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

                     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 March 31, 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 of Incorporation)                                     (IRS Employer ID #)

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

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

Check whether the issuer (1) filed all reports required to be filed by Sections
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES | | NO |X|

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.

                  Class: Common Stock, par value $.01 per share
               Outstanding shares as of April 14, 2006: 49,483,268

    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 March 31, 2006 (Unaudited) and June 30, 2005

    Consolidated Statements of Cash Flows (Unaudited) Nine Month Periods Ended
    March 31, 2006 and 2005

    Consolidated Statements of Operations (Unaudited) Three and Nine Month
    Periods Ended March 31, 2006 and 2005

    Notes to Unaudited Consolidated Financial Statements For the Three and Nine
    Month Periods Ended March 31, 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

                                                     March 31,       June 30,
                                                       2006            2005
                                                   ------------    ------------
                                                    (Unaudited)     (Audited)
                                     Assets

Current assets:
  Cash and cash equivalents                        $  2,903,611       2,162,866
  Trade accounts receivable, net of allowance
    for doubtful accounts of $77,000 and $65,000,
    respectively                                      3,007,752       4,199,610
  Prepaid expenses and other                            386,104         490,473
                                                   ------------    ------------
      Total current assets                            6,297,467       6,852,949
Furniture, fixtures and equipment, net                  225,429         286,371
                                                   ------------    ------------
      Total assets                                 $  6,522,896       7,139,320
                                                   ============    ============

                     Liabilities and Stockholders' Deficit

Current liabilities:
  Accounts payable                                 $  1,101,895       1,213,332
  Accrued compensation and related costs              1,972,484       1,868,877
  Deferred revenue                                    4,880,681       5,955,815
  Accrued interest                                       73,140          39,698
  Other accrued expenses                                870,167         995,911
                                                   ------------    ------------
      Total current liabilities                       8,898,367      10,073,633
                                                   ------------    ------------

Long-term debt                                        1,500,000       1,500,000
                                                   ------------    ------------
      Total Liabilities                              10,398,367      11,573,633
                                                   ------------    ------------

Stockholders' deficit:
  Undesignated capital stock, 23,383,000 shares
    authorized at March 31, 2006 and June 30,
    2005; none issued and outstanding                        --              --
  Series C convertible preferred stock, par value
    $100 per share; 17,000 shares authorized;
    17,000 outstanding at March 31, 2006 and
    June 30, 2005, respectively, liquidation
    preference of $2,550,000 at March 31, 2006        1,724,500       1,767,500
  Series B convertible preferred stock, par value
    $0.01 per share; 600,000 shares authorized;
    360,000 outstanding at March 31, 2006 and
    June 30, 2005, respectively, liquidation
    preference of $360,000 at March 31, 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 March 31, 2006
    and June 30, 2005, respectively                          --              --
  Common stock, $0.01 par value; 75,000,000
    shares authorized; 49,483,268 shares issued
    and outstanding at March 31, 2006 and
    June 30, 2005, respectively                         494,833         494,833
  Additional paid-in capital                         22,234,720      22,012,720
  Accumulated deficit                               (27,277,860)    (27,738,043)
  Deferred compensation                                (208,933)        (17,900)
  Accumulated other comprehensive loss                 (846,331)       (957,023)
                                                   ------------    ------------
      Total stockholders' deficit                    (3,875,471)     (4,434,313)
                                                   ------------    ------------
      Total liabilities and stockholders' deficit  $  6,522,896       7,139,320
                                                   ============    ============

See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES

                Consolidated Statements of Cash Flows (Unaudited)

                Nine Month Periods Ended March 31, 2006 and 2005

                                                         2006           2005
                                                     -----------    -----------
Cash flows from operating activities:
  Net income (loss)                                  $   516,825     (3,381,117)
  Adjustments to reconcile net income (loss) to
    net cash provided by (used in) operating
    activities:
      Depreciation                                       121,050        121,029
      Warrants and stock options vested                   30,967         25,900
      Changes in operating assets and liabilities:
        Trade accounts receivable, net                 1,191,858        655,455
        Prepaid expenses and other                       104,369        (19,650)
        Accounts payable                                (111,437)      (462,892)
        Accrued compensation and related costs           103,607       (555,696)
        Deferred revenue                                (962,771)       486,206
        Accrued interest                                  33,442        (88,452)
        Other accrued expenses                          (225,386)       (62,275)
                                                     -----------    -----------
          Net cash provided by (used in)
            operating activities                         802,524     (3,281,492)
                                                     -----------    -----------

