U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A-1
(X) QUARTERLY REPORT UNDER SECTION 13 OF 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT
For the transition period from __________ to __________.
Commission File No. 000-29299
CorVu Corporation
(Exact name of registrant as specified in its charter)
Minnesota 41-1457090
(State of Incorporation) (IRS Employer ID #)
3400 West 66th Street
Edina, Minnesota 55435
(Address of Principal Executive Offices)
952-944-7777
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by
Sections 13 or 15(d) of the Exchange Act during the past 12 months
(or such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes ____ No X
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Class: Common Stock, par value $.01 per share
Outstanding shares as of May 8, 2000: 19,500,654
<PAGE>
CorVu Corporation
Index to Form 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets at March 31, 2000
(unaudited) and June 30, 1999 (audited) 2
Consolidated Statements of Cash Flows (unaudited)
for the nine month periods ended March 31, 2000 and
1999 3
Consolidated Statements of Operations (unaudited) for
the three and nine month periods ended March 31, 2000
and 1999 4
Notes to Unaudited Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Default Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 13
EXHIBIT INDEX 14
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
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CORVU CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2000 (Unaudited) and June 30, 1999
March 31,
2000 June 30,
Assets (Unaudited) 1999
------------------ ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,073 31,335
Stock subscription receivable -- 250,000
Trade accounts receivable, net of allowance for doubtful
accounts of $234,363 and $100,000, respectively 3,602,827 3,763,628
Prepaid expenses and other 211,163 176,163
------------------ ---------------
Total current assets 3,834,063 4,221,126
Property and equipment, net 162,862 152,941
------------------ ---------------
$ 3,996,925 4,374,067
================== ===============
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 2,312,144 1,904,989
Accrued compensation 1,456,244 1,507,916
Deferred revenue 1,552,672 1,435,792
Accrued interest 50,621 370,287
Other accrued expenses 287,170 192,811
Convertible note payable -- 2,000,000
Notes payable 731,133 1,407,000
Director advances 293,595 444,826
------------------ ---------------
Total current liabilities 6,683,579 9,263,621
------------------ ---------------
Stockholders' deficit:
Undesignated, 24,000,000 shares -- --
Series A convertible preferred stock, par value $10 per share;
1,000,000 shares authorized; 1,700 shares issued and outstanding 17,000 --
Common stock, $0.01 par value; 75,000,000 shares authorized;
19,079,279 and 10,162,200 shares issued and outstanding 190,793 101,622
Additional paid-in capital 13,238,210 4,346,250
Accumulated deficit (15,743,460) (9,473,781)
Deferred compensation (725,550) (75,000)
Foreign currency translation adjustment 336,353 211,355
------------------ ---------------
Total stockholders' deficit (2,686,654) (4,889,554)
------------------ ---------------
Total liabilities and stockholders' deficit $ 3,996,925 4,374,067
================== ===============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CORVU CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)
Nine Month Periods Ended March 31, 2000 and 1999
2000 1999
----------------------- -------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,269,679) (1,834,032)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 37,873 26,997
Non-cash charges related to equity transactions 2,128,741 419,554
Changes in operating assets and liabilities:
Accounts receivable 160,801 (404,121)
Other current assets (35,000) (124,062)
Accounts payable 407,155 118,170
Accrued compensation (51,672) 298,703
Deferred revenue 116,880 38,167
Accrued interest 20,423 104,573
Other accrued expenses 94,359 223,106
----------------------- -------------------
Net cash used in operating activities (3,390,119) (1,132,945)
----------------------- -------------------
Cash flows from investing activities:
Capital expenditures (47,794) (93,683)
----------------------- -------------------
Net cash used in investing activities (47,794) (93,683)
----------------------- -------------------
Cash flows from financing activities:
Proceeds from sale of common stock, net of costs 3,379,301 3,100
Collection of stock subscription receivable 250,000 --
Borrowings on notes payable 500,000 393,860
Repayment on notes payable (600,000) --
Borrowings on notes payable-director 300,000 486,001
