UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                     FOR THE FISCAL YEAR ENDED JUNE 30, 2005

                         COMMISSION FILE NO.: 000-29299

                                CORVU CORPORATION
           (Name of Small Business Issuer as specified in its charter)

          MINNESOTA                                           41-1457090
(State or other jurisdiction of                             (IRS Employer
incorporation or organization)                          Identification Number)

                  3400 WEST 66TH STREET, EDINA, MINNESOTA 55435
               (Address of principal executive offices)(Zip Code)

         Issuer's telephone number, including area code: (952) 944-7777

    Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                                  COMMON STOCK

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

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |_|

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

Issuer's revenues for its most recent fiscal year: $13,170,574.

The aggregate market value of the Common Stock held by nonaffiliates of the
Registrant as of August 31, 2005 was approximately $4,600,000 based upon the
closing price of the Registrant's Common Stock on such date.

There were 49,483,268 shares of Common Stock outstanding as of August 31, 2005.

                       DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference pursuant to Rule 12b-23: Portions of the
Registrant's Proxy Statement for its 2005 Annual Meeting to be held on December
8, 2005 are incorporated by reference into Items 9, 10, 11, 12 and 14 of Part
III.

Transitional Small Business Disclosure Format (check one). YES |_| NO |X|

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

We are a holding company that develops and sells business performance management
software products and related professional services through our subsidiaries:
CorVu North America, Inc. (incorporated in Minnesota, responsible for North and
South America); CorVu Plc (incorporated in England, responsible for United
Kingdom/Europe), CorVu Australasia Pty. Ltd. (incorporated in Australia,
responsible for the Asia-Pacific region), CorVu Software Marketing, Inc.
(incorporated in Minnesota), and CorVu Latin America, Inc. (incorporated in
Minnesota, currently inactive). CorVu Australasia Pty. Ltd has one subsidiary,
CorVu Asia Limited, incorporated under the laws of China. CorVu Software
Marketing, Inc. has one subsidiary, CorVu Software, Ltd., incorporated under the
laws of England.

The Company was incorporated in Minnesota as J.B Goodhouse on September 29,
1983. On April 28, 1988, it changed its name to Lockermate Corporation, and on
October 20, 1992, it changed its name to Minnesota American, Inc. Following the
merger of CorVu Corporation, a privately held company, with and into the Company
on January 14, 2000, the Company continued to operate the business of the
privately held company and changed its name to "CorVu Corporation".

BUSINESS OF ISSUER

(i) Our Principal Products and Services

CorVu is a provider of performance management software products. The CorVu
solution enables organizations to proactively monitor and manage business
performance. The most recent software release, CorVu 5, combines performance
metrics, reporting and analysis, budgeting and planning, objectives,
initiatives, and risk management in a single application. As a web-based,
purpose-built application, CorVu 5 can typically be deployed quickly to a large
number of users.

We generate revenues in three areas: (1) sale and licensing of our software
products; (2) consulting and training services (we refer to these services as
"professional services"); and (3) maintenance agreements entered into in
connection with the sale and licensing of our products.

Our Products
CorVu 5 consists of five integrated modules:
o     CorBusiness(TM)
o     CorStrategy(TM)
o     CorPlanning(TM)
o     CorRisk(TM)
o     CorIncentive(TM)

CorBusiness(TM) is a powerful and flexible business intelligence platform for
reporting, analysis, and data access than can be deployed rapidly and cost
effectively. It provides rich capabilities for custom reporting, graphical
analysis, alerts, dashboards, briefing books, and automated data collection and
consolidation.

CorStrategy(TM), the foundational module of CorVu 5, provides powerful and
flexible scorecarding, objective management, and initiative management
capabilities. Key features include interactive scorecards, strategy maps,
briefing books, dashboards, pre-built reports and views, and a central
repository for all metrics, calculations, and commentary.

CorPlanning(TM) is an easy-to-use, comprehensive, and flexible budgeting and
planning application. It can be used as a stand-alone application or as an
integrated component of CorVu 5 to link the planning, budgeting, and forecasting
processes to business strategy. CorPlanning(TM) offers powerful capabilities,
including breakback, consolidation, inter-company eliminations, multi-currency,
real-time planning, driver-driven forecasting, and sophisticated, role-based
security. It supports most popular planning methods, such as rolling forecasts,
zero-base budgeting, outcome budgeting, "what-if" scenario modeling, beyond
budgeting, top-down, bottom-up, and Activity Based Management/Costing.

CorRisk(TM) is a purpose-built enterprise risk management application that can
be deployed rapidly. It provides an advanced risk management framework that
monitors and manages the threats and obstacles to achieving business strategy.
CorRisk(TM) offers comprehensive risk management capabilities, including loss
events/incidents, risk profile reports, forecasting and modeling, personalized
dashboards, risk maps, and the linking of risk management to strategy execution.

                                       2
<PAGE>

CorIncentive(TM), an integrated component of CorVu 5, aligns employee incentives
with business strategy. A flexible, purpose-built application, CorIncentive(TM)
links employee performance results, appraisals, reviews, and variable
compensation to corporate goals. Key capabilities include a structured
performance management environment for employee incentives, communication and
collaboration, data collection, reporting and analysis.

CorVu's client (desktop) products are available for Windows 95, 98, 2000, and
XP; Windows NT; and Linux. CorVu's server products are available on Windows NT,
UNIX, and Linux. All pricing is based upon the number of users licensed under
the agreement with the respective customer.

Services
CorVu's Professional Services team is dedicated to providing a complete
performance management solution for every customer and CorVu's proven RapidROI
Methodology is designed to empower customers to maximize the return on their
CorVu software investment. The RapidROI methodology leverages years of
collective project experience with CorVu solutions for a wide variety of
industries, business requirements, and technical environments.

CorVu's Professional Services team partners with each customer to build quality
performance management solutions via three main service functions:

1) Training Services
CorVu offers a comprehensive array of `hands-on' courses designed to equip both
business and technical users with the skills necessary to grow the overall
solution. CorVu's professional course instructors deliver both on-site training
and public training at various CorVu locations around the globe. All CorVu
courses are designed to give students `hands-on' experience in building their
CorVu solution.

In addition to the various technical training required by application
administrators, solution developers and system integrators, CorVu also
recommends business user training which can be easily customized using any
customer's own applications and to meet specific customer needs. CorVu also
offers Mentoring Workshops to reinforce classroom learning within a customer's
own environment. There are many `best practice' techniques - born from years of
experience and many customer projects - which our customers can learn from CorVu
consultants. Customers can choose from a list of topics, or CorVu can suggest
topics that have achieved the greatest impact for other customers with similar
business needs.

2) Consulting Services
CorVu's experienced consultants provide expertise and experience to ensure
customers meet their business solution objectives and maximize their return on
the CorVu software investment. Consulting Services are available to benefit both
new and long-standing customers. CorVu's highly skilled consultants have strong
business awareness, exceptional technical skills, and professional project
management experience.

For new customers, CorVu consultants use CorVu's RapidROI methodology to
implement the CorVu software solutions within the customer's organization to
quickly deliver a return on their CorVu software investment.

For existing customers, CorVu's consultants offer:
o     Fast delivery of new applications or other deliverables
o     Optimization of existing CorVu applications
o     Mentoring and knowledge transfer for customer personnel
o     Advisement on any specific technical matters, business issues or project
      matters
o     Best Practices Reviews to investigate and recommend opportunities for more
      effective usage of the CorVu solution

3) Help Desk Services
Phone, e-mail, and web support is provided to customers for quick product
questions, issue management, and enhancement requests for future product
direction.

                                       3
<PAGE>

Maintenance Agreements
CorVu provides support services to customers with a "Software Maintenance
Agreement." Such customers are entitled to new versions of CorVu software, Help
Desk support services and online support services.

A Software Maintenance Agreement is meant to give customers access to our Help
Desk staff upon experiencing a software problem or with any questions regarding
the use of our products. Customers with a Software Maintenance Agreement may
reach our Help Desk staff via telephone, e-mail or through our home page on the
web (www.corvu.com). The services provided through the web are designed to make
it easier for customers to answer questions and solve problems without the need
of direct assistance from CorVu support personnel.

(ii) Market Analysis for CorVu's Products and Services

Key market forces -- regulatory, competitive and economic -- are converging to
cause companies to seek better ways to proactively monitor and manage business
performance. At the same time, various regulatory requirements and initiatives
now mandate that most public sector organizations operate efficiently and
effectively. As a result, both private and public sector organizations are
looking to performance management technology to ensure compliance, improve
efficiencies, and effectively execute their strategy or mission. As a result,
performance management software has emerged as one of the fastest growing
markets in the technology sector. There are numerous variants of the name -
Enterprise Performance Management (EPM), Corporate Performance Management (CPM),
and Business Performance Management (BPM) - used by industry analysts and
vendors. Gartner defines CPM as "the methodologies, metrics, processes, and
systems used to monitor and manage the business performance of an enterprise."

Analysts predict that the worldwide financial/Business Performance Management
market will increase to $2.1 billion in 2008 with an 11.2 percent compound
annual growth rate (CAGR) for the period from 2003 through 2008. "The BPM
analytic applications market performance exceeded expectations in 2004, and
double-digit growth is expected to continue," says Kathleen Wilhide, research
director, Compliance and BPM solutions, IDC. "Information transparency and
performance management initiatives are a top priority from both a business and
IT standpoint, and they will play an increasingly important role in
enterprisewide transformation initiatives that reduce information silos and
optimize performance management processes." Based on these predictions the
Company assumes that private and public sector organizations will continue to
look to performance management technology to improve efficiencies, strategy
execution, visibility and accountability. The Company, therefore, believes that
the market demand for its performance management software should continue to
grow.

(iii) Distribution of our Products and Services

CorVu products and services are sold through our subsidiaries' direct sales
offices and through "Value Added Resellers," distributors, and alliance
partners.

Direct Sales Offices
Our North American subsidiary has direct sales offices in Atlanta, Washington
D.C. and Minneapolis. In Europe, the CorVu sales office is located in London.
Sales offices for the CorVu Asia-Pacific region have been established in
Australia in Sydney and Melbourne, and in China in Shanghai and Beijing. Direct
sales activities are concentrated on Global 1000 accounts.

Value Added Resellers (VARs)
Our VARs are software companies with industry applications that sell our
software products in conjunction with their own products. Some VARs will
private-label CorVu products. Current VARs offer CorVu products into a variety
of industries, including manufacturing, distribution, warehouse logistics,
healthcare, insurance, mining, power/utilities, and human resources. Under the
typical agreement between a VAR and one of our subsidiaries, the VAR receives
the non-exclusive license to sell the software products specified in the
agreement and to grant sublicenses for the use of such software to users of the
VAR's applications. The license fees paid by a VAR are a percentage of our
standard license fee for the use of our software and generally may be increased
at our discretion upon 30 days prior written notice. Any of the parties may
terminate the agreement without giving any reason by written notice 90 days
prior to the termination date. A typical VAR agreement would have a three-year
term.

Distributors
CorVu distributors are companies that sell technology into geographic regions
where CorVu has no physical presence. Currently, distributors are in various
global locations, including Argentina, Brazil, Chile, Colombia, Mexico, Peru,
Germany, Sweden, Saudi Arabia, Belgium, Bulgaria, Croatia, Denmark, France,
Ireland, Italy, Netherlands, Norway, Poland, Spain, Saudi Arabia, South Africa,
India, Taiwan, Korea and China. Our subsidiaries typically grant to distributors
the non-exclusive license to sell the software products specified in the
distributor agreement and to grant sublicenses for the use of such software. The
fees a distributor pays are a percentage of our standard license fee for the use
of our software and may generally be increased at our discretion upon 30 days
prior written notice. The agreement may be entered into for a five-year term;
termination usually requires cause such as nonperformance.

                                       4
<PAGE>

Alliance Partners
CorVu Alliance Partners are companies that provide both technology and
management consulting and implementation services, but typically do not actually
sell software. Recommending CorVu products as a service to their clients, they
often greatly influence corporate sales. Alliance Partners maintain no financial
relationship with CorVu in that they do not receive fees in exchange for their
recommendations. The Partners benefit from such recommendations because CorVu
will, if the occasion arises, refer management consulting services to them.

Historically, approximately 30-40% of our annual license revenues have been
received through distributors, VARs and Alliance Partners.