Cash flows from investing activities:
  Capital expenditures                                   (60,108)       (92,513)
                                                     -----------    -----------
          Net cash used in investing activities          (60,108)       (92,513)
                                                     -----------    -----------

Cash flows from financing activities:
  Proceeds from sale of common stock, net                     --      3,007,335
  Proceeds from sale of Series B convertible
    preferred stock, net                                      --        344,583
  Proceeds from sale of Series C convertible
    preferred stock                                           --      1,700,000
  Borrowings on long-term debt                                --      1,500,000
  Repayment of line of credit                                 --       (300,000)
                                                     -----------    -----------
          Net cash provided by financing
            activities                                        --      6,251,918
Effect of exchange rate changes on cash                   (1,671)        43,203
                                                     -----------    -----------
          Net increase in cash and cash
            equivalents                                  740,745      2,921,116
Cash and cash equivalents at beginning of period       2,162,866        148,475
                                                     -----------    -----------
Cash and cash equivalents at end of period           $ 2,903,611      3,069,591
                                                     ===========    ===========

Supplemental cash flow disclosures:
Cash paid during the period for interest             $    70,316        189,356
Cash paid during the period for income taxes                  --             --
                                                     ===========    ===========
Non-cash investing and financing activities:
Series B Convertible Preferred Stock issued for
  cancellation of note payable-stockholder,
  subsequently converted into common stock           $        --        240,000
Common stock issued for cancellation of note
  payable-stockholder                                         --        405,600
                                                     ===========    ===========

See accompanying notes to unaudited consolidated financial statements.

                                       4
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES

                Consolidated Statements of Operations (Unaudited)

           Three and Nine Month Periods Ended March 31, 2006 and 2005

<TABLE>
<CAPTION>
                                                         Three Months Ended              Nine Months Ended
                                                    ----------------------------    ----------------------------
                                                      March 31,       March 31,       March 31,       March 31,
                                                        2006            2005            2006            2005
                                                    ------------    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>             <C>
Revenues:
  Software and license fees                         $  1,590,839       1,213,434       4,736,898       3,515,973
  Maintenance fees                                     1,483,796       1,492,390       4,417,015       4,075,023
  Consulting and other                                   748,016         867,616       2,134,440       2,350,694
                                                    ------------    ------------    ------------    ------------

      Total revenues                                   3,822,651       3,573,440      11,288,353       9,941,690
                                                    ------------    ------------    ------------    ------------
Operating costs and expenses:
  Cost of consulting and other services                  753,172         883,518       2,277,008       2,671,721
  Product development                                    531,419         552,681       1,605,910       1,651,139
  Sales and marketing                                    993,250       1,676,198       3,368,331       5,479,075
  General and administrative                           1,129,608       1,165,692       3,464,621       3,428,299
                                                    ------------    ------------    ------------    ------------
      Total operating costs and expenses               3,407,449       4,278,089      10,715,870      13,230,234
                                                    ------------    ------------    ------------    ------------

      Operating income (loss)                            415,202        (704,649)        572,483      (3,288,544)

Interest expense, net                                    (11,121)        (34,836)        (55,658)        (92,573)
                                                    ------------    ------------    ------------    ------------

      Income (loss) before income taxes                  404,081        (739,485)        516,825      (3,381,117)

Benefit from income taxes                                     --              --              --              --
                                                    ------------    ------------    ------------    ------------

      Net income (loss)                                  404,081        (739,485)        516,825      (3,381,117)

Preferred stock dividends                                (24,842)       (103,157)        (56,642)       (332,402)
                                                    ------------    ------------    ------------    ------------

Income (loss) attributable to common stockholders   $    379,239        (842,642)        460,183      (3,713,519)
                                                    ============    ============    ============    ============