Repayment on notes payable-director (450,000) --
Other (77,648) --
----------------------- -------------------
Net cash provided by financing activities 3,301,653 882,961
Effect of exchange rate changes on cash 124,998 132,196
----------------------- -------------------
Net increase (decrease) in cash and cash equivalents (11,262) (211,471)
Cash and cash equivalents at beginning of period 31,335 287,289
----------------------- -------------------
Cash and cash equivalents at end of period $ 20,073 75,818
======================= ===================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CORVU CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations (unaudited)
For the Three and Nine Month Periods Ended March 31, 2000 and 1999
Three Months Ended Nine Months Ended
March 31, March 31, March 31, March 31,
2000 1999 2000 1999
---------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Software $ 1,506,089 1,592,226 5,172,391 4,751,182
Maintenance, consulting, and other 1,574,403 821,028 3,937,660 2,649,315
---------------- --------------- -------------- --------------
Total revenues 3,080,492 2,413,254 9,110,051 7,400,497
---------------- --------------- -------------- --------------
Operating costs and expenses:
Cost of maintenance, consulting, and other 853,230 512,830 2,402,064 1,538,077
Product development 280,095 148,665 759,949 389,261
Sales and marketing 2,484,025 1,713,859 6,333,139 4,447,699
Costs of merger 1,429,339 -- 1,429,339 --
General and administrative 1,193,588 875,375 4,004,875 2,671,179
---------------- --------------- -------------- --------------
Total operating expenses 6,240,277 3,250,729 14,929,366 9,046,216
---------------- --------------- -------------- --------------
Operating loss (3,159,785) (837,475) (5,819,315) (1,645,719)
Interest expense, net (87,325) (67,526) (450,364) (188,313)
---------------- --------------- -------------- --------------
Net loss $ (3,247,110) (905,001) (6,269,679) (1,834,032)
================ =============== ============== ==============
Loss per common share--basic and diluted $ (0.19) (0.10) (0.50) (0.19)
Weighted average shares--basic and diluted 16,686,091 9,491,337 12,589,954 9,490,909
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
CorVu Corporation and Subsidiaries
Notes to Unaudited Consolidated Financial Statements For the
Three and Nine Month Periods Ended March 31, 2000 and 1999
(1) Unaudited Financial Statements
The accompanying unaudited consolidated financial statements of
CorVu Corporation and Subsidiaries have been prepared by the
Company in accordance with generally accepted accounting
principles for interim financial information, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Pursuant to such rules and regulations, certain financial
information and footnote disclosures normally included in the
financial statements have been condensed or omitted. The results
for the periods indicated are unaudited, but reflect all
adjustments (consisting only of normal recurring adjustments)
which management considers necessary for a fair presentation of
operating results.
(2) New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133 is effective for fiscal years beginning after June 15,
2000. SFAS No. 133 established standards for accounting and
reporting of derivative financial instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
The accounting for changes in fair value of a derivative depends
on the intended use of the derivative and the resulting
designation. Management is currently in the process of assessing
the impact of SFAS No. 133 to the Company.
(3) Summary of Significant Accounting Policies
(a) Revenue Recognition
The Company recognizes revenue in accordance with Statement of
Position Nos. 97-2 and 98-9, Software Revenue Recognition, with
Respect to Certain Transactions. Software license revenue is
recognized when all of the following criteria have been met: there
is an executed license agreement, software has been shipped to the
customer, no significant vendor obligations remain, the license
fee is fixed and payable within twelve months and collection is
deemed probable. 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.
<PAGE>
Deferred revenue represents payment received or amounts in advance
of services to be performed.
(b) Stockholder's Deficit
Equity accounts as of March 31, 2000 have been adjusted to reflect
the conversion of shares in connection with the reverse merger
with Minnesota American, Inc. using a conversion rate of 1.125 to
1. This conversion has also been reflected in the calculation of
weighted average shares and resulting net loss per share for the
three and nine-month periods ended March 31, 2000.