(iv) Competition

The performance management market is an emerging market experiencing rapid
growth. Competition is entering the space from various market segments. Primary
competition comes from three basic types of vendors - Enterprise Resource
Planning (ERP) vendors, Business Intelligence (BI)/Analytic Application vendors
that offer product suites, and Point Solution providers that focus on a narrow
segment of performance management, such as budgeting or scorecarding. This
competition includes companies such as Cognos, Business Objects, Hyperion, SAP,
Oracle, Peoplesoft, Geac, SAS, Cartesis, OutlookSoft, PerformanceSoft, and
Applix.

CorVu specializes exclusively in performance management software. The CorVu
solution is a purpose-built application that was built from the ground-up for
managing all performance management business processes and supports all popular
management methodologies, including Balanced Scorecard and Six Sigma. As a
purpose-built application, it offers inherent advantages, such as comprehensive
capabilities, rapid implementation, reduced total cost of ownership, and
flexibility.

(v) Our Customers

We have customers all over the world, including North America, Latin America,
United Kingdom, Europe, Australia and China. Key industry sectors represented by
our customers are manufacturing, government, financial services, hospitality,
non-profit, and pharmaceuticals. The CorVu customer base includes one of the
largest performance management deployments in the world, several Balanced
Scorecard Hall of Fame winners, and numerous reference customers that have
achieved significant and measurable results.

The most license revenue that any single customer or partner has contributed to
CorVu in fiscal year 2005 was about 8%. In the past, several of our customers
have ordered additional software and services, occurring within a
non-predictable time frame, that is, from a few months of the original order up
to a few years after that order. The additional orders typically have been
either (a) the addition of users for new projects, departments, divisions etc.
within a given customer, or (b) the purchase of new products as these become
available. Repeat business accounted for approximately 34% of our annual license
revenues in fiscal year 2005.

(vi) Intellectual Property

Due to the length of the patent application procedure on one hand and the
necessity to continually develop and improve our software products on the other
hand, we have not sought patent protection for any of our products.

We have a number of registrations and one pending application for our
trademarks. These include U.S. registrations for the trademarks CORBUSINESS,
CORMANAGE, CORSTRATEGY, CORVU, MANAGING BUSINESS PERFORMANCE and both U.S. and
Canadian registrations for RAPIDSCORECARD; Mexican, Colombian and Venezuelan
registrations for CORVU MANAGING BUSINESS PERFORMANCE and design; and a U.S.
application to register the trademark HYPERVU. Typically, trademark
registrations worldwide have a duration of ten years with the possibility of an
indefinite number of ten year renewals.

The computer code underlying our software is protected by copyright.

Contracts under which we license the use and/or sale of our products include
confidentiality clauses to protect our products and any information in
connection with them as trade secrets.

(vii) Research and Development Activities

In fiscal 2004, we spent $1,843,265 on research and development (R&D)
activities, and in fiscal 2005, a total of $2,098,644. None of these costs was
borne directly by any customer. We expect to continue to maintain our high level
of investment in R&D activities in fiscal 2006 and are projected to spend
approximately $2 million in this area.

                                       5
<PAGE>

(viii) Our Employees

As of June 30, 2005, we employed 88 people in our Company and our subsidiaries
around the world. Twenty-nine of these employees worked in Sales and Marketing,
23 provided professional services such as training and general product
assistance, 20 worked in product development and 16 provided general
administrative and help-desk support services. All of our employees are working
full-time. No employees are represented by a labor union and we consider our
relations with employees to be good.

ITEM 2. DESCRIPTION OF PROPERTY

Our corporate headquarters are located in 6,600 square feet of leased office
space at 3400 West 66th Street, Edina, Minnesota. Pursuant to the lease
agreement, that extends to August 31, 2007, we make monthly base rent payments
with annual increases of approximately 3% per year. In addition to the base rent
payments, we reimburse the landlord for any operating costs allocable to our
premises based upon the rentable square foot office area allocable to our
premises. Rent payments are approximately $11,000 per month. The premises
include a reception area, conference and training rooms, as well as executive
and administrative offices.

The major regional centers of our subsidiaries are located in Sydney (Australia)
and London (England). Monthly rental payments (in U.S. dollars) for the Sydney
office amount to about $24,000 and for the London office to approximately
$14,000. These amounts are subject to variations due to the applicable exchange
rates. The lease agreements vary concerning terms and conditions, are subject to
the applicable local laws and expire at various times through March 2010.

We believe that our current facilities are adequate for the current level of our
activities. In the event we require additional facilities, we believe we could
procure acceptable facilities.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material litigation and are not aware of any
threatened litigation that would have a material adverse effect on our business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

None.

                                    PART II.

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTC Bulletin Board under the symbol CRVU.OB.
Quotations in the following table are based on information provided by IDD
Information Services, Tradeline(r) on Lexis(R). The quotations represent
inter-dealer prices, without retail markup, markdown or commission, and do not
necessarily represent actual transactions.

                                                          COMMON STOCK
                                                ------------------------------
FISCAL QUARTER ENDED                               HIGH BID       LOW BID
------------------------------------------------------------------------------
September 30, 2003                                $    1.14      $     .65
December 31, 2003                                 $    1.20      $     .70
March 31, 2004                                    $    1.20      $     .58
June 30, 2004                                     $    1.29      $     .58

September 30, 2004                                $     .55      $     .27
December 31, 2004                                 $     .36      $     .16
March 31, 2005                                    $     .35      $     .20
June 30, 2005                                     $     .20      $     .12

As of August 31, 2005, we had 176 shareholders of record. We have never paid
cash dividends on our Common Stock and do not anticipate paying dividends in the
foreseeable future.

                                       6
<PAGE>

The following table provides information as of June 30, 2005 about the Company's
equity compensation plans.

<TABLE>
<CAPTION>

                                                                                        NUMBER OF SECURITIES REMAINING
                               NUMBER OF SECURITIES TO        WEIGHTED AVERAGE        AVAILABLE FOR FUTURE ISSUANCE UNDER
                               BE ISSUED UPON EXERCISE       EXERCISE PRICE OF             EQUITY COMPENSATION PLANS
                               OF OUTSTANDING OPTIONS,      OUTSTANDING OPTIONS,      (EXCLUDING SECURITIES REFLECTED IN
                                 WARRANTS AND RIGHTS        WARRANTS AND RIGHTS                   COLUMN (A))
                             ---------------------------- -------------------------  --------------------------------------
                                         (A)                         (B)                            (C)
                             ---------------------------- -------------------------  --------------------------------------
<S>                                     <C>                          <C>                            <C>
Equity compensation plans
   approved by security
   Holders**..............              5,022,419                    $ 0.55                         2,977,581

Equity compensation plans
   not approved by
   security holders*.....               2,082,942                    $ 1.21                               -0-

Total                                   7,105,361                    $ 0.74                         2,977,581
</TABLE>

      *     Includes individual compensation agreements with employees domiciled
            in the U.S. and outside the U.S. as well as agreements with certain
            vendors issued in exchange for goods and services rendered.

      **    Includes an additional 3,500,000 of shares reserved for the plan
            that have been approved by the Board of Directors but are subject to
            approval by the shareholders at the upcoming Annual meeting.

RECENT SALES OF UNREGISTERED SECURITIES

None

                                       7
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

CorVu is an international provider of Integrated Business Intelligence and
Business Performance Management software. Our Company designs, develops, markets
and supports its management software products and its services through sales
offices of our subsidiaries as well as through distributors, Value Added
Resellers, and Alliance Partners. Sales and support offices belonging to our
subsidiaries are located in the United States, Australia and Europe. See for
details ITEM 1, Business of the Issuer.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these consolidated financial statements requires us
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements, the reported
amounts of revenues and expenses during the reporting period, and related
disclosures of contingent assets and liabilities for the periods indicated. The
notes to the consolidated financial statements contained herein describe our
significant accounting polices used in the preparation of the consolidated
financial statements. On an on-going basis, we evaluate our estimates,
including, but not limited to, those related to bad debts and contingencies. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
could differ from these estimates under different assumptions or conditions.

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

Revenue Recognition. We recognize revenues in accordance with the provisions of
the American Institute of Certified Public Accountants' Statement of Position
(SOP) 97-2, "Software Revenue Recognition," as amended by SOP 98-4 and SOP 98-9,
as well as Technical Practice Aids issued from time to time by the American
Institute of Certified Public Accountants, and in accordance with the Securities
and Exchange Commission Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition in Financial Statements", as amended by SAB 104. We license software
under non-cancelable license agreements and provide related professional
services, including consulting, training, and implementation services, as well
as ongoing customer support and maintenance. Consulting, training and
implementation services are not essential to the functionality of our software
products, are sold separately and also are available from a number of
third-party service providers. Accordingly, revenues from these services are
generally recorded separately from license fees. Our specific revenue
recognition policies are as follows:

Software License Fees. Software license fee revenues from end-users 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 receives cash for prepayment of
software license fees from resellers or 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. Revenues related
to multiple element arrangements are allocated to each element of the
arrangement based on the fair values of elements such as license fees,
maintenance, and professional services. Fair value is determined based on vendor
specific objective evidence.

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

Software Development Costs. Software development costs are expensed as incurred
until technological feasibility is established. Software development costs
incurred subsequent to establishing technological feasibility are capitalized
and amortized over the estimated useful lives of the software. Management is
required to use professional judgment in determining whether development costs
meet the criteria for immediate expense or capitalization.

Allowance for Doubtful Accounts. We maintain allowances for doubtful accounts
for estimated losses resulting from the inability of our customers to make
required payments. If the financial condition of specific 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.

                                       8
<PAGE>

Accounting for Income Taxes. The Company accounts for income taxes using the
asset and liability method. Under the asset and liability method, deferred tax
assets and liabilities are recognized at the enacted rates for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing tax assets and liabilities and their respective tax
basis. The effect on deferred tax assets and liabilities of a change in tax rate
is recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amounts expected to be realized. Any changes in the projections of
future taxable income may change the deferred asset amount expected to be
realized.

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.

FISCAL YEAR ENDED JUNE 30, 2005 VERSUS JUNE 30, 2004

REVENUES:

CorVu derives its revenues from three sources: (i) the sale and licensing of its
software products; (ii) consulting and training services; and (iii) maintenance
agreements in connection with the sale and licensing of software products. CorVu
recognizes revenue in accordance with Statement of Position No. 97-2, "Software
Revenue Recognition," as amended by Statements of Position 98-4 and 98-9.
Software license revenue is recognized when all of the following criteria have
been met: there is an executed license agreement, software has been delivered to
the customer, the license fee is fixed and payable within twelve months,
collection is deemed probable and product returns are deemed reasonably
estimable. Revenues related to multiple element arrangements are allocated to
each element of the arrangement based on the fair values of elements such as
license fees, maintenance and professional services. Fair value is determined
based on vendor specific objective evidence. Maintenance revenues are recognized
ratably over the term of the maintenance contract, typically 12 to 36 months.
Consulting and other revenues are recognized when services are performed.

Total revenue decreased by $2,987,089 (18%) from $16,157,663 for the year ended
June 30, 2004 to $13,170,574 for the year ended June 30, 2005.

Software and license fee revenues decreased $2,604,656 (38%) from $6,813,690 in
2004 to $4,209,034 in 2005. There were disappointing sales results in the
Americas region (a 59% decrease from 2004) and the Asia-Pacific region (a 52%
decrease from 2004), which were caused by poor sales execution stemming from a
lack of operational focus on the sales process, including the sales
qualification process, and a lack of focus on defined target markets and
prospects. These issues led to significant salesperson turnover and reductions
during the year and, ultimately, changes in sales management. The only region
which showed consistent performance year on year was the UK/Europe region, which
showed an increase of 3%.

Maintenance fees increased $259,925 (5%) from $5,572,287 in 2004 to $5,832,212
in 2005. We would expect to continue to show revenue growth in this area in 2006
based on expected renewal rates on existing contracts and the expected growth in
the sale of new contracts to new customers.

Consulting and other revenues decreased $642,358 (17%) from $3,771,686 in 2004
to $3,129,328 in 2005. A significant part of this revenue stream follows along
with the sale of new software and license fees. As a result of the decrease in
software and license fees discussed above, billable hours for implementation and
consulting services declined substantially from 2004 to 2005. Reductions in
number of consulting personnel also contributed to the decline in billable
hours. As sales of software and license fees improve in 2006, we would also
expect to see increases in this area of revenue.

OPERATING EXPENSES:

Operating expenses decreased by $1,171,453 (6%) from $18,214,852 for the year
ended June 30, 2004 to $17,043,399 for the year ended June 30, 2005.