Net income (loss) per common share--basic           $       0.01           (0.02)           0.01           (0.12)
Income (loss) attributable to common
  stockholders per common share- basic              $       0.01           (0.02)           0.01           (0.13)
Weighted average shares outstanding--basic            49,483,268      37,855,779      49,483,268      28,531,202
Net income (loss) per common share--diluted         $       0.01           (0.02)           0.01           (0.12)
Income (loss) attributable to common
  stockholders per common share- diluted            $       0.01           (0.02)           0.01           (0.13)
Weighted average shares outstanding--diluted          57,390,234      37,855,779      56,226,114      28,531,202
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       5
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES

          Notes to Unaudited Consolidated Financial Statements for the
           Three and Nine Month Periods Ended March 31, 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 and nine months ended March 31, 2006 are
      not necessarily indicative of the results that may be expected for the
      year ending June 30, 2006. These unaudited consolidated financial
      statements should be read in conjunction with the consolidated financial
      statements and footnotes thereto included in the Company's Annual Report
      on Form 10-KSB for the year ended June 30, 2005.

(2)   Summary of Significant Accounting Policies

      (a) Revenue Recognition

      We recognize revenue in accordance with the provisions of the American
      Institute of Certified Public Accountants (AICPA) 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
      AICPA, 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.

      Software license revenues from end-users and resellers are generally
      recognized when there is an executed license agreement, software has been
      delivered to the customer, the license fee is fixed and payable within
      twelve months, collection is deemed probable and product returns are
      reasonably estimable. When the Company received cash for prepayment of
      software license fees from resellers and distributors, 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. Revenues related to multiple element
      arrangements are allocated to each element of the arrangement based on the
      fair values of elements such as license fees, maintenance, and
      professional services. Fair value is determined based on vendor specific
      objective evidence.

      Maintenance revenues are recognized ratably, upon collection of the funds
      from the customer, over the term of the maintenance contract, typically 12
      to 36 months.

      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.

                                       6
<PAGE>

      (b) Net Income (Loss) per Common Share

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

      Following is a reconciliation of basic and diluted net income (loss)
      attributable to common stockholders per common share for the three and
      nine months ended March 31, 2006 and 2005, respectively:

<TABLE>
<CAPTION>
                                                    Three Months Ended             Nine Months Ended
                                                         March 31,                     March 31,
                                                 -------------------------    ---------------------------
                                                   2006           2005            2006           2005
                                               ------------   ------------    ------------   ------------
<S>                                            <C>            <C>             <C>            <C>
Income (loss) attributable to common
  stockholders                                 $    379,239       (842,642)        460,183     (3,713,519)

Weighted average shares outstanding- basic       49,483,268     37,855,779      49,483,268     28,531,202

Income (loss) attributable to common
  stockholders per common share- basic         $       0.01          (0.02)           0.01          (0.13)

Income (loss) per common share- diluted:
Income (loss) attributable to common
  stockholders                                 $    379,239       (842,642)        460,183     (3,713,519)

Weighted average shares outstanding- basic       49,483,268     37,855,779      49,483,268     28,531,202

Common stock equivalents                          3,306,966              0       2,142,846              0

Convertible preferred stock                       4,600,000              0       4,600,000              0

Weighted average shares outstanding- diluted     57,390,234     37,855,779      56,226,114     28,531,202

Income (loss) attributable to common
  stockholders- diluted                        $       0.01          (0.02)           0.01          (0.13)
</TABLE>

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

      Options and warrants outstanding totaling 9,728,504 and 9,894,504 were
      excluded from the computation of common share equivalents for the three
      and nine months ended March 31, 2006, as they were anti-dilutive. Options,
      warrants and convertible preferred stock outstanding at March 31, 2005
      totaling 18,988,964 were excluded from the computation of common share
      equivalents for the three and nine months ended March 31, 2005, as they
      were anti-dilutive.