(c) Net Loss per Common Share
Basic loss per common share is computed by dividing net loss by
the weighted average number of common shares outstanding during
the period. Diluted loss per common share is computed by dividing
net loss by the weighted average number of common shares
outstanding during the period assuming the exercise of dilutive
stock options and warrants. The dilutive effect of stock options
a warrants is computed using the average market price of the
Company's stock during each period under the treasury stock
method. In periods where losses have occurred, options and
warrants are considered anti-dilutive and thus have not been
included in the diluted loss per common share calculations.
(4) Comprehensive Income
Comprehensive income and its components, including all changes in
equity during a period except those resulting from investments by
owners or distributions to owners are as follows:
<TABLE>
<CAPTION>
-------------------- -------------------- ------------------- -------------------- ------------------
For the Three For the Three For the Nine For the Nine
Months Ended March Months Ended Months Ended March Months Ended
31, 2000 March 31, 1999 31, 2000 March 31, 1999
-------------------- -------------------- ------------------- -------------------- ------------------
-------------------- -------------------- ------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Net Loss $ (3,247,110) $ (1,114,148) $ (6,269,679) $ (1,845,498)
-------------------- -------------------- ------------------- -------------------- ------------------
-------------------- -------------------- ------------------- -------------------- ------------------
Other
comprehensive loss:
Foreign currency
translation
adjustment
$ 87,599 $ (8,195) $ 124,998 $ 132,196
-------------------- -------------------- ------------------- -------------------- ------------------
Total
comprehensive loss
$ (3,159,511) $1,122,343) $ (6,144,681) $ (1,713,302)
-------------------- -------------------- ------------------- -------------------- ------------------
</TABLE>
<PAGE>
(5) Liquidity
The accompanying interim consolidated financial statements are
prepared assuming the Company will continue as a going concern.
During the year ended June 30, 1999, the Company incurred an
operating loss of $4,554,807 and used $1,391,656 of cash in
operating activities. Subsequently, for the nine-month period
ended March 31, 2000, the Company incurred an operating loss of
$5,819,315 and used $3,390,119 of cash in operating activities. As
of March 31, 2000, the Company had an accumulated deficit of
$15,743,460, total stockholders' deficit of $2,686,654, and
negative working capital of $2,849,516. Going forward the Company
must raise additional cash either through raising additional
capital or through profits from operations. During the years ended
June 30, 1999 and June 30, 1998, the Company raised capital of
$216,471 and $293,550, respectively. Subsequent to June 30, 1999,
the Company has raised an additional $4.3 million in convertible
debt and equity financing.
Management anticipates that the impact of certain subsequent
activities, as well as the actions listed below, will generate
sufficient cash flows to fund the Company's future operations.
1. Continue to increase the Company's revenues from
software licenses and other revenue sources.
2. Increase the level of indebtedness.
3. Solicit additional equity investment in the Company.
4. Reduce operating costs, as deemed necessary, in the
event the sales of product licenses and/or additional
equity or debt financing do not generate adequate
proceeds.
(6) Note Payable
In February 1998, the Company entered into a loan agreement in the
amount of $927,014 with a third party lender. During fiscal 1999,
the Company borrowed an additional $479,986. The note is secured
by the assets of the Company. The interest rate on the outstanding
principal balance is based on an index defined in the loan
agreement plus 3%, with interest due monthly. On March 31, 2000
and June 30, 1999 the interest rates were 8.65% and 8.05%,
respectively. The outstanding principal balance became due on
December 15, 1999. Subsequently, the Company repaid $720,000
and continues discussions with the lender regarding repayment of
the remaining balance.