Cost of consulting and other services decreased $21,789 (1%) from $3,365,157 in
2004 to $3,343,368 in 2005. As discussed above under consulting and other
revenues, we reduced the number of personnel in this area during 2005 due to a
reduction in demand for their services from 30 employees at the end of 2004 to
23 employees at the end of 2005. This reduction was almost entirely offset by an
increase in the foreign currency exchange rate in both of our non-U.S. regions.
For fiscal year 2006, we expect expenditure levels to be comparable to the level
incurred in 2005.

Product development costs increased $255,379 (14%) from $1,843,265 in 2004 to
$2,098,644 in 2005. We continue to maintain our high level of investment in this
area in our effort to keep improving our products. The number of employees in
this area decreased during 2005 from a high of 24 at the beginning of the year
to 20 at the end of the year. This reduction in force was more than offset by an
increase in the foreign currency exchange rate in Australia, where our product
development team is located. For fiscal year 2006, we expect expenditure levels
to be comparable to the level incurred in 2005.

                                       9
<PAGE>

Sales and marketing expenses decreased $1,477,825 (18%) from $8,335,379 in 2004
to $6,857,554 in 2005. Due to declining sales during the year and, in an effort
to minimize operating losses, significant reductions in staffing levels in this
area occurred during 2005. At the beginning of 2005, we had a total of 42
employees in this area which was reduced to a level of 29 employees by the end
of 2005. This reduction in force included quota-carrying salespeople and sales
management positions. In addition to reduction in salaries, commissions and
related costs, we curtailed spending in other areas such as marketing activities
and employee travel costs. Due to the significant reductions implemented during
fiscal year 2005 and, as we have stabilized operating expense levels in regards
to sales and marketing expenditures, we would expect a significant reduction in
expenses during fiscal year 2006.

General and administrative expenses increased $72,782 (2%) from $4,671,051 in
2004 to $4,743,833 in 2005. The amount in 2005 includes a $250,000 write-off of
a receivable from an international distributor. As with the other areas of the
operation, we expect fiscal year 2006 expenditures in this area to be less than
the level achieved in 2005 due to cost savings and expense reduction measures
that have been implemented.

OPERATING LOSS:

CorVu Corporation incurred operating losses of $3,872,825 and $2,057,189 for the
years ended June 30, 2005 and 2004, respectively. The $1,815,636 increase in
operating loss from 2004 to 2005 resulted primarily from the $2,987,089 decrease
in revenue which was only partly offset by the $1,171,453 decrease in operating
expense.

INTEREST EXPENSE, NET:

Interest expense, net increased $38,305 (54%) from $71,468 in 2004 to $109,773
in 2005. An increased level of indebtedness, as a result of the debt
transactions that occurred during the year, contributed to increased interest
expense. We expect the expense level in this area to continue to decline
moderately in fiscal year 2006.

DEFERRED INCOME TAX PROVISION:

For the year ended June 30, 2005, we have recorded a one-time, non-recurring
deferred income tax provision of $2,615,000 against a previously (fiscal 2003)
recorded deferred income tax asset, which represented a portion of the value of
accumulated net operating losses which could have been utilized in future
periods to offset federal and state income tax liabilities. In light of the
operating losses incurred over the past two years, management felt it was
prudent to record this provision as of June 30, 2005.

NET LOSSES:

CorVu Corporation incurred net losses of $6,597,598 and $2,128,657 for the years
ended June 30, 2005 and 2004, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Total cash and cash equivalents increased by $2,014,391 from $148,475 as of June
30, 2004 to $2,162,866 as of June 30, 2005.

Net cash used in operating activities was $4,125,929 for the year ended June 30,
2005, reflecting the net loss incurred for 2005 as well as changes in various
working capital items. Net cash used in investing activities was $167,303 for
the year ended June 30, 2005 reflecting the acquisition of capital assets. Net
cash provided by financing activities was $6,253,178 for the year ended June 30,
2005. Proceeds from the sale of preferred and common stock and the exercise of
stock options accounted for $5,053,178, net of expenses. In addition, the
Company had borrowings under long-term debt of $1.5 million under a new term
loan and repaid its existing line of credit facility in the amount of $300,000.

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. As of June 30, 2005, the
Company had an accumulated deficit of $27,738,043 and total stockholders'
deficit of $4,434,313.

During the past twelve months, because revenues have not been sufficient to
cover operating expenses, the Company has initiated expense reductions in all
areas. Concurrent with those reductions, the Company has brought in new
leadership including sales management and has re-focused sales and marketing
initiatives. Management expects revenues to improve as sales and marketing
initiatives commenced within the last few months, allowing the Company to be
more effective in selling its products and services. In the event these
initiatives do not materialize at the expected rates, management would seek
additional financing through private equity placements or would conserve cash by
further reducing operating expenses. There can be no assurance that the Company
will be successful in achieving these objectives. In connection with the debt
and equity transaction discussed in Note 12, 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. The Company's ability to continue as a
going concern is dependent on it achieving profitability and generating cash
flow to fund operations. We believe that we will generate sufficient cash flow
from operations to meet our operating cash requirements for the next 12 months.

                                       10
<PAGE>

DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following summarizes our contractual obligations, including interest
expense, at June 30, 2005, and the effect these contractual obligations are
expected to have on our liquidity and cash flows in future periods (in
Thousands):

                                          1 YEAR      1-3        OVER
                                TOTAL     OR LESS    YEARS      3 YEARS
                               ------     -------    ------     -------
Operating leases .........     $2,911     $  811     $1,168     $  932
Long-term debt............      1,945        109      1,836         --
                               ------     ------     ------     ------
Total ....................     $4,856     $  920     $3,004     $  932
                               ------     ------     ------     ------

                                       11
<PAGE>

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

This Annual Report on Form 10-KSB, including the information incorporated by
reference herein and the exhibits hereto, may include "forward-looking"
statements. Forward-looking statements broadly involve our current expectations
for future results. 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. 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 ability to actually
achieve results consistent with our current expectations depends significantly
on certain factors that may cause actual future results to differ materially
from our current expectations. Some of these factors include:

Risks related to our Company and business, including, but not limited to:
o     adverse effects in connection with any loss of key personnel
o     limited market in our securities
o     limited working capital and lack of working capital financing
o     timing, size and nature of market opportunities available to us and our
      ability to capitalize on these as they occur
o     our ability to maintain or increase research and development expenditures
      to maintain current and attract new customers
o     reduction in information technology spending by our current and/or
      potential customers

Competitive factors, including, but not limited to
o     pricing pressures, both in the United States and abroad
o     superior financial strength of some of our competitors
o     possible development of new products by competitors having superior
      performance characteristics
o     possible technological advances, intellectual property rights and
      registrations obtained by competitors

Difficulties and delays inherent in the development, marketing and sale of
business intelligence technology and business performance management systems,
including, but not limited to:
o     the imposition of regulatory requirements, such as those concerning data
      privacy
o     the failure to obtain, limitations on the use of, or the loss of
      intellectual property rights
o     our lengthy and variable sales cycles

Governmental action, including, but not limited to:
o     changes in tax and other laws and regulations affecting our business,
      including changes in securities laws and changes regarding accounting
      policies and principles

Legal disputes, including, but not limited to:
o     disputes over intellectual property rights
o     product liability claims
o     claims asserting securities law violations

General economic conditions, including, but not limited to:
o     international and domestic business conditions
o     political instability in foreign countries
o     interest rates
o     foreign currency exchange rates
o     changes in the rate of inflation
o     our limited ability to reduce the impact of these conditions on our
      results

Other factors beyond our control, including floods, fires, explosions, or acts
of terrorism or war.

You must carefully consider forward-looking statements and understand that such
statements involve a variety of risks and uncertainties, known and unknown, and
may be affected by inaccurate assumptions. It is not possible to foresee or
identify all factors that may affect our forward-looking statements, and you
should not consider any list of such factors to be an exhaustive list of all
risks, uncertainties or potentially inaccurate assumptions affecting such
forward-looking statements.

We caution you to consider carefully these factors as well as any other specific
factors discussed with each specific forward-looking statement in this annual
report. In some cases, these factors have affected, and in the future (together
with other unknown factors) could affect, our ability to implement our business
strategy and may cause actual results to differ materially from those
contemplated by such forward-looking statements. No assurance can be made that
any expectation, estimate or projection contained in a forward-looking statement
can be achieved.

                                       12
<PAGE>

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 the preceding cautionary language
for the express purpose of enabling us to use the protections of the safe harbor
with respect to all forward-looking statements.

                                       13
<PAGE>

ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS

                       CORVU CORPORATION AND SUBSIDIARIES
                        Consolidated Financial Statements
                             June 30, 2005 and 2004

                                       14
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Stockholders, Board of Directors, and Audit Committee
CorVu Corporation and Subsidiaries

We  have  audited  the  accompanying   consolidated   balance  sheets  of  CorVu
Corporation  and  Subsidiaries  as of June 30,  2005  and  2004 and the  related
consolidated statements of operations,  stockholders' deficit and cash flows for
the years then ended.  These statements are the  responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of CorVu Corporation
and  Subsidiaries  as of June  30,  2005  and  2004  and the  results  of  their
operations and their cash flows for the years then ended in conformity with U.S.
generally accepted accounting principles.

Minneapolis, Minnesota                       /s/ VIRCHOW, KRAUSE & COMPANY, LLP
September 9, 2005

                                       15
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES
                           Consolidated Balance Sheets
                             June 30, 2005 and 2004

<TABLE>
<CAPTION>

                                                                                             2005              2004
                                                                                         ------------      ------------
                                        ASSETS

Current assets:
<S>                                                                                      <C>               <C>
   Cash and cash equivalents .......................................................     $  2,162,866      $    148,475
   Trade accounts receivable, net of allowance for doubtful accounts of $65,000 and
     $112,000, respectively ........................................................        4,199,610         4,207,058
   Deferred income taxes ...........................................................               --           727,000
   Prepaid expenses ................................................................          379,072           209,777
   Other current assets ............................................................          111,401            75,607
                                                                                         ------------      ------------
        Total current assets .......................................................        6,852,949         5,367,917
                                                                                         ------------      ------------
Furniture, fixtures, and equipment .................................................          755,318           725,744
   Less accumulated depreciation ...................................................         (468,947)         (463,125)
                                                                                         ------------      ------------
        Net furniture, fixtures and equipment ......................................          286,371           262,619

Other assets:
   Deferred income taxes ...........................................................               --         1,888,000
                                                                                         ------------      ------------
                                                                                         $  7,139,320      $  7,518,536
                                                                                         ============      ============

                         LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Line of credit ..................................................................     $         --      $    300,000
   Accounts payable ................................................................        1,213,332         1,489,123
   Accrued compensation and related costs ..........................................        1,868,877         2,425,730
   Deferred revenue ................................................................        6,190,490         4,948,118
   Accrued interest ................................................................           39,698           100,534
   Other accrued expenses ..........................................................          761,236           911,966
                                                                                         ------------      ------------
        Total current liabilities ..................................................       10,073,633        10,175,471
Long-term debt................................................................ .....        1,500,000                --
Notes payable - stockholder ........................................................               --           600,784
                                                                                         ------------      ------------
        Total liabilities ..........................................................       11,573,633        10,776,255
                                                                                         ------------      ------------

Stockholders' deficit:
   Undesignated capital stock, 23,383,000 and 24,000,000 shares
     at June 30, 2005 and 2004, respectively, none issued                                          --                --
   Series C convertible preferred stock, Par value $100 per share:
     17,000 shares authorized; 17,000 and none issued and outstanding at June 30, 2005
     and 2004, respectively, liquidation preference of $2,550,000 at June 30, 2005          1,767,500                --
   Series B convertible preferred stock, Par value $0.01 per share:
     600,000 shares authorized; 360,000 and none issued and outstanding at June
     30, 2005 and 2004, respectively, liquidation preference of $360,000
     at June 30, 2005                                                                           3,600                --
   Series A convertible preferred stock, Par value $10 per share:
     1,000,000 shares authorized; none issued and outstanding
     at June 30, 2005 and 2004, respectively ..............................                        --                --
   Common stock, $0.01 par value; 75,000,000 shares authorized;
     49,483,268 and 23,970,268 shares issued and outstanding at June 30, 2005 and 2004,
     respectively ..................................................................          494,833           239,703
   Additional paid-in capital ......................................................       22,012,720        18,026,955
   Accumulated deficit .............................................................      (27,738,043)      (20,792,143)
   Deferred compensation ...........................................................          (17,900)          (23,616)
   Accumulated other comprehensive loss ............................................         (957,023)         (708,618)
                                                                                         ------------      ------------
        Total stockholders' deficit ................................................       (4,434,313)       (3,257,719)
                                                                                         ------------      ------------
        Commitments (Notes 4 and 6)
        Total liabilities and stockholders' deficit ................................     $  7,139,320      $  7,518,536
                                                                                         ============      ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       16
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations
                       Years ended June 30, 2005 and 2004

