American region, (2) an overall reduction in billablehours due to a decreased demand for services because of lower software andlicense fee revenue during the quarter ended September 30, 2001 and (3) anincrease in services delivered at discounted hourly rates based on partneractivity and the lower demand for the services.

 

OPERATING COSTS AND EXPENSES:

 

Operating expenses decreased $954,792 (26%) and $2,796,615 (33%) forthe three and six-month periods ended December 31, 2001, respectively, from thesame periods last year.

 

Cost of maintenance, consulting and otherexpenses decreased $70,512 (9%) and $359,872 (21%) for the three and six-monthperiods ended December 31, 2001, respectively, from the same periods lastyear.  As explained above, this wascaused by the reduced demand for professional services and a 38% reduction inpersonnel in the North American region.

 

Product development costs decreased $16,095 (5%) and $41,553 (7%) forthe three and six-month periods ended December 31, 2001, respectively, from thesame periods last year.  These decreaseswere caused by a reduction in the number of development staff from 18 as ofDecember 31, 2000 to 16 as of December 31, 2001.

 

Sales and marketing expenses decreased $245,419 (20%) and $1,162,240(38%) for the three and six-month periods ended December 31, 2001,respectively, from the same periods last year, due to the lower number ofemployees working in that sector (as discussed above under Software and licenserevenue) and other factors such as lower expenditures for remote sales offices,travel expenses, reduction of middle sales management staff, advertising,production of marketing materials, and participation in trade show activities.

 

9

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General and administrative expenses decreased $622,766 (46%) and$1,232,950 (41%) for the three and six-month periods ended December 31, 2001,respectively, from the same periods last year. Many factors have contributed tothis including an amendment of the chief executive officer’s employmentcontract, a reduction in audit and tax fees due to a change in the Company’spublic accounting firm and overall reductions in travel and general overheadcosts.

 

INTEREST EXPENSE, NET:

 

Interest expense, net increased $23,802 (90%) and $17,821 (32%) for thethree and six-month periods ended December 31, 2001, respectively, compared tothe same periods last year. Interest charges recorded are reflective ofsettlement agreements currently being serviced with the Internal RevenueService, a creditor and notes payable- stockholder (see footnotes to unauditedfinancial statements).

 

NET INCOME (LOSS):

 

CorVu Corporation reported net income of $210,405 and incurred a netloss of $471,022 for the three and six-month periods ended December 31, 2001,respectively, compared to net losses of $499,716 and $2,780,958 for the threeand six-month periods ended December 31, 2000, respectively.

 

**Liquidityand Capital Resources**

 

Total cash and cash equivalents decreased by $20,496 during thesix-month period ended December 31, 2001 from $77,409 as of June 30, 2001 to$56,913 as of December 31, 2001.  Netcash provided in operating activities was $78,620 for the six-month periodended December 31, 2001. Net cash used in investing activities was $46,079,reflecting the acquisition of capital assets during the period. Net cash usedby financing activities was $54,137 for the six-month period ended December 31,2001.  Proceeds from the sale of commonstock were $19,005, net of costs.  Inaddition, during the six-month period ended December 31, 2001, the Companyrepaid $188,123 of an existing note payable. Additionally, the Company received borrowings from a stockholder ofapproximately $161,000 and repaid amounts under notes payable- stockholder inthe amount of $46,400.

 

In addition, CorVu’s management intends to undertake one or several ofthe following activities: (1) continue to increase CorVu’s revenues fromsoftware licenses and other revenue sources; (2) reduce operating costs, asdeemed necessary.  CorVu’s managementbelieves that these activities will generate sufficient cash flows to sustainCorVu’s operations through the end of fiscal 2002.

 

10

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**PART II**

**OTHERINFORMATION**

 

Item 1.    Legal Proceedings

 

See Item 2 of Part II ofForm 10Q-SB for the quarter ended September 30, 2001.

 

Item 2.   Changes in Securities and Use of Proceeds.

 

Effective December 19,2001, the Registrant issued 80,000 shares of Common Stock to David C. Carlson,Chief Financial Officer of the Registrant, in consideration of the cancellationof debt in the aggregate amount of $12,000. The Registrant relied on Section4(2) of the Securities Act of 1933 for the offer and sale of such shares. Mr.Carlson represented his intention to acquire the shares for investment purposesonly and not with a view to the distribution thereof. In addition, a restrictivesecurities legend has been placed on the certificates representing such shares.

 

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.    Exhibitsand Reports on Form 8-K

 

(a)         Exhibits:  None

 

(b)        Reports on Form 8-K: None

 

11

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**SIGNATURES**

 

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

 
|                           |   |   | CORVU CORPORATION    |
|--------------------------------|--------|--------|----------------------|
|                           |   |   |                 |
|                           |   |   |                 |
| Date:   February 14, 2002 | By     |   | /s/ David C. Carlson |
|                           |   |   |                 | David C. Carlson |
|                           |   |   |                 | Chief Financial Officer |

 

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