(7) Convertible Bridge Loan
On November 15, 1999, the Company entered into two loan agreements
with third parties totaling $500,000. The outstanding principal
was due on March 14, 2000. Interest was charged at a rate of 10%
per annum. In addition, the agreements called for the issuance of
warrants to purchase up to 450,000 shares of common stock at an
exercise price of $.01 per share. After the merger of CorVu with
and into Minnesota American, Inc., the outstanding principal and
interest was converted into a total of 285,702 shares of common
stock of our Company, at a price of $2 per share. The Company has
recorded a non-cash expense of approximately $183,000 to reflect
the fair value of the warrants issued using the Black-Scholes
pricing model over the period the bridge loan was outstanding
during the nine month period ended March 31, 2000. In addition,
the Company recorded a non-cash expense of approximately $134,000
during the nine month period ended March 31, 2000 to reflect the
difference between the $2 per share conversion price and $3 per
share. The fair value of the warrants and the conversion feature
<PAGE>
were determined to be $1,345,000 and $250,000, respectively. The fair
value that was allocated to the warrants and the conversion feature
were limited based on the proceeds of the loan. The value of the
unamortized discount at the time of the conversion ($183,000) was
charged to Additional Paid-in Capital.
(8) Agreement and Plan of Reorganization
On January 14, 2000, the Company completed a reverse merger
transaction with Minnesota American, Inc. (MNAC). The merger
resulted in shareholders of the Company and MNAC owning
approximately 74 percent and 26 percent, respectively of the
outstanding shares of the combined entity. The shares of MNAC were
quoted on the Over-the-Counter Bulletin Board (OTCBB) of the
National Association of Securities Dealers (NASD). The combined
entity changed its name to CorVu Corporation and continues CorVu's
business operations. In addition, the Company received $950,000 in
cash from Minnesota American, Inc.
The Company issued 345,806 common shares and paid $47,500 to its
business advisor at closing in exchange for services. In addition,
the Company granted its business advisor a five-year warrant to
purchase up to 185,572 common shares at $5.3125 per share. For
accounting purposes, the Company has estimated the value of the
stock and warrants issued to be $5.3125 per share, the closing
trading price of the stock on the date of the merger and,
accordingly, recorded a charge of approximately $2,124,000 in the
nine-month period ending March 31, 2000. This charge is recorded
in the fiscal quarter ended March 31, 2000 as a $950,000 reduction
to Additional Paid-in Capital based on the amount of cash received
in the merger, with the remainder ($1,174,000) shown as an
operating expense.
(9) Director Advance
In March 2000, the Company received a short-term loan for the
principal amount of $300,000 from a director. The loan was due on
April 30, 2000. Interest is payable based upon a bank index rate
plus 2% (11% as of March 31, 2000). The Company did not repay this
short-term loan on April 30, 2000. In June 2000, the Company repaid
$50,000 and is currently discussing repayment terms with this
director.
(10) Equity Financing
Subsequent to March 31, 2000, CorVu raised a total of $400,000
from the sale of common stock (priced at $4 per share). In
connection with the transactions, the Company also issued warrants
to purchase up to 30,000 shares of common stock at exercise prices
ranging from $4 to $7 per share.
(11) Warrant Dividend
In March 2000, the Company declared a warrant dividend to
shareholders of record as of April 28, 2000. For every ten shares
of common stock held, each shareholder will receive a warrant to
purchase one share of common stock at a price of $8. The warrant
is cancelable, at the Company's option, upon 30 days notice if the
Company's stock closes at a price of $12 per share or higher for
at least ten consecutive trading days.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
For the Three and Nine Month Periods Ended March 31, 2000 versus March 31, 1999
REVENUES:
Total revenue for the three and nine-month periods ended March 31, 2000
increased 28% and 23%, respectively, compared to the same periods a year ago.