                                                  2005               2004
                                              ------------      ------------
Revenues:
   Software and license fees ...............  $  4,209,034      $  6,813,690
   Maintenance fees ........................     5,832,212         5,572,287
   Consulting and other ....................     3,129,328         3,771,686
                                              ------------      ------------
        Total revenues .....................    13,170,574        16,157,663
                                              ------------      ------------
Operating costs and expenses:
   Cost of consulting and other services....     3,343,368         3,365,157
   Product development .....................     2,098,644         1,843,265
   Sales and marketing .....................     6,857,554         8,335,379
   General and administrative ..............     4,743,833         4,671,051
                                              ------------      ------------
        Total operating costs and expenses .    17,043,399        18,214,852
                                              ------------      ------------
        Operating loss......................    (3,872,825)       (2,057,189)
Interest expense, net ......................      (109,773)          (71,468)
                                              ------------      ------------
        Loss before income taxes ...........    (3,982,598)       (2,128,657)
Deferred income tax provision...............     2,615,000                --
                                              ------------      ------------
        Net loss............................    (6,597,598)       (2,128,657)
Preferred stock dividends...................      (348,302)               --
                                              ------------      ------------
Loss attributable to common stockholders....  $ (6,945,900)     $ (2,128,657)
                                              ============      ============

Net loss per common share--basic............  $      (0.20)     $      (0.09)
Loss attributable to common stockholders
 per common share-basic.....................         (0.21)            (0.09)
Weighted average shares outstanding--basic...   33,754,597        23,079,416
Net loss per common share--diluted........... $      (0.20)     $      (0.09)
Loss attributable to common stockholders
 per common share-diluted...................         (0.21)            (0.09)
Weighted average shares outstanding-diluted     33,754,597        23,079,416

See accompanying notes to consolidated financial statements.

                                       17
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES
                Consolidated Statements of Stockholders' Deficit
                       Years ended June 30, 2005 and 2004

<TABLE>
<CAPTION>

                                                          SERIES C                      SERIES B
                                                      PREFERRED STOCK                PREFERRED STOCK
                                                 -------------------------  --------------------------------
                                                    SHARES      AMOUNT          SHARES          AMOUNT
                                                 ----------- -------------  ---------------- ---------------
<S>                                              <C>         <C>            <C>              <C>
Balance, June 30, 2003                                   --   $        --                --  $           --
                                                 ----------- -------------  ---------------- ---------------
Balance, June 30, 2004                                   --            --                --              --

Issuance of preferred stock, net of expenses         17,000     1,700,000           360,000            3,600
Note payable-stockholder converted into preferred
  stock                                                  --            --           240,000            2,400
Preferred stock converted into common stock              --            --          (240,000)          (2,400)
Increasing rate dividend adjustment                      --        90,000                --               --
Amortization of increasing rate dividend
  adjustment                                             --       (22,500)               --               --
                                                 ----------- -------------  ---------------- ---------------
Balance, June 30, 2005                               17,000  $  1,767,500           360,000  $         3,600
                                                 =========== =============  ================ ===============

</TABLE>

<TABLE>
<CAPTION>

                                                            COMMON STOCK         ADDITIONAL          STOCK
                                                     -------------------------   PAID-IN         SUBSCRIPTION     ACCUMULATED
                                                       SHARES         AMOUNT      CAPITAL          RECEIVABLE         DEFICIT
                                                     ------------  ------------  -------------    --------------  ----------------
<S>                                                  <C>        <C>              <C>              <C>             <C>
Balance, June 30, 2003                               22,753,029 $      227,474   $ 16,886,375     $   (324,000)   $   (18,509,486)
Comprehensive loss:
        Net loss                                           --              --              --               --         (2,128,657)
        Foreign currency translation adjustment            --              --              --               --                 --

Repurchase of common stock                           (1,087,097)       (10,871)      (313,129)         324,000           (154,000)
Exercise of stock options                               204,335          2,044         47,078               --                 --
Non-cash transactions related to equity
   transactions (Note 4)                                   --               --         31,020               --                 --
Issuance of common stock, net of expenses             2,100,001         21,056      1,375,611               --                 --
                                                    ----------   --------------   ------------    ---------------  ---------------
Balance, June 30, 2004                              23,970,268         239,703     18,026,955               --        (20,792,143)

Issuance of preferred stock, net of expenses               --               --        340,983               --                --
Note payable-stockholder converted into preferred
  stock                                                    --               --        237,600               --                --
Preferred stock converted into common stock                --               --             --               --                --
Increasing rate dividend adjustment                        --               --             --               --                --
Amortization of increasing rate dividend adjustment        --               --             --               --                --
Comprehensive loss:
        Net loss                                           --               --             --               --        (6,597,598)
        Foreign currency translation adjustment            --               --             --               --                --

Exercise of stock options                                9,000              90          1,170               --                --
Non-cash transactions related to equity
    transactions (Note 4)                                  --               --         20,184               --                --
Issuance of common stock, net of expenses           22,000,000         220,000      2,787,335               --                --
Preferred stock converted into common stock            800,000           8,000         (5,600)              --                --
Notes payable-stockholder converted into
    common stock                                     2,704,000          27,040        378,560               --                --
Intrinsic dividend adjustment                              --               --        225,533               --           (225,533)
Increasing rate dividend adjustment                        --               --             --                --           (90,000)
Amortization of increasing rate dividend
    adjustment                                             --               --             --                --            22,500
Preferred stock dividends                                  --               --             --                --           (55,269)
                                                    ----------   --------------   ------------    --------------  ----------------
Balance, June 30, 2005                              49,483,268    $    494,833    $22,012,720  $            --  $     (27,738,043)
                                                    ==========   ==============   ============    ==============  ================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       18
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES
                Consolidated Statements of Stockholders' Deficit
                       Years ended June 30, 2005 and 2004

<TABLE>
<CAPTION>
                                                                          ACCUMULATED
                                                                             OTHER            TOTAL
                                                              DEFERRED    COMPREHENSIVE   STOCKHOLDERS'
                                                             COMPENSATION     LOSS         DEFICIT
                                                             ----------- -------------  --------------
<S>                                                         <C>          <C>            <C>
            Balance, June 30, 2003                           $  (131,250) $  (520,929)   $  (2,371,816)
            Comprehensive loss:
                    Net loss                                          --           --       (2,128,657)
                    Foreign currency translation adjustment           --      (187,689)       (187,689)
                                                                                         -------------
            Comprehensive loss                                                             (2,316,346)
            Repurchase of common stock                                --           --        (154,000)
            Exercise of stock options                                 --           --          49,122
            Non-cash transactions related to equity
                Transactions (Note 4)                             107,634           --        138,654
            Issuance of common stock, net of expenses                 --           --       1,396,667
                                                             ----------- -------------  --------------
            Balance, June 30, 2004                                (23,616)    (708,618)    (3,257,719)
            Issuance of preferred stock, net of expenses              --           --       2,044,583
            Note payable-stockholder converted into preferred
              stock                                                   --           --         240,000
            Preferred stock converted into common stock               --           --              --
            Increasing rate dividend adjustment                       --           --              --
            Amortization of increasing rate dividend adjustment       --           --              --
            Comprehensive loss:
                    Net loss                                          --           --      (6,597,598)
                    Foreign currency translation adjustment           --      (248,405)      (248,405)
                                                                                         -------------
            Comprehensive loss                                                             (6,846,003)
            Exercise of stock options                                 --           --           1,260
            Non-cash transactions related to equity
                transactions (Note 4)                               5,716          --          25,900
            Issuance of common stock, net of expenses                 --           --       3,007,335
            Preferred stock converted into common stock               --           --              --
            Notes payable-stockholder converted into
                common stock                                          --           --         405,600
            Intrinsic dividend adjustment                             --           --              --
            Increasing rate dividend adjustment                       --           --              --
            Amortization of increasing rate dividend adjustment       --           --              --
            Preferred stock dividends                                 --           --         (55,269)
                                                             ----------- -------------  --------------
            Balance, June 30, 2005                           $   (17,900)$    (957,023) $  (4,434,313)
                                                             =========== =============  ==============
</TABLE>

                   See accompanying notes to consolidated financial statements.

                                       19
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                       Years ended June 30, 2005 and 2004

<TABLE>
<CAPTION>

                                                                                           2005           2004
                                                                                       -----------    -----------
Cash flows from operating activities:
<S>                                                                                    <C>            <C>
   Net loss.........................................................................   $(6,597,598)   $(2,128,657)

   Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation ..................................................................       143,551        134,409
     Warrants and stock options vested .............................................        25,900        138,654
     Deferred income tax provision......................................... ........     2,615,000             --
     Changes in operating assets and liabilities:
        Trade accounts receivable, net .............................................         7,448     (1,312,865)
        Prepaid expenses ...........................................................      (169,295)        69,379
        Other current assets .......................................................       (35,794)        (8,273)
        Accounts payable ...........................................................      (350,791)       527,355
        Accrued compensation and related costs .....................................      (631,853)       502,426
        Deferred revenue ...........................................................     1,167,372        559,394
        Accrued interest ...........................................................       (60,836)       (68,130)
        Other accrued expenses .....................................................      (239,033)       194,385
                                                                                       -----------    -----------
          Net cash used in operating activities.....................................    (4,125,929)    (1,391,923)
                                                                                       -----------    -----------

Cash flows from investing activities:
   Capital expenditures ............................................................      (167,303)      (235,647)
                                                                                       -----------    -----------
          Net cash used in investing activities ....................................      (167,303)      (235,647)
                                                                                       -----------    -----------

Cash flows from financing activities:
   Net proceeds from sale of common stock ..........................................     3,007,335      1,396,667
   Net proceeds from sale of Series B convertible preferred stock...................       344,583             --
   Net 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)            --
   Borrowings on line of credit ....................................................           --          50,000
   Exercise of stock options .......................................................         1,260         49,122
   Repurchase of common stock ......................................................            --       (154,000)
   Repayment of notes payable- stockholder .........................................           --        (193,978)
                                                                                       -----------    -----------
          Net cash provided by financing activities ................................     6,253,178      1,147,811

Effect of exchange rate changes on cash ............................................        54,445        (15,112)
                                                                                       -----------    -----------
          Net increase (decrease) in cash and cash equivalents .....................     2,014,391       (494,871)

Cash and cash equivalents at beginning of year .....................................       148,475        643,346
                                                                                       -----------    -----------
Cash and cash equivalents at end of year ...........................................   $ 2,162,866    $   148,475
                                                                                       ===========    ===========

Supplemental cash flow disclosures:
Cash paid during the year for interest .............................................   $   201,641    $   149,628
Cash paid during the year for income taxes..........................................         3,354         42,918
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             --
Cancellation of stock subscription and exercise of stock option.....................            --       (324,000)

</TABLE>

See accompanying notes to consolidated financial statements.

                                       20
<PAGE>

                       CORVU CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                             June 30, 2005 and 2004

(1) DESCRIPTION OF BUSINESS AND CONSOLIDATED FINANCIAL STATEMENT PRESENTATION

(A) ORGANIZATION

CorVu Corporation (the Company or CorVu) is an international provider of
Integrated Business Intelligence and Business Performance Management Solutions.
The Company designs, develops, markets, and supports its proprietary management
software solutions. CorVu is a Minnesota corporation.

The Company's products and services are sold through both direct and indirect
channels. Sales and support offices are located in the United States (U.S.),
Australia, and United Kingdom/Europe.

(B) BASIS OF CONSOLIDATED FINANCIAL STATEMENT PRESENTATION

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. Intercompany accounts and
transactions have been eliminated in consolidation.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) REVENUE RECOGNITION

The Company recognizes revenues in accordance with the provisions of the
American Institute of Certified Public Accountants Statement of Position (SOP)
97-2, "Software Revenue Recognition," as amended by SOP 98-4 and SOP 98-9, as
well as Technical Practice Aids issued from time to time by the American
Institute of Certified Public Accountants, and in accordance with the Securities
and Exchange Commission Staff Accounting Bulletin No. (SAB) 101, "Revenue
Recognition in Financial Statements", as amended by SAB 104.