                                       7
<PAGE>

      (c) Stock-Based Compensation

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

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

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

<TABLE>
<CAPTION>
                                                          Three Months Ended            Nine Months Ended
                                                               March 31,                     March 31,
                                                     ---------------------------    ---------------------------
                                                         2006           2005            2006           2005
                                                     ------------   ------------    ------------   ------------
<S>                                                  <C>            <C>             <C>            <C>
Income (loss) attributable to common
  stockholders:
    As reported                                      $    379,239       (842,642)        460,183     (3,713,519)
    Pro forma                                             318,711       (872,574)        299,250     (3,939,763)
Basic income (loss) attributable to common
  stockholders per common share:
    As reported                                              0.01          (0.02)           0.01          (0.13)
    Pro forma                                                0.01          (0.02)           0.01          (0.14)
Diluted income (loss) attributable to common
  stockholders per common share:
    As reported                                              0.01          (0.02)           0.01          (0.13)
    Pro forma                                                0.01          (0.02)           0.01          (0.14)
Stock based compensation:
    As reported                                                 0              0               0              0
    Pro forma                                              60,528         29,932         160,933        226,244
</TABLE>

      In determining the compensation cost of options granted during the three
      and nine months ended March 31, 2006 and 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:

<TABLE>
<CAPTION>
                                        Three Months Ended               Nine Months Ended
                                             March 31,                       March 31,
                                   ----------------------------    ----------------------------
                                       2006            2005            2006            2005
                                   ------------    ------------    ------------    ------------
<S>                                <C>             <C>             <C>             <C>
Risk-free interest rate                    4.50%     3.375-3.50%     3.875-4.50%    3.375-3.625%
Expected life of options granted        7 years         7 years       5-7 years       5-7 years
Expected volatility                         152%            122%            152%            122%
Expected dividend yield                       0%              0%              0%              0%
</TABLE>

                                       8
<PAGE>

(3)   Comprehensive Income (Loss)

      Comprehensive income (loss) and its components consist of the following:

<TABLE>
<CAPTION>
                                          Three Months Ended March 31,   Nine Months Ended March 31,
                                          ---------------------------    ---------------------------
                                              2006           2005            2006           2005
                                          ------------   ------------    ------------   ------------
<S>                                       <C>            <C>             <C>            <C>
Net income (loss)                         $    404,081   $   (739,485)   $    516,825   $ (3,381,117)
Other comprehensive income (loss):
Foreign currency translation adjustment         11,445         (4,457)        110,692       (376,108)
                                          ------------   ------------    ------------   ------------
Comprehensive income (loss)               $    415,526   $   (743,942)   $    627,517   $ (3,757,225)
                                          ============   ============    ============   ============
</TABLE>

(4)   Income Taxes

      Through March 31, 2006, the Company has U.S. Federal and State operating
      loss carryforwards of approximately $9.1 million and $3.3 million,
      respectively. In addition, the Company has foreign net operating loss
      carryforwards of approximately $4.1 million. The U.S. net operating loss
      carryforwards expire in the years 2010 through 2024. The Company has
      recorded a valuation allowance at March 31, 2006 and June 30, 2005 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.

(5)   Series B Convertible Preferred Stock

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

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

      The proceeds of the Series B Convertible Preferred Stock of $360,000 and
      the conversion of the note payable-stockholder of $240,000 were allocated
      between preferred stock, the fair value of the warrants based on using
      Black-Scholes pricing model and the beneficial conversion of the preferred
      stock. As defined in Emerging Issues Task Force (EITF) 00-27 "Application
      of Issue No. 98-5 to Certain Convertible Instruments", the resulting
      beneficial conversion of the Series B Convertible Preferred Stock of
      approximately $225,000 was accounted for as preferred stock dividends
      during the year ended June 30, 2005. For the three and nine month periods
      ended March 31, 2006 and 2005, the Company has recorded dividends of
      $5,400 and $7,057, respectively, and $16,200 and $10,769, respectively.
      Dividends accrued but not paid as of March 31, 2006 in the amount of
      $5,400 were paid to the holders of the Series B Convertible Preferred
      Stock subsequent to March 31, 2006.