Software and license fee revenues decreased $86,137 (5%) and increased $421,182
(9%) for the three and nine-month periods ended March 31, 2000, respectively,
from the same periods last year. CorVu's management believes several factors are
responsible for these variances. During fiscal year 2000, CorVu changed its
sales and marketing strategy, in order to become a seller of comprehensive
business software offerings for entire organizations. This has resulted in an
increase in the average dollar value of each sale. In addition, the number of
sales people employed increased substantially from 46 as of March 31, 1999 to 73
as of March 31, 2000. The increases discussed above were offset by other
factors: (1) The sale of such comprehensive software products requires on the
part of the sales force skills that are different from the skills the sales
personnel employed previously for the sale of separate tools and modules. As a
result, CorVu experienced temporarily a high turnover in its sales force. The
new sales personnel did not contribute significantly to corporate revenues
because they were not yet fully trained. (2) The described change in the sales
and marketing strategy resulted in an extension of the sales cycle. (3) Many
potential customers were in the final phase of their Y2K compliance work and
therefore froze additional spending and implementation of new systems.
Maintenance, consulting and other revenues increased by $753,375 (92%) and
$1,288,345 (49%), for the three and nine month periods ended March 31, 2000,
respectively, from the same periods last year, due to the employment of
additional service professionals to meet the demands of the increased customer
base for both consulting and training services. In addition, annual maintenance
fees continued to increase in line with the increased customer base.
OPERATING EXPENSES:
Operating expenses increased by $2,989,548 (92%) and $5,883,150 (65%) for the
three and nine-month periods ended March 31, 2000, respectively, from the same
periods last year.
Cost of maintenance, consulting and other expenses increased $340,400 (66%) and
$863,987 (56%) and product development costs increased $131,430 (88%) and
$370,688 (95%) for the three and nine month periods ended March 31, 2000,
respectively, from the same periods last year. These increases were primarily
caused by the employment of additional professionals in both the consulting and
training services, as well as in the research and development area.
Sales and marketing expenses increased $770,166 (45%) and $1,885,440 (42%) for
the three and nine month periods ended March 31, 2000, respectively, from the
same periods last year, due to the higher number of employees working in that
sector and other factors such as higher expenditures for marketing including
advertising, production of marketing materials, and participation in trade show
activities.
<PAGE>
Merger costs of $1,429,339 were incurred in the three and nine-month periods
ended March 31, 2000. Costs to complete the reverse merger transaction with
Minnesota American, Inc. included legal, accounting and broker fees.
General and administrative expenses increased $318,213 (36%) and $1,333,696
(50%) for the three and nine-month periods ended March 31, 2000, respectively,
from the same periods last year. The increases were caused by increased
overhead expenditures such as salaries, wages and benefits for administrative
personnel, office rent, equipment rent for computers and communication
equipment, professional services such as legal and accounting fees and
corporate travel expenses.
INTEREST EXPENSE, NET:
Interest expense, net increased by $19,799 (29%) and $262,051 (139%) for the
three and nine-month periods ended March 31, 2000, respectively, compared to the
same periods last year. In November 1999, the Company entered into two loan
agreements with third parties totaling $500,000. The agreement allowed the
holder to convert the debt into common stock at any time at a conversion rate of
$2 per share. In addition, the loan was automatically convertible into common
stock upon the closing of the merger with Minnesota American, Inc. The loan
agreements also called for the issuance of warrants to purchase up to 450,000
shares of common stock at an exercise price of $.01 per share. The increase in
interest expense, net was caused by the recording of approximately $317,000 of
non-cash interest expense charges related to this debt instrument. The non-cash
charges were required to (1) reflect the difference between the $2 per share
conversion price included within the agreements and $3 per share, the Company's
estimate of the fair value of the stock on the date of issuance and, (2) reflect
the fair value of the warrants attached to the debt instrument using the
Black-Scholes pricing model over the period the bridge loan was outstanding.
NET LOSSES:
CorVu Corporation incurred net losses of $3,247,110 and $6,269,679 for the three
and nine-month periods ended March 31, 2000, respectively, compared to net
losses of $905,001 and $1,834,032 for the three and nine-month periods ended
March 31, 1999, respectively.