Software license revenue is recognized when all of the following criteria have
been met: there is an executed license agreement, software has been delivered to
the customer, the license fee is fixed and payable within twelve months,
collection is deemed probable and product returns are reasonably estimable. When
the Company receives cash for prepayment of software license fees from resellers
or distributors, revenue is recognized upon the delivery and acceptance of the
product, when the title to the product has been passed to the reseller or
distributor and there is no right of return. 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 over the term of the maintenance
contract, typically 12 to 36 months. Consulting and other revenues are
recognized when services are performed.

Deferred revenue represents payment received or amounts billed in advance of
services to be performed. Billing occurs within 30 days of scheduled performance
of services.

(B) RESEARCH AND DEVELOPMENT

Expenditures for software research and development are expensed as incurred.
Such costs are required to be expensed until the point that technological
feasibility of the software is established. Technological feasibility is
determined after a working model has been completed. The Company's software
research and development costs primarily relate to software development during
the period prior to technological feasibility and are expensed as incurred.
During fiscal 2005 and 2004, no software development costs were capitalized.

                                       21
<PAGE>

(C) COMPREHENSIVE LOSS

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

Comprehensive loss and its components consist of the following for the years
ended June 30:

                                   2005           2004
                               -----------    -----------
Net loss..................   $  (6,597,598)    (2,128,657)
Other comprehensive loss:
Foreign currency translation
   adjustment ..............      (248,405)      (187,689)
                               -----------    -----------
Comprehensive loss..........   $(6,846,003)   $(2,316,346)
                               -----------    -----------

(D) FOREIGN CURRENCY TRANSLATION

The functional currency of the Company's subsidiaries is the local currency.
Accordingly, the Company translates all assets and liabilities into U.S. dollars
at current rates. Revenues, costs, and expenses are translated at average rates
during each reporting period. Gains and losses resulting from the translation of
the consolidated financial statements are excluded from results of operations
and are reflected as a translation adjustment and a separate component of
stockholders' deficit.

Gains and losses resulting from foreign currency transactions are recognized in
the consolidated statements of operations in the period they occur.

(E) NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE

Basic net loss attributable to common stockholders per common share is computed
by dividing net loss attributable to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted net loss
attributable to common stockholders per common share is computed by dividing net
loss attributable to common stockholders by the weighted average number of
common shares outstanding plus all additional common stock that would have been
outstanding if potentially dilutive common stock related to stock options and
warrants had been issued. Dilutive common equivalent shares have not been
included in the computation of basic or diluted net loss attributable to common
stockholders per share for the years ended June 30, 2005 and 2004 because their
inclusion would be anti-dilutive.

                                       22
<PAGE>

Following is a reconciliation of basic and diluted net loss attributable to
common stockholders per common share for the years ended June 30:

                                              2005          2004
                                           ----------    ----------
Net loss attributable to common
  stockholders                            $(6,945,900)  (2,128,657)

Weighted average shares outstanding        33,754,597    23,079,416

Net loss attributable to common
  Stockholders per common share-basic     $     (0.21)       (0.09)

Net loss per common share -diluted:

Net loss attributable to common
  Stockholders                            $(6,945,900)  (2,128,657)

Weighted average shares outstanding        33,754,597    23,079,416

Common stock equivalents                           --            --

Weighted average shares and potential
   diluted shares outstanding              33,754,597    23,079,416

Net loss attributable to common
  Stockholders per common share-diluted   $     (0.21)       (0.09)

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

All options and warrants outstanding at June 30, 2005 and 2004 were excluded
from the computation of common share equivalents for the years ended June 30,
2005 and 2004 because their inclusion would be anti-dilutive. The number of
potential anti-dilutive shares at June 30, 2005 and 2004 were 15,193,069 and
8,068,223, respectively.

                                       23
<PAGE>

(F) 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".

Had compensation cost been recognized based on the fair values of options at the
grant dates consistent with the provisions of SFAS No. 123, the Company's loss
attributable to common stockholders and basic and diluted loss attributable to
common stockholders per common share would have been changed to the following
pro forma amounts for the years ended June 30:

                                                2005              2004
                                             ------------     ------------
Loss attributable to common stockholders:
   As reported                               $ (6,945,900)    $(2,128,657)
   Pro forma                                   (7,700,568)     (2,594,805)

Basic loss attributable to common
  stockholders per common share:
   As reported                                      (0.21)          (0.09)
   Pro forma                                        (0.23)          (0.11)

Diluted loss attributable to common
  stockholders per common share:
   As reported                                      (0.21)          (0.09)
   Pro forma                                        (0.23)          (0.11)

Stock based compensation:
   As reported                                     25,900          34,604
   Pro forma                                      754,668         466,148

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

                                              2005             2004
                                          --------------   -------------
Risk-free interest rate                     3.375-3.625%    2.625-4.000%
Expected life of options granted               5-7 years         7 years
Expected volatility                                 152%            122%
Expected dividend yield                               0%              0%

                                       24
<PAGE>

(G) INCOME TAXES

The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized at the enacted rates for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing tax
assets and liabilities and their respective tax basis. The effect on deferred
tax assets and liabilities of a change in tax rate is recognized in income in
the period that includes the enactment date. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.

(H) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of the Company's financial instruments (cash and cash
equivalents, trade accounts receivable and accounts payable) because of their
short-term nature, approximates fair value. The carrying value of notes payable
approximates fair value because the current rates approximate market rates
available on similar instruments and terms.

(I) CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid money market accounts carried at cost
plus accrued interest, which approximates market value. The Company deposits
cash in high credit quality financial institutions. The balances at times may
exceed federally insured limits. All cash equivalents have remaining maturities
of 90 days or less when purchased.

(J) FURNITURE, FIXTURES AND EQUIPMENT, NET

Furniture, fixtures and equipment consists of property, equipment, furniture and
computers and are stated at cost less accumulated depreciation. Depreciation is
calculated using the straight-line method over the estimated useful lives of the
respective assets that generally range from three to seven years. Leasehold
improvements are amortized using straight-line methods over the shorter of the
life of the asset or the life of the lease. Maintenance, repairs and minor
renewals are expensed when incurred. Depreciation expense was $143,551 and
$134,409 for the years ended June 30, 2005 and 2004, respectively.

(K) ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising costs totaled
approximately $0 and $130,000 for the years ended June 30, 2005 and 2004,
respectively.

(L) BUSINESS AND CREDIT CONCENTRATIONS

Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of trade accounts receivable. The Company sells
principally to resellers and end users in the United States, Australia, and
United Kingdom/Europe. The Company performs ongoing credit evaluations of its
customers and trade accounts receivable are unsecured. On a periodic basis, the
Company evaluates its accounts receivable based on history of past write-offs
and collections and current credit conditions and accordingly adjusts their
allowance for doubtful accounts. Past due accounts are determined based on
individual customer terms and the policy of write-offs and collection efforts
vary based on account circumstances. The Company does not accrue interest on
outstanding accounts receivable balances. As of June 30, 2005 and 2004, the
balance of accounts receivable represented by unpaid maintenance contracts
(which is included in deferred revenues) was $1,858,407 and $1,269,477,
respectively.

(M) IMPAIRMENT OF LONG-LIVED ASSETS AND ASSETS TO BE DISPOSED OF

Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net undiscounted cash flows expected to be generated by the asset.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. The Company did not record any impairment charges
for the years ended June 30, 2005 and 2004.

                                       25
<PAGE>

(N) USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of those assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. A change in the facts and circumstances
surrounding these estimates could result in a change to the estimates and impact
future operating results.

(P) NEW ACCOUNTING PRONOUNCEMENTS

In December 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46 (Revised December 2003), "Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51" (FIN 46R). This standard
replaces FIN 46, Consolidation of Variable Interest Entities" that was issued in
January 2003. FIN 46R modifies or clarifies various provisions of FIN 46. FIN
46R addresses the consolidation of business enterprises of variable interest
entities (VIEs), as defined by FIN 46R. FIN 46R exempts certain entities from
its requirements and provides for special effective dates for entities that have
fully or partially applied FIN 46 prior to issuance of FIN 46R. Otherwise,
application of FIN 46R is required in financial statements of public entities
that have interest in structures commonly referred to as special purpose
entities for periods ending after December 15, 2003. Application by the Company
for all other types of VIEs is required in financial statements for periods
ending no later than the quarter ended January 31, 2005. The Company does not
expect the adoption of FIN 46R to have a material effect on the Company's
consolidated financial statements.

In November 2004, FASB issued SFAS No. 151 "Inventory Costs" which amends the
guidance in ARB No. 43, Chapter 4 "Inventory Pricing," to clarify the accounting
for abnormal amounts of idle facility expense, freight, handling costs , wasted
material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and re-handling costs may be so abnormal as to require
treatment as current period chargers. SFAS No. 151 requires that those items be
recognized as current period charges regardless of whether they meet the
criteria of "so abnormal." In addition, SFAS No. 151 requires that allocation of
fixed production overheads to the costs of conversion be based on normal
capacity of the production facilities. SFAS No. 151 shall be effective for
inventory costs incurred during fiscal years beginning after June 15, 2005.
Earlier application is permitted for inventory costs incurred during fiscal
years beginning after the date SFAS No. 151 was issued. SFAS No. 151 shall be
applied prospectively. The Company does not expect the adoption of SFAS No. 151
to have a material effect on its consolidated financial statements.

In December 2004, FASB issued SFAS No. 153 "Exchanges of Non-monetary Assets"
which amends APB Opinion No. 29, "Accounting for Non-monetary Transaction." APB
No. 29 is based on the principle that exchanges should be measured based on the
fair value of the assets exchanged. The guidance in that Opinion, however,
included certain exceptions to that principle. SFAS No. 153 amends APB No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. A non-monetary exchange has commercial
substance if the future cash flow of the entity is expected to change
significantly as a result of the exchange. SFAS No. 153 shall be effective for
non-monetary assets exchanges occurring in fiscal periods beginning after June
15, 2005. Earlier application is permitted for non-monetary asset changes
occurring in fiscal periods beginning after the date SFAS No. 153 was issued.
SFAS No. 153 shall be applied prospectively. The Company does not expect the
adoption of SFAS No. 153 to have a material effect on its consolidated financial
statements.

In December 2004, the FASB issued 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.

In June 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections", a replacement of APB Opinion No. 20 and SFAS No. 3. The statement
applies to all voluntary changes in accounting principle, and changes the
requirements for accounting for and reporting of a change in accounting
principle. SFAS No. 154 requires retrospective application to prior periods'
financial statements of a voluntary change in accounting principle unless it is
impracticable. SFAS No. 154 is effective for accounting changes and corrections
of errors made in fiscal years beginning after December 15, 2005. Earlier
application is permitted for accounting changes and corrections of errors made
occurring in fiscal years beginning after June 1, 2005. The statement does not
change the transition provisions of any existing accounting pronouncements,
including those that are in a transition phase as of the effective date of this
statement. The Company does not expect the adoption of SFAS No. 154 to have a
material effect on its consolidated financial statements.

                                       26
<PAGE>

(3)  LIQUIDITY

The accompanying consolidated financial statements are prepared assuming the
Company will continue as a going concern. During the year ended June 30, 2005,
the Company generated an operating loss of $3,872,825. As of June 30, 2005, the
Company had an accumulated deficit of $27,738,043 and total stockholders'
deficit of $4,434,313.

During the year ended June 30, 2005, the Company has raised approximately $6.5
million in debt and equity financing, net of expenses (see Notes 11 and 12).
Proceeds are being used to fund operating losses and to retire its line of
credit. In addition, the existing notes payable-stockholder have been converted
into approximately 3.5 million shares of the Company's common stock at prices
ranging from $0.15-0.30 per share.

During the past twelve months, because revenues have not been sufficient to
cover operating expenses, the Company has initiated expense reductions in all
areas. Concurrent with those reductions, the Company has brought in new
leadership including sales management and has re-focused sales and marketing
initiatives. Management expects revenues to improve as sales and marketing
initiatives commenced within the last few months, allowing the Company to more
effectively sell its products and services. In the event these initiatives do
not materialize at the expected rates, management would seek additional
financing through private equity placements or would conserve cash by further
reducing operating expenses. There can be no assurance that the Company will be
successful in achieving these objectives. In connection with the debt and equity
transaction discussed in Note 12, 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. The Company's ability to continue as a going
concern is dependent on it achieving profitability and generating cash flow to
fund operations. We believe that we will generate sufficient cash flow from
operations to meet our operating cash requirements for the next 12 months.