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

                                       9
<PAGE>

(6)   Debt and Equity Financing Transaction

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

      Each share of Series C Convertible Preferred Stock has a par value of $100
      and is convertible into 200 shares of the Company's common stock, subject
      to customary anti-dilution provisions. In addition, holders of the Series
      C Convertible Preferred Stock are entitled to voting rights together with
      the common stock, on an as-if converted basis. The Series C Convertible
      Preferred Stock accrues cumulative quarterly dividends of $1.50 per share
      during the first year after issuance, $2.25 per share during the second
      year after issuance, and $3.00 per share during the third year after
      issuance. The Company has the right to redeem Series C Convertible
      Preferred Stock at any time upon 10 business days prior written notice
      upon payment of $100 per share plus accumulated but unpaid dividends;
      holders of Series C Convertible Preferred Stock may elect to convert the
      stock at any time. The fair value of the warrants at the date of grant was
      estimated to be approximately $748,000 using the Black-Scholes pricing
      model. The following assumptions were used to calculate the fair value of
      the warrants: dividend yield of 0%; expected volatility of 122%; risk-free
      interest rate of 3.375%; and an expected life of five years. As defined in
      Emerging Issues Task Force (EITF) 00-27 "Application of Issue No. 98-5 to
      Certain Convertible Instruments", it was determined that there was no
      resulting beneficial conversion of the Series C Convertible Preferred
      Stock. Upon liquidation of the Company, each share of Series C Convertible
      Preferred Stock entitles its holder to receive an amount of $150, prior
      and in preference to holders of common stock and any other preferred
      stock. In accordance with Staff Accounting Bulletin Topic 5, "Increasing
      Rate Preferred Stock", the Company has increased the carrying value of the
      Series C Convertible Preferred Stock by $90,000, represented as the net
      present value of the difference between the actual stated value of
      dividends payable in the first two years after issuance and the effective
      dividends based on a 12% market rate during those periods. Since its
      issuance, as of March 31, 2006, the Company has amortized $65,500 of the
      effective dividend discussed above. In addition, for the three and nine
      month periods ended March 31, 2006 and 2005, the Company has recorded
      dividends of $32,442 and $13,600, respectively, and $83,442 and $13,600,
      respectively. Dividends accrued but not paid as of March 31, 2006, in the
      amount of $32,442, were paid to the holders of the Series C Convertible
      Preferred Stock subsequent to March 31, 2006.

      The loan is collateralized by substantially all of the assets of the
      Company and ranks senior to any existing or future indebtedness of the
      Company. The interest rate for the loan is 6% during the first year of the
      loan, 9% during the second year and 12% for the third year. The loan
      becomes immediately due and payable upon the earlier of (i) 36 months from
      the date of issuance (February 2008), (ii) a merger or combination of the
      Company or a sale of all or substantially all of the assets of the
      Company, or (iii) the acquisition of more than 50% of the voting power or
      interest in the Company by a single entity or person. The Company has
      recorded interest in the amount of $33,750 and $12,082, respectively, and
      $101,250 and $12,082, respectively, which is included in interest expense
      in the accompanying statement of operations, for the three and nine month
      periods ended March 31, 2006 and 2005, respectively. The collateralized
      loan balance in the amount of $1,500,000 is included as long-term debt in
      the accompanying balance sheets as of March 31, 2006 and June 30, 2005,
      respectively.

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

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

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

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

      Subject to waiver by the unanimous consent of the Company's Board of
      Directors, the Company has agreed to maintain a minimum cash balance of
      $750,000. This cash is available for the Company to use but, in the event
      of its use, an event of default under the debt instrument would be
      triggered which, if left uncured, could result in the debt being declared
      immediately due and payable. As of March 31, 2006, the Company is in
      compliance with all covenants contained in the debt agreement.

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

                                       10
<PAGE>

(7)   Contingencies

      The Company was involved in a dispute with a customer involving software,
      support and services that were purchased from the Company in February
      2001. In accordance with the contractual terms, the matter was brought to
      arbitration in November 2003 and, in February 2006, the dispute was
      settled and the Company received approximately $50,000 from the customer.
      The amount, which was collected during the three month period ended March
      31, 2006, was recorded as a reduction of general and administrative
      expenses in the accompanying statement of operations.

                                       11
<PAGE>

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

            For the Three and Nine Month Periods Ended March 31, 2006
                              versus March 31, 2005

REVENUES:

Total revenue increased 7% and 14% for the three and nine month periods ended
March 31, 2006, respectively, compared to the same periods a year ago.

