SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 11, 2005
CorVu Corporation
(Exact name of Registrant as Specified in its Charter)
Minnesota
(State or Other Jurisdiction of Incorporation)
0-29299 41-1457090
(Commission File Number) (IRS Employer
Identification No.)
3400 West 66th Street
Edina, Minnesota 55435
(Address of Principal Executive Offices and Zip Code)
(952) 944-7777
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 1 Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
On February 11, 2005, CorVu Corporation (the "Company") and ComVest
Investment Partners II LLC ("ComVest") signed a Securities Purchase Agreement
(the "Purchase Agreement") and consummated the transactions contemplated
thereby. Pursuant to the terms and conditions set forth in the Purchase
Agreement, ComVest (i) purchased 22,000,000 shares of the Company's common stock
for a purchase price of $3,300,000,(ii) purchased 17,000 shares of a Series C
Convertible Preferred Stock ("Series C Preferrred 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 for an aggregate purchase price of $1,700,000,
and (iii) provided to CorVu a senior secured loan in the principal amount of
$1,500,000. In addition, the Company granted to ComVest warrants to purchase an
additional 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 and ComVest owns more than 5,000,000 shares of the Company's
common stock. Both warrants will not become exercisable prior to August 11,
2005.
Each share of Series C Preferred Stock has a par value of $100 and will
convert into 200 shares of the Company's common stock, subject to customary
antidilution provisions. The Series C Preferred Stock will accrue 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. If the Company fails to pay such dividend
within thirty days after the end of a quarter, ComVest has the right to request
the conversion of the outstanding dividend amount into shares of the Company's
common stock at the volume-weighted average closing price of the Common Stock of
the Company conversion notice. The Company will have the right to redeem Series
C 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 Preferred Stock may elect to convert the stock at any time. The Company
is obligated to use 100% of the proceeds from any equity or debt financing to
redeem the Series C Preferred Stock. Upon liquidation of the Company, each share
of Series C 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, and to participate, on an as-converted basis and together with holders of
the Company's Series B Convertible Preferred Stock ("Series B Preferred Stock"),
in any liquidation distributions to holders of common stock.
The loan is secured by substantially all of the assets of the Company
and its wholly-owned subsidiary, CorVu North America, 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, (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 is obligated to use 50% of any
proceeds it may receive in the future upon the sale of certain equity or debt
securities to retire the loan, provided, that all shares of Series C Preferred
Stock have been redeemed previously. Without ComVest's approval, the Company may
not maintain a cash balance of less than $750,000.
All warrants are subject to anti-dilution protection.
The Company paid a cash fee of $240,000 to ComVest at the closing.
As a condition to closing, the Company and its Chief Executive Officer,
Justin M. MacIntosh, entered into an amendment to Mr. MacIntosh's employment
agreement. The agreement, which became effective February 11, 2005, defers any
annual compensation payable to Mr. MacIntosh by the Company and/or the Company's
subsidiaries for services provided by Mr. MacIntosh to the Company and its
subsidiaries in excess of an aggregate amount of $250,000 until such time as the
Company achieves, on a consolidated basis, two (2) consecutive quarters of
revenues in excess of $4,000,000 and positive EBITDA
Upon the closing of the financing transaction with ComVest, Delia
MacIntosh, the spouse of the Company's Chief Executive Officer, converted the
outstanding principal amounts of $405,600 of loans she had made to the Company
and/or its subsidiaries into 2,704,000 shares of the Company's common stock.
Mrs. MacIntosh also exercised her right to convert 240,000 shares of Series B
Preferred Stock into 800,000 shares of the Company's common stock.
Item 1.02 Termination of Material Definitive Agreement.
Out of the proceeds received at the closing of the transactions with
ComVest, the Company paid off its credit line with Commerce Bank N.A. in the
principal amount of $300,000 plus interest.
Section 2 Financial Information
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Arrangement of a Registrant.
The information provided in Item 1.01 regarding the senior secured loan in
the principal amount of $1,500,000 is incorporated by reference herein.
Section 3 Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities.
The information provided in Item 1.01 regarding the stock issuances to
ComVest and to Mrs. MacIntosh is incorporated by reference herein.
Item 3.03 Material Modification to Rights of Security Holders.
Prior to the closing of the transactions with ComVest, the Company amended
its articles of incorporation by filing the statement of designation of rights,
preferences and limitations of the Series C Preferred Stock. The Company's board
of directors had approved such statement of designation and had designated
17,000 shares out of the Company's authorized undesignated stock as shares of
Series C Preferred Stock. The information provided in Item 1.01 regarding the
Series C Preferred Stock is incorporated by reference herein.
As required by the Company's articles of incorporation, the majority of
the holders of the outstanding shares of the Company's Series B Preferred Stock
consented to the creation of the Series C Preferred Stock with liquidation
preference, dividend and redemption rights on parity with, or senior to, the
Series B Preferred Stock.
Section 5 Corporate Governance and Management
Item 5.01 Changes in Control of Registrant.
Including the shares of common stock and the shares of Series C Preferred
Stock (on an as converted basis) that ComVest acquired in the transactions on
February 11, 2005, ComVest now has the beneficial ownership of 48% of the
Company's stock. The information provided in Item 1.01 is incorporated by
reference herein. ComVest used working capital to acquire the Company's
securities.
Contingent upon the closing of the transaction, the Company's board of
directors increased the number of directors to seven and elected two individuals
designated by ComVest to fill these newly created seats. ComVest will also
appoint an observer to the Company's board of directors. One of the warrants
granted to ComVest will become exercisable only if ComVest has less than two
designees on the Company's board of directors at a time when ComVest owns more
than 5,000,000 shares of the Company's stock (on an as-converted basis). The
information provided in Item 1.01 is incorporated by reference herein.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On February 11, 2004, the Company's board of directors increased the
number of directors to seven and elected Robert L. Priddy and Robert L. Doretti
to the board. Messrs. Priddy and Doretti had been designated by ComVest; the
information provided in Item 5.01 is incorporated by reference herein.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
The information provided in Item 3.03 is incorporated by reference herein.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements: None.
(b) Pro forma financial information: None.
(c) Exhibits:
99.1 Press release dated February 16, 2005.
99.2 Press release dated February 16, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORVU CORPORATION
By /s/ David C. Carlson
--------------------------------------------
Date: February 16, 2005 David C. Carlson
Chief Financial Officer