(4) STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

The Company's 1996 Stock Option Plan (the Plan) provides for the issuance of up
to an aggregate of 4,500,000 shares of common stock to employees, directors, and
consultants. The Plan provides for the issuance of incentive and nonqualified
stock options. In June 2005, the Board of Directors authorized an increase in
the number of shares reserved for the Plan to 8,000,000. The increase in the
number of shares reserved for the Plan is subject to approval by the
shareholders at the upcoming Annual meeting. In addition, the vesting on all
outstanding stock options was accelerated so that all were 100% exercisable as
of June 30, 2005. As defined in Financial Accounting Standards Board
Interpretation (FIN) No.44, "Accounting for Certain Transactions Involving Stock
Compensation", it was determined that there was no compensation expense as a
result of the acceleration of the vesting of the outstanding options.

Under the Plan, the exercise price for incentive stock options is at least 100%
of the fair market value on the date of the grant. The exercise price for
incentive stock options is at least 110% of the fair market value on the date of
the grant for persons with greater than 10% of the voting power of all classes
of stock. Options generally expire in five or seven years; incentive stock
options may expire in five years if the optionee owns stock representing more
than 10% of the voting power of all classes of stock. Vesting periods are
determined by a compensation committee appointed by the board of directors and
generally provide for shares to vest ratably over three years.

Under SFAS No. 123 "Accounting for Stock-Based Compensation," the weighted
average estimated fair value of stock options granted at exercise price equal to
market price of grant date during 2005 and 2004 was $0.15 and $0.75 per share,
respectively.

                                       27
<PAGE>

The activity for the Plan is summarized as follows:

<TABLE>
<CAPTION>

                                                                     WEIGHTED-
                                                                  AVERAGE EXERCISE
                                                  OPTIONS         PRICE PER SHARE
                                             -------------------  ------------------
<S>                                          <C>                  <C>
Outstanding at June 30, 2003 ............             3,401,126    $           1.13
   Granted ..............................             1,485,750                0.85
   Exercised ............................              (204,335)               0.24
   Forfeited.............................              (607,665)               1.68
                                             -------------------   -----------------
Outstanding at June 30, 2004 ............             4,074,876    $           0.98
   Granted ..............................             2,466,751                0.16
   Exercised ............................                (9,000)               0.14
   Forfeited.............................            (1,510,208)               1.09
                                             -------------------   -----------------
Outstanding at June 30, 2005.............             5,022,419    $           0.55
                                             ===================   =================
Options exercisable at June 30, 2005.....             5,022,419    $           0.55
                                             ===================   =================
Options exercisable at June 30, 2004.....             2,921,043    $           1.07
                                             ===================   =================
</TABLE>

At June 30, 2005 and 2004, the weighted average remaining contractual life of
outstanding options was 5.1 and 4.5 years, respectively.

During fiscal 2005, the Company issued five year stock options to directors in
exchange for services, valued at $43,800 using the Black Scholes pricing model,
to purchase up to an aggregate of 215,000 shares of common stock at prices
ranging from $0.24-0.28 per share. During fiscal 2004, the Company issued five
year stock options to directors in exchange for services, valued at $58,220
using the Black Scholes pricing model, to purchase up to an aggregate of 80,000
shares of common stock at prices ranging from $0.82-$1.10 per share.

In connection with these issuances, the Company has recorded expenses totaling
$25,900 and $34,604 in the accompanying consolidated statements of operations
for the years ended June 30, 2005 and 2004, respectively. Remaining amounts to
be expensed in the future, which is included in deferred compensation in the
accompanying consolidated balance sheets as of June 30, 2005 and 2004, are
$17,900 and $23,616, respectively.

                                       28
<PAGE>

Options activity outside the Plan is summarized as follows:

<TABLE>
<CAPTION>

                                                                     WEIGHTED-
                                                                  AVERAGE EXERCISE
                                                  OPTIONS         PRICE PER SHARE
                                             -------------------  ------------------
<S>                                          <C>                  <C>
Outstanding at June 30, 2003 ............             1,349,439    $           1.69
   Granted ..............................                 4,500                1.78
   Exercised ............................                    --                  --
   Forfeited.............................               (27,000)               2.41
                                             -------------------   -----------------
Outstanding at June 30, 2004 ............             1,326,939    $           1.67
   Granted ..............................                    --                  --
   Exercised ............................                    --                  --
   Forfeited.............................              (127,126)               2.11
                                             -------------------   -----------------
Outstanding at June 30, 2005.............             1,199,813    $           1.63
                                             ===================   =================
Options exercisable at June 30, 2005.....             1,199,813    $           1.63
                                             ===================   =================
Options exercisable at June 30, 2004.....             1,326,939    $           1.67
                                             ===================   =================
</TABLE>

At June 30, 2005 and 2004, the weighted average remaining contractual life of
outstanding options outside the Plan was 1.0 and 2.0 years, respectively.

The following tables summarize information about stock options outstanding as of
June 30, 2005:

<TABLE>
<CAPTION>

                                     OPTIONS OUTSTANDING                            OPTIONS EXERCISABLE
                   -------------------------------------------------------- ------------------------------------
                                      WEIGHTED-AVERAGE        WEIGHTED-                            WEIGHTED-
                                          REMAINING           AVERAGE                              AVERAGE
EXERCISE                NUMBER           CONTRACTUAL         EXERCISE            NUMBER           EXERCISE
PRICES                OUTSTANDING           LIFE               PRICE           EXERCISABLE          PRICE
-----------------   -----------------  -----------------   ----------------   -----------------   --------------
<S>       <C>              <C>                      <C>    <C>                      <C>           <C>
$    0.08-0.12             2,052,751                6.5    $          0.12          2,052,751     $        0.12
     0.14-0.20               183,000                2.7               0.20            183,000              0.20
     0.23-0.36               949,000                5.0               0.27            949,000              0.27
     0.38-0.42               281,000                4.1               0.40            281,000              0.40
     0.58-0.82               484,667                5.0               0.70            484,667              0.70
     0.90-1.33             1,579,000                2.4               1.22          1,579,000              1.22
     1.78-2.67               589,814                0.9               2.37            589,814              2.37
     3.00                     79,000                1.9               3.00             79,000              3.00
     7.00                     24,000                1.7               7.00             24,000              7.00
-----------------   -----------------  -----------------   ----------------   ----------------    --------------
$    0.08-7.00             6,222,232                4.3    $          0.76          6,222,232     $        0.76
=================   =================  =================   ================   ================    ==============
</TABLE>

                                       29
<PAGE>

WARRANTS ISSUED TO THIRD PARTIES

During fiscal 2005, the Company issued five year warrants to purchase up to an
aggregate of 1,500,001 shares of common stock at a price $0.20 per share to
various investors and a broker under a private placement in connection with the
sale of Series B Convertible Preferred Stock, which generated proceeds of
approximately $584,000, net of associated expenses (see Note 11). In a separate
transaction, the Company issued five year warrants to purchase up to 5,400,000
shares of common stock at a price of $0.50 per share in connection with the
issuance of Series C Convertible Preferred Stock to an investor (see Note 12).
In connection with a financing agreement entered into in July 2004 (see Note 8),
the Company issued a seven-year warrant to purchase up to 38,867 shares of
common stock at a price of $0.6175 per share that expires in July 2011.

During fiscal 2004, the Company issued three and five year warrants to various
investors and a broker to purchase up to an aggregate of 699,066 shares of
common stock at prices ranging from $0.90-$1.25 per share which expire through
November 2008. The warrants were issued in connection with the sale of 2,100,001
shares of common stock at a price of $0.75 per share, the proceeds of which
totaled approximately $1.4 million, net of associated expenses of approximately
$55,000.

As of June 30, 2005, warrants to purchase a total of 8,970,837 shares of common
stock were outstanding at exercise prices ranging from $0.15-$2.67 per share,
expiring through August 2010.

Information regarding the Company's warrants is summarized below:

                                                                     WEIGHTED-
                                                                     AVERAGE
                                                                     EXERCISE
                                                                    PRICE PER
                                                 NUMBER               SHARE
                                              -------------        ------------
Outstanding at June 30, 2003 .............       1,967,342         $      1.98
   Granted ...............................         699,066                1.22
   Exercised .............................              --                  --
   Forfeited..............................              --                  --
                                              -------------        ------------
Outstanding at June 30, 2004 .............       2,666,408         $      1.78
   Granted ...............................       6,938,868                0.44
   Exercised .............................              --                  --
   Forfeited..............................        (634,439)               4.35
                                              -------------        ------------
Outstanding at June 30, 2005..............       8,970,837         $      0.56
                                              =============        ============

                                       30
<PAGE>

 (5) INCOME TAXES

Loss before income taxes consists of the following for the years ended June 30
(in thousands):

                                                        2005         2004
                                                 ------------- -------------
United States..................... ..........    $    (2,198)  $      (927)
International................................         (1,785)       (1,202)
                                                 ------------- -------------
Total....................... ........... ....    $    (3,983)  $    (2,129)
                                                 ============= =============

The Company has incurred cumulative net operating losses since inception. Income
tax computed at the U.S. federal statutory rate reconciled to the effective tax
rate as follows for the years ended June 30:

                                                           2005         2004
                                                       ------------  ---------
Federal statutory tax rate benefits.................        (34.0)%    (34.0)%
State tax, net of federal benefit...................         (4.0)      (4.0)
Reduction of net operating losses...................           --         --
Provision (benefits) related to foreign operations..         15.1       18.3
Change in valuation allowance.......................         98.1       31.4
Permanent differences and other.....................         (9.5)     (11.7)%
                                                       ------------  ---------
Effective tax rate..................................         65.7%        -- %
                                                       ============  =========

The Company has recorded a valuation allowance as follows at June 30 (in
thousands):

<TABLE>
<CAPTION>
                                                                       2005          2004
                                                                 ------------- -------------
Deferred income tax assets:
<S>                                                              <C>           <C>
   Foreign net operating loss carryforwards..................    $     3,236   $      2,811
   U.S. and state net operating loss carryforwards and
     credits.................................................          3,333          2,351
   Miscellaneous reserves and accruals.......................            171            286
                                                                 ------------- -------------
        Total gross deferred tax assets......................          6,740          5,448
Less: Valuation allowance....................................         (6,740)        (2,833)
                                                                 ------------- -------------
        Net deferred income tax assets.......................    $        --   $      2,615
                                                                 ============= =============
</TABLE>

The income tax provision for the year ended June 30, 2005 relates entirely to
deferred income taxes.

In assessing the realization of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible.

Based on the level of historical taxable income and projections of future
taxable income over the periods in which the deferred tax assets are deductible,
during 2003, the Company recorded a deferred tax asset of $2,615,000. A
valuation allowance had been provided for the remaining deferred tax assets
related to certain foreign net operating loss carryforwards as of June 30, 2004.

As of June 30, 2005, due to operating losses that were incurred for the fiscal
years ended June 30, 2005 and 2004, management felt it prudent to write-off the
previously recorded deferred income tax asset. This one-time, non-recurring
expense is reflected in the accompanying statement of operations as of June 30,
2005.

The change in the valuation allowance was $3,907,000 and $669,000 for the years
ended June 30, 2005 and 2004.

                                       31
<PAGE>

As of June 30, 2005, the Company has reported U.S. net Federal and State
operating loss carryforwards of approximately $8,900,000 and $3,160,000,
respectively. The net operating loss carryforwards expire in the years 2010
through 2025.

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 that 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.

(6) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases certain facilities and equipment under noncancelable
operating leases that expire at various dates through 2010. Future minimum lease
commitments under these operating leases are as follows:

YEAR ENDING JUNE 30:
--------------------
2006................................    $          811,000
2007................................               653,000
2008................................               515,000
2009................................               494,000
2010................................               438,000
                                        ------------------
                                        $        2,911,000
                                        ==================

Rent expense under operating leases for the years ended June 30, 2005 and 2004
was $1,350,000 and $1,115,000, respectively.

LEGAL PROCEEDINGS

The Company is involved in legal actions in the ordinary course of its business.
Although the outcome of any such legal actions cannot be predicted, management
believes that there are no pending legal proceedings against or involving the
Company for which the outcome is likely to have a material adverse effect upon
the Company's financial position, results of operations, or cash flow.

(7) NOTES PAYABLE- STOCKHOLDER

The Company had received interest-bearing advances from a stockholder under term
notes. The notes carried an interest rate of 8.5% per year and were scheduled to
mature on December 31, 2006, with the right to demand payment on or after
September 30, 2005. The notes were collateralized by substantially all the
assets of the Company. Balances due under these notes were approximately
$601,000, plus accrued interest of approximately $100,000, as of June 30, 2004.