Software revenues increased $377,405 (31%) and $1,220,925 (35%) for the three
and nine month periods ended March 31, 2006, respectively, from the same periods
last year. We continue to experience improved results based on focusing the
sales efforts on specific targeted markets. For the nine month period ended
March 31, 2006, all regions reflect improved software revenues over the same
period last year.

Maintenance revenues decreased $8,594 (1%) and increased $341,992 (8%) for the
three and nine month periods ended March 31, 2006, respectively, from the same
periods last year. Results for the nine months ended March 31, 2006 are
indicative of the continued maintenance contract renewals and collections, and
maintenance contracts sold to new customers at the current rate of 20% of the
software license fee paid, which is recognized ratably over the contract period.

Consulting and other revenues decreased $119,600 (14%) and $216,254 (9%), for
the three and nine month periods ended March 31, 2006, respectively, from the
same periods last year. Staffing levels totaled 24 at the end of March 2006, a
reduction of 8% over the same period last year. Revenues in this area are
primarily the result of new software license fee sales. When new software
license sales are down, eventually this will lead to lower consulting revenues.
Conversely, when new software license sales increase, consulting and other
revenues increase. The lack of sufficient new software license revenue in FY
2004 and FY 2005, in the Americas and Asia-Pacific regions, have impacted
revenues in this area in FY 2006. For the nine month period ended March 31,
2006, revenues in the Americas region have declined by $188,468 or 32%, and
revenues in the Asia-Pacific region have declined by $265,867, or 25%. As
software revenues improve in these regions (see discussion above), we would
expect revenues in this area to improve as well. Conversely, revenues in the
UK/Europe region have increased by $238,081, or 35%, based on better results in
the area of new software revenues.

OPERATING COSTS AND EXPENSES:

Operating expenses decreased $870,640 (20%) and $2,514,364 (19%) for the three
and nine month periods ended March 31, 2006, respectively, from the same periods
last year. We continue to focus efforts on controlling expenses, reducing and
eliminating unnecessary expenses and efficiently spending our resources on our
focused sales efforts.

Cost of maintenance, consulting and other expenses decreased $130,346 (15%) and
$394,713 (15%) for the three and nine month periods ended March 31, 2006,
respectively. As stated under consulting and other revenues above, the number of
personnel in this area has declined by 8%.

Product development costs decreased $21,262 (4%) and $45,229 (3%) for the three
and nine month periods ended March 31, 2006, respectively, from the same periods
last year.

Sales and marketing expenses decreased $682,948 (41%) and $2,110,744 (39%) for
the three and nine month periods ended March 31, 2006, respectively, from the
same periods last year. Included in these decreases are increases in sales
commission expense for the three and nine month periods ended March 31, 2006 of
$27,883 (23%) and $108,133 (24%), respectively, as compared to the same periods
last year. The increase in sales commission expense is due to increased software
license fees for those periods. Taking those increases into effect, our other
sales and marketing expenses actually decreased $710,831 (46%) and $2,218,877
(44%) for the three and nine month periods ended March 31, 2006, from the same
periods last year. Expenses like communications, travel and general marketing
costs have been reduced to bring them in line with expected revenues.

General and administrative expenses decreased $36,084 (3%) and increased $36,322
(1%) for the three and nine month periods ended March 31, 2006, respectively,
from the same periods last year.

OPERATING INCOME (LOSS):

CorVu Corporation generated operating income of $415,202 and $572,483 for the
three and nine month periods ended March 31, 2006, respectively, compared to
operating losses of $704,649 and $3,288,544 for the three and nine month periods
ended March 31, 2005, respectively.

                                       12
<PAGE>

INTEREST EXPENSE, NET:

Interest expense, net decreased $23,715 (68%) and $36,915 (40%) for the three
and nine month periods ended March 31, 2006, respectively, from the same periods
last year. Generally, our cost of borrowing decreased this year compared to the
same periods last year. In addition, we have earned interest income
(approximately $48,000) on our excess cash balances this year due to our
stronger cash position compared to previous periods.

NET INCOME (LOSS):

CorVu Corporation reported net income of $404,081 and $516,825 for the three and
nine month periods ended March 31, 2006, respectively, compared to net losses of
$739,485 and $3,381,117 for the three and nine month periods ended March 31,
2005, respectively.