Liquidity and Capital Resources
Total cash and cash equivalents decreased by $11,262 during the nine-month
period ended March 31, 2000 from $31,335 as of June 30, 1999 to $20,073 as of
March 31, 2000. Net cash used in operating activities was $3,390,119 for the
period ended March 31, 2000. This was caused by the net loss during the period
as discussed above. Net cash used in investing activities was $47,794 for fiscal
2000 reflecting the acquisition of office furniture and computer and office
software and equipment as part of the Company's expansion. Net cash provided by
financing activities was $3,301,653 for the period ended March 31, 2000.
Proceeds from the sale of common stock at prices ranging from $2.00-$4.00 per
share accounted for $3,379,301, net of financing costs. In addition, the Company
collected a stock subscription receivable in the amount of $250,000 and entered
into a $500,000 bridge loan facility as discussed above which was converted to
common stock on January 14, 2000. During the nine-month period ended March 31,
2000, the Company repaid $600,000 of an existing note payable. Subsequently, the
Company repaid an additional $120,000 on the note. Additionally, the Company
received borrowings from a director of $300,000 and repaid director loans in
the amount of $500,000.
<PAGE>
In April 2000, the Company sold to four accredited investors a total of 100,000
shares of common stock, together with warrants to purchase up to 30,000 shares
at prices ranging from $4 to $7 per share, for a total purchase price of
$400,000. In addition, CorVu's management intends to undertake one or several of
the following activities: (1) continue to increase CorVu's revenues from
software licenses and other revenue sources; (2) increase the level of
indebtedness; (3) solicit additional equity investment in the Company; (4)
reduce operating costs, as deemed necessary, in the event the sales of product
licenses and / or additional equity or debt financing do not generate adequate
proceeds. CorVu's management believes that these activities will generate
sufficient cash flows to sustain CorVu's operations through the end of fiscal
2000.
Forward Looking Statements
This Report contains statements, which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and the
Securities Exchange Act of 1934. These statements appear in a number of places
in this Report and include all statements regarding the intent, belief or
current expectations of the Company, its directors or its officers with respect
to, among other things: (i) the Company's financing plans; (ii) trends affecting
the Company's financial condition or results of operations; (iii) the Company's
growth strategy and operating strategy; and (iv) the declaration and payment of
dividends. Investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors discussed herein.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities and Use of Proceeds.
During the quarter ended March 31, 2000, the Company made the following
sales of unregistered securities:
(a) On January 14, 2000, in connection with the merger (the "Merger")
of former CorVu Corporation into the Company, former CorVu Corporation issued to
its business advisor, Jon Adams Financial Co., L.L.P., 345,806 shares of Common
Stock as partial payment for services rendered valued at $5.3125 per share;
based upon a conversion ratio of 1.125, these shares were converted into 389,032
shares of Common Stock of the Company in the Merger (see below (c)). The Company
relied on the exemption from registration provided by Rule 506 of Regulation D
under the Securities Act of 1933. A restrictive securities legend has been
placed on the certificate representing the shares.
<PAGE>
(b) On January 13, 2000, before the Merger, the former CorVu
Corporation sold 100,000 shares of Common Stock to Ismail Kurdi, a director of
the Company, at a price of $2 per share; based upon a conversion ratio of 1.125,
these shares were converted into 112,500 shares of Common Stock of the Company
in the Merger (see below (c)). The Company relied on the exemption from
registration provided by Rule 506 of Regulation D under the Securities Act of
1933. The purchaser represented his intention to acquire the securities for
investment purposes only and not with a view to the distribution thereof; in
addition, a restrictive securities legend has been placed on the certificate
representing the shares.