In December 2004, one of the notes in the amount of $239,384, together with $616
of accrued but unpaid interest, was converted by the stockholder into 240,000
shares of the newly created Series B Convertible Preferred Stock (see Note 11).
In February 2005, in connection with the sale of common stock discussed in Note
12, the remaining balance of note of $405,600 was converted into 2,704,000
shares of the Company's common stock at a price of $0.15 per share and the
240,000 shares of Series B Convertible Preferred Stock issued in December 2004
were converted into 800,000 shares of common stock at a price of $0.30 per
share.

Interest expense was approximately $29,000 and $58,000 for the years ended June
30, 2005 and 2004, respectively.

                                       32
<PAGE>

(8) LINE OF CREDIT AGREEMENTS

In April 2003, the Company entered into a one-year revolving line of credit
agreement with a bank with a credit limit of $300,000. The line of credit
carried an interest rate based on the prime rate plus 2% and was secured by the
assets of its wholly-owned subsidiary CorVu North America, Inc. and was
guaranteed by the Company. In April 2004, the due date of the line of credit was
extended to July 2004 and was subsequently repaid.

In July 2004, the Company entered into a one-year financing agreement with a
bank that provided financing based on eligible receivables up to a maximum
amount of $800,000. The financing agreement carried an interest rate based on
the prime rate plus 2.5% and was collateralized by substantially all assets of
its wholly-owned subsidiary CorVu North America, Inc. and was guaranteed by the
Company. In addition, the Company paid an additional fee equal to 0.5% per month
of the outstanding balance on each financed receivable. The financing agreement
also called for an up-front loan fee equal to 1% of the maximum facility
($8,000). In connection with this agreement, the Company issued a seven-year
warrant to purchase up to 38,867 shares of common stock at a price of $0.6175
per share that expires in July 2011. The fair value of the warrants at the date
of grant were estimated to be approximately $21,000 using the Black-Scholes
pricing model, which will be charged to operations on a straight-line basis over
the term of the facility. 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 3.625%; and an expected life of seven years. In
December 2004, this agreement was terminated and the financing agreement was
paid in full. In March 2005, the warrants issued in connection with this
financing agreement were cancelled.

In December 2004, the Company entered into a ninety-day revolving line of credit
agreement with a bank with a credit limit of $300,000. The line of credit
carried an interest rate based on the prime rate plus 3% and was secured by the
assets of its wholly-owned subsidiary CorVu North America, Inc. and was
guaranteed by the Company and an officer of the Company. The agreement was
subject to financial covenants and borrowing base restrictions. In addition, the
Company was required to maintain cash collateral with the bank in the amount of
not less than $100,000. In February 2005, the outstanding balance was paid with
proceeds of the financing discussed in Note 12 and this agreement was
terminated.

Interest expense for all facilities for the years ended June 30, 2005 and 2004
was approximately $11,000 and $14,000, respectively, which is included in
interest expense in the accompanying consolidated statements of operations.

                                       33
<PAGE>

(9) INDUSTRY SEGMENT AND OPERATIONS BY GEOGRAPHIC AREAS:

The Company operates predominantly in one industry segment, being the design,
development, support and marketing of its proprietary management software
solutions. The geographic distributions of the Company's revenue,long-lived
assets and other measures are summarized in the following table:

                                               YEAR ENDED JUNE 30,
                                  --------------------------------------------
                                               2005                  2004
                                  ---------------------   --------------------
Total Revenues:
   United States...............   $          4,098,000              6,096,000
   Australia...................              4,504,000              5,724,000
   United Kingdom..............              4,569,000              4,338,000
                                  ---------------------   --------------------
                                  $         13,171,000             16,158,000
                                  =====================   ====================
Operating Income (Loss):
   United States...............   $        (1,701,000)               (525,000)
   Australia...................            (1,586,000)                307,000
   United Kingdom..............              (146,000)             (1,467,000)
   Corporate......... .........              (440,000)               (372,000)
                                  ---------------------   --------------------
                                  $        (3,873,000)             (2,057,000)
                                  =====================   ====================
Deferred income tax provision:
   United States...............   $                --                     --
   Australia...................               248,000                     --
   United Kingdom..............                    --                     --
   Corporate......... .........             2,367,000                     --
                                  ---------------------   --------------------
                                  $         2,615,000                     --
                                  =====================   ====================
Capital Expenditures:
   United States...............   $              2,000                 65,000
   Australia...................                 35,000                 43,000
   United Kingdom..............                130,000                128,000
                                  ---------------------   --------------------
                                  $            167,000                236,000
                                  =====================   ====================
Depreciation:
   United States...............   $             38,000                 36,000
   Australia...................                 18,000                 22,000
   United Kingdom..............                 67,000                 56,000
   Corporate......... .........                 21,000                 20,000
                                  ---------------------   --------------------
                                  $            144,000                134,000
                                  =====================   ====================
Long-Lived Assets:
   United States...............   $             53,000                109,000
   Australia...................                 63,000                 47,000
   United Kingdom..............                170,000                107,000
                                  ---------------------   --------------------
                                  $            286,000                263,000
                                  =====================   ====================

                                       34
<PAGE>

                                                 YEAR ENDED JUNE 30,
                                  --------------------------------------------
                                              2005                  2004
                                  ---------------------   --------------------
Total Assets:
   United States...............   $         1,948,000             1,586,000
   Australia...................             2,003,000             1,890,000
   United Kingdom..............             2,007,000             1,572,000
   Corporate......... .........             1,181,000             2,471,000
                                  ---------------------   --------------------
                                  $         7,139,000             7,519,000
                                  =====================   ====================

(10) SERIES A CONVERTIBLE PREFERRED STOCK

The Series A Convertible Preferred Stock ($10 par value) bears a 6.5% cumulative
dividend rate payable January 1 and July 1 of each year. Each share of Series A
Convertible Preferred Stock is convertible into eight shares of common stock.
The Holder of each share of Series A Convertible Preferred Stock is entitled to
eight votes, subject to adjustment. Upon an involuntary or voluntary liquidation
or dissolution of the Company at any time, the holders of the Series A
Convertible Preferred Stock are entitled to receive a liquidation preference of
$10 per share. The preferred stock may be called for redemption in whole or in
part by the Company for a redemption price of $11.70 per share. There are no
shares of Series A Convertible Preferred Stock currently outstanding.

(11) 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 (see Note 7). Subsequently, in February 2005, these 240,000
shares were converted into 800,000 shares of the Company's common stock at a
price of $0.30 per share.

Under the terms of these shares, holders of the Series B Convertible Preferred
Stock (1) are entitled to a liquidation preference equal to $1.00 per share in
the event of any liquidation or dissolution of the Company, (2) are entitled to
receive a dividend of 6% per annum, payable quarterly in either cash or common
stock, at the option of the Company and (3) received piggyback registration
rights. Shares of the Series B Convertible Preferred Stock are convertible into
shares of the Company's common stock, at the option of the holder, at a rate of
$0.30 per share, or a total of 1,200,000 shares. The conversion price is subject
to adjustment under certain conditions such as stock dividends, stock splits and
reclassifications. In addition, shares of the Series B Convertible Preferred
Stock participate on an as-if converted basis in any dividends paid on 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 year
ended June 30, 2005, the Company has recorded additional dividends of $16,169.

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.

                                       35
<PAGE>

(12) DEBT AND EQUITY 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. For the
year ended June 30, 2005, the Company has amortized $22,500 of the effective
dividend discussed above. In addition, the Company has recorded dividends of
$39,100 for the year ended June 30, 2005, of which $25,500 are accrued for as of
June 30, 2005.

The loan is collateralized by substantially all of the assets of the Company and
ranks senior to any existing or future indebtedness of the Company. The interest
rate for the loan is 6% during the first year of the loan, 9% during the second
year and 12% for the third year. The loan becomes immediately due and payable
upon the earlier of (i) 36 months from the date of issuance (February 2008),
(ii) a merger or combination of the Company or a sale of all or substantially
all of the assets of the Company, or (iii) the acquisition of more than 50% of
the voting power or interest in the Company by a single entity or person. The
Company has recorded interest in the amount of $51,780, which is included in
interest expense in the accompanying statement of operations for the year ended
June 30, 2005. The collateralized loan balance in the amount of $1.5 million is
included as long-term debt in the accompanying balance sheet as of June 30,
2005.

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

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

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

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

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

Upon the closing of the financing transaction with ComVest, Delia MacIntosh, the
spouse of the Company's former Chief Executive Officer, converted the remaining
outstanding debt of the Company due to her in the aggregate amount of
approximately $400,000 into 2,704,000 shares of Common Stock at the same terms
as the equity financing (see Note 7).

                                       36
<PAGE>

(13) PROFIT SHARING AND 401(K) RETIREMENT PLAN

The Company has a pre-tax salary reduction/profit sharing plan under the
provisions of Section 401(k) of the Internal Revenue Code that covers employees
meeting certain eligibility requirements. Any employer contributions are
discretionary. There were no Company contributions for the years ended June 30,
2005 and 2004.

(14) CONSULTING AGREEMENT

In September 2002, the Company entered into a consulting agreement with
GlobalNet Venture Partners, L.L.C. (GlobalNet) to provide management advisory
services for a period of 30 months. In exchange for these services, the Company
paid GlobalNet a fee of $26,500 per month. In addition, GlobalNet could earn
additional fees under the agreement as a result of its involvement in obtaining
financing and for introducing and developing strategic partnerships that result
in revenue to the Company. The agreement could be terminated by either party
upon 60 days written notice. As part of the services to be provided under this
agreement, a principal of GlobalNet agreed to serve as the Company's Chairman of
the Board for a period of 24 months.

On July 1, 2003, the Company entered into a restructuring agreement with
GlobalNet pursuant to which GlobalNet ceased to provide monthly consulting
services to the Company. As part of the restructuring agreement, the Principal
of GlobalNet who was serving as the Company's Chairman of the Board resigned
from that position effective July 31, 2003. In addition, the Company repurchased
560,000 shares of the Company's common stock that was previously held by
GlobalNet for a price of $0.27 per share by canceling $151,200 of the promissory
note that existed between the two parties and adjusting the balance of the note
to $172,800 (See Note 15).

(15) STOCK PURCHASE

In September 2002, the Company sold 1.2 million shares of the Company's common
stock to GlobalNet at a price of $0.27 per share under a stock purchase
agreement. GlobalNet paid the entire purchase price by delivering a promissory
note to the Company and pledged the stock purchased as security for the note.
The note, which expires in September 2009, bears an interest rate of 5.5% per
annum through September 2, 2009, with interest payable quarterly starting
September 30, 2002. The note is a limited recourse note in that in the event of
non-payment, the Company's only recourse is against the pledged shares.

On September 15, 2003, under separate agreements, the Company exercised its
option to repurchase 440,000 shares at a price of $0.62 per share from GlobalNet
by reducing the principal balance of the promissory note held by $118,800 and
agreeing to make cash payments totaling $154,000. In addition, for the remaining
200,000 shares of common stock held by GlobalNet, the Company converted those
shares into 112,903 fully paid shares by reducing the remaining principal
balance under the promissory note ($54,000) to zero (See Note 14).

(16) SALE OF COMMON STOCK

During the year ended June 30, 2004, the Company sold 2,100,001 shares of common
stock at a price of $0.75 per share to several accredited investors under a
private placement, the proceeds of which totaled approximately $1.4 million, net
of associated expenses. In connection therewith, the Company issued three year
warrants to the investors which allows them to purchase a total of 630,000
shares of common stock at a price of $1.25 per share. In addition, the Company
issued five year warrants in exchange for services performed in connection with
the private placement for a total of 69,066 shares of common stock at prices
ranging from $.90-$1.25 per share.