Liquidity and Capital Resources

Total cash and cash equivalents increased by $740,745 during the nine month
period ended March 31, 2006 from $2,162,866 as of June 30, 2005 to $2,903,611 as
of March 31, 2006. Net cash provided by operating activities was $802,524 for
the nine month period ended March 31, 2006. Net income of $404,081 that was
generated for the nine month period ended March 31, 2006 has driven cash to
these levels. Net cash used in investing activities was $60,108, reflecting the
acquisition of capital assets during the period. Foreign exchange rate changes
resulted in a reduction in cash of $1,671.

The accompanying consolidated financial statements are prepared assuming the
Company will continue as a going concern. During the year ended June 30, 2005,
the Company generated an operating loss of $3,872,825. For the ensuing nine
month period ended March 31, 2006, operating income of $572,483 has been
generated. As of March 31, 2006, the Company had an accumulated deficit of
$27,277,860 and total stockholders' deficit of $3,875,471.

During the year ended June 30, 2005, the Company raised approximately $6.5
million in debt and equity financing, net of expenses. As operating performance
has improved this year, the Company continues to monitor and control operating
expenses to assure they are in line with expected revenue. In addition, we
continue to focus our sales on targeted markets and to continue to improve cash
flow.

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,
2005. The accounting policies used in preparing our interim 2006 consolidated
financial statements are the same as those described in our annual report, and
are as follows:

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

Revenue Recognition. We recognize revenues in accordance with the provisions of
the American Institute of Certified Public Accountants' Statement of Position
(SOP) 97-2, "Software Revenue Recognition," as amended by SOP 98-4 and SOP 98-9,
as well as Technical Practice Aids issued from time to time by the American
Institute of Certified Public Accountants, and in accordance with the Securities
and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue
Recognition." We license software under non-cancelable license agreements and
provide related professional services, including consulting, training, and
implementation services, as well as ongoing customer support and maintenance.
Our specific revenue recognition policies are as follows:

      Software license revenues from end-users and resellers are generally
      recognized when there is an executed license agreement, software has been
      delivered to the customer, the license fee is fixed and payable within
      twelve months, collection is deemed probable and product returns are
      reasonably estimable. When the Company received cash for prepayment of
      software license fees from resellers and distributors, 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. Revenues related to multiple element
      arrangements are allocated to each element of the arrangement based on the
      fair values of elements such as license fees, maintenance, and
      professional services. Fair value is determined based on vendor specific
      objective evidence.

      Maintenance revenues are recognized ratably, upon collection of the funds
      from the customer, over the term of the maintenance contract, typically 12
      to 36 months.

      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.

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

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

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

                                       14
<PAGE>

Cautionary Factors That May Affect Future Results

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

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

Item 3 Controls and Procedures

Management of the Company has evaluated, with the participation of the Chief
Executive Officer and Chief Financial Officer of the Company, the effectiveness
of the Company's disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the fiscal quarter covered by this
Quarterly Report on Form 10-QSB. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer of the Company have concluded that the
Company's disclosure controls and procedures as of the end of the fiscal quarter
covered by this Quarterly Report on Form 10-QSB are effective to (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. Management is aware that there is a
lack of segregation of duties due to the small number of employees dealing with
general administrative and financial matters. However, management has decided
that considering the employees involved and the control procedures in place,
risks associated with such lack of segregation of duties are insignificant and
the potential benefits of adding employees to clearly segregate duties do not
justify the expenses associated with such increases.

                                       15
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings.

         The Company was involved in a dispute with a customer involving
         software, support and services that were purchased from the Company in
         February 2001. In accordance with the contractual terms, the matter was
         brought to arbitration in November 2003 and, in February 2006, the
         dispute was settled and the Company received approximately $50,000 from
         the customer.

         During the quarter ended March 31, 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.

         None

Item 3.  Defaults Upon Senior Securities.

         None

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

         None

Item 5.  Other Information.

         None

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:  April 25, 2006                         By  /s/ David C. Carlson
                                                  --------------------
                                                  David C. Carlson
                                                  Chief Financial Officer

                                       17
<PAGE>

                                  EXHIBIT INDEX

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

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

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

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

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

                                       18