(c) On January 14, 2000, the Company issued 13,356,780 shares of Common
Stock in connection with the Merger. Such shares were issued on the basis of
1.125 shares of the Company for each share of former CorVu Corporation
(including the shares issued in the transactions mentioned under (a) and (b)
above). The Company relied on the exemption from registration provided by Rule
506 of Regulation D under the Securities Act of 1933. A restrictive securities
legend has been placed on the certificates representing the shares.
(d) On January 14, 2000, after the Merger, the Company issued a 5-year
Warrant to purchase 185,572 shares of Common Stock, at $5.3125 per share, to Jon
Adams Financial Co., L.L.P for services rendered. The Company relied on the
exemption from registration provided by Rule 506 of Regulation D under the
Securities Act of 1933. A restrictive securities legend has been placed on the
Warrant certificate.
(e) On January 25, 2000, the Company sold 500,000 shares of Common
Stock and Warrants to purchase 300,000 shares of Common Stock to two accredited
investors for a total purchase price of $1,000,000. The Warrants are exercisable
for a term of 5 years at exercise prices ranging from $2 to $8 per share. Equity
Securities Investments, Inc. received a commission of 7.5% plus a
non-accountable expense allowance of 1% in connection with the sales. The
Company relied on the exemption from registration provided by Rule 506 of
Regulation D under the Securities Act of 1933. The purchasers represented their
intention to acquire the securities for investment purposes only and not with a
view to the distribution thereof; in addition, a restrictive securities legend
has been placed on the certificates representing the securities.
(f) On January 20, 2000 the Company issued 285,702 shares of Common
Stock at $2 per share to two business entities, both of which are accredited
investors, in consideration of the conversion of the outstanding principal and
interest under a loan agreement. The Company relied on the exemption from
registration provided by Rule 506 of Regulation D under the Securities Act of
1933. The purchasers represented their intention to acquire the shares for
investment purposes only and not with a view to the distribution thereof; in
addition, a restrictive securities legend has been placed on the certificates
representing the shares.
(g) On February 1, 2000 the Company issued 20,000 shares of Common
Stock to one shareholder in connection with the conversion of preferred stock.
The Company relied on the exemption from registration provided by Section
3(a)(9) of the Securities Act of 1933. No commission or other remuneration was
paid or given, directly or indirectly, in connection with such conversion.
(h) On February 15, 2000, in connection with the exercise of stock
options by a former director, the Company sold 1,000 shares of Common Stock at a
price of $0.20 per share and 1,000 shares of Common Stock at a price of $0.13
per share. The Company relied on the exemption from registration provided by
Rule 701 under the Securities Act of 1933. A restrictive securities legend has
been placed on the certificate representing the shares.
Item 3. Default Upon Senior Securities.
The Company is in default on a loan agreement with a third party
lender. For details see Part I, Item 1., footnote 6 to Unaudited Consolidated
Financial Statements.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
A special meeting of the shareholders of the Company was held on
January 14, 2000.
At the special meeting the shareholders approved the sale of all of the
issued and outstanding capital stock of LockerMate Corporation by a vote of
2,621,022 shares in favor, with 21,000 shares against, 2,000 shares abstaining
and no broker non-votes.
At the special meeting the shareholders approved the Agreement and Plan
of Merger pursuant to which former CorVu Corporation was merged into the
Company, as well as the amendment and restatement of the Company's Articles of
Incorporation, by a vote of 2,624,022 shares in favor, with 26,000 shares
against, 4,000 shares abstaining and no broker non-votes.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) See Exhibit Index on page following Signatures.
(b) No reports on Form 8-K were filed during the quarter ended March
31, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CORVU CORPORATION
Date: June 29, 2000 By /s/ David C. Carlson
David C. Carlson
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
CORVU CORPORATION
FORM 10-QSB
FOR QUARTER ENDED MARCH 31, 2000
Exhibit Number Description
10.1 Agency Agreement, dated March 17, 2000, between the
Company and Equity Securities Investments, Inc.*
27 Financial Data Schedule (filed in electronic format only)*
* Previously filed.