(17) SUBSEQUENT EVENT

Subsequent to June 30, 2005, the Company entered into an employment agreement
with an individual to serve as the Company's Chief Executive Officer. The
agreement has a term of two years and will be automatically renewed for
additional two-year periods unless terminated earlier by either party. Under
this agreement, the individual will receive a base salary of $250,000 per year
plus, in accordance with criteria established by the Company's Board of
Directors, a performance bonus of up to 80% of base salary. Upon termination of
the agreement due to change in control, the individual will receive a payment
equal to eighteen months of his then-current salary plus any bonus he is
otherwise entitled to. Upon termination of the agreement without cause by the
Company, the individual shall be entitled to severance pay in the form of salary
continuation of this individual's base salary. If there are six or more months
remaining on the term of the agreement, this individual will receive salary
continuation for the balance of the term of the agreement. If there are fewer
than six months remaining on the term of the agreement, this individual will
receive salary continuation for the balance of the term of the agreement plus
six months. In connection with this agreement, the Company granted, under its
Stock Option Plan, a seven-year option to purchase up to 2,850,000 shares of the
Company's common stock at a price of $0.265 per share. Twenty-five percent of
the options will vest on the first anniversary of the date of grant, with the
remainder vesting in thirty-six equal monthly installments beginning on the
fifteenth of the month immediately following the anniversary date, subject to
continued employment. The fair value of the options at the date of grant was
estimated to be approximately $682,000 using the Black-Scholes pricing model.
Starting July 1, 2006, the amount will be charged to operations over the vesting
period. The following assumptions were used to calculate the fair value of the
options: dividend yield of 0%; expected volatility of 152%; risk-free interest
rate of 3.875%; and an expected life of seven years.

                                       37
<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

ITEM 8A. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, 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 (the "Exchange Act")). Based on this evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

ITEM 8B. OTHER INFORMATION

All information required to be reported on a Form 8-K has been reported on a
Form 8-K.

                                       38
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

The information required by this item is incorporated by reference to the
sections labeled "Election of Directors", "Section 16(a) Reporting Compliance"
and "Code of Ethics" that appear in the definitive proxy statement for the 2005
Annual Meeting of Shareholders.

ITEM 10. EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the
section labeled "Executive Compensation" that appears in the definitive proxy
statement for the 2005 Annual Meeting of Shareholders.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCK MATTERS

The information required by this item is incorporated by reference to the
section labeled "Principal Shareholders and Management Shareholdings" that
appears in the definitive proxy statement for the 2005 Annual Meeting of
Shareholders.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated by reference to the
section labeled Certain Relationships and Related Transactions that appears in
the definitive proxy statement for the 2005 Annual Meeting of Shareholders.

ITEM 13. EXHIBITS

(a) Exhibits.

See "Exhibit Index" immediately following the signature page of this Form
10-KSB.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the
section labeled "Ratification of Selection of Independent Auditors" that appears
in the definitive proxy statement for the 2005 Annual Meeting of Shareholders.

                                       39
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                CORVU CORPORATION

Dated:  September 28, 2005              By: /s/ Joseph Caffarelli
                                            ------------------------------------
                                            Joseph Caffarelli
                                            Chief Executive Officer

In accordance with the Exchange Act, this Report has been signed by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>

SIGNATURE AND TITLE                                                                                        DATE
------------------------------------------------------------------------------------------      ----------------------------
<S>                                                                                              <C>
/s/ Joseph Caffarelli
----------------------------------------------------------------
Joseph Caffarelli, President and Chief Executive Officer, Director                                  September 28, 2005
(principal executive officer)

/s/ David C. Carlson
----------------------------------------------------------------
David C. Carlson, Chief Financial Officer                                                           September 28, 2005
(principal financial and accounting officer)

/s/ Ismail Kurdi
----------------------------------------------------------------
Ismail Kurdi, Director
                                                                                                    September 28, 2005
/s/ James L. Mandel
----------------------------------------------------------------
James L. Mandel, Chairman of the Board                                                              September 28, 2005

/s/ Justin M. MacIntosh
----------------------------------------------------------------
Justin M. MacIntosh, Director                                                                       September 28, 2005

/s/ Daniel Fishback
----------------------------------------------------------------
Daniel Fishback, Director                                                                           September 28, 2005

/s/ Robert Doretti
----------------------------------------------------------------
Robert Doretti, Director                                                                            September 28, 2005

/s/ Robert Priddy
----------------------------------------------------------------
Robert Priddy, Director                                                                             September 28, 2005

</TABLE>

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<PAGE>

                                CORVU CORPORATION
                                EXHIBIT INDEX FOR
                 FORM 10-KSB FOR FISCAL YEAR ENDED JUNE 30, 2005

<TABLE>
<CAPTION>

 EXHIBIT
 NUMBER                                   DESCRIPTION
 ----------------------------------------------------------------------------------------------------------------
<S>            <C>
2              Agreement and Plan of Reorganization between CorVu Corporation
               and Minnesota American, Inc. dated as of November 17,
               1999--incorporated by reference to Exhibit 2 to Registrant's Form
               10-SB, File No. 000-29299

3.1            Amended and Restated Articles of Incorporation, Certificate of
               Designation of Rights and Preferences of Series B Convertible
               Preferred Stock and Certificate of Designation of Rights and
               Preferences of Series C Convertible Preferred Stock of the
               Registrant--incorporated by reference to Exhibit 3.1 to
               Registrant's Form 10-QSB for fiscal quarter ended March 31, 2005
               filed May 11, 2005

3.2            Bylaws--incorporated by reference to Exhibit 3.2 to the
               Registrant's Form 10-SB, File No. 000-29299

4.1            Rights of Holders of Series A Convertible Preferred Stock--see
               Article 3 of Amended and Restated Articles of Incorporation
               (Exhibit 3.1)

4.2            Rights of Holders of Series B Convertible Preferred
               Stock--incorporated by reference to Exhibit 3.1 to Registrant's
               Form 10-QSB for fiscal quarter ended March 31, 2005 filed May 11,
               2005

4.3            Rights of Holders of Series C Convertible Preferred
               Stock--incorporated by reference to Exhibit 3.1 to Registrant's
               Form 10-QSB for fiscal quarter ended March 31, 2005 filed May 11,
               2005

4.4            Registration Rights Agreement dated February 11, 2005 between
               CorVu Corporation and ComVest Investment Partners II
               LLC--incorporated by reference to Exhibit 4.2 to Registrant's
               Form 10-QSB for fiscal quarter ended March 31, 2005 filed May 11,
               2005

10.1*          Employment Agreement between Registrant and Justin MacIntosh,
               dated July 1, 1999--incorporated by reference to Exhibit 10.4 to
               Registrant's Form 10-SB, File No. 000-29299

10.2*          Employment Agreement between Registrant and David C. Carlson,
               dated July 15, 1996 and amended July 20, 1999--incorporated by
               reference to Exhibit 10.5 to Registrant's Form 10-SB, File No.
               000-29299

10.3           Lease Agreement between United Properties Investment LLC. and
               CorVu Corporation for premises at 3400 West 66th Street, Edina,
               Minnesota-incorporated by reference to Exhibit 10.7 to
               Registrant's Form 10-KSB for the fiscal year ended June 30, 2002,
               File No. 000-29299

10.4*          CorVu Corporation 1996 Stock Option Plan, as amended through
               December 18, 2003 and approved by the shareholders at
               their meeting on December 18, 2003--incorporated by
               reference to Exhibit 10.1 to Registrant's Form 10-QSB
               for fiscal quarter ended September 30, 2004 filed
               November 12, 2004

10.5           Commercial Lease between Perpetual Trustee Company Limited and
               CorVu Australasia Pty Ltd., dated March 1, 2004, for premises at
               Suite 1, Level 8, Tower A, Zenith Centre 821 Pacific Highway,
               Chatswood, NSW - incorpoated by reference to Exhibit 10.16 to
               Registrants. Form 10-KSB/A for fiscal quarter ended June 30,
               2004 filed January 12, 2005.

10.6           Accounts Receivable Financing Agreement with Silicon Valley
               Bank--incorporated by reference to Exhibit 10.2 to Registrant's
               Form 10-QSB for fiscal quarter ended September 30, 2004 filed
               November 12, 2004

10.7           Promissory Note dated December 2, 2004 from CorVu North America,
               Inc. to Commerce Bank--incorporated by reference to Exhibit 10.1
               to Registrant's Form 10-QSB for fiscal quarter ended December 31,
               2004 filed February 14, 2005
</TABLE>

                                       41
<PAGE>
<TABLE>
<CAPTION>

<S>                   <C>
10.8           CorVu Corporation Guaranty Agreement with Commerce
               Bank--incorporated by reference to Exhibit 10.2 to Registrant's
               Form 10-QSB for fiscal quarter ended December 31, 2004 filed
               February 14, 2005

10.9           CorVu Corporation Debt Subordination Agreement with Commerce
               Bank--incorporated by reference to Exhibit 10.3 to Registrant's
               Form 10-QSB for fiscal quarter ended December 31, 2004 filed
               February 14, 2005

10.10          Term Sheet dated December 20, 2004 between CorVu Corporation and
               ComVest Investment Partners II LLC--incorporated by reference to
               Exhibit 10.4 to Registrant's Form 10-QSB for fiscal quarter ended
               December 31, 2004 filed February 14, 2005

10.11          Amended and Restated Term Sheet dated January 31, 2005 between
               CorVu Corporation and ComVest Investment Partners II
               LLC--incorporated by reference to Exhibit 10.5 to Registrant's
               Form 10-QSB for fiscal quarter ended December 31, 2004 filed
               February 14, 2005

10.12*         Separation Agreement dated March 22, 2005 with Alan
               Missroon--incorporated by reference to Exhibit 10.1 to
               Registrant's Form 10-QSB for fiscal quarter ended March 31, 2005
               filed May 11, 2005

10.13          Lease dated March 24, 2005 between 3 Furzeground (No. 1) Limited
               and 3 Furzeground (No. 2) Limited and CorVu plc--incorporated by
               reference to Exhibit 10.2 to Registrant's Form 10-QSB for fiscal
               quarter ended March 31, 2005 filed May 11, 2005

10.14          Amendment No. 4 to Employment Agreement dated February 11, 2005
               between CorVu Corporation and Justin MacIntosh--incorporated by
               reference to Exhibit 10.3 to Registrant's Form 10-QSB for fiscal
               quarter ended March 31, 2005 filed May 11, 2005

10.15          Securities Purchase Agreement dated as of February 11, 2005 among
               CorVu Corporation, ComVest Partners II LLC and the
               Subsidiaries--incorporated by reference to Exhibit 10.4 to
               Registrant's Form 10-QSB for fiscal quarter ended March 31, 2005
               filed May 11, 2005

10.16          Security Agreement dated February 11, 2005 among CorVu
               Corporation, CorVu North America, Inc. and ComVest Investment
               Partners II LLC--incorporated by reference to Exhibit 10.5 to
               Registrant's Form 10-QSB for fiscal quarter ended March 31, 2005
               filed May 11, 2005

10.17          Stockholders' Agreement dated as of February 11, 2005 among
               certain stockholders and ComVest Investment Partners II
               LLC--incorporated by reference to Exhibit 10.6 to Registrant's
               Form 10-QSB for fiscal quarter ended March 31, 2005 filed May 11,
               2005

10.18          Senior Secured Promissory Note dated February 11, 2005 payable to
               ComVest Investment Partners II LLC--incorporated by reference to
               Exhibit 10.7 to Registrant's Form 10-QSB for fiscal quarter ended
               March 31, 2005 filed May 11, 2005

10.19          Protective Warrant dated February 11, 2005 issued to ComVest
               Investment Partners II LLC--incorporated by reference to Exhibit
               10.8 to Registrant's Form 10-QSB for fiscal quarter ended March
               31, 2005 filed May 11, 2005

10.20          Preferred Warrant dated February 11, 2005 issued to ComVest
               Investment Partners II LLC--incorporated by reference to Exhibit
               10.9 to Registrant's Form 10-QSB for fiscal quarter ended March
               31, 2005 filed May 11, 2005

10.21*         Employment Agreement dated August 1, 2005 between CorVu
               Corporation and Joseph Caffarelli--incorporated by reference to
               Exhibit 10.1 to Registrant's Form 8-K filed August 4, 2005

10.22*         Termination of Employment Agreement dated July 31, 2005 between
               CorVu Corporation and Justin M. MacIntosh--incorporated by
               reference to Exhibit 10.1 to Registrant's Form 8-K filed August
               4, 2005

21**           Subsidiaries of CorVu Corporation
</TABLE>

                                       42
<PAGE>

<TABLE>
<CAPTION>
<S>                   <C>
23**           Consent of Independent Registered Public Accounting Firm-
               Virchow, Krause & Company, LLP

24             Power of Attorney (contained on Signature Page of this Form
               10-KSB)

31.1**         Certification of Chief Executive Officer Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002

31.2**         Certification of Chief Financial Officer Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002

32**           Certification of Chief Executive Officer and Chief Financial
               Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

o  *  Indicates a management contract or compensatory plan or arrangement
      required to be filed as an exhibit to this Form 10-KSB.
o  ** Filed herewith

                